S-1/A

As filed with the Securities and Exchange Commission on May 23, 2012

Registration No. 333-180780

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1

TO

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

Five Below, Inc.

(Exact name of Registrant as specified in its charter)

Pennsylvania	5331	75-3000378
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1818 Market Street

Suite 1900

Philadelphia, PA 19103

(215) 546-7909

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Kenneth R. Bull

Chief Financial Officer

1818 Market Street

Suite 1900

Philadelphia, PA 19103

(215) 546-7909

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Barry M. Abelson, Esq. John P. Duke, Esq. Pepper Hamilton LLP 3000 Two Logan Square 18^th and Arch Streets Philadelphia, PA 19103 (215) 981-4000 Robert E. Buckholz, Esq. Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 (212) 558-4000

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

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act of 1934.

Large Accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x (do not check if a smaller reporting  company)	Smaller reporting company  ¨

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

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated May 23, 2012.

             Shares

Five Below, Inc.

Common Stock

This is an initial public offering of shares of common stock of Five Below, Inc.

Five Below is offering              of the shares to be sold in the offering. The selling shareholders identified in this prospectus are offering an additional              shares. Five Below will not receive any of the proceeds from the sale of the shares being sold by the selling shareholders.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $         and $        .   Five Below intends to list the common stock on The NASDAQ Global Select Market under the symbol “FIVE.”

Five Below is an “emerging growth company” as that term is used in the Jumpstart Our Business Startups (JOBS) Act of 2012, however, the Company does not intend to take advantage of any of the reduced public company reporting requirements afforded by the JOBS Act.

See “Risk Factors” beginning on page 11 to read about factors you should consider before buying shares of the common stock.

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

	Per Share	Total
Initial public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to Five Below	$	$
Proceeds, before expenses, to the selling shareholders	$	$

To the extent that the underwriters sell more than              shares of common stock, the underwriters have the option to purchase up to an additional              shares from the selling shareholders at the initial price to the public less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on                     , 2012.

Goldman, Sachs & Co. Barclays Jefferies

Credit Suisse Deutsche Bank Securities UBS Investment Bank Wells Fargo Securities

Prospectus dated                     , 2012.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		11
Special Note Regarding Forward-Looking Statements		25
Use of Proceeds		27
Dividends		28
Capitalization		29
Dilution		31
Selected Financial and Other Data		33
Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Business		56
Management		66
Executive Compensation		73
Certain Relationships and Related Party Transactions		93
Principal and Selling Shareholders		96
Description of Capital Stock		100
Shares Eligible for Future Sale		107
Material United States Tax Considerations for Non-United States Holders of Common Stock		110
Underwriting		115
Conflicts of Interest		117
Validity of Common Stock		120
Experts		120
Where You Can Find Additional Information		120
Index to Financial Statements		F-1

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Persons who come into possession of this prospectus and any such free writing prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.

Market and Industry Data

We obtained the industry, market and competitive position data throughout this prospectus from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties.

Basis of Presentation

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year. References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012, references to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011 and references to “fiscal year 2009” or “fiscal 2009” refer to the fiscal year ended January 30, 2010. Each of fiscal years 2011, 2010 and 2009 consisted of a 52-week period. The quarterly reporting periods contained in the unaudited financial statements included in this prospectus consist of 13-week periods ended on April 28, 2012 and April 30, 2011.

In connection with this offering, we will amend our articles of incorporation to effect a     -for-     reverse stock split of our common stock prior to the closing of this offering. Concurrent with the reverse stock split, we will adjust (x) the conversion price of our Series A 8% convertible preferred stock, (y) the number of shares subject to and the exercise price of our outstanding stock option awards under our equity incentive plan and (z) the number of shares subject to and the exercise price of our outstanding warrants, such that the holders of the preferred stock, options and warrants are in the same economic position both before and after the reverse stock split. In addition, the outstanding shares of our Series A 8% convertible preferred stock will convert into shares of our common stock. Unless otherwise indicated, all share data gives effect to the conversion of our preferred stock into common stock.

Trademarks

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business, including Five Below^® and Five Below Hot Stuff. Cool Prices.^® Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ^® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. In this prospectus, we also refer to product names, trademarks, trade names and service marks that are the property of other companies. Each of the trademarks, trade names or service marks of other companies appearing in this prospectus belongs to its owners. Our use or display of other companies’ product names, trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of, the product, trademark, trade name or service mark owner, unless we otherwise indicate.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context otherwise requires, references to “Five Below,” the “Company,” “we,” “us” and “our” refer to Five Below, Inc. Numbers may not sum due to rounding.

We purchase products in reaction to existing marketplace trends and, hence, refer to our products as “trend-right.” We define the teen customer, who aspires to be a young adult and shop as one, as well as the pre-teen customer, who aspires to be a teenager and shop as one, as “aspirational” teen and pre-teen customers. We use the term “dynamic” merchandise to refer to the broad range and frequently changing nature of the products we display in our stores. We use the term “power” shopping center to refer to an unenclosed shopping center with 250,000 to 750,000 square feet of gross leasable area that contains three or more “big box” retailers (large retailers with floor space over 50,000 square feet) and various smaller retailers with a common parking area shared by the retailers. We use the term “lifestyle” shopping center to refer to a shopping center or commercial development that is often located in suburban areas and combines the traditional retail functions of a shopping mall with leisure amenities oriented towards upscale consumers. We use the term “community” shopping center to refer to a shopping area designed to serve a trade area of 40,000 to 150,000 people with a minimum of 430,500 square feet (10 acres) in area, where the lead tenant is a variety discount or junior department store.

Overview

Five Below is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the aspirational teen and pre-teen customer. We offer a dynamic, edited assortment of exciting products, all priced at $5 and below, including select brands and licensed merchandise across a number of categories, which we refer to as “worlds”: Style, Room, Sports, Media, Crafts, Party, Candy and Seasonal (which we refer to as “Now”). We believe we are transforming the shopping experience of our target demographic with a unique merchandising strategy and high-energy retail concept that our customers consider fun and exciting. Based upon management’s experience and industry knowledge, we believe our compelling value proposition and the dynamic nature of our merchandise offering appeal to teens and pre-teens, as well as customers across a variety of age groups beyond our target demographic.

Five Below was founded in 2002 by our Executive Chairman, David Schlessinger, and our President and Chief Executive Officer, Thomas Vellios, who recognized a market need for a fun and affordable shopping destination aimed at our target customer. We opened the first Five Below store in 2002 and have since been expanding across the eastern half of the U.S. As of April 28, 2012, we operated a total of 199 locations across 17 states. Our stores average approximately 7,500 square feet and are typically located within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets. We plan to open approximately 50 stores in 2012, and we believe we have the opportunity to grow our store base to more than 2,000 locations over approximately 20 years.

We believe our business model has resulted in strong financial performance irrespective of the economic environment:

• We have achieved positive comparable store sales during each of the last 24 fiscal quarters.

• For the thirteen weeks ended April 28, 2012, our comparable store sales increased by 10.4%. For the same period in the prior year, our comparable store sales increased by 7.6%. Our net sales for the

thirteen weeks ended April 28, 2012 were $71.8 million, an increase of 51.5%, from $47.4 million for the thirteen weeks ended April 30, 2011. Our operating income (loss) was $(2.0) million for the thirteen weeks ended April 28, 2012 compared to $1.7 million for the thirteen weeks ended April 30, 2011.

• Our comparable store sales increased by 12.1% in fiscal 2009, 15.6% in fiscal 2010 and 7.9% in fiscal 2011 with positive comparable store sales performance across all geographic regions and store-year classes.

• Over the past two fiscal years, we expanded our store base from 102 stores to 192 stores, representing a compound annual growth rate of 37.2%.

• Between fiscal 2009 and 2011, our net sales increased from $125.1 million to $297.1 million, representing a 54.1% compound annual growth rate.

• Over the same period, our operating income increased from $6.9 million to $26.2 million, representing a compound annual growth rate of 95.3%.

Our Competitive Strengths

We believe the following strengths differentiate Five Below from competitors and are the key drivers of our success:

• Unique Focus on the Teen and Pre-Teen Customer.    We target an attractive customer segment of teens and pre-teens with trend-right merchandise at a differentiated price point of $5 and below. Our brand concept, merchandising strategy and store ambience work in concert to create an upbeat and vibrant retail experience that is designed to appeal to our target audience. We monitor trends in the ever-changing teen and pre-teen markets and are able to quickly identify and respond to those that become mainstream. We believe our price points enable teens and pre-teens to shop independently and exercise self-expression, using their own money to make frequent purchases of items geared primarily to them.

• Broad Assortment of Trend-Right, High-Quality Merchandise with Universal Appeal.    We deliver an edited assortment of trend-right, everyday products that changes frequently to create a sense of anticipation and freshness. Our unique approach encourages frequent customer visits and limits the cyclical fluctuations experienced by many other specialty retailers. The breadth, depth and quality of our product mix and the diversity of our category worlds attract shoppers across a broad range of age and socio-economic demographics.

• Exceptional Value Proposition for Customers.    We believe we offer a clear value proposition to our customers with our price points of $5 and below. We are able to deliver on this value proposition through sourcing products in a manner that is designed to minimize cost, accelerate response times and maximize sell-through. We have collaborative relationships with our vendor partners and also employ an opportunistic buying strategy, which allows us to capitalize on select excess inventory opportunities. This unique and flexible sourcing strategy allows us to offer high-quality products at exceptional value across all of our category worlds.

• Differentiated Shopping Experience.    We have created an in-store atmosphere that we believe our customers find easy-to-shop, fun and exciting. While we refresh our products frequently, we maintain a consistent floor layout with an easy-to-navigate racetrack flow and sight-lines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day. We employ colorful and stimulating in-store fixtures and signage and also utilize dynamic product displays, which encourage hands-on interaction. We have developed a unique culture that emanates from our employees, driving a higher level of connectivity with customers. Additionally, we believe the combination of our price points and

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merchandising create an element of discovery, driving customer engagement and repeat visits while insulating us against e-commerce cannibalization trends.

• Powerful and Consistent Store Economics.    We have a proven store model that generates strong cash flow, consistent store-level financial results and high level returns on investment. Our stores have been successful in varying geographic regions, population densities and real estate settings. Each of our stores was profitable on a four-wall basis in fiscal 2011 and our new stores have achieved average payback periods of less than one year. We believe our robust store model, reinforced by our rigorous site selection process and in-store execution, drives the strength and consistency of our comparable store sales financial performance across all geographic regions and store-year classes.

• Highly Experienced and Passionate Senior Management Team with Proven Track Record.    Our senior management team has extensive experience across a broad range of disciplines, including merchandising, real estate, finance, store operations, supply chain management and information technology. Our co-founders, David Schlessinger and Thomas Vellios, have approximately 65 combined years of retail experience and have set the vision and strategic direction for Five Below. Our management team drives our operating philosophy, which is based on a relentless focus on providing high-quality merchandise at exceptional value and a superior shopping experience utilizing a disciplined, low-cost operating and sourcing structure.

Growth Strategy

We believe we can grow our net sales and earnings by executing on the following strategies:

• Grow Our Store Base.    We believe we have the potential to grow our store base in the U.S. from 199 locations, as of April 28, 2012, to more than 2,000 locations over approximately 20 years, based on our experience and historical store base growth of over 20% annually and supported by research conducted for us by The Buxton Company, a customer analytics research firm, although there is no guarantee that we will achieve this target. Based upon our strategy of store densification in existing markets and expanding into adjacent states and markets, we expect most of our near-term growth will occur within our existing markets. We opened 50 net new stores in fiscal 2011 and plan to open approximately 50 in fiscal 2012 and approximately 60 in fiscal 2013.

• Drive Comparable Store Sales.    We expect to continue driving comparable store sales growth by maintaining our dynamic merchandising offering, supported by our flexible sourcing strategy and differentiated in-store shopping experience. We intend to increase our brand awareness through cost-effective marketing efforts and enthusiastic customer engagement.

• Increase Brand Awareness.    We intend to leverage our cost-effective marketing strategy to increase awareness of our brand. Our strategy includes the use of newspaper circulars, local media and grassroots marketing to support existing and new market entries. We believe we have an opportunity to leverage our growing social media and online presence to drive brand excitement and increased store visits within existing and new markets. These platforms allow us to continue to build brand awareness and expand our new customer base.

• Enhance Operating Margins.    We believe we have further opportunities to drive margin improvement over time. A primary driver of our expected margin expansion will come from leveraging our cost structure as we continue to increase our store base and drive our average net sales per store. We intend to capitalize on opportunities across our supply chain as we grow our business and achieve further economies of scale.

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Our Market Opportunity

As a result of our unique merchandise offering and value proposition, we believe we have effectively targeted the teen and pre-teen markets. According to the U.S. Census Bureau, there were over 63 million people in the U.S. between the ages of 5 and 19, which represented over 20% of the U.S. population as of April 1, 2010. Based on management’s experience and industry knowledge, we believe that this segment of the population has a significant amount of disposable income as the vast majority of this age group’s basic needs are already met. According to EPM Communications, Inc., a publishing, research and consulting firm, teens and pre-teens between the ages of 8 and 19 were projected to spend over $250 billion in the U.S. in 2011.

Risks Associated with our Business

There are a number of risks and uncertainties that may affect our financial and operating performance and our growth prospects. You should carefully consider all of the risks discussed in “Risk Factors,” which begins on page 12, before investing in our common stock. These risks include the following:

• we may not be able to successfully implement our growth strategy if we are unable to identify suitable sites for store locations, obtain favorable lease terms, attract customers to our stores, hire and retain personnel and maintain sufficient levels of cash flow and financing to support our expansion;

• we may not be able to effectively anticipate changes in trends or in spending patterns or shopping preferences of our customers, which could adversely impact our business;

• we may face disruptions in our ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow us to profitably sell such merchandise;

• our business is seasonal and we may face adverse events during the holiday season, which could negatively impact our business;

• we may not be able to effectively expand and improve our operations, including our distribution center capacity, or manage our existing resources to support our future growth;

• we may not be able to maintain or improve levels of our comparable store sales;

• we may lose key management personnel, which could adversely impact our business;

• we may face increased competition, which could adversely impact our business;

• our cash flows from operations may be negatively affected if we are not successful in managing our inventory balances; and

• our profitability is vulnerable to inflation, cost increases and energy prices.

Financing Transactions

On May 16, 2012, we entered into a $100.0 million senior secured term loan facility, or term loan facility, with a syndicate of lenders. We used the net proceeds from the term loan facility of approximately $98.0 million and cash on hand to pay a special dividend totaling approximately $99.5 million on all outstanding shares of our common stock and Series A 8% convertible preferred stock, which we refer to as the 2012 Dividend. On the same day, we amended and restated our existing senior secured revolving credit facility with Wells Fargo Bank, National Association. We refer to the term loan facility, the new amended and restated senior secured revolving credit facility, or revolving credit facility, and related transactions as the “Financing Transactions.”

Principal Shareholders

Following the closing of this offering, funds managed by Advent International Corporation, or Advent, are expected to own approximately     % of our outstanding common stock, or     %, if the underwriters’ option to purchase additional shares is fully exercised. As a result, Advent will be able to exert significant voting influence

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over fundamental and significant corporate matters and transactions. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock” and “Principal and Selling Shareholders.”

Certain of our principal shareholders, including Advent, may acquire or hold interests in businesses that compete directly with us, or may pursue acquisition opportunities which are complementary to our business, making such an acquisition unavailable to us. Our second amended and restated shareholders agreement, as amended, contains provisions renouncing any interest or expectancy held by our directors affiliated with Advent in certain corporate opportunities. For further information, see “Risk Factors—Risks Relating to Our Business and Industry—Certain of our existing investors have interests and positions that could present potential conflicts with our and our shareholders’ interests.”

Since 1984, Advent has raised $26 billion in private equity capital and completed over 270 transactions in 35 countries. Advent’s current portfolio is comprised of investments in 54 companies across five sectors—Retail, Consumer & Leisure; Financial and Business Services; Industrial; Technology, Media & Telecoms; and Healthcare. The Advent team includes more than 160 investment professionals across Western and Central Europe, North America, Latin America and Asia.

Advent and certain of our other principal shareholders, directors, executive officers and their affiliates received the following approximate distributions in connection with the 2012 Dividend and we expect them to receive the following approximate offering proceeds and equity grants in connection with this offering:

Name	Relationship	2012 Dividend Distribution		Offering Proceeds(1)	Value of Equity Awards Granted
	($ in thousands)
Advent	Shareholder	$	62,150			—
LLR Partners	Shareholder	$	9,500			—
David Schlessinger	Executive Chairman, Director	$	5,600			—
Thomas Vellios	President and Chief Executive Officer, Director	$	5,600			—
Kenneth R. Bull	Chief Financial Officer, Secretary and Treasurer	$	193			—
Steven J. Collins	Director		—			—
Andrew W. Crawford	Director		—			—
David M. Mussafer	Director		—			—
Howard D. Ross	Director		—			—
Thomas Ryan	Director	$	322		$	60
Ron Sargent	Director	$	529		$	60

(1) Assumes an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover of this prospectus.

Corporate and Other Information

Five Below was incorporated in Pennsylvania in January 2002. David Schlessinger, our Executive Chairman, and Thomas Vellios, our President and Chief Executive Officer, are the founders of Five Below. In October 2010, Advent acquired a majority interest in Five Below, which we refer to as the 2010 Transaction, with the goal of supporting the management team in accelerating our growth. Please see “Certain Relationships and Related Party Transactions—Investment by Advent” for a description of the 2010 Transaction.

Our principal executive office is located at 1818 Market Street, Suite 1900, Philadelphia, PA 19103 and our telephone number is (215) 546-7909. Our corporate website address is www.fivebelow.com. The information contained on, or accessible through, our corporate website does not constitute part of this prospectus.

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The Offering

Common stock offered by us	shares
Common stock offered by selling shareholders	shares (             shares if the underwriters exercise their option to purchase additional shares in full)
Common stock outstanding immediately after the offering	shares
Option to purchase additional shares	The underwriters have an option to purchase a maximum of              additional shares of common stock from the selling shareholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.
Use of proceeds	We estimate that we will receive net proceeds from this offering of approximately $         million, assuming the shares are offered at $         per share (the midpoint of the price range set forth on the cover of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling shareholders. We intend to use the net proceeds from this offering to pay any offering-related expenses and to repay $50.0 million of outstanding indebtedness under our new term loan facility incurred in connection with the Financing Transactions. We intend to use the remaining proceeds (if any) for general corporate purposes, including working capital. See “Use of Proceeds” and “Prospectus Summary—Financing Transactions.”
Principal shareholder	Upon the closing of this offering, Advent will continue to own a majority interest in us. We do not intend to avail ourselves of any of the “controlled company” exemptions under the corporate governance rules of The NASDAQ Stock Market LLC.
Dividend policy	We currently intend to retain any future earnings for use in the operation and expansion of our business. Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. In addition, the terms of our term loan facility and revolving credit facility contain restrictions on our ability to pay dividends. See “Dividends.”

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Proposed symbol for trading on The NASDAQ Global Select Market

“FIVE”

Conflicts of interest

As described under “Use of Proceeds,” we expect to use all or substantially all of the net proceeds we receive from this offering to repay $50 million of the outstanding indebtedness under our new term loan facility with a syndicate of lenders. Affiliates of Goldman, Sachs & Co., Barclays Capital Inc., Jefferies & Company, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC are lenders under our new term loan facility and will each receive their pro rata share of such repayment. Because it is possible that Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. or their affiliates could receive more than 5% of the proceeds of this offering in connection with the repayment of our new term loan facility, each of Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. is deemed to have a “conflict of interest” under Rule 5121 (“Rule 5121”) of the Financial Industry Regulatory Authority. Accordingly, this offering will be conducted in accordance with Rule 5121. Rule 5121 requires that a “qualified independent underwriter,” meeting certain standards, participate in the preparation of the registration statement and prospectus and exercise the usual standards of due diligence with respect thereto. Credit Suisse Securities (USA) LLC has served as “qualified independent underwriter” within the meaning of Rule 5121 in connection with this offering. For more information, see “Underwriting.”

After giving effect to the conversion of our Series A 8% convertible preferred stock into common stock in connection with the closing of this offering, the number of shares of common stock to be outstanding after this offering is based on 142,073,147 shares outstanding as of May 23, 2012 and excludes:

• 2,901,800 shares of common stock issuable upon the exercise of options to purchase common stock outstanding as of May 23, 2012 at a weighted average exercise price of $         per share; and

•              shares of common stock reserved for issuance under our equity incentive plan, which will be in effect upon the closing of this offering.

Except as otherwise indicated, all information in this prospectus assumes:

• that the underwriters will not exercise their option to purchase additional shares;

• the conversion of all outstanding shares of our Series A 8% convertible preferred stock into              shares of our common stock in connection with the closing of this offering; and

• the adoption of our amended and restated articles of incorporation and amended bylaws to be effective upon the closing of this offering.

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Summary Financial and Other Data

The following table presents summary financial and other data for the periods and at the dates indicated. The statement of operations and cash flows data for fiscal 2009, 2010 and 2011 and the balance sheet data as of January 29, 2011 and January 28, 2012 have been derived from audited financial statements included elsewhere in this prospectus. The balance sheet data as of January 30, 2010 has been derived from audited financial statements not included in this prospectus. The statement of operations and cash flows data for each of the thirteen weeks ended April 30, 2011 and April 28, 2012 and the balance sheet data as of April 28, 2012 have been derived from unaudited financial statements included elsewhere in this prospectus. You should read this data along with the sections of this prospectus entitled “Selected Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of results for any future period.

	Fiscal Year									Thirteen Weeks Ended
	2009			2010			2011			April 30, 2011			April 28, 2012
	(in thousands, except total stores, share and per share data)
Statement of Operations Data:
Net sales	$	125,135		$	197,189		$	297,113		$	47,427		$	71,829
Cost of goods sold		85,040			131,046			192,252			32,840			48,809
Gross profit		40,095			66,143			104,861			14,587			23,020
Selling, general and administrative expenses(1)		33,217			54,339			78,640			12,926			24,985
Operating income (loss)		6,878			11,804			26,221			1,661			(1,965	)
Interest expense (income), net		73			28			(16	)		(3	)		(37	)
Income (loss) before income taxes		6,805			11,776			26,237			1,664			(1,928	)
Income tax (benefit) expense		(4,853	)		4,753			10,159			665			(771	)
Net income (loss)		11,658			7,023			16,078			999			(1,157	)
Series A 8% convertible preferred stock cumulative dividends		—			(4,507	)		(15,913	)		(3,869	)		(4,168	)
Accretion of redeemable convertible preferred stock		(4,250	)		(3,329	)		—			—			—
Net income (loss) available to shareholders		7,408			(813	)		165			(2,870	)		(5,325	)
Less: Net income attributable to participating securities		(3,365	)		—			(109	)		—			—
Net income (loss) available to common shareholders	$	4,043		$	(813	)	$	56		$	(2,870	)	$	(5,325	)
Per Share Data:
Basic income (loss) per common share(2)	$	0.19		$	(0.03	)	$	—		$	(0.06	)	$	(0.11	)
Diluted income (loss) per common share(2)	$	0.19		$	(0.03	)	$	—		$	(0.06	)	$	(0.11	)
Weighted average shares outstanding:
Basic shares		21,539,917			27,954,322			45,964,159			45,664,835			47,458,718
Diluted shares		21,539,917			27,954,322			45,965,631			45,664,835			47,458,718
Unaudited pro forma net income (loss)(3)							$	14,159					$	(1,619	)
Unaudited pro forma basic income (loss) per common share(3)
Unaudited pro forma diluted income (loss) per common share(3)
Unaudited pro forma weighted average shares outstanding:
Basic shares
Diluted shares
Statement of Cash Flows Data:
Net cash provided by (used in):
Operating activities	$	9,227		$	15,045		$	46,695		$	1,581		$	(23,698	)
Investing activities	$	(7,285	)	$	(14,883	)	$	(18,558	)	$	(4,576	)	$	(4,801	)
Financing activities	$	(145	)	$	(445	)	$	1,003		$	(27	)	$	1,709
Other Operating and Financial Data:
Total stores at end of period		102			142			192			145			199
Comparable store sales growth		12.1	%		15.6	%		7.9	%		7.6	%		10.4	%
Average net sales per store(4)	$	1,302		$	1,542		$	1,658		$	326		$	368
Adjusted EBITDA(5)	$	11,088		$	25,798		$	42,377		$	3,732		$	6,625
Capital expenditures	$	7,285		$	14,883		$	18,558		$	4,576		$	4,801
Adjusted EBITDA Reconciliation:
Net income (loss)	$	11,658		$	7,023		$	16,078		$	999		$	(1,157	)
Interest expense (income), net		73			28			(16	)		(3	)		(37	)
Income tax (benefit) expense		(4,853	)		4,753			10,159			665			(771	)
Depreciation and amortization		3,660			4,805			7,071			1,434			2,107
EBITDA(6)		10,538			16,609			33,292			3,095			142
Non-contractual executive bonus expense(7)		—			—			6,087			—			—
Deferred rents(8)		232			1,164			1,401			258			110
Non-cash stock-based compensation and warrant expense(9)		274			2,332			1,246			319			6,373
Loss on disposal of assets(10)		5			288			273			—			—
Closed stores(11)		39			76			78			60			—
Transaction expense(12)		—			5,329			—			—			—
Adjusted EBITDA	$	11,088		$	25,798		$	42,377		$	3,732		$	6,625

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(1) Fiscal 2010 includes $5.3 million of expense related to the 2010 Transaction and fiscal 2011 includes $6.1 million of non-contractual executive bonus expense, as described in Note 7 below. The thirteen weeks ended April 28, 2012 includes $5.9 million of stock-based compensation expense that relates to the cancellation of certain stock options, in exchange for the grant of restricted shares, as described in Note 5 in our unaudited financial statements.

(2) Please see Note 2 in both our annual and quarterly financial statements, included elsewhere in this prospectus, for an explanation of per share calculations.

(3) Pro forma information is unaudited and is prepared in accordance with Article 11 of Regulation S-X.

Pro Forma net income gives effect to: (i) income attributable to participating securities; (ii) cumulative dividends related to Series A 8% convertible preferred stock; and (iii) the Financing Transactions, including the repayment of $50.0 million of outstanding indebtedness under the new term loan facility with the offering proceeds.

The following is a reconciliation of historical net income to unaudited pro forma net income:

	Fiscal Year 2011			Thirteen Weeks Ended April 28, 2012
Net income (loss) available to common shareholders	$	56		$	(5,325	)
Add:
Net income attributable to participating securities		109			—
Series A 8% Convertible Preferred Stock cumulative dividend		15,913			4,168
Less:
Interest expense, net of tax		(1,616	)		(386	)
Amortization of deferred financing fees, net of tax		(303	)		(76	)
Pro forma net income (loss)	$	14,159		$	(1,619	)

Pro Forma per share data gives effect to (i) the Financing Transactions; (ii) the conversion of our outstanding shares of Series A 8% convertible preferred stock into shares of common stock in connection with the closing of this offering and (iii) the number of shares whose proceeds will be used to repay $50.0 million of the outstanding indebtedness under the term loan facility.

The following is a reconciliation of pro forma basic and diluted weighted average common shares outstanding:

	Fiscal Year 2011		Thirteen Weeks Ended April 28, 2012
Shares used in computing basic net (loss) income per common share		45,964,159		47,458,718
Adjustment for assumed conversion of preferred stock		89,291,773		89,291,773
Adjustment for shares used to repay outstanding indebtedness under the term loan facility
Basic pro forma weighted average common shares outstanding
Dilutive effect of securities
Diluted pro forma weighted average common shares outstanding

(4) Only includes stores open during the full fiscal year.

(5) Adjusted EBITDA is defined as EBITDA (as defined below), further adjusted to exclude certain non-cash, non-recurring and other items not related to ongoing performance, such as non-contractual executive bonus expense, deferred rents, non-cash stock-based compensation and warrant expense, loss on disposal of assets, EBITDA for closed stores and expense related to the 2010 Transaction. We have presented Adjusted EBITDA because we believe that the exclusion of these items is appropriate to provide additional information to investors about our ongoing operating performance excluding certain non-cash and other items not related to ongoing performance and as a means to evaluate our period-to-period results. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. We have provided this information as a means to evaluate the results of our ongoing operations. Other companies in our industry may calculate Adjusted EBITDA differently than we do. Adjusted EBITDA is not a measure of performance under U.S. generally accepted accounting principles, or GAAP, and should not be considered as a substitute for net income prepared in accordance with GAAP. Adjusted EBITDA has similar limitations as an analytical tool to those set forth in Note 6 below related to the use of EBITDA, and you should not consider it in isolation or as substitute for analysis of our results as reported under GAAP. Some of these additional limitations to the use of Adjusted EBITDA are:

Ÿ Adjusted EBITDA does not reflect the non-contractual executive bonus expense, deferred rents, non-cash stock-based compensation and warrant expense, loss on disposal of assets, EBITDA for closed stores and expense related to the 2010 Transaction; and

Ÿ Adjusted EBITDA does not reflect certain other costs that may recur in future periods.

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We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplemental measure.

(6) EBITDA represents net income before interest expense (income), income taxes (benefit), depreciation and amortization. We have presented EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. Management uses EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. Other companies in our industry may calculate EBITDA differently than we do. EBITDA is not a measure of performance under GAAP, and should not be considered as a substitute for net income prepared in accordance with GAAP. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Ÿ EBITDA does not reflect our cash expenditures, our future requirements for capital expenditures or contractual commitments;

Ÿ EBITDA does not reflect interest expense or the cash requirements necessary to service interest or principal payments on debt;

Ÿ EBITDA does not reflect tax expense or the cash requirements necessary to pay tax obligations; and

Ÿ Although depreciation and amortization are non-cash charges, the asset being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.

(7) Represents a non-contractual bonus to certain executive officers for performance in fiscal 2011 and associated tax expense.

(8) Represents the non-cash portion of rent expense.

(9) Represents non-cash stock-based compensation and warrant expense.

(10) Represents asset write-offs for remodeled or closed stores.

(11) Represents the EBITDA, excluding the non-cash portion of rent expense, for stores which management has made the decision to close, from the period in which the decision was made.

(12) Represents expenses incurred in conjunction with the 2010 Transaction, including expenses related to the modification of certain stock options, professional fees and other employee compensation-related expenses.

The following table represents a summary of our balance sheet data as of January 30, 2010, January 29, 2011, January 28, 2012 and April 28, 2012. The summary balance sheet data as of April 28, 2012 is presented:

• on an actual basis, derived from our balance sheet as of April 28, 2012;

• on a “pro forma” basis, giving effect to:

– the Financing Transactions, including the payment of the 2012 Dividend and

– the conversion of our outstanding shares of Series A 8% convertible preferred stock into shares of common stock in connection with the closing of this offering.

• on a “pro forma as adjusted” basis, further reflecting: (a) our receipt of the net proceeds from the sale of              shares of common stock by us at an assumed initial public offering price of $         per share, which is the mid-point of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (b) the repayment of outstanding indebtedness as described in “Use of Proceeds.” See “Capitalization” and “Use of Proceeds.”

	As of									As of April 28, 2012
	January 30, 2010			January 29, 2011			January 28, 2012			Actual			Pro Forma			Pro Forma As Adjusted
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	12,436		$	12,153		$	41,293		$	14,503		$	12,027		$
Total current assets		35,335			45,942			92,249			89,051			86,575
Total current liabilities		10,983			18,215			49,942			36,186			36,186
Total long-term debt		—			250			250			250			100,250
Total liabilities		20,036			33,524			72,431			64,402			164,402
Series A 8% convertible preferred stock		—			191,855			191,855			191,855			—
Series A redeemable convertible preferred stock		18,778			—			—			—			—
Series A-1 redeemable convertible preferred stock		18,510			—			—			—			—
Total shareholders’ deficit		(1,049	)		(148,797	)		(129,759	)		(122,316	)		(29,912	)

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Relating to Our Business and Industry

We may not be able to successfully implement our growth strategy on a timely basis or at all, which could harm our growth and results of operations.

Our growth is dependent on our ability to open profitable new stores. We believe we have an opportunity to continue to grow our store base from 199 stores in 17 states as of April 28, 2012, to more than 2,000 locations over approximately 20 years.

Our ability to open profitable new stores depends on many factors, including our ability to:

• identify suitable markets and sites for new stores;

• negotiate leases with acceptable terms;

• achieve brand awareness in the new markets;

• efficiently source and distribute additional merchandise;

• maintain adequate distribution capacity, information systems and other operational system capabilities;

• hire, train and retain store management and other qualified personnel; and

• achieve sufficient levels of cash flow and financing to support our expansion.

Unavailability of attractive store locations, delays in the acquisition or opening of new stores, delays or costs resulting from a decrease in commercial development due to capital constraints, difficulties in staffing and operating new store locations or lack of customer acceptance of stores in new market areas may negatively impact our new store growth and the costs or the profitability associated with new stores.

Additionally, some of our new stores may be located in areas where we have little experience or a lack of brand recognition. Those markets may have different competitive conditions, market conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause these new stores to be less successful than stores in our existing markets. Other new stores may be located in areas where we have existing stores. Although we have experience in these markets, increasing the number of locations in these markets may result in inadvertent over-saturation of markets and temporarily or permanently divert customers and sales from our existing stores, thereby adversely affecting our overall financial performance.

Accordingly, we cannot assure you that we will achieve our planned growth or, even if we are able to grow our store base as planned, that any new stores will perform as planned. If we fail to successfully implement our growth strategy, we will not be able to sustain the rapid growth in sales and profits that we expect, which would likely have an adverse impact on the price of our common stock.

Any disruption in our ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow us to profitably sell such merchandise could impact our business negatively.

We generally have been able to select and obtain sufficient quantities of attractive merchandise at prices that allow us to be profitable. If we are unable to continue to select products that are attractive to our customers, to

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obtain such products at costs that allow us to sell such products at a profit, or to market such products effectively to consumers, our sales or profitability could be affected adversely. In addition, the success of our business depends in part on our ability to anticipate, identify and respond promptly to evolving trends in demographics and consumer preferences, expectations and needs. If we are unable to quickly respond to developing trends or if the spending patterns or demographics of these markets change, and we do not timely and appropriately respond to such changes, then the demand for our products, which are discretionary, and our market share could be adversely affected. Failure to maintain attractive stores and to timely identify or effectively respond to changing consumer needs, preferences and spending patterns could adversely affect our relationship with customers, the demand for our products and our market share.

Any disruption in the supply or increase in pricing of our merchandise could negatively impact our ability to achieve anticipated operating results. The products we sell are sourced from a wide variety of domestic and international vendors. We have not experienced any difficulty in obtaining sufficient quantities of core merchandise and believe that, if one or more of our current sources of supply become unavailable, we would generally be able to obtain alternative sources without experiencing a substantial disruption of our business. However, such alternative sources could increase our merchandise costs and reduce the quality of our merchandise, and an inability to obtain alternative sources could affect our sales.

A significant majority of our merchandise is manufactured outside the United States, and changes in the prices and flow of these goods for any reason could have an adverse impact on our operations. The United States and other countries have occasionally proposed and enacted protectionist trade legislation, which may result in changes in tariff structures and trade policies and restrictions that could increase the cost or reduce the availability of certain merchandise. Any of these or other measures or events relating to vendors and the countries in which they are located or where our merchandise is manufactured, some or all of which are beyond our control, can negatively impact our operations, increase costs and lower our margins. Such events or circumstances include, but are not limited to:

• political and economic instability;

• the financial instability and labor problems of vendors;

• the availability and cost of raw materials;

• merchandise quality or safety issues;

• changes in currency exchange rates;

• inflation; and

• transportation availability and cost.

These and other factors affecting our vendors and our access to products could affect our financial performance adversely.

Our new store growth is dependent upon our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could affect our performance adversely.

We maintain a distribution center in New Castle, Delaware and we plan to open a new distribution center in the southern United States during fiscal 2013 to support our growth objectives. Delays in opening this new distribution center (or new distribution centers in the future) could adversely affect our future operations by slowing store growth, which could in turn reduce sales growth. In addition, any distribution-related construction or expansion projects entail risks which could cause delays and cost overruns, such as: shortages of materials; shortages of skilled labor or work stoppages; unforeseen construction, scheduling, engineering, environmental or geological problems; weather interference; fires or other casualty losses; and unanticipated cost increases. The completion date and ultimate cost of future projects, including the distribution center planned for fiscal 2013, could differ significantly from initial expectations due to construction-related or other reasons. We cannot guarantee that any project will be completed on time or within established budgets.

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A significant disruption to our distribution network or to the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would decrease our profits.

We currently rely primarily on our distribution center in New Castle, Delaware to distribute our products. Because most of our products are distributed from this center, the loss of our distribution center, due to natural disaster or otherwise, would materially affect our operations. We also rely upon independent third-party transportation to provide goods to our stores in a timely and cost-effective manner, through deliveries to our distribution center from vendors and then from the distribution center or direct ship vendors to our stores. Our use of outside delivery services for shipments is subject to risks outside of our control and any disruption, unanticipated expense or operational failure related to this process could affect store operations negatively. For example, unexpected delivery delays or increases in transportation costs (including through increased fuel costs or a decrease in transportation capacity for overseas shipments) could significantly decrease our ability to generate sales and earn profits. In addition, labor shortages or work stoppages in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays or interruptions of deliveries could negatively affect our business. If we change shipping companies, we could face logistical difficulties that could adversely impact deliveries and we would incur costs and expend resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those received from the independent third-party transportation providers we currently use, which would increase our costs.

Inability to attract and retain qualified employees, particularly district, store and distribution center managers, and to control labor costs, as well as other labor issues, could adversely affect our business.

Our growth could be adversely impacted by our inability to attract, retain and motivate qualified employees at the store operations level, in distribution facilities, and at the corporate level, at costs which allow us to profitably conduct our operations. Our ability to meet our labor needs, while controlling our labor costs, is subject to many external factors, including competition for and availability of qualified personnel in a given market, unemployment levels within those markets, prevailing wage rates, minimum wage laws, health and other insurance costs, and changes in employment and labor laws (including changes in the process for our employees to join a union) or other workplace regulation. To the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor costs could increase. In addition, we believe the current pricing of our healthcare costs includes the potential future impact of recently enacted comprehensive healthcare reform legislation, but such legislation may further cause our healthcare costs to increase. While significant costs of the healthcare reform legislation may occur after 2013 due to provisions of the legislation being phased in over time, changes to our healthcare costs structure could have a significant negative effect on our business. In addition, our ability to pass along any increase in labor costs to our customers is constrained by our low price model.

Our growth from existing stores is dependent upon our ability to increase sales and improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these plans could affect our performance adversely.

Increases in sales in existing stores are dependent on factors such as competition, merchandise selection, store operations and customer satisfaction. If we fail to realize our goals of successfully managing our store operations and increasing our customer retention and recruitment levels, our sales may not increase and our growth may be impacted adversely.

Our success depends on our executive officers and other key personnel. If we lose our executive officers or any other key personnel, or are unable to hire additional qualified personnel, our business could be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of our executive officers and other key personnel, including Messrs. Schlessinger and Vellios, our founders. The loss of the services of any of our executive officers or other key personnel could have an adverse effect on our operations. Absent the consent of the lenders under our revolving credit facility, the loss of the services of both

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Messrs. Schlessinger and Vellios would render our revolving credit facility unavailable. Our future success will also depend on our ability to attract, retain and motivate qualified personnel, as a failure to attract these key personnel could have an adverse effect on our operations. We do not currently maintain key person life insurance policies with respect to our executive officers or key personnel.

Our cash flows from operations may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage.

Our inventory balance represented approximately 38% of our total assets as of April 28, 2012. Efficient inventory management is a key component of our business success and profitability. To be successful, we must maintain sufficient inventory levels to meet our customers’ demands without allowing those levels to increase to such an extent that the costs to store and hold the goods unduly impacts our financial results. If our buying decisions do not accurately predict customer trends or purchasing actions, we may have to take unanticipated markdowns to dispose of excess inventory, which also can adversely impact our financial results. We also experience inventory shrinkage, and we cannot assure you that incidences of inventory loss and theft will stay at acceptable levels or decrease in the future, or that the measures we are taking will effectively address the problem of inventory shrinkage. We continue to focus on ways to reduce these risks, but we cannot assure you that we will be successful in our inventory management. If we are not successful in managing our inventory balances, our cash flows from operations may be negatively affected.

Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the leases negotiated in the past.

We do not own any real estate. Instead, we lease all of our store locations, as well as our corporate headquarters and distribution facility in New Castle, Delaware. Our stores are leased from third parties, with typical initial lease terms of five to ten years. Many of our lease agreements also have additional five-year renewal options. We believe that we have been able to negotiate favorable rental rates and tenant allowances over the last few years due in large part to the state of the economy and higher than usual vacancy rates in shopping centers and regional malls. These trends may not continue, and there is no guarantee that we will be able to continue to negotiate such favorable terms. Many of our lease agreements have defined escalating rent provisions over the initial term and any extensions. Increases in our occupancy costs and difficulty in identifying economically suitable new store locations could have significant negative consequences, which include:

• requiring that a greater portion of our available cash be applied to pay our rental obligations, thus reducing cash available for other purposes and reducing our profitability;

• increasing our vulnerability to general adverse economic and industry conditions; and

• limiting our flexibility in planning for, or reacting to changes in, our business or in the industry in which we compete.

We depend on cash flow from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flow from operating activities to fund these expenses and needs and sufficient funds are not otherwise available to us, we may not be able to service our lease expenses, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which could harm our business. Additional sites that we lease may be subject to long-term non-cancelable leases if we are unable to negotiate our current standard lease terms. If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under that lease. In addition, if we are not able to enter into new leases or renew existing leases on terms acceptable to us, this could have an adverse effect on our results of operations.

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We operate in a competitive environment and, as a result, we may not be able to compete effectively or maintain or increase our sales, market shares or margins.

We operate in a highly competitive retail environment with numerous competitors, some of which have greater resources or better brand recognition than we do. We compete with respect to customers, price, store location, merchandise quality, assortment and presentation, in-stock consistency, customer service and employees. This competitive environment subjects us to various risks, including the ability to provide quality, trend-right merchandise to our customers at competitive prices that allow us to maintain our profitability. Because of our low price model, we may have limited ability to increase prices in response to increased costs without losing competitive position which may adversely affect our margins and financial performance. In addition, price reductions by our competitors may result in the reduction of our prices and a corresponding reduction in our profitability.

Consolidation among retailers, changes in pricing of merchandise or offerings of other services by competitors could have a negative impact on the relative attractiveness of our stores to consumers. We do not possess exclusive rights to many of the elements that comprise our in-store experience and product offerings. Our competitors may seek to copy our business strategy and in-store experience, which could result in a reduction of any competitive advantage or special appeal that we might possess. In addition, most of our products are sold to us on a non-exclusive basis. As a result, our current and future competitors may be able to duplicate or improve on some or all of our in-store experience or product offerings that we believe are important in differentiating our stores and our customers’ shopping experience. If our competitors were to duplicate or improve on some or all of our in-store experience or product offerings, our competitive position and our business could suffer. Our ability to provide quality, trend-right products while offering attractive, competitively-priced products could be impacted by various actions of our competitors that are beyond our control.

Our profitability is vulnerable to inflation, cost increases and energy prices.

Future increases in costs such as the cost of merchandise, shipping rates, freight costs, fuel costs and store occupancy costs may reduce our profitability, particularly given our $5 and below pricing model. These cost increases may be the result of inflationary pressures that could further reduce our sales or profitability. Increases in other operating costs, including changes in energy prices, wage rates and lease and utility costs, may increase our cost of goods sold or operating expenses. Our low price model and competitive pressures in our industry may have the effect of inhibiting our ability to reflect these increased costs in the prices of our products and therefore reduce our profitability.

Our business is seasonal, and adverse events during the holiday season could impact our operating results negatively.

Our business is seasonal, with the highest percentage of sales (approximately 42% of total annual sales over the last two fiscal years) occurring during the last fiscal quarter (November, December and January), which includes the holiday season. We purchase substantial amounts of inventory in the end of the third quarter (October) and beginning of the fourth quarter (November and December) and incur higher shipping costs and higher payroll costs in anticipation of the increased sales activity during these time periods. Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions or unusual weather could result in lower-than-planned sales during the holiday season which may lead to unanticipated markdowns. Since we rely on third parties for transportation and use third party warehouses when we build up inventory, a number of these factors are outside of our control. An unsuccessful fourth quarter, or holiday season, will have a substantial negative impact on our financial condition and results of operations for the entire fiscal year.

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Material damage to, or interruptions to, our technology systems as a result of external factors, staffing shortages and difficulties in updating our existing technology or developing or implementing new technology could have a material adverse effect on our business or results of operations.

We depend on a variety of information technology systems for the efficient functioning of our business. Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches and natural disasters. Damage or interruption to these systems may require a significant investment to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material interruptions may have a material adverse effect on our business or results of operations.

We also rely heavily on our information technology staff. Failure to meet these staffing needs may negatively affect our ability to fulfill our technology initiatives while continuing to provide maintenance on existing systems. We rely on certain vendors to maintain and periodically upgrade many of these systems so that they can continue to support our business. The software programs supporting many of our systems were licensed to us by independent software developers. The inability of these developers or us to continue to maintain and upgrade these information systems and software programs would disrupt or reduce the efficiency of our operations if we are unable to convert to alternate systems in an efficient and timely manner. In addition, costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology, or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations.

Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in our stock price.

Reporting obligations as a public company and our anticipated growth are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel. In addition, as a public company, in the future we will be required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 so that our management can certify the effectiveness of our internal controls and our independent registered public accounting firm can render an opinion on the effectiveness of our internal control over financial reporting. As a result, we may be required to incur substantial expenses to test our systems, to make any necessary improvements, and to hire additional personnel. If our management is unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot render an opinion on the effectiveness of our internal control over financial reporting, or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could harm our business and cause a decline in our stock price. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and harm our ability to raise capital. Failure to accurately report our financial performance on a timely basis could also jeopardize our continued listing on The NASDAQ Global Select Market or any other stock exchange on which our common stock may be listed. Delisting of our common stock on any exchange could reduce the liquidity of the market for our common stock, which could reduce the price of our stock and increase the volatility of our stock price.

Our ability to obtain additional financing on favorable terms, if needed, could be adversely affected by volatility in the capital markets.

We obtain and manage liquidity from the positive cash flow we generate from our operating activities, our access to capital markets and our revolving credit facility. There is no assurance that our ability to obtain additional financing from financial institutions or through the capital markets, if needed, will not be adversely impacted by economic conditions. Tightening in the credit markets, low liquidity and volatility in the capital markets could result in diminished availability of credit, higher cost of borrowing and lack of confidence in the equity market, making it more difficult to obtain additional financing on terms that are favorable to us.

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If we are unable to secure our customers’ confidential or credit card information, or other private data relating to our employees or our Company, we could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage our business reputation and adversely affect our financial results.

The protection of our customer, employee and company data is critical to us. We have procedures and technology in place to safeguard our customers’ debit and credit card, and other personal information, our employees’ private data and company records and intellectual property. However, if we experience a data security breach of any kind, we could be exposed to negative publicity, government enforcement actions, private litigation or costly response measures. In addition, our reputation within the business community and with our customers may be affected, which could result in our customers discontinuing the use of debit or credit cards in our stores, or not shopping in our stores altogether. This could cause us to lose market share to our competitors and could have an adverse effect on our financial results.

We are exposed to the risk of natural disasters, unusual weather conditions, pandemic outbreaks, global political events, war and terrorism that could disrupt business and result in lower sales, increased operating costs and capital expenditures.

Our headquarters, store locations and distribution center, as well as certain of our vendors and customers, are located in areas which have been and could be subject to natural disasters such as floods, hurricanes, tornadoes, fires or earthquakes. Adverse weather conditions or other extreme changes in the weather, including resulting electrical and technological failures, may disrupt our business and may adversely affect our ability to sell and distribute products. In addition, we operate in markets that may be susceptible to pandemic outbreaks, war, terrorist acts or disruptive global political events, such as civil unrest in countries from which our vendors are located or products are manufactured. Our business may be harmed if our ability to sell and distribute products is impacted by any such events, any of which could influence customer trends and purchases and may negatively impact our net sales, properties or operations. Such events could result in physical damage to one or more of our properties, the temporary closure of some or all of our stores or distribution center, the temporary lack of an adequate work force in a market, temporary or long-term disruption in the transport of goods, delay in the delivery of goods to our distribution center or stores, disruption of our technology support or information systems, or fuel shortages or dramatic increases in fuel prices, which increase the cost of doing business. These events also can have indirect consequences such as increases in the costs of insurance if they result in significant loss of property or other insurable damage. Any of these factors, or combination thereof, could adversely affect our operations.

Current economic conditions and other economic factors could adversely impact our financial performance and other aspects of our business in various respects.

A delayed recovery in the U.S. economy or other economic factors affecting disposable consumer income, such as employment levels, inflation, business conditions, fuel and energy costs, consumer debt levels, lack of available credit, interest rates, tax rates and further erosion in consumer confidence may affect our business adversely. Such factors could reduce overall consumer spending or cause customers to shift their spending to products other than those sold by us or to products sold by us that are less profitable than other product choices, all of which could result in lower net sales, decreases in inventory turnover or a reduction in profitability due to lower margins. We have limited or no ability to control many of these factors. The current global economic uncertainty, the impact of recessions and the potential for failures or realignments of financial institutions and the related impact on available credit may impact us, our vendors and other business partners, our landlords, our customers, our service providers and our operations in an adverse manner.

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Changes in state or federal legislation or regulations, including the effects of legislation and regulations on product and food safety and quality, wage levels, employee rights, health care, social welfare and entitlement programs could increase our cost of doing business.

Our business is subject to numerous federal, state and local laws and regulations. We routinely incur costs in complying with these laws and regulations. We are exposed to the risk that federal, state or local legislation may negatively impact our operations. Changes in product and food safety and quality (including changes in labeling or disclosure requirements), federal or state wage requirements, employee rights (including changes in the process for our employees to join a union), health care, social welfare or entitlement programs such as health insurance, paid leave programs, or other changes in workplace regulation or tax laws could adversely impact our ability to achieve our financial targets. Changes in other regulatory areas, such as consumer credit, privacy and information security, or environmental regulation may result in significant added expenses or may require extensive system and operating changes that may be difficult to implement and/or could materially increase our costs of doing business. Untimely compliance or noncompliance with applicable laws and regulations may subject us to legal risk, including government enforcement action, significant fines and penalties and class action litigation, as well as reputational damage, which could adversely affect our results of operations.

Litigation may adversely affect our business, financial condition, results of operations or liquidity.

Our business is subject to the risk of litigation by employees, consumers, vendors, competitors, intellectual property rights holders, shareholders, government agencies and others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action lawsuits, regulatory actions and intellectual property claims, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to these lawsuits may remain unknown for substantial periods of time. In addition, certain of these lawsuits, if decided adversely to us or settled by us, may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operation are required. The cost to defend future litigation may be significant. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition, results of operations or liquidity.

If we fail to protect our brand name, competitors may adopt trade names that dilute the value of our brand name.

We may be unable or unwilling to strictly enforce our trademarks in each jurisdiction in which we do business. Also, we may not always be able to successfully enforce our trademarks against competitors, or against challenges by others. Our failure to successfully protect our trademarks could diminish the value and efficacy of our brand recognition and could cause customer confusion, which could, in turn, adversely affect our sales and profitability.

Our management has limited experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations.

Following the closing of this offering, we will be subject to various regulatory requirements, including those of the SEC and The NASDAQ Stock Market LLC. These requirements include record keeping, financial reporting and corporate governance rules and regulations. Our management team has limited experience in managing a public company and, historically, has not had the resources typically found in a public company. Our internal infrastructure may not be adequate to support our increased reporting obligations and we may be unable to hire, train or retain necessary staff and may be reliant on engaging outside consultants or professionals to overcome our lack of experience or employees. Our business could be adversely affected if our internal infrastructure is inadequate, we are unable to engage outside consultants or are otherwise unable to fulfill our public company obligations.

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Product and food safety claims and the effects of legislation and regulations on product and food safety and quality could affect our sales and results of operations adversely.

We may be subject to product liability claims from customers or actions required or penalties assessed by government agencies relating to products, including food products that are recalled, defective or otherwise alleged to be harmful. Such claims may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling and transportation phases. All of our vendors and their products are contractually required to comply with applicable product and food safety laws. We generally seek contractual indemnification and insurance coverage from our vendors. However, if we do not have adequate contractual indemnification and/or insurance available, such claims could have a material adverse effect on our business, financial condition and results of operations. Our ability to obtain indemnification from foreign vendors may be hindered by the manufacturers’ lack of understanding of U.S. product liability or other laws, which may make it more likely that we be required to respond to claims or complaints from customers as if we were the manufacturer of the products. Even with adequate insurance and indemnification, such claims could significantly damage our reputation and consumer confidence in our products. Our litigation expenses could increase as well, which also could have a materially negative impact on our results of operations even if a product liability claim is unsuccessful or is not fully pursued.

We purchase a portion of our products on a closeout basis. Some of these products are obtained through brokers or intermediaries rather than through manufacturers. The closeout nature of a portion of our products sometimes makes it more difficult for us to investigate all aspects of these products. We attempt to assure compliance and to test products when appropriate, and we seek to obtain indemnification through our vendors or to be listed as an additional insured, but there is no assurance that these efforts will be successful.

We will incur significant expenses as a result of being a public company, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

We will incur significant legal, accounting, insurance, compliance and other expenses as a result of being a public company. After this offering, we will become obligated to file annual and quarterly information and other reports with the SEC. In addition, we will also become subject to other reporting and corporate governance requirements which will impose significant compliance obligations upon us. The Sarbanes-Oxley Act of 2002, together with related rules implemented by the SEC and by The NASDAQ Stock Market LLC, have required changes in corporate governance practices of public companies. We expect that compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act as discussed in “—Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in our stock price” above, will substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. As a result of the foregoing, we expect a substantial increase in legal, accounting and insurance compliance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

The terms of our new term loan facility and our revolving credit facility may restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and to manage our operations.

Our new term loan facility and our revolving credit facility contain, and any additional debt financing we may incur would likely contain, covenants requiring us to maintain or adhere to certain financial ratios or limits and covenants that restrict our operations, which may include limitations on our ability to, among other things:

• incur additional indebtedness;

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• pay dividends and make certain distributions, investments and other restricted payments;

• create certain liens or encumbrances;

• enter into transactions with our affiliates;

• redeem our common stock; and

• engage in certain merger, consolidation or asset sale transactions.

Complying with these covenants could adversely affect our ability to respond to changes in our business and manage our operations. In addition, these covenants could affect our ability to invest capital in our new stores and fund capital expenditures for existing stores, including the costs associated with the conversion of certain stores existing before fiscal 2009 to our current prototype size. Our ability to comply with these covenants and other provisions in the term loan facility, the revolving credit facility and any future debt instruments may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments, or other events beyond our control. A failure by us to comply with the financial ratios and restrictive covenants contained in our term loan facility, revolving credit facility and any future debt instruments could result in an event of default. Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding to be due and payable and exercise other remedies as set forth in our term loan facility, revolving credit facility and any future debt instruments. In addition, if we are in default, we may be unable to borrow additional amounts under any such facilities to the extent that they would otherwise be available and our ability to obtain future financing may also be impacted negatively. If the indebtedness under our term loan facility, revolving credit facility and any future debt instruments were to be accelerated, our future financial condition could be materially adversely affected.

Risks Related to This Offering and Ownership of Our Common Stock

Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

After this offering, the market price for our common stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, broad market and industry factors, most of which we cannot control, may harm the price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuation in the price of our common stock may include, among other things:

• actual or anticipated fluctuations in quarterly operating results or other operating metrics, such as comparable store sales, that may be used by the investment community;

• changes in financial estimates by us or by any securities analysts who might cover our stock;

• speculation about our business in the press or the investment community;

• conditions or trends affecting our industry or the economy generally;

• stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in the retail industry;

• announcements by us or our competitors of new product offerings, significant acquisitions, strategic partnerships or divestitures;

• our entry into new markets;

• timing of new store openings;

• percentage of sales from new stores versus established stores;

• additions or departures of key personnel;

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• actual or anticipated sales of our common stock, including sales by our directors, officers or significant shareholders;

• significant developments relating to our relationships with business partners, vendors and distributors;

• customer purchases of new products from us and our competitors;

• investor perceptions of the retail industry in general and our Company in particular;

• major catastrophic events;

• volatility in our stock price, which may lead to higher stock-based compensation expense under applicable accounting standards; and

• changes in accounting standards, policies, guidance, interpretation or principles.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation, even if it does not result in liability for us, could result in substantial costs to us and divert management’s attention and resources.

Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock in the market after this offering. The sales, or the perception that these sales might occur, could depress the market price of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon the closing of this offering, we will have              shares of common stock outstanding. The shares of common stock offered in this offering will be freely tradable without restriction under the Securities Act of 1933, as amended, or the Securities Act, except for any shares of common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. In addition, pursuant to our amended and restated investor rights agreement, certain of our investors have rights to require us to file registration statements registering additional sales of shares of common stock or to include sales of such shares of common stock in registration statements that we may file for ourselves or other shareholders. In order to exercise these registration rights, these shareholders must satisfy certain conditions. Subject to compliance with applicable lock-up restrictions, shares of common stock sold under these registration statements can be freely sold in the public market. In the event such registration rights are exercised and a large number of shares of common stock are sold in the public market, such sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. Additionally, we will bear all expenses in connection with any such registrations (other than stock transfer taxes and underwriting discounts or commissions). See “Certain Relationships and Related Party Transactions—Amended and Restated Investor Rights Agreement.”

We and the holders of substantially all of our common stock outstanding on the date of this prospectus, including each of our executive officers, directors and selling shareholders, have agreed with the underwriters, that for a period of 180 days after the date of this prospectus, we or they will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of or hedge any shares of our common stock, or any options or warrants to purchase any shares of our common stock or any securities convertible into or exchangeable for shares of common stock, subject specified exceptions. The representatives of the underwriters may, in their discretion, at any time without prior notice, release all or any portion of the shares from the restrictions in any such agreement. See “Underwriting” for more information. Substantially all of

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our shares of common stock outstanding as of the date of this prospectus may be sold in the public market by existing shareholders 90 days after the date of this prospectus, subject to the lock-up agreement and applicable volume and other limitations imposed under federal securities laws. See “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling shares of our common stock after this offering. Sales by our existing shareholders of a substantial number of shares in the public market, or the perception that these sales might occur, could cause the market price of our common stock to decrease significantly.

In the future, we may also issue our securities in connection with investments or acquisitions. The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Insiders will continue to have substantial control over us after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control.

Upon the closing of this offering, funds managed by Advent will control an aggregate of     % of the voting power of our outstanding common stock or     % if the underwriters exercise in full their option to purchase additional shares in this offering. As a result, Advent would be able to influence or control matters requiring approval by our shareholders, including the election of directors and the approval of mergers, acquisitions and other extraordinary transactions. It may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of Five Below, could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of Five Below and might ultimately affect the market price of our common stock.

Certain of our existing investors have interests and positions that could present potential conflicts with our and our shareholders’ interests.

Advent makes investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Advent may also pursue, for its own accounts, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Our second amended and restated shareholders agreement, as amended, contains provisions renouncing any interest or expectancy held by our directors affiliated with Advent in certain corporate opportunities. Accordingly, the interests of Advent may supersede ours, causing them or their affiliates to compete against us or to pursue opportunities instead of us, for which we have no recourse. Such actions on the part of Advent and inaction on our part could have a material adverse effect on our business, financial condition and results of operations.

If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution.

If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution in the amount of $         per share, because the initial public offering price of $         per share is substantially greater than the net tangible book value per share of our outstanding common stock. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our capital stock and have received or will receive substantial dividends on their shares of capital stock. In addition, you may also experience additional dilution upon future equity issuances on the exercise of stock options to purchase common stock granted to our directors, management personnel and consultants under our equity incentive plan. See “Dilution.”

We do not expect to pay any cash dividends for the foreseeable future.

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any determination to pay

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dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, contractual restrictions, including under agreements for indebtedness we may incur, restrictions imposed by applicable law and other factors our board of directors deems relevant. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of us, the trading price for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if our operating results do not meet the expectations of the investor community, or one or more of the analysts who cover our Company downgrades our stock, our stock price could decline.

No market currently exists for our common stock and we cannot assure you that an active market will develop for such stock.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations among us, the qualified independent underwriter and the representatives of the underwriters and may not be indicative of the market price of our common stock after this offering or to any other established criteria of the value of our business. If you purchase shares of our common stock, you may not be able to resell those shares at or above the initial public offering price. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market on The NASDAQ Global Select Market or otherwise or how liquid that market might become. An active public market for our common stock may not develop or be sustained after the offering. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you or at all.

Anti-takeover provisions could delay and discourage takeover attempts that shareholders may consider to be favorable.

Certain provisions of our amended and restated articles of incorporation and amended bylaws that will be in effect upon the closing of this offering and applicable provisions of Pennsylvania law may make it more difficult or impossible for a third party to acquire control of us or effect a change in our board of directors and management.

In particular, these provisions, among other things:

• provide that only the chairman of the board of directors, the chief executive officer or a majority of the board of directors may call special meetings of the shareholders;

• classify our board of directors into three separate classes with staggered terms;

• provide for supermajority approval requirements for amending or repealing provisions in our amended and restated articles of incorporation and amended bylaws;

• establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings; and

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• permit the board of directors, without further action of the shareholders, to issue and fix the terms of preferred stock, which may have rights senior to those of the common stock.

In addition, anti-takeover provisions in Pennsylvania law could make it more difficult for a third party to acquire control of us. These provisions could adversely affect the market price of our common stock and could reduce the amount that shareholders might receive if we are sold. For example, Pennsylvania law may restrict a third party’s ability to obtain control of us and may prevent shareholders from receiving a premium for their shares of our common stock. Pennsylvania law also provides that our shareholders are not entitled by statute to propose amendments to our articles of incorporation.

These and other provisions of Pennsylvania law and our amended and restated articles of incorporation and amended bylaws could delay, defer or prevent us from experiencing a change of control or changes in our board of directors and management and may adversely affect our shareholders’ voting and other rights. Any delay or prevention of a change of control transaction or changes in our board of directors and management could deter potential acquirors or prevent the completion of a transaction in which our shareholders could receive a substantial premium over the then current market price for their shares of our common stock.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus constitute forward-looking statements, including in the sections captioned “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the introduction of new merchandise, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this prospectus reflect our views as of the date of this prospectus about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors include without limitation:

Ÿ failure to successfully implement our growth strategy;

Ÿ disruptions in our ability to select, obtain, distribute and market merchandise profitably;

Ÿ our ability to successfully expand our distribution network capacity;

Ÿ disruptions to our distribution network or the timely receipt of inventory;

Ÿ inability to attract and retain qualified employees;

Ÿ ability to increase sales and improve the efficiencies, costs and effectiveness of our operations;

Ÿ our dependence on our executive officers and other key personnel or our inability to hire additional qualified personnel;

Ÿ our ability to successfully manage our inventory balances and inventory shrinkage;

Ÿ our lease obligations;

Ÿ changes in our competitive environment, including increased competition from other retailers;

Ÿ increasing costs due to inflation, increased operating costs or energy prices;

Ÿ the seasonality of our business;

Ÿ disruptions to our information technology systems in the ordinary course or as a result of system upgrades;

Ÿ our failure to maintain adequate internal controls;

Ÿ our ability to obtain additional financing;

Ÿ failure to secure customers’ confidential or credit card information, or other private data relating to our employees or our company;

Ÿ natural disasters, unusual weather conditions, pandemic outbreaks, global political events, war and terrorism;

Ÿ current economic conditions and other economic factors;

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Ÿ the impact of governmental laws and regulations and the outcomes of legal proceedings;

Ÿ our inability to protect our brand name, trademarks and other intellectual property rights;

Ÿ increased costs as a result of being a public company; and

Ÿ restrictions imposed by our indebtedness on our current and future operations.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. All of the forward-looking statements we have included in this prospectus are based on information available to us on the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

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USE OF PROCEEDS

We estimate that we will receive net proceeds from the sale of our common stock in this offering of approximately $         million based upon an assumed initial public offering price of $         per share (the midpoint of the price range set forth on the cover of this prospectus) and after deducting estimated underwriting discount, commissions and offering expenses payable by us. We will not receive any proceeds from the sale of shares of our common stock by the selling shareholders, which includes certain of our officers, directors and affiliates, including any shares sold by the selling shareholders in connection with the exercise of the underwriters’ option to purchase additional shares. A $1.00 increase or decrease in the assumed initial public offering price of $         per share would increase or decrease the net proceeds to us from this offering by approximately $         million, assuming the number of shares offered by us, as indicated on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount, commissions and offering expenses payable by us.

We intend to use the net proceeds to us from this offering in the following order:

• to pay offering-related expenses of approximately $4.0 million; and

• to repay $50.0 million of outstanding indebtedness under our new term loan facility which was incurred in connection with the Financing Transactions.

We intend to use the remaining proceeds (if any) for general corporate purposes, including working capital.

On May 16, 2012, we entered into our $100.0 million term loan facility with a syndicate of lenders which bears interest, at our option, at an alternate base rate which is the greater of (i) the administrative agent’s prime rate in effect on such day and (ii) the federal funds effective rate in effect on such day plus 0.50% with a 2.00% floor, plus a margin of 3.25%, or a LIBOR-based rate with a 1.00% floor plus a margin of 4.25%; provided, that if no initial public offering occurs prior to May 16, 2013 and our consolidated net leverage ratio is greater than 2.00 to 1.00, the applicable margin for the alternate base rate shall be 4.75% and for the LIBOR-based rate shall be 5.75%. At May 23, 2012 our interest rate was 5.25% and our outstanding balance was $100.0 million. The term loan facility matures on the earlier of (i) May 16, 2015 and (ii) the date on which such facility is accelerated following the occurrence of an event of default; provided, that if no initial public offering occurs prior to May 16, 2013, the term loan facility shall mature on the earlier of (i) May 16, 2014 and (ii) the date on which such facility is accelerated following the occurrence of an event of default.

We used the amounts of the net proceeds from our term loan facility of $98.0 million and cash on hand to pay a special dividend of approximately $37.0 million to holders of our common stock and approximately $62.5 million to holders of our Series A 8% convertible preferred stock. Advent and LLR Partners, our principal shareholders, received distributions in respect of this dividend in the amounts of approximately $62.2 million and $9.5 million, respectively. In addition, certain of our current executive officers and directors received distributions in respect of this dividend as follows: Messrs. Bull, Ryan, Sargent, Schlessinger and Vellios received approximately $193,000, $322,000, $529,000, $5.6 million and $5.6 million, respectively.

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DIVIDENDS

In connection with the 2010 Transaction, we declared a special dividend to the holders of our common stock on October 13, 2010, referred to herein as the 2010 Dividend. We paid the 2010 Dividend on October 14, 2010 to all of our shareholders of record as of October 13, 2010. The aggregate amount of the 2010 Dividend was approximately $196.7 million, or $4.58 per share. Of this amount, $4.3 million was recorded as additional compensation expense. Please see “Certain Relationships and Related Party Transactions—Investment by Advent” for a description of the 2010 Transaction.

On May 15, 2012, we declared and subsequently paid on May 16, 2012 a special dividend of $0.70 per share on shares of our common stock and our Series A 8% convertible preferred stock totaling approximately $99.5 million, which we refer to as the 2012 Dividend.

Other than the 2010 Dividend and the 2012 Dividend, we have not declared, and currently do not plan to declare in the foreseeable future, dividends on shares of our common stock. We currently intend to retain any future earnings for use in the operation and expansion of our business. Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. In addition, the terms of our term loan facility and revolving credit facility contain restrictions on our ability to pay dividends.

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CAPITALIZATION

The following table sets forth our capitalization as of April 28, 2012:

• on an actual basis;

• on a pro forma basis further reflecting: (1) the Financing Transactions, including the payment of the 2012 Dividend and; (2) the conversion of all outstanding shares of our Series A 8% convertible preferred stock into 89,291,773 shares of common stock; and

• on a pro forma as adjusted basis to further reflect:

• our receipt of the net proceeds from the sale of              shares of our common stock in this offering based upon an assumed initial public offering price of $         per share (the midpoint of the price range set forth on the cover of this prospectus) and after deducting estimated underwriting discount, commissions and offering expenses payable by us; and

• the application of the estimated net proceeds from this offering as described under “Use of Proceeds.”

You should read this table together with the sections entitled “Use of Proceeds,” “Selected Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this prospectus.

	As of April 28, 2012
	Actual			Pro Forma			Pro Forma as Adjusted
	(in thousands, except share and per share data)
Cash and cash equivalents	$	14,503		$	12,027		$
Long-term debt (including current maturities)
Revolving line of credit(1)	$	—		$	—		$
Note payable		250			100,250
Total long-term debt		250			100,250
Preferred stock, $0.01 par value. Authorized 100,000,000 shares; 10,000,000 shares undesignated; 90,000,000 shares designated as Series A 8% convertible preferred stock:		191,855			—
Series A 8% convertible preferred stock, $0.01 par value. Issued and outstanding 89,291,773 shares with a liquidation preference of $218,588, actual; none authorized, none issued and outstanding, pro forma and pro forma, as adjusted(2)
Shareholders’ (deficit) equity:
Common stock, $0.01 par value. Authorized 200,000,000 shares; issued and outstanding 52,781,374 shares, actual; 142,073,147 issued and outstanding shares, pro forma; and 142,073,147 issued and outstanding shares on a pro forma, as adjusted basis		528			1,421
Additional paid-in capital		11,925			190,963
Accumulated deficit		(134,769	)		(222,296	)
Total shareholders’ (deficit) equity		(122,316	)		(29,912	)
Total capitalization(3)	$	69,789		$	70,338		$

(1) At April 28, 2012, there were no outstanding letters of credit and excess availability was approximately $20.0 million.

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(2) Our outstanding Series A 8% convertible preferred stock will convert into shares of our common stock in connection with the closing of this offering.

(3) Each $1.00 increase or decrease in the assumed initial public offering price of $         per share would increase or decrease each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity and total capitalization on a pro forma as adjusted basis by approximately $         million, assuming that the number of shares of common stock offered by us and the selling shareholders, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The number of shares of common stock outstanding set forth in the table above does not include:

• 2,901,800 shares of our common stock issuable upon the exercise of stock options outstanding as of May 23, 2012 with a weighted average exercise price of $         per share; and

•              shares of our common stock reserved for future issuance under our equity incentive plan, which will be in effect upon the closing of this offering.

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DILUTION

If you invest in our common stock in this offering, you will experience immediate and substantial dilution in the pro forma net tangible book value of your shares of our common stock. The pro forma net tangible book value of our common stock as of                     , 2012 was $         million, or approximately $         per share. Pro forma net tangible book value per share represents the amount of our total tangible assets less our total liabilities divided by the pro forma number of shares of common stock that would have been outstanding on                     , 2012 after giving pro forma effect to the conversion of all outstanding shares of our Series A 8% convertible preferred stock into a total of              shares of common stock and the exercise of all outstanding warrants to purchase a total of              shares of common stock.

Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after the closing of this offering. After giving effect to the sale of shares of our common stock in this offering based upon an assumed initial public offering price of $         (the midpoint of the price range set forth on the cover of this prospectus) and after deducting estimated underwriting discount, commissions and offering expenses payable by us, the conversion of all outstanding shares of our Series A 8% convertible preferred stock into a total of              shares of common stock and the exercise of all of our outstanding warrants to purchase a total of              shares of common stock, our pro forma net tangible book value as of                      would have been approximately $         million, or approximately $         per share. This represents an immediate increase in pro forma net tangible book value of $         per share to existing shareholders and an immediate dilution of $         per share to new investors purchasing shares of our common stock in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:

Assumed initial public offering price per share		$
Pro forma net tangible book value as of                     , 2012	$
Increase in pro forma net tangible book value per share attributable to new investors in this offering
Pro forma as adjusted net tangible book value per share after this offering .
Dilution per share to new investors		$

If the underwriters exercise their option to purchase additional shares in full, pro forma net tangible book value per share after the offering will be $        , and dilution in pro forma net tangible book value per share to new shareholders will be $        . A $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) our pro forma net tangible book value by $         million, the pro forma net tangible book value per share after this offering by $         per share and the dilution in pro forma net tangible book value to new investors in this offering by $         per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

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The following table presents, on a pro forma basis, as of                     , 2012, the differences between the number of shares of common stock purchased from us, the total consideration paid or exchanged and the average price per share paid by existing shareholders and by new investors purchasing shares of our common stock in this offering before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The table assumes an initial public offering price of $         per share, as specified above.

	Shares Purchased				Total Consideration				Average    Price Per   Share
	Number	Percent			Amount	Percent
Existing shareholders(1)				%	$			%	$
New investors				%	$			%	$
Total			100.0	%	$		100.0	%	$

(1) The total consideration paid by existing shareholders does not reflect the dividends received by them in the 2010 Dividend and 2012 Dividend.

A $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) total consideration paid by new shareholders by $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

Sales by the selling shareholders in this offering will reduce the number of shares held by existing shareholders to              shares, or approximately     % (             shares, or approximately     %, if the underwriters exercise their option to buy additional shares in full), and will increase the number of shares to be purchased by new investors to              shares, or approximately     % (             shares, or approximately     %, if the underwriters exercise their option to buy additional shares in full), of the total common stock outstanding after the offering.

The number of shares outstanding in the table above is based on the number of shares outstanding as of May 23, 2012, after giving effect to the conversion of all outstanding shares of our Series A 8% convertible preferred stock into 89,291,773 shares of our common stock in connection with the closing of this offering. The discussion and tables above do not include the following shares:

• 2,901,800 shares of our common stock issuable upon the exercise of stock options outstanding as of May 23, 2012 with a weighted average exercise price of $         per share; and

•              shares of our common stock reserved for future issuance under our amended and restated equity incentive plan.

To the extent any such shares of common stock are issued, new investors may experience further dilution. If the underwriters exercise their option to purchase additional shares in full, the following will occur: (1) the number of shares of common stock held by existing shareholders will represent approximately     % of the total number of shares of common stock outstanding after this offering; and (2) the number of shares of common stock held by new investors will be increased to             , or approximately     % of the total number of shares of common stock outstanding after this offering.

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SELECTED FINANCIAL AND OTHER DATA

The following tables present selected financial and other data as of and for the periods indicated. The selected statement of operations data for fiscal 2009, 2010 and 2011 and selected balance sheet data as of January 29, 2011 and January 28, 2012 have been derived from our financial statements audited by KPMG LLP, our independent registered public accounting firm, included elsewhere in this prospectus. The selected statement of operations data for the fiscal years ended February 2, 2008, which we refer to as fiscal 2007, and January 31, 2009, which we refer to as fiscal 2008, and the selected balance sheet data as of February 2, 2008, January 31, 2009 and January 30, 2010 have been derived from our audited financial statements that have not been included in this prospectus. The selected statement of operations and cash flows data for each of the thirteen weeks ended April 30, 2011 and April 28, 2012 and the selected balance sheet data as of April 30, 2011 and April 28, 2012 have been derived from unaudited financial statements included elsewhere in this prospectus. The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should read this selected financial data in conjunction with the financial statements and accompanying notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this prospectus.

We operate on a fiscal calendar that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31^st of the following year. The reporting periods contained in our audited financial statements included in this prospectus contain 52 weeks of operations in fiscal 2007, 2008, 2009, 2010 and 2011. The quarterly reporting periods contained in the unaudited financial statements included in this prospectus consist of 13-week periods ended on April 30, 2011 and April 28, 2012.

	Fiscal Year															Thirteen Weeks Ended
	2007			2008			2009			2010			2011			April 30, 2011			April 28, 2012
	(in thousands, except total stores, share and per share data)
Statement of Operations Data:
Net sales	$	66,411		$	89,466		$	125,135		$	197,189		$	297,113		$	47,427		$	71,829
Cost of goods sold		48,758			64,155			85,040			131,046			192,252			32,840			48,809
Gross profit		17,653			25,311			40,095			66,143			104,861			14,587			23,020
Selling, general and administrative expenses(1)		20,935			26,930			33,217			54,339			78,640			12,926			24,985
Operating (loss) income		(3,282	)		(1,619	)		6,878			11,804			26,221			1,661			(1,965	)
Interest expense (income), net		208			131			73			28			(16	)		(3	)		(37	)
(Loss) income before income taxes		(3,490	)		(1,750	)		6,805			11,776			26,237			1,664			(1,928	)
Income tax expense (benefit)		—			—			(4,853	)		4,753			10,159			665			(771	)
Net (loss) income		(3,490	)		(1,750	)		11,658			7,023			16,078			999			(1,157	)
Series A 8% convertible preferred stock cumulative dividends		—			—			—			(4,507	)		(15,913	)		(3,869	)		(4,168	)
Accretion of redeemable convertible preferred stock		(1,605	)		(2,881	)		(4,250	)		(3,329	)		—			—			—
Net (loss) income available to shareholders		(5,095	)		(4,631	)		7,408			(813	)		165			(2,870	)		(5,325	)
Less: Net income attributable to participating securities		—			—			(3,365	)		—			(109	)		—			—
Net income (loss) available to common shareholders	$	(5,095	)	$	(4,631	)	$	4,043		$	(813	)	$	56		$	(2,870	)	$	(5,325	)
Per Share Data:
Basic (loss) income per common share(2)	$	(0.23	)	$	(0.22	)	$	0.19		$	(0.03	)	$	—		$	(0.06	)	$	(0.11	)

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	Fiscal Year													Thirteen Weeks Ended
	2007			2008			2009		2010			2011		April 30, 2011			April 28, 2012
	(in thousands, except total stores, share and per share data)
Diluted (loss) income per common share(2)	$	(0.23	)	$	(0.22	)	$	0.19	$	(0.03	)	$	—	$	(0.06	)	$	(0.11	)
Dividends declared per common share	$	—		$	—		$	—	$	4.58		$	—		—			—
Weighted average shares outstanding:
Basic shares		21,829,611			21,438,516			21,539,917		27,954,322			45,964,159		45,664,835			47,458,718
Diluted shares		21,829,611			21,438,516			21,539,917		27,954,322			45,965,631		45,664,835			47,458,718
Unaudited pro forma net income (loss)(3)												$	14,159				$	(1,619	)
Unaudited pro forma basic income (loss) per common share(3)
Unaudited pro forma diluted income (loss) per common share(3)
Unaudited pro forma weighted average shares outstanding:
Basic shares
Diluted shares

	Fiscal Year															Thirteen Weeks Ended
	2007			2008			2009			2010			2011			April 30, 2011			April 28, 2012
	(in thousands, except total stores, share and per share data)
Statement of Cash Flows Data:
Net cash (used in) provided by:
Operating activities	$	(1,219	)	$	3,671		$	9,227		$	15,045		$	46,695		$	1,581		$	(23,698	)
Investing activities	$	(5,021	)	$	(5,988	)	$	(7,285	)	$	(14,883	)	$	(18,558	)	$	(4,576	)	$	(4,801	)
Financing activities	$	6,641		$	10,900		$	(145	)	$	(445	)	$	1,003		$	(27	)	$	1,709
Other Operating and Financial Data:
Total stores at end of period		67			82			102			142			192			145			199
Comparable store sales growth		5.4	%		5.8	%		12.1	%		15.6	%		7.9	%		7.6	%		10.4	%
Average net sales per store(4)	$	1,037		$	1,185		$	1,302		$	1,542		$	1,658		$	326		$	368
Adjusted EBITDA(5)	$	(285	)	$	2,285		$	11,088		$	25,798		$	42,377		$	3,732		$	6,625
Capital expenditures	$	5,033		$	5,991		$	7,285		$	14,883		$	18,558		$	4,576		$	4,801
Adjusted EBITDA Reconciliation:
Net (loss) income	$	(3,490	)	$	(1,750	)	$	11,658		$	7,023		$	16,078		$	999		$	(1,157	)
Interest expense (income), net		208			131			73			28			(16	)		(3	)		(37	)
Income tax (benefit) expense		—			—			(4,853	)		4,753			10,159			665			(771	)
Depreciation and amortization		2,115			2,799			3,660			4,805			7,071			1,434			2,107
EBITDA(6)		(1,167	)		1,180			10,538			16,609			33,292			3,095			142
Non-contractual executive bonus expense(7)		—			—			—			—			6,087			—			—
Deferred rents(8)		608			297			232			1,164			1,401			258			110
Non-cash stock-based compensation and warrant expense(9)		199			329			274			2,332			1,246			319			6,373
Loss on disposal of assets(10)		16			169			5			288			273			—			—
Closed stores(11)		59			310			39			76			78			60			—
Transaction expense(12)		—			—			—			5,329			—			—			—
Adjusted EBITDA	$	(285	)	$	2,285		$	11,088		$	25,798		$	42,377		$	3,732		$	6,625

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	As of
	February 2, 2008			January 31, 2009			January 30, 2010			January 29, 2011			January 28, 2012			April 30, 2011			April 28, 2012
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	2,056		$	10,639		$	12,436		$	12,153		$	41,293			9,131			14,503
Total current assets		15,261			26,533			35,335			45,942			92,249			55,625			89,051
Total current liabilities		13,303			10,522			10,983			18,215			49,942			29,356			36,186
Total long-term debt(13)		223			122			—			250			250			250			250
Total liabilities		19,255			18,331			20,036			33,524			72,431			45,484			64,402
Series A 8% convertible preferred stock		—			—			—			191,855			191,855			191,855			191,855
Series A redeemable convertible preferred stock		16,312			17,030			18,778			—			—			—			—
Series A-1 redeemable convertible preferred stock		—			16,008			18,510			—			—			—			—
Total shareholders’ deficit		(7,343	)		(8,879	)		(1,049	)		(148,797	)		(129,759	)		(147,284	)		(122,316	)

(1) Fiscal 2010 includes $5.3 million of expense related to the 2010 Transaction and fiscal 2011 includes $6.1 million of non-contractual executive bonus expense, as described in Note 7 to the Adjusted EBITDA Reconciliation. The thirteen weeks ended April 28, 2012 includes $5.9 million of stock-based compensation expense that relates to the cancellation of certain stock options, in exchange for the grant of restricted shares, as described in Note 5 in our unaudited financial statements.

(2) Please see Note 2 in both our annual and quarterly financial statements, included elsewhere in this prospectus, for an explanation of per share calculations.

(3) Pro forma information is unaudited and is prepared in accordance with Article 11 of Regulation S-X.

Pro forma net income gives effect to: (i) income attributable to participating securities; (ii) cumulative dividends related to Series A 8% convertible preferred stock; and (iii) the Financing Transactions, including the repayment of $50 million of outstanding indebtedness under the new term loan facility with the IPO proceeds.

The following is a reconciliation of historical net income to unaudited pro forma net income:

	Fiscal Year 2011			Thirteen Weeks Ended April  28, 2012
Net income (loss) available to common shareholders	$	56		$	(5,325	)
Add:
Net income attributable to participating securities		109			—
Series A 8% Convertible Preferred Stock cumulative dividend		15,913			4,168
Less:
Interest expense, net of tax		(1,616	)		(386	)
Amortization of deferred financing fees, net of tax		(303	)		(76	)
Pro forma net income (loss)	$	14,159		$	(1,619	)

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Pro forma per share data gives effect to (i) the Financing Transactions; (ii) the conversion of our outstanding shares of Series A 8% convertible preferred stock into shares of common stock in connection with the closing of this offering and (iii) the number of shares whose proceeds will be used to repay $50.0 million of the outstanding indebtedness under the term loan facility.

The following is a reconciliation of pro forma basic and diluted weighted average common shares outstanding:

	Fiscal Year 2011		Thirteen Weeks Ended April  28, 2012
Shares used in computing basic net (loss) income per common share		45,964,159		47,458,718
Adjustment for assumed conversion of preferred stock		89,291,773		89,291,773
Adjustment for shares used to repay outstanding indebtedness under the term loan facility
Basic pro forma weighted average common shares outstanding
Dilutive effect of securities
Diluted pro forma weighted average common shares outstanding

(4) Only includes stores open during the full fiscal year.

(5) Adjusted EBITDA is defined as EBITDA (as defined below), further adjusted to exclude non-cash, non-recurring and other items not related to ongoing performance, such as non-contractual executive bonus expense, deferred rents, non-cash stock-based compensation and warrant expense, loss on disposal of assets, EBITDA for closed stores and expense related to the 2010 Transaction. We have presented Adjusted EBITDA because we believe that the exclusion of these items is appropriate to provide additional information to investors about our ongoing operating performance excluding certain non-cash and other items not related to ongoing performance and as a means to evaluate our period-to-period results. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. We have provided this information as a means to evaluate the results of our ongoing operations. Other companies in our industry may calculate Adjusted EBITDA differently than we do. Adjusted EBITDA is not a measure of performance under GAAP and should not be considered as a substitute for net income prepared in accordance with GAAP. Adjusted EBITDA has similar limitations as an analytical tool to those set forth in Note 6 below related to the use of EBITDA, and you should not consider it in isolation or as substitute for analysis of our results as reported under GAAP. Some of these additional limitations to the use of Adjusted EBITDA are:

• Adjusted EBITDA does not reflect the non-contractual executive bonus expense, deferred rents, non-cash stock-based compensation and warrant expense, loss on disposal of assets, EBITDA for closed stores and expense related to the 2010 Transaction; and

• Adjusted EBITDA does not reflect certain other costs that may recur in future periods.

We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplemental measure.

(6) EBITDA represents net income before interest expense (income), income taxes (benefit), depreciation and amortization. We have presented EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. Management uses EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. Other companies in our industry may calculate EBITDA differently than we do. EBITDA is not a measure of performance under GAAP, and should not be considered as a substitute for net income prepared in accordance with GAAP. EBITDA has

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limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• EBITDA does not reflect our cash expenditures, our future requirements for capital expenditures or contractual commitments;

• EBITDA does not reflect interest expense or the cash requirements necessary to service interest or principal payments on debt;

• EBITDA does not reflect tax expense or the cash requirements necessary to pay tax obligations; and

• Although depreciation and amortization are non-cash charges, the asset being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.

(7) Represents a non-contractual bonus to certain executive officers for performance in fiscal 2011 and associated tax expense.

(8) Represents the non-cash portion of rent expense.

(9) Represents non-cash stock-based compensation and warrant expense.

(10) Represents asset write-offs for remodeled or closed stores.

(11) Represents the EBITDA, excluding the non-cash portion of rent expense, for stores which management has made the decision to close, from the period in which the decision was made.

(12) Represents expenses incurred in conjunction with the 2010 Transaction, including expenses related to the modification of certain stock options, professional fees and other employee compensation-related expense.

(13) Includes capital lease obligations, less current portion.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with “Selected Financial and Other Data,” and the financial statements and related notes included elsewhere in this prospectus. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year. References to “fiscal year 2011” or “fiscal 2011” refer to the fiscal year ended January 28, 2012, references to “fiscal year 2010” or “fiscal 2010” refer to the fiscal year ended January 29, 2011 and references to “fiscal year 2009” or “fiscal 2009” refer to the fiscal year ended January 30, 2010. Each of fiscal years 2011, 2010 and 2009 consisted of a 52-week period. The quarterly reporting periods contained in the unaudited consolidated financial statements included in this prospectus consist of thirteen weeks ended April 30, 2011 and April 28, 2012. Historical results are not necessarily indicative of the results to be expected for any future period and results for any interim period may not necessarily be indicative of the results that may be expected for a full year.

Overview

Five Below is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the aspirational teen and pre-teen customer. We offer a dynamic, edited assortment of exciting products, all priced at $5 and below, including select brands and licensed merchandise across our category worlds.

Five Below was founded in 2002 by our Executive Chairman, David Schlessinger, and our President and Chief Executive Officer, Thomas Vellios, who recognized a market need for a fun and affordable shopping destination aimed at teens and pre-teens aspiring to be young adults.

We believe that our business model has resulted in strong financial performance irrespective of the economic environment. For the thirteen weeks ended April 28, 2012, our comparable store sales increased by 10.4%. For the same period in the prior year, our comparable store sales increased by 7.6%. Our net sales for the thirteen weeks ended April 18, 2012 were $71.8 million, an increase of 51.5%, from $47.4 million for the thirteen weeks ended April 30, 2011. Our operating income (loss) was $(2.0) million for the thirteen weeks ended April 28, 2012 compared to $1.7 million for the thirteen weeks ended April 30, 2011. We increased net sales from $125.1 million in fiscal 2009 to $297.1 million in fiscal 2011, representing a 54.1% compound annual growth rate. We increased operating income from $6.9 million to $26.2 million during this same time period, representing a compound annual growth rate of 95.3%. Our comparable store sales also increased by 12.1% in fiscal 2009, 15.6% in fiscal 2010 and 7.9% in fiscal 2011 with positive comparable store sales performance across all geographic regions and store-year classes. In addition, over the past two fiscal years we expanded our store base from 102 stores to 192 stores. As of April 28, 2012, our store base was 199 stores.

We expect to continue our strong growth in the future. By offering trend-right merchandise at a differentiated price point of $5 and below, our stores have been successful in varying geographic regions, population densities and real estate settings. We operate stores in 17 states in the Northeast, South and Midwest regions of the U.S. We are primarily present in power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets with minimum trade areas including 100,000 to 150,000 people in the specified market. We believe we have the opportunity to expand our store base in the U.S. from 199 locations in the eastern half of the U.S. at April 28, 2012, to more than 2,000 locations over approximately 20 years. Our ability to open profitable new stores depends on many factors, including our ability to identify suitable markets

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and sites; negotiate leases with acceptable terms; achieve brand awareness in the new markets; efficiently source and distribute additional merchandise; and achieve sufficient levels of cash flow and financing to support our expansion. Our planned store expansion may place increased demands on our operational, managerial, administrative and other resources. Managing our growth effectively will require us to continue to maintain adequate distribution capacity, information systems and other operational system capabilities, and to hire, train and retain store management and other qualified personnel. For further information see “Risk Factors—Risk Relating to our Business and Industry.”

We have a proven and highly profitable store model that has produced consistent financial results and returns. All of our current stores were profitable on a four-wall basis in fiscal 2011 and our new stores have achieved average payback periods of less than one year. Our new store model anticipates a target store size of 7,500 square feet that achieves annual sales of $1.5 million to $1.6 million in the first full year of operation. Our new store model also assumes an average new store investment of approximately $300,000. Our new store investment includes our store buildout (net of tenant allowances), inventory and cash pre-opening expenses.

Our planned store expansion will place increased demands on our operational, managerial, administrative and other resources. Managing our growth effectively will require us to continue to enhance our store management systems, financial and management controls and information systems. In addition, we will be required to hire, train and retain store management and store personnel.

Over the past 5 years we have invested a significant amount of capital in infrastructure and systems necessary to support our future growth and we expect to incur additional capital expenditures related to expansion of our infrastructure and systems in future periods. In fiscal 2010, we expanded our New Castle, Delaware distribution center, and in fiscal 2011, we relocated our corporate headquarters and upgraded our warehouse management and information systems. We have also identified the need to open a second distribution center in order to support our growth, which we expect to open in fiscal 2013. In addition, the timing and amount of investments in our infrastructure and systems could affect the comparability of our results of operations in future periods. The completion date and ultimate cost of future projects, including the new distribution center planned for fiscal 2013 could differ significantly from initial expectations due to construction-related or other reasons.

We believe our business strategy will continue to offer significant opportunity, but it also presents risks and challenges. These risks and challenges include, but are not limited to, that we may not be able to effectively identify and respond to changing trends and customer preferences, that we may not be able to find desirable locations for new stores and that we may not be able to effectively manage our future growth. In addition, our financial results can be expected to be directly impacted by substantial increases in product costs due to commodity cost increases or general inflation which could lead to a reduction in our sales as well as greater margin pressure as costs may not be able to be passed on to consumers. To date, changes in commodity prices and general inflation have not materially impacted our business. In response to increasing commodity prices or general inflation, we seek to minimize the impact of such events by sourcing our merchandise from different vendors and changing our product mix. See “Risk Factors” for a description of these and other important factors that could adversely impact us and our results of operations.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable store sales, gross profit, selling, general and administrative expenses, operating income, EBITDA and Adjusted EBITDA.

Net Sales

Net sales constitute gross sales net of merchandise returns for damaged or defective goods. Net sales consist of sales from comparable stores and non-comparable stores. Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase merchandise.

Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

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Comparable Store Sales

Comparable store sales include net sales from stores that have been open for at least 15 full months from their opening date.

Comparable stores include the following:

• Stores that have been remodeled while remaining open;

• Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and

• Stores that have expanded, but are not significantly different in size, within their current locations.

For stores that are relocated or expanded, the following periods are excluded when calculating comparable store sales:

• The period of construction and pre-opening during which the store is closed through:

^¡   the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or

^¡   the last day of the fiscal month in which the store re-opens (for all other stores); and

• The period beginning on the first anniversary of the date the store closed for construction through the first anniversary of the date the store re-opened.

There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales. As a result, data in this prospectus regarding our comparable store sales may not be comparable to similar data made available by other retailers. Non-comparable store sales are comprised of new store sales, sales for stores not open for a full 15 months, and sales from existing store relocation and expansion projects that were temporarily closed and not included in comparable store sales.

Measuring the change in fiscal year-over-year comparable store sales allows us to evaluate how our store base is performing. Various factors affect comparable store sales, including:

• consumer preferences, buying trends and overall economic trends;

• our ability to identify and respond effectively to customer preferences and trends;

• our ability to provide an assortment of high-quality, trend-right and everyday product offerings that generate new and repeat visits to our stores;

• the customer experience we provide in our stores;

• the level of traffic near our locations in the power, community and lifestyle centers in which we operate;

• competition;

• changes in our merchandise mix;

• pricing;

• our ability to source and distribute products efficiently;

• the timing of promotional events and holidays;

• the timing of introduction of new merchandise and customer acceptance of new merchandise;

• our opening of new stores in the vicinity of existing stores; and

• the number of items purchased per store visit.

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Opening new stores is an important part of our growth strategy. As we continue to pursue our growth strategy, we expect that a significant percentage of our net sales will continue to come from new stores not included in comparable store sales. Accordingly, comparable store sales is only one measure we use to assess the success of our growth strategy.

Cost of Goods Sold and Gross Profit

Gross profit is equal to our net sales less our cost of goods sold. Gross margin is gross profit as a percentage of our net sales. Cost of goods sold reflects the direct costs of purchased merchandise and inbound freight, as well as store occupancy, distribution and buying expenses. Store occupancy costs include rent, common area maintenance, utilities and property taxes for all store locations. Distribution costs include costs for receiving, processing, warehousing and shipping of merchandise to or from our distribution center and between store locations. Buying costs include compensation expense and other costs for our internal buying organization.

These costs are significant and can be expected to continue to increase as our company grows. The components of our cost of goods sold may not be comparable to the components of cost of goods sold or similar measures of our competitors and other retailers. As a result, data in this prospectus regarding our gross profit and gross margin may not be comparable to similar data made available by our competitors and other retailers.

The variable component of our cost of goods sold is higher in higher volume quarters because the variable component of our cost of goods sold generally increases as net sales increase. We regularly analyze the components of gross profit as well as gross margin. Any inability to obtain acceptable levels of initial markups, a significant increase in our use of markdowns, and a significant increase in inventory shrinkage or inability to generate sufficient sales leverage on the store occupancy, distribution and buying components of costs of goods sold could have an adverse impact on our gross profit and results of operations. Changes in the mix of our products may also impact our overall cost of goods sold.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses are composed of payroll and other compensation, marketing and advertising expense, depreciation and amortization expense and other selling and administrative expenses. SG&A expenses as a percentage of net sales are usually higher in lower sales volume quarters and lower in higher sales volume quarters.

The components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth and in part due to additional legal, accounting, insurance and other expenses we expect to incur as a result of being a public company. Among other things, we expect that compliance with the Sarbanes-Oxley Act of 2002 and related rules and regulations could result in significant incremental legal, accounting and other overhead costs. In addition, any increase in future stock option or other stock-based grants or modifications will increase our stock-based compensation expense included in SG&A.

Operating Income

Operating income equals gross profit less SG&A expenses. Operating income excludes interest expense or income and income tax expense or benefit. We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses. Operating income percentage measures operating income as a percentage of our net sales.

EBITDA and Adjusted EBITDA

We define EBITDA as net income (loss) before interest expense (income), income taxes (benefit), depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted to exclude certain non-cash, non-recurring items and other items not relating to ongoing performance. We caution investors that

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amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate EBITDA or Adjusted EBITDA in the same manner. We present EBITDA in this prospectus because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We present Adjusted EBITDA in this prospectus as a further supplemental measure of our performance. For a discussion of our use of EBITDA and Adjusted EBITDA and a reconciliation to net income, please refer to “Prospectus Summary—Summary Financial and Other Data” and “Selected Financial and Other Data.”

Results of Operations

The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales.

	Fiscal Year									Thirteen weeks ended
	2009			2010			2011			April 30, 2011			April 28, 2012
	(in thousands, except total stores)
Statements of Operations Data:
Net sales	$	125,135		$	197,189		$	297,113		$	47,427		$	71,829
Cost of goods sold		85,040			131,046			192,252			32,840			48,809
Gross profit		40,095			66,143			104,861			14,587			23,020
Selling, general and administrative expenses(1)		33,217			54,339			78,640			12,926			24,985
Operating income (loss)		6,878			11,804			26,221			1,661			(1,965	)
Interest expense (income), net		73			28			(16	)		(3	)		(37	)
Income (loss) before income taxes		6,805			11,776			26,237			1,664			(1,928	)
Income tax (benefit) expense		(4,853	)		4,753			10,159			665			(771	)
Net income (loss)	$	11,658		$	7,023		$	16,078		$	999		$	(1,157	)
Percentage of Net Sales:
Net sales		100	%		100	%		100	%		100	%		100	%
Cost of goods sold		68.0	%		66.5	%		64.7	%		69.2	%		68.0	%
Gross profit		32.0	%		33.5	%		35.3	%		30.8	%		32.0	%
Selling, general and administrative expenses(1)		26.5	%		27.6	%		26.5	%		27.3	%		34.8	%
Operating income (loss)		5.5	%		6.0	%		8.8	%		3.5	%		(2.7	%)
Interest expense (income), net		0.1	%		—	%		—	%		—	%		(0.1	%)
Income (loss) before income taxes		5.4	%		6.0	%		8.8	%		3.5	%		(2.7	%)
Income tax (benefit) expense		(3.9	%)		2.4	%		3.4	%		1.4	%		(1.1	%)
Net income (loss)		9.3	%		3.6	%		5.4	%		2.1	%		(1.6	%)
Operational Data:
Total stores at end of period		102			142			192			145			199
Comparable stores sales growth		12.1	%		15.6	%		7.9	%		7.6	%		10.4	%
Average net sales per store(2)	$	1,302		$	1,542		$	1,658		$	326		$	368

(1) Fiscal 2010 includes $5.3 million of expense related to the 2010 Transaction and fiscal 2011 includes $6.1 million of non-contractual executive bonus expense, as described in Note 7 under “Selected Financial and Other Data.” The thirteen weeks ended April 28, 2012 includes $5.9 million of stock-based compensation expense that relates to the cancellation of certain stock options, in exchange for the grant of restricted shares, as described in Note 5 in our unaudited quarterly financial statements.

(2) Only includes stores open during the full fiscal year.

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Thirteen Weeks Ended April 28, 2012 Compared to the Thirteen Weeks Ended April 30, 2011

Net Sales

Net sales increased from $47.4 million in the thirteen weeks ended April 30, 2011 to $71.8 million in the thirteen weeks ended April 28, 2012, an increase of $24.4 million, or 51.5%. The increase was the result of a comparable store sales increase of $4.8 million and a non-comparable store sales increase of $19.6 million. During the thirteen weeks ended April 28, 2012, we opened 7 new stores. We plan to open approximately 43 additional stores during the remainder of the fiscal year. New store openings are the primary driver for our increase in non-comparable store sales.

Comparable store sales increased 10.4% for the thirteen weeks ended April 28, 2012 compared to the thirteen weeks ended April 30, 2011. This increase resulted from an increase of approximately 10.3% in the number of transactions in our stores and an increase in the average dollar value of transactions of approximately 0.1%.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased from $32.8 million in the thirteen weeks ended April 30, 2011 to $48.8 million in the thirteen weeks ended April 28, 2012, an increase of $16.0 million, or 48.6%. The increase in cost of goods sold was primarily the result of a $12.2 million increase in the direct costs of goods resulting from an increase in sales and a $2.7 million increase in store occupancy as a result of new store openings.

Gross profit increased from $14.6 million in the thirteen weeks ended April 30, 2011 to $23.0 million in the thirteen weeks ended April 28, 2012, an increase of $8.4 million, or 57.8%. Gross margin increased from 30.8% in the thirteen weeks ended April 30, 2011 to 32.0% for the thirteen weeks ended April 28, 2012, an increase of 129 basis points. The increase in gross margin was primarily the result of a 48 and 93 basis point increase from distribution and store occupancy expense, respectively, reducing as a percentage of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased from $12.9 million in the thirteen weeks ended April 30, 2011 to $25.0 million in the thirteen weeks ended April 28, 2012, an increase of $12.1 million, or 93.3%. As a percentage of net sales, selling, general and administrative expenses increased 753 basis points to 34.8% in the thirteen weeks ended April 28, 2012 compared to 27.3% in the thirteen weeks ended April 30, 2011. The increase in selling, general and administrative expense was primarily the result of increases of $5.9 million of stock-based compensation expense associated with the cancellation of certain stock options in exchange for the grant of restricted shares, $3.9 million of store-related expenses to support new store growth and $1.2 million in corporate related expense.

Income Tax Expense (Benefit)

Income tax was an expense for the thirteen weeks ended April 30, 2011 of $0.7 million compared to a benefit of $0.8 million for the thirteen weeks ended April 28, 2012, a decrease of $1.4 million, or (215.9)%. This decrease in income tax was primarily the result of a $3.6 million decrease in pre-tax income. Our effective tax rate was 40.0% during both the thirteen weeks ended April 30, 2011 and April 28, 2012. For the remainder of fiscal 2012, we believe our effective tax rate will be approximately 40.0%.

Net Income

As a result of the foregoing, net income decreased from $1.0 million in the thirteen weeks ended April 30, 2011 to a net loss of $1.2 million in the thirteen weeks ended April 28, 2012, a decrease of $2.2 million, or (215.8)%.

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Fiscal Year 2011 Compared to Fiscal Year 2010

Net Sales

Net sales increased from $197.2 million in fiscal year 2010 to $297.1 million in fiscal year 2011, an increase of $99.9 million, or 50.7%. The increase was the result of a comparable store sales increase of $13.1 million and a non-comparable store sales increase of $86.8 million. In fiscal year 2011, we opened a net of 50 new stores compared to a net of 40 new stores in fiscal year 2010. New store openings are the primary driver for our increase in non-comparable store sales.

Comparable store sales increased 7.9% for fiscal year 2011 compared to fiscal year 2010. This increase resulted from an increase of approximately 6.1% in the number of transactions in our stores and an increase in the average dollar value of transactions of approximately 1.8%.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased from $131.0 million in fiscal year 2010 to $192.3 million in fiscal year 2011, an increase of $61.2 million, or 46.7%. The increase in cost of goods sold was primarily the result of a $48.2 million increase in the direct costs of goods resulting from an increase in sales and a $9.7 million increase in store occupancy as a result of new store openings.

Gross profit increased from $66.1 million in fiscal year 2010 to $104.9 million in fiscal year 2011, an increase of $38.7 million, or 58.5%. Gross margin increased from 33.5% in fiscal year 2010 to 35.3% for fiscal year 2011, an increase of 180 basis points. The increase in gross margin was primarily the result of a 102 and 64 basis point increase from buying and store occupancy expense, respectively, reducing as a percentage of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased from $54.3 million in fiscal year 2010 to $78.6 million in fiscal year 2011, an increase of $24.3 million, or 44.7%. As a percentage of net sales, selling, general and administrative expenses decreased 110 basis points to 26.5% in fiscal year 2011 compared to 27.6% in fiscal year 2010. The increase in selling, general and administrative expense was primarily the result of increases of $17.4 million of store-related expenses to support new store growth and $6.0 million of a non-contractual bonus to certain executive officers for performance in fiscal 2011, which was partially offset by a decrease of $5.3 million in expense related to the 2010 Transaction, including compensation cost associated with the modification of certain stock options.

Income Tax Expense

Income tax expense increased from $4.8 million in fiscal year 2010 to $10.2 million in fiscal year 2011, an increase of $5.4 million, or 113.7%. This increase in income tax expense was primarily the result of a $14.5 million increase in pre-tax net income. Our effective tax rate decreased from 40.4% in fiscal year 2010 to 38.7% in fiscal year 2011. For fiscal 2012, we believe our effective tax rate will be approximately 40%.

Net Income

As a result of the foregoing, net income increased from $7.0 million in fiscal year 2010 to $16.1 million in fiscal year 2011, an increase of $9.1 million, or 128.9%.

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Fiscal Year 2010 Compared to Fiscal Year 2009

Net Sales

Net sales increased from $125.1 million in fiscal year 2009 to $197.2 million in fiscal year 2010, an increase of $72.1 million, or 57.6%. The increase was the result of a comparable store sales increase of $16.8 million and a non-comparable store sales increase of $55.3 million. In fiscal year 2010, we opened a net of 40 new stores compared to a net of 20 new stores in fiscal year 2009. New store openings are the primary driver for our increase in non-comparable store sales.

Comparable store sales increased 15.6% for fiscal year 2010 compared to fiscal year 2009. This increase resulted from an increase of approximately 14.9% in the number of transactions in our stores and an increase in the average dollar value of transactions of approximately 0.7%.

Cost of Goods Sold and Gross Profit

Cost of goods sold increased from $85.0 million in fiscal year 2009 to $131.0 million in fiscal year 2010, an increase of $46.0 million, or 54.1%. The increase in cost of goods sold was primarily the result of a $34.4 million increase in the direct costs or goods resulting from an increase in sales and a $6.6 million increase in store occupancy as a result of new store openings.

Gross profit increased from $40.1 million in fiscal year 2009 to $66.1 million in fiscal year 2010, an increase of $26.0 million, or 65.0%. Gross margin increased from 32.0% for fiscal year 2009 to 33.5% for fiscal year 2010, an increase of 150 basis points. The increase in gross margin was primarily the result of a 137 basis point increase from store occupancy expense reducing as a percentage of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased from $33.2 million in fiscal year 2009 to $54.3 million in fiscal year 2010, an increase of $21.1 million, or 63.6%. As a percentage of net sales, selling, general and administrative expenses increased 110 basis points to 27.6% in fiscal year 2010 compared to 26.5% in fiscal year 2009. The increase in selling, general and administrative expenses was primarily the result of increases of $11.3 million of store-related expense to support new store growth and $5.3 million of expense related to the 2010 Transaction, including compensation cost associated with the modification of certain stock options.

Income Tax Expense (Benefit)

Income taxes increased from a tax benefit of $4.9 million in fiscal year 2009 to a tax expense of $4.8 million in fiscal year 2010. This increase in income tax expense was primarily the result of a reversal of a $7.4 million deferred tax valuation allowance in fiscal 2009. Our effective tax rate changed from (71.3%) in fiscal year 2009 to 40.4% in fiscal year 2010.

Net Income

As a result of the foregoing, net income decreased from $11.7 million in fiscal year 2009 to $7.0 million in fiscal year 2010, a decrease of $4.6 million, or 39.8%.

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Quarterly Results of Operations and Seasonality

The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our annual results and our net sales. In our opinion, this unaudited quarterly information has been prepared on the same basis as our annual audited financial statements appearing elsewhere in this prospectus, and includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary to present fairly the financial information for the fiscal quarters presented. You should read this information in conjunction with our audited financial statements and the related notes appearing elsewhere in this prospectus. Operating results for any fiscal quarter are not necessarily indicative of results for the full year.

	Fiscal Year 2010												Fiscal Year 2011												Fiscal Year 2012
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter
	(unaudited)
	(in thousands, except percentages and other operating data)
Net sales	$	31,625		$	42,375		$	41,459		$	81,730		$	47,427		$	61,966		$	61,895		$	125,825		$	71,829
Gross profit		9,146			13,959			9,983			33,055			14,587			20,011			18,373			51,890			23,020
Operating income (loss) (1)		202			1,686			(6,173	)		16,089			1,661			3,688			739			20,133			(1,965	)
Net income (loss)	$	129		$	1,004		$	(3,678	)	$	9,568		$	999		$	2,212		$	440		$	12,427		$	(1,157	)
Percentage of Annual Results:
Net sales		16.1	%		21.5	%		21.0	%		41.4	%		16.0	%		20.9	%		20.8	%		42.3	%
Gross profit		13.8	%		21.1	%		15.1	%		50.0	%		13.9	%		19.1	%		17.5	%		49.5	%
Operating income (loss) (1)		1.7	%		14.3	%		(52.3	%)		136.3	%		6.3	%		14.1	%		2.8	%		76.8	%
Net income (loss)		1.8	%		14.3	%		(52.4	%)		136.3	%		6.2	%		13.8	%		2.7	%		77.3	%
Percentage of Net Sales:
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		28.9	%		32.9	%		24.1	%		40.4	%		30.8	%		32.3	%		29.7	%		41.2	%		32.0	%
Operating income (loss) (1)		0.6	%		4.0	%		(14.9	%)		19.7	%		3.5	%		6.0	%		1.2	%		16.0	%		(2.7	%)
Net income (loss)		0.4	%		2.4	%		(8.9	%)		11.7	%		2.1	%		3.6	%		0.7	%		9.9	%		(1.6	%)
Other Operating Data:
Total stores at end of period		105			115			138			142			145			168			189			192			199
Comparable store sales growth		22.8	%		26.5	%		15.9	%		6.3	%		7.6	%		0.7	%		7.6	%		12.1	%		10.4	%

(1) The third quarter of fiscal year 2010 includes $5.3 million of expense related to the 2010 Transaction. The fourth quarter of fiscal year 2011 includes $6.1 million of non-contractual executive bonus expense, as described in Note 7 under “Selected Financial and Other Data.” The first quarter of fiscal year 2012 includes $5.9 million of expense related to the cancellation of certain stock options in exchange for the grant of restricted shares.

Our business is seasonal in nature and demand is generally the highest in the fourth fiscal quarter due to the year-end holiday season. To prepare for the holiday season, we must order and keep in stock more merchandise than we carry during other parts of the year. We expect inventory levels, along with an increase in accounts payable and accrued expenses, generally to reach their highest levels in the third and fourth fiscal quarters in anticipation of the increased net sales during the year-end holiday season. As a result of this seasonality, and generally because of variation in consumer spending habits, we experience fluctuations in net sales and working capital requirements during the year.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash flows from operations, historical equity financings and borrowings under our revolving credit facility. Our primary cash needs are for capital expenditures and working capital.

Capital expenditures typically vary depending on the timing of new store openings and infrastructure-related investments. We plan to make capital expenditures of approximately $20.0 million in fiscal 2012 and approximately $23.0 million in fiscal 2013. We expect to devote approximately $15.0 million of our capital expenditure budget in fiscal 2012 to construct and open 50 new stores and a new distribution center, which will continue into fiscal 2013, with the remainder projected to be spent on corporate infrastructure and store relocations and remodels.

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Our primary working capital requirements are for the purchase of store inventory and payment of payroll, rent, other store operating costs and distribution costs. Our working capital requirements fluctuate during the year, rising in the third and fourth fiscal quarters as we take title to increasing quantities of inventory in anticipation of our peak, year-end holiday shopping season in the fourth fiscal quarter. Fluctuations in working capital are also driven by the timing of new store openings.

Historically, we have funded our capital expenditures and working capital requirements during the fiscal year with cash on hand and borrowings under our revolving credit facility. We did not have any direct borrowings under our revolving credit facility at any point during fiscal 2011. When we have used our revolving credit facility, the amount of indebtedness outstanding under it has tended to be the highest in the beginning of the fourth quarter of each fiscal year. Over the past three fiscal years, to the extent that we have drawn on the facility, we have paid down the borrowings before the end of the fiscal year with cash generated during our peak selling season in the fourth quarter.

Based on our growth plans, we believe that our cash position, net cash provided by operating activities and availability under our revolving credit facility will be adequate to finance our planned capital expenditures and working capital requirements during fiscal 2012 and 2013. If cash flows from operations and borrowings under our revolving credit facility are not sufficient or available to meet our capital requirements, then we will be required to obtain additional equity or debt financing in the future. There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders.

Cash Flows

A summary of our cash flows from operating, investing and financing activities is presented in the following table:

	Fiscal Year									Thirteen Weeks Ended
	2009			2010			2011			April 30, 2011			April 28, 2012
	(in millions)
Net cash provided by (used in) operating activities	$	9.2		$	15.0		$	46.7		$	1.6		$	(23.7	)
Net cash used in investing activities		(7.3	)		(14.9	)		(18.6	)		(4.6	)		(4.8	)
Net cash provided by (used in) financing activities		(0.1	)		(0.4	)		1.0			—			1.7
Net increase (decrease) during period in cash and cash equivalents	$	1.8		$	(0.3	)	$	29.1		$	(3.0	)	$	(26.8	)

Cash (Used in) Provided by Operating Activities

Net cash used in operating activities for the thirteen weeks ended April 28, 2012 was $23.7 million, a decrease of $25.3 million compared to the thirteen weeks ended April 30, 2011. The increase in net cash used in operating activities was primarily the result of the change in income taxes paid of $8.7 million, the settlement of $7.9 million of book overdrafts that were outstanding at January 28, 2012 and the payment of $6.0 million of non-contractual bonuses to certain executive officers for performance which were accrued at January 28, 2012.

Net cash provided by operating activities for fiscal 2011 was $46.7 million, an increase of $31.7 million compared to fiscal 2010. The increase in net cash provided by operating activities was primarily driven by an increase in operating income and the reclassification of $7.9 million in book overdrafts as accounts payable, due to the timing of bank settlement. The primary driver of the increase in our operating income is the addition of our new stores. During fiscal 2011, we added 50 stores and we expect to add approximately 50 stores in fiscal 2012, with the majority of new stores opening prior to the beginning of the fourth quarter. Further, we will pay $8.9 million of taxes payable and $6.0 million related to non-contractual bonuses to certain executive officers for performance which were accrued at January 28, 2012.

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Net cash provided by operating activities for fiscal 2010 was $15.0 million, an increase of $5.8 million compared to fiscal 2009. The increase was primarily driven by an increase in operating income and a decrease in payments on accounts payable due to the timing of vendor payments at fiscal 2010 year-end. The increase in operating income was primarily driven by the addition of 40 stores in fiscal 2010, with the majority of new stores opening prior to the beginning of the fourth quarter. Partially offsetting these increases were an increase in inventory purchases to support our growth.

Cash Used in Investing Activities

Net cash used in investing activities for the thirteen weeks ended April 28, 2012 was $4.8 million, an increase of $0.2 million compared to the thirteen weeks ended April 30, 2011 related solely to capital expenditures. The increase in capital expenditures was primarily for our new store construction and corporate infrastructure.

Net cash used in investing activities for fiscal 2011 was $18.6 million, an increase of $3.7 million compared to fiscal 2010 and related solely to capital expenditures. The increase in capital expenditures was primarily for corporate infrastructure and our distribution facility. We estimate capital expenditures in 2012 to be $15.0 million.

Net cash used in investing activities for fiscal 2010 was $14.9 million, an increase of $7.6 million compared to fiscal 2009 and related solely to capital expenditures. The increase in capital expenditures was primarily for our new store construction and distribution facility.

Cash (Used in) Provided by Financing Activities

Net cash provided by financing activities for the thirteen weeks ended April 28, 2012 was $1.7 million, an increase of $1.7 million compared to the thirteen weeks ended April 30, 2011. The increase in net cash provided by financing activities was primarily the result of $1.5 million of excess tax benefit related to restricted shares.

Net cash (used in) provided by financing activities for fiscal 2009, 2010 and 2011, was $(0.1) million, $(0.4) million and $1.0 million, respectively. Fiscal 2011 cash flows provided by financing activities was primarily the result of proceeds of $1.1 million from the issuance of common stock. Fiscal 2010 cash flows used in financing activities were primarily the result of dividends paid to our common shareholders of $192.4 million and the redemption of warrants of $10.2 million, partially offset by net proceeds from the issuance of shares of our preferred stock of $191.9 million, proceeds from the exercise and prepayment of warrants and options to purchase common stock of $6.9 million, and the related excess tax benefit of $3.2 million. The $192.4 million dividend, together with the $4.3 million classified as compensation expense, comprised the 2010 dividend. Fiscal 2009 cash flows used in financing activities were primarily the result of payments under capital lease agreements of $0.2 million, partially offset by proceeds from the exercise of warrants and options to purchase common stock of $0.1 million.

On May 16, 2012, we entered into a $100.0 million term loan facility with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders, which we refer to as the term loan facility. We used the net proceeds from the term loan facility and cash on hand to pay a dividend totaling approximately $99.5 million on all outstanding shares of our common stock and Series A 8% convertible preferred stock.

Financing Transactions

On May 16, 2012, we entered into a $100.0 million term loan facility with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders, which we refer to as the term loan facility. We used the net

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proceeds from the term loan facility and cash on hand to pay the 2012 Dividend totaling approximately $99.5 million on all outstanding shares of our common stock and Series A 8% convertible preferred stock. On the same day, we amended and restated our existing senior secured revolving credit facility with Wells Fargo Bank, National Association, which is described below under “—Line of Credit.” We refer to the term loan facility, the revolving credit facility, as amended and restated, and related transactions as the “Financing Transactions.”

The term loan facility provides for a term loan of $100.0 million and matures on the earlier of (i) May 16, 2015 and (ii) the date on which such facility is accelerated following the occurrence of an event of default; provided, that if no initial public offering occurs prior to May 16, 2013, the term loan facility shall mature on the earlier of (x) May 16, 2014 and (y) the date on which such facility is accelerated following the occurrence of an event of default. The term loan facility provides for interest on borrowings, at our option, at an alternate base rate which is the greater of (a) the administrative agent’s prime rate in effect on such day and (b) the federal funds effective rate in effect on such day plus 0.50% with a 2.00% floor, plus a margin of 3.25%, or a LIBOR-based rate with a 1.00% floor plus a margin of 4.25%; provided, that if no initial public offering occurs prior to May 16, 2013 and our consolidated net leverage ratio is greater than 2.00 to 1.00, the applicable margin for the alternate base rate shall be 4.75% and for the LIBOR-based rate shall be 5.75%.

The credit agreement for the term loan facility includes a financial covenant of a maximum consolidated net leverage ratio.

The credit agreement for the term loan facility also includes customary negative and affirmative covenants including, among others, limitations on our ability to: (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or other restricted payments; (vi) engage in mergers or consolidations; or (vii) change our business.

The term loan facility is subject to repayment upon our receipt of certain proceeds, including those from the sale of certain assets, insurance proceeds and indebtedness not otherwise permitted. The term loan facility is also subject to repayment of $50.0 million upon our receipt of proceeds from this offering.

Amounts under the credit agreement may become due upon certain events of default including, among others, failure to comply with the credit agreement’s covenants, bankruptcy, default on certain other indebtedness or a change in control. The default rate under the term loan facility is 2.00% per annum.

All obligations under the term loan facility are secured by substantially all of our assets.

As of May 23, 2012, we were in compliance with the financial covenant and other covenants applicable to us under the credit agreement.

Line of Credit

On August 18, 2006, we entered into a Loan and Security Agreement with Wachovia Bank National Association (predecessor in interest to Wells Fargo Bank, National Association) that included a revolving line of credit with advances tied to a borrowing base. The revolving credit facility was amended and restated on January 28, 2010 and later amended on October 14, 2010 and November 12, 2010. During fiscal year 2011, we had no borrowings under the revolving credit facility and we had approximately $20.0 million available on the line of credit for borrowings at January 28, 2012 based on the borrowing base. During fiscal year 2010, the maximum borrowings and weighted average interest rate under the revolving credit facility were $8.2 million and 4.85%, respectively, and interest expense was $53,267. During fiscal year 2009, we had no borrowings under the revolving credit facility.

The revolving credit facility was amended and restated again on May 16, 2012. The revolving credit facility allows maximum borrowings of $20.0 million and expires on the earliest to occur of (i) May 16, 2017, (ii) the

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date which is 45 days prior to the maturity date of the term loan facility or (iii) upon the occurrence of an event of default. The revolving credit facility may be increased to $30.0 million upon certain conditions. The revolving credit facility includes a $5.0 million sublimit for the issuance of letters of credit. The borrowing base is 90% of eligible credit card receivables plus 90% of the net recovery percentage of eligible inventory less established reserves.

The revolving credit facility provides for interest on borrowings, at our option, at (a) a prime rate plus a margin of (i) 0.75% if excess availability is greater than or equal to 75%, (ii) 1.0% if excess availability is less than 75% but greater than or equal to 33% or (iii) 1.25% if excess availability is less than 33% or (b) a LIBOR-based rate plus a margin of (i) 1.75% if excess availability is greater than or equal to 75%, (ii) 2.00% if excess availability is less than 75% but greater than or equal to 33% or (iii) 2.25% if excess availability is less than 33%. The revolving credit facility further provides for a letter of credit fee equal to the LIBOR-based rate plus (x) 1.75% if excess availability is greater than or equal to 75%, (y) 2.00% if excess availability is less 75% but greater than or equal to 33% or (z) 2.25% if excess availability is less than 33%. The revolving credit facility also contains an unused credit facility fee of 0.375% per annum and is subject to a servicing fee of $12,000 per year.

The Second Amended and Restated Loan and Security Agreement includes a covenant which requires us to maintain minimum excess collateral availability of no less than the greater of (i) 10% of the then effective maximum credit and (ii) $3.0 million.

The Second Amended and Restated Loan and Security Agreement also includes customary negative and affirmative covenants including, among others, limitations on our ability to (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or other restricted payments; (vi) engage in mergers or consolidations; or (vii) change our business.

Additionally, the revolving credit facility is subject to payment upon our receipt of certain proceeds, including those from the sale of certain assets and is subject to an increase in the interest rate on borrowings and the letter of credit fee of 2.0% upon an event of default. Amounts under the Second Amended and Restated Loan and Security Agreement may become due upon certain events of default including among others, failure to comply with the Second Amended and Restated Loan and Security Agreement’s covenants, bankruptcy, default on certain other indebtedness or a change in control.

All obligations under the revolving credit facility are secured by substantially all of our assets.

As of May 23, 2012, we were in compliance with the covenants applicable to us under the Loan and Security Agreement.

2010 Transaction

On October 14, 2010, Advent and Sargent Family Investment, LLC, a limited liability company controlled by Ronald Sargent, one of our board members, invested $192.9 million and $1.1 million, respectively, in Five Below in consideration for 88,785,489 and 506,284 shares of our Series A 8% convertible preferred stock, respectively, and, as a result of such investment, Advent acquired a majority interest in us. In connection with this transaction, all of our outstanding shares of preferred stock on October 13, 2010 were converted into shares of our common stock and all of our then outstanding options and warrants were exercised or exchanged for restricted or unrestricted shares of our common stock. We used the proceeds of this investment as well as cash on hand to pay a special dividend to the holders of our common stock on October 14, 2010. The aggregate amount of such dividend was approximately $196.7 million, or $4.58 per share. Please see “Certain Relationships and Related Party Transactions—Investment by Advent” for more discussion of this transaction.

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Critical Accounting Policies and Estimates

We have identified the policies below as critical to our business operations and understanding of our results of operations. The impact and any associated risks related to these policies on our business operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect our reported and expected financial results. Our financial statements, which have been prepared in accordance with US generally accepted accounting principles, require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. For a detailed discussion on the application of these and other accounting policies, See Note 1 in our annual financial statements included elsewhere in this prospectus.

Inventories

Inventories consist of finished goods purchased for resale, including freight, and are stated at the lower of cost or market value, at the individual product level. Cost is determined on a weighted average cost method which approximates a FIFO (first-in, first-out) basis. The market value used in the lower of cost or market analysis is subject to the effects of consumer demands, customer preferences and the broader economy. The effects of the previously listed criteria are not controllable by management. Our management reviews inventory levels in order to identify obsolete and slow-moving merchandise as these factors can indicate a decline in the market value of inventory on hand. Inventory cost is reduced when the selling price less costs of disposal is below cost. We accrue an estimate for inventory shrink for the period between the last physical count and the balance sheet date. The shrink estimate can be affected by changes in merchandise mix and changes in actual shrink trends. These estimates are derived using available data and our historical experience. Our estimates may be impacted by changes in certain underlying assumptions and may not be indicative of future activity.

Impairment of Long-Lived Assets

In accordance with Accounting Standards Codification (ASC) Topic 360, Property, Plant and Equipment, long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level of which there are identifiable cash flows, which is generally at a store level. Assets are reviewed for impairment using factors including, but not limited to, our future operating plans and projected cash flows. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is based on discounted future cash flows of the asset using a discount rate commensurate with the risk. In the event of a store closure, we will record an impairment charge, if appropriate, or accelerate depreciation over the revised useful life of the asset. Based on the analysis performed, our management believes that there was no impairment of long-lived assets for each of the 2009, 2010 and 2011 fiscal years. The impairment loss analysis requires management to apply judgment and make estimates.

Income Taxes

Income taxes are accounted for under the asset-and-liability method in accordance with ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize the effect of income tax

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positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists. In assessing the realizability of deferred tax assets, our management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Our management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of this statement, our stock-based compensation expense is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity grant). We recognize compensation expense based on the estimated grant date fair value using the Black-Scholes option-pricing model. The determination of the grant date fair value of options using an option-pricing model is affected by a number of assumptions, such as our estimated common stock fair value, our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends. As a result, if any of the inputs or assumptions used in the Black-Scholes model change significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously.

There are significant judgments and estimates inherent in the determination of fair value of stock-based awards. These judgments and estimates include determinations of an appropriate valuation method and the selection of appropriate inputs to be used in the valuation model. The use of alternative assumptions, including expected term, volatility, risk-free interest rate and dividend yield, could cause stock-based compensation to differ significantly from what has been recorded in the past. Future stock-based compensation cost will increase when we grant additional equity awards. Modifications, cancellations or repurchases of awards may require us to accelerate any remaining unearned stock-based compensation cost or incur additional cost.

Determination of the Fair Value of Common Stock on Grant Date.    We have been a private company with no active public market for our common stock. In connection with each grant of stock options, the fair value of the common stock underlying the stock options was determined by our board of directors, which intended all stock options granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those stock options on the date of grant. We have determined the estimated per share fair value of our common stock generally using a contemporaneous valuation consistent with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, or the Practice Aid. In conducting this valuation, we have considered all objective and subjective factors that we believed to be relevant, including our best estimate of our business condition, prospects and operating performance at the valuation date. Management, with the assistance of third-party valuation specialists engaged by us, used a range of factors, assumptions and methodologies to perform the valuation. The significant factors included:

• the fact that we are a private retail company with illiquid securities;

• our historical operating results;

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• our discounted future cash flows, based on our projected operating results;

• the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions;

• valuation of comparable public companies at the time of grant;

• the U.S. and global capital market conditions; and

• outlook for our industry at the time of grant.

After review of the fair value analysis, our board of directors authorized the use of at least that fair value as the value for restricted shares granted and the exercise price for options granted on the date of that valuation report.

Valuation Methodologies Used in Determining Fair Value.    To determine the estimated fair value of our common stock in relation to stock grants, we conducted valuation analyses with the assistance of third-party valuation specialists who have experience in the retail industry. The valuation analyses utilize a combination of methods, including an income approach, using an analysis of expected future discounted cash flows and a market approach for similar public companies, as well as our recent third-party transactions. The expected future discounted cash flows analysis identified a level of annual cash flows for a finite number of years and a residual value at the end of the projection period. A discount rate reflecting estimates of investor-required rates of return for similar investments was used to calculate the present value. The market approach used valuation multiples of comparable companies which were applied to our operating results to arrive at a value. The results of the methods were probability weighted to estimate an expected business enterprise value which was applied to our capital structure to determine a value per common share.

Contractual Obligations

The following table summarizes, as of January 28, 2012, our minimum rental commitments under operating lease agreements including assumed extensions, minimum payments for long-term debt and other obligations in future periods:

	Payments Due By Period
(In millions)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations(1)	$	268.0	$	30.6	$	66.1	$	62.0	$	109.3
Purchase obligations(2)		1.7		1.7		—		—		—
Notes payable		0.3		—		0.3		—		—
Total	$	270.0	$	32.3	$	66.4	$	62.0	$	109.3

(1) Our store leases generally have initial lease terms of 5-10 years and include renewal options on substantially the same terms and conditions as the original lease. Also included in operating leases is our corporate office and distribution center leases.

(2) Purchase obligations consist primarily of inventory purchase orders. Our inventory purchase orders are cancellable with limited or no recourse available to the vendor until the inventory is shipped to us.

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Since January 28, 2012, we have entered into 25 new fully executed retail leases with an average term of 10 years that increased our operating lease obligations to the following:

Less than 1 year	$	1.7
1-3 years		7.8
3-5 years		7.8
More than 5 years		22.5
Total	$	39.8

Off Balance Sheet Arrangements

As of and for the thirteen weeks ended April 28, 2012 and for the three fiscal years ended January 28, 2012, except for operating leases entered into in the normal course of business, we were not party to any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS). The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. generally accepted accounting principles, or U.S. GAAP, and international financial reporting standards, or IFRS, and change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. ASU No. 2011-04 is effective during interim and annual periods beginning after December 15, 2011. The adoption of the new requirements of ASU No. 2011-04 did not have an impact on our financial position or results of operations.

JOBS Act

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act, enacted on April 5, 2012. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation. However, we do not intend to take advantage of any the exemptions available to “emerging growth companies.”

Under the JOBS Act, we will remain an “emerging growth company” until the earliest of:

• the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more;

• the last day of the fiscal year following the fifth anniversary of the completion of this offering;

• the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and

• the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, or the Exchange Act. We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates as of the last day of our most recently completed second fiscal quarter, (ii) been a public company for at least 12 months and (iii) filed at least one annual report with the SEC. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

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The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we are choosing to opt out of that extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our principal market risk relates to interest rate sensitivity, which is the risk that future changes in interest rates will reduce our net income or net assets. We have a Loan and Security Agreement which includes a revolving line of credit with advances tied to a borrowing base and which bears interest at a variable rate. Because our revolving credit facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates. As of January 28, 2012, we had no outstanding borrowings under our revolving credit facility, nor did we have any borrowings during fiscal year 2011. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial. We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future.

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BUSINESS

Our Company

Five Below is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the aspirational teen and pre-teen customer. We offer a dynamic, edited assortment of exciting products, all priced at $5 and below, including select brands and licensed merchandise across a number of our category worlds: Style, Room, Sports, Media, Crafts, Party, Candy and Seasonal (which we refer to as “Now”). We believe we are transforming the shopping experience of our target demographic with a unique merchandising strategy and high-energy retail concept that our customers consider fun and exciting. Based on management’s experience and industry knowledge, we believe our compelling value proposition and the dynamic nature of our merchandise offering has fostered universal appeal to teens and pre-teens, as well as customers across a variety of age groups beyond our target demographic.

Five Below was founded in 2002 by our Executive Chairman, David Schlessinger, and our President and Chief Executive Officer, Thomas Vellios, who recognized a market need for a fun and affordable shopping destination aimed at our target customer. We opened the first Five Below store in the greater Philadelphia area in 2002 and, since then, have been expanding contiguously across the eastern half of the U.S. As of April 28, 2012, we operated a total of 199 locations across 17 states. Our stores average approximately 7,500 square feet and are typically located within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets. We plan to open approximately 50 stores in 2012, and we believe we have the opportunity to grow our store base to more than 2,000 locations over approximately 20 years.

We believe our business model has resulted in strong financial performance irrespective of the economic environment:

• We have achieved positive comparable store sales during each of the last 24 fiscal quarters.

• For the thirteen weeks ended April 28, 2012, our comparable store sales increased by 10.4%. For the same period in the prior year, our comparable store sales increased by 7.6%. Our net sales for the thirteen weeks ended April 28, 2012 were $71.8 million, an increase of 51.5%, from $47.4 million for the thirteen weeks ended April 30, 2011. Our operating income (loss) was $(2.0) million for the thirteen weeks ended April 28, 2012 compared to $1.7 million for the thirteen weeks ended April 30, 2011.

• Our comparable store sales increased by 12.1% in fiscal 2009, 15.6% in fiscal 2010 and 7.9% in fiscal 2011 with positive comparable store sales performance across all geographic regions and store-year classes.

• Over the past two fiscal years, we expanded our store base from 102 stores to 192 stores, representing a compound annual growth rate of 37.2%.

• Between fiscal 2009 and 2011, our net sales increased from $125.1 million to $297.1 million, representing a 54.1% compound annual growth rate.

• Over the same period, our operating income increased from $6.9 million to $26.2 million, representing a compound annual growth rate of 95.3%.

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Our Competitive Strengths

We believe the following strengths differentiate Five Below from competitors and are the key drivers of our success:

• Unique Focus on the Teen and Pre-Teen Customer.    We target an attractive customer segment of teens and pre-teens with trend-right merchandise at a differentiated price point of $5 and below. We have built our concept to appeal to this customer base, which we believe to be economically influential and resilient based on our industry knowledge and experience, as well as their parents and others who shop for them. Our brand concept, merchandising strategy and store ambience work in concert to create an upbeat and vibrant retail experience that is designed to appeal to our target audience, drive traffic to our stores and keep our customers engaged throughout their visits. We monitor trends in the ever-changing teen and pre-teen markets and are able to quickly identify and respond to trends that become mainstream. Our price points enable aspiring teens and pre-teens to shop independently, often using their own money to make frequent purchases of items geared primarily to them and to exercise self-expression through their independent retail purchases.

• Broad Assortment of Trend-Right, High-Quality Merchandise with Universal Appeal.    We deliver an edited assortment of trend-right as well as everyday products within each of our category worlds that changes frequently to create a sense of anticipation and freshness, which we believe provides excitement for our customers. We have a broad range of vendors, most of which are domestically-based, which enables us to shorten response lead times, maximizes our speed to market and equips us to make more informed buying decisions. Our unique approach encourages frequent customer visits and limits the cyclical fluctuations experienced by many other specialty retailers. The breadth, depth and quality of our product mix and the diversity of our category worlds attract shoppers across a broad range of age and socio-economic demographics.

• Exceptional Value Proposition for Customers.    We believe we offer a clear value proposition to our customers. Our price points of $5 and below resonate both with our target demographic and also with other value-oriented customers. We are able to deliver on this value proposition through sourcing products in a manner that is designed to achieve low cost, fast response and high item velocity and sell-through. We maintain a dynamic and collaborative relationship with our vendor partners that provides us with favorable access to quality merchandise at attractive prices. We also employ an opportunistic buying strategy, capitalizing on select excess inventory opportunities with our vendors. This unique and flexible sourcing strategy allows us to offer high-quality products at exceptional value across all of our category worlds.

• Differentiated Shopping Experience.    We believe we have created a unique and engaging in-store atmosphere that customers find fun and exciting. While we refresh our products frequently, we maintain a consistent floor layout, designed with an easy-to-navigate racetrack flow and featuring sight-lines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing trend-right music throughout the shopping day. We employ novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our products, and convey our value pricing. We have developed a unique culture that emanates from our employees, many of whom frequently shop at Five Below, to our customers, thereby driving a higher level of connectivity and engagement. Additionally, we believe our price points of $5 and below, coupled with our dynamic merchandising approach, create an element of discovery, driving repeat visits and customer engagement while insulating us against e-commerce cannibalization trends.

• Powerful and Consistent Store Economics.    We have a proven store model that generates strong cash flow, consistent store-level financial results and high level return on investment. Our stores have been successful in varying geographic regions, population densities and real estate settings. Each of our stores was profitable on a four-wall basis in fiscal 2011 and our new stores have achieved average

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payback periods of less than one year. We believe our robust store model, reinforced by our rigorous site selection process and in-store execution, drives the strength and consistency of our comparable store sales financial results across all geographic regions and store-year classes.

• Highly Experienced and Passionate Senior Management Team with Proven Track Record.    Since our inception, our co-founders, David Schlessinger and Thomas Vellios, who have approximately 65 combined years of retail experience, have set the vision and strategic direction for Five Below. Messrs. Schlessinger and Vellios have assembled a talented senior management team averaging 24 years of retail experience across a broad range of disciplines, including merchandising, real estate, finance, store operations, supply chain management and information technology. Our management team drives our operating philosophy, which is based on a relentless focus on providing high-quality merchandise at exceptional value and a superior shopping experience utilizing a disciplined, low-cost operating and sourcing structure. We believe our management team is integral to our success and has positioned us well for long-term growth.

Growth Strategy

We believe we can grow our net sales and earnings by executing on the following strategies:

• Grow Our Store Base.    We believe there is significant opportunity to expand our store base in the U.S. from 199 locations as of April 28, 2012 to more than 2,000 locations within the U.S. over approximately 20 years, based on our experience and supported by research conducted for us by The Buxton Company, a customer analytics research firm. Based upon our strategy of store densification in existing markets and expanding into adjacent states and markets, we expect most of our near-term growth will occur within our existing markets as well as contiguous new markets. This strategy allows us to benefit from enhanced brand awareness and achieve operational efficiencies. We opened 50 net new stores in fiscal 2011 and plan to open approximately 50 in fiscal 2012 and approximately 60 in fiscal 2013. Our stores average approximately 7,500 square feet and are primarily inline locations within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets. We have a talented and disciplined real estate management team and a rigorous real estate site selection process. We analyze the demographics of the surrounding trade areas, the performance of adjacent retailers as well as traffic and specific site characteristics and other variables. As of April 28, 2012, we have executed lease agreements for the opening of 50 stores in fiscal 2012.

• Drive Comparable Store Sales.    We expect to continue generating positive comparable store sales growth by continuing to hone and refine our dynamic merchandising offering and differentiated in-store shopping experience. We intend to increase our brand awareness through cost-effective marketing efforts and enthusiastic customer engagement. We believe that executing on these strategies will increase the size and frequency of purchases by our existing customers and attract new customers to our stores.

• Increase Brand Awareness.    We have a cost-effective marketing strategy designed to drive store traffic and promote brand awareness. Our strategy includes the use of newspaper circulars, local media and grassroots marketing to support existing and new market entries. We believe we have an opportunity to leverage our growing social media presence to drive brand excitement and increased store visits within existing and new markets. We believe our online platform is an extension of our brand and retail stores, serving as a marketing and informational tool for us. This platform allows us to continue to build brand awareness and expand our customer base.

• Enhance Operating Margins.    We believe we have further opportunities to drive margin improvement over time. A primary driver of our expected margin expansion will come from leveraging our cost structure as we continue to increase our store base and drive our average net sales per store. We intend to capitalize on opportunities across our supply chain as we grow our business and achieve further economies of scale.

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Our Market Opportunity

As a result of our unique merchandise offering and value proposition, we believe we have effectively tapped the teen and pre-teen markets. According to the U.S. Census Bureau, there were over 63 million people in the U.S. between the ages of 5 and 19, which represented over 20% of the U.S. population as of April 1, 2010. Based on managements’s experience and industry knowledge, we believe that this segment of the population has a significant amount of disposable income as the vast majority of this age group’s basic needs are already met. According to EPM Communications, Inc., a publishing, research and consulting firm, teens and pre-teens between the ages of 8 and 19 were projected to spend over $250 billion in the U.S. in 2011.

Our Merchandise

Strategy

We offer a dynamic, edited assortment of trend-right, high-quality products, all priced at $5 or below, including select brands and licensed merchandise, targeted at the teen and pre-teen customer. We believe we are transforming the shopping experience of our target demographic with a unique merchandising strategy and high-energy retail concept that our customers consider fun and exciting. Based on management’s experience and industry knowledge, our compelling value proposition and the dynamic nature of our merchandise offering has fostered universal appeal to customers across a variety of age groups beyond our target demographic.

Our typical store features in excess of 4,000 stock-keeping units, or SKUs, across a number of our category worlds including Style, Room, Sports, Media, Crafts, Party, Candy and Seasonal. We focus our merchandising strategy on maintaining core categories within our stores, but aim to generate high item velocity and sell-through to keep our assortment fresh and drive repeat visits. We monitor trends in our target demographic market, historical sales trends of current and prior products and the success of new product launches to ensure that our merchandise is relevant for our customers. We have a highly planned merchandise strategy focused on trend-right and everyday products supplemented by selected opportunistic purchases from our vendors to drive traffic and therefore offer our customers a consistently exciting shopping experience.

We believe we offer a compelling value proposition to our customers across all of our core product categories. The common element of our dynamic merchandise selection is the consistent delivery of exceptional value to the consumer, with all products offered at or below the $5 price point. Pricing all items at $5 or below enables us to provide an extensive range of exciting products, while maintaining the attraction of a value retailer. Many of the products we sell can also be found in mall specialty stores, department stores, mass merchandisers and drug stores; however, we offer all of these products in an exciting and easy to shop retail environment at price points of $5 and below.

Product Mix

We organize the merchandise in our stores into the following category worlds:

• Style:    Consists primarily of accessories such as novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories and “attitude” t-shirts. Our beauty offering includes products such as nail polish, lip gloss, fragrance and branded cosmetics.

• Room:    Consists of items used to complete and personalize our customer’s living space, including glitter lamps, posters, frames, fleece blankets, pillows, candles, incense and related items. We also offer storage options for the customer’s room and locker.

• Sports:    Consists of an assortment of sport balls, team sports merchandise and fitness accessories, including hand weights, jump ropes and gym balls. We also offer a variety of games, including name brand board games, puzzles, toys and plush items. In the summer season, our sports offering also includes pool, beach and outdoor toys, games and accessories.

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• Media:    Consists of a selection of accessories for PCs, cell phones, MP3 players and tablet computers. The offering includes cases, chargers, headphones and other related items. We also carry a range of media products including books, video games and DVDs.

• Crafts:    We offer an assortment of craft activity kits, as well as arts and crafts supplies such as crayons, markers and stickers. We also offer trend-right items for school such as backpacks, fashion notebooks and journals, novelty pens and pencils, as well as everyday name brand items.

• Party:    Consists of party goods, decorations and greeting cards, as well as everyday and special occasion merchandise.

• Candy:    Consists of branded items that appeal to teens and pre-teens. This category includes an assortment of classic and novelty candy bars and movie-size box candy as well as gum and snack food. We also sell chilled drinks via coolers.

• Seasonal:    Consists of seasonally-specific items used to celebrate and decorate for events such as Christmas, Easter, Halloween and St. Patrick’s Day. These products are most often placed at the front of the store.

Set forth below is data for the following groups of products – leisure, fashion and home, and party and snack. The percentage of net sales represented by each product group for each of the last three fiscal years was as follows:

Sales by Product Group	Percentage of Sales
	2011			2010			2009
Leisure		50.5	%		50.5	%		51.7	%
Fashion and home		33.0			33.1			31.7
Party and snack		16.5			16.4			16.6
Total		100	%		100	%		100	%

Leisure includes items such as sporting goods, games, toys, media, books, electronic accessories, and arts and crafts.

Fashion and home includes items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options.

Party and snack includes items such as party and seasonal goods, greeting cards, candy and other snacks, and beverages.

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Our Stores

As of April 28, 2012, we operated 199 stores throughout the eastern half of the U.S. In fiscal 2011, our average store size was approximately 7,500 square feet. Our stores are primarily located in power, community and lifestyle shopping centers; only approximately 5% of our stores are located in malls. The following map shows the number of stores in each of the states in which we operated as of April 28, 2012.

Store Design and Layout

We present our products in a unique and engaging in-store atmosphere. We maintain a consistent floor layout designed with an easy-to-navigate racetrack flow and featuring sight-lines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day. We employ novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our products and convey our value pricing. In addition to traditional perimeter and gondola shelving, racks and tables, we utilize innovative approaches such as wheelbarrows, barrels and bins strategically placed throughout our stores. These techniques foster customer interaction with products, supporting the strong relationship we strive to develop with our customers and enhance our upbeat and vibrant shopping environment.

Each of our category worlds is strategically located within our stores in an effort to enhance the customer’s shopping experience. For example, seasonal offerings are located in the front of the store with the goal of catching customers’ attention and being “top of mind,” and specially featured value “wow” items and other key items are positioned along the center aisle. Impulse items and “dollar value” tables surround the checkout areas to capture add-on purchases.

Expansion Opportunities and Site Selection

Our unique focus on the teen and pre-teen customer is supported by our real estate strategy to locate stores in high visibility locations. We seek to operate stores in high-visibility, high traffic retail venues, which reinforce our brand message, heighten brand awareness and drive customer traffic.

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Our strategy is to saturate markets with clusters of stores because of the considerable benefit that stores derive from market concentration. Our store model is profitable across a variety of urban, suburban and semi-rural markets and in multiple real estate venues including power, community and lifestyle shopping centers. Our retail concept works well with a large and varied group of national co-tenants that drive customer traffic.

We select store sites for new store openings based upon certain criteria including minimum population density requirements, availability of attractive lease terms, sufficient space and strong positioning within a center. Members of our real estate team spend considerable time evaluating prospective sites before bringing a proposal to our real estate committee. Our real estate committee, which is composed of senior management including our executive officers, approves all of our locations before a lease is signed.

We believe there is a significant opportunity to expand our store base in the U.S. In fiscal 2011, we opened 50 net new stores, and in fiscal 2012, we intend to open approximately 50 new stores through expansion in existing markets and by entering new markets. We maintain a pipeline of real estate sites that have been approved by our real estate committee and have executed 50 leases through April 28, 2012 for new stores in fiscal 2012. Our recent store growth is summarized in the following table:

Period	Stores at Start of Period		Stores Opened		Stores Closed		Net Store Increase		Stores at End of Period
Fiscal 2009		82		20		—		20		102
Fiscal 2010		102		40		—		40		142
Fiscal 2011		142		51		1		50		192

During the thirteen weeks ended April 28, 2012, seven additional stores were opened and zero stores closed, bringing the total number of stores open as of April 28, 2012 to 199.

Opening stores within existing markets enables Five Below to benefit from enhanced brand awareness and to achieve advertising, operating and distribution efficiencies. Our targeted new store openings include additional locations in existing markets as well as expansion into adjacent states and markets. In existing markets, we use a store densification strategy that promotes brand awareness and leverages marketing, operating and distribution costs. When entering new markets we employ a store clustering strategy, opening multiple stores in a single market on the same day, enabling us to leverage marketing and pre-opening expenses.

Our store growth is supported by our new store economics, which we believe to be compelling. Our new store model assumes an average store size of approximately 7,500 square feet that achieves sales of approximately $1.5 million to $1.6 million in the first full year of operation, which is in line with the average net sales per store of our existing store base over the last two years, and an average new store cash investment of approximately $300,000, including our store buildout (net of tenant allowances), inventory and cash pre-opening expenses. Our new store model targets an average payback period of less than one year on our initial investment.

Store Management, Culture and Training

Each of our stores is managed by a general manager and one or two assistant managers who oversee full-time and part-time team members within each store. Each general manager is responsible for the day-to-day operations of his or her store, including the unit’s operating results, maintaining a clean and appealing store environment and the hiring, training and development of personnel. We also employ district managers, who are responsible for overseeing the operations of 10 to 15 stores, on average.

We are guided by a philosophy that recognizes strong sales performance and customer service, allowing us to identify and reward team members who meet our high performance standards. Store managers and assistant managers participate in a rewarding bonus incentive program based on exceeding planned levels of sales and are paid on a monthly basis. We also recognize individual performance through internal promotions and provide extensive opportunities for advancement.

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Our employees are critical to achieving our goals, and we strive to hire talented employees with high energy levels and motivation. We have well-established store operating policies and procedures and an in-store training program for new store managers, assistant managers and staff. In addition, we have a dedicated group of training and new store opening managers who are focused on ensuring a consistent new store opening process and who leverage their extensive experience and knowledge of the Five Below culture to train new store managers. Our customer service and store procedure training programs are designed to enable associates to assist customers in a friendly manner and to help to create a positive sales-driven environment and culture as well as teach successful operating practices and procedures.

Merchandise Sourcing and Distribution

We have developed a disciplined approach to buying and a dynamic inventory planning and allocation process to support our merchandising strategy.

Merchandising

Our merchandising team consists of two general merchandise managers, who report directly to our Chief Executive Officer, supported by an approximate 30-member merchandising team. Our merchandising team works directly with our central planning and allocation group to ensure a consistent delivery of products across our store base. Each of our general merchandise managers has over 20 years of experience within the retail sector.

Sourcing

We believe we have strong sourcing capabilities developed through a dynamic and collaborative relationship with our vendor partners that provides us with favorable access to quality merchandise at attractive prices. We regularly purchase core merchandise in accordance with our key categories. We also employ an opportunistic buying strategy, capitalizing on selected excess inventory opportunities, to purchase complementary merchandise based on consumer trends, product availability and favorable economic terms.

We work with approximately 700 active vendors, with no single vendor representing more than 8% of our purchases in fiscal 2011. We source approximately 90% of our purchases from domestic vendors. We typically have no long-term supply agreements or exclusive arrangements with our vendors and our top 20 vendors represent approximately 35% of total goods purchased in fiscal 2011.

Distribution

We distribute over 85% of the merchandise sold by us from our 421,000 square foot distribution center in New Castle, Delaware with the remaining merchandise shipped directly from the vendor to our stores. We realize cost savings by working with our vendors to streamline and reduce packaging to diminish shipping costs.

We generally ship merchandise from our distribution center to our stores between two and four times a week, depending on the season and the volume of a specific store. We use contract carriers to ship merchandise to our stores.

We are in the process of finalizing alternatives for a new distribution center, which we expect to open during fiscal 2013, to support our growth. From time to time, we augment our distribution facilities with third party warehousing.

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Marketing and Advertising

Our cost-effective marketing strategy is designed to drive store traffic and increase brand awareness with our target demographic, as well as other value-oriented customers. Our strategy includes the use of newspaper circulars focused during peak selling seasons that highlight our brand and exceptional value proposition as well as local media and grassroots marketing to support existing and new market entries. Additionally, we rely on the strong visibility and the presence of our store locations, email messaging and community and school marketing to promote and further our brand image and drive traffic.

Our marketing team works with our merchandising team to develop novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our products and convey our value pricing.

For new store openings, we seek to create community awareness and consumer excitement through a mix of print advertising, public relations and radio promoting the grand opening and by creating an on-site grand opening event that includes free drinks and signature “Five Cent” hot dogs. We also aim to target multiple store openings in a given new market on the same day in order to leverage marketing efforts to produce maximum impact.

In addition to our marketing and public relations efforts described above, we also maintain a website (www.fivebelow.com) and, over the last year, our online following has grown substantially. We use both our website and social networking sites to highlight our value proposition, store locations, employment opportunities, featured products and grand openings.

Competition

We compete with a broad range of retailers including discount, mass merchandise, grocery, drug, convenience, variety and other specialty stores. Many of these retail companies operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts.

The principal basis upon which we compete is by offering a dynamic, edited assortment of exciting products, all priced at $5 or below and including select brands and licensed merchandise, targeted at the teen and pre-teen customer. We believe we are transforming the shopping experience of our target demographic with a unique merchandising strategy and high-energy retail concept that our customers consider fun and exciting. Our success also depends in substantial part on our ability to respond quickly to trends so that we can meet the changing demands of our customers. We believe that we compare favorably relative to many of our competitors based on our merchandising strategy, edited product assortment targeted at teens and pre-teens, store environment, flexible real estate strategy and company culture. Nonetheless, certain of our competitors have greater financial, distribution, marketing and other resources than we do.

Trademarks and Other Intellectual Property

We own several trademarks that have been registered with the U.S. Patent and Trademark Office, including Five Below^® and Five Below Hot Stuff. Cool Prices^®. We also own domain names, including www.fivebelow.com, and unregistered copyrights in our website content. We attempt to obtain registration of our trademarks whenever practicable and pursue any infringement of those marks.

Management Information Systems

Our management information systems provide a full range of business process assistance and timely information to support our merchandising strategy, warehouse management, stores and operating and financial

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teams. We believe our current systems provide us with operational efficiencies, scalability, management control and timely reporting that allow us to identify and respond to merchandising and operating trends in our business. We use a combination of internal and external resources to support store point-of-sale, merchandise planning and buying, inventory management, financial reporting, real estate and administrative functions. We believe that our information systems have the capacity to accommodate our growth plans.

Government Regulation

We are subject to labor and employment laws, laws governing advertising, privacy laws, safety regulations and other laws, including consumer protection regulations that regulate retailers and/or govern the promotion and sale of merchandise and the operation of stores and warehouse facilities. We monitor changes in these laws and believe that we are in material compliance with applicable laws.

Insurance

We maintain third-party insurance for a number of risk management activities including workers’ compensation, general liability, property and employee-related health care benefits. We evaluate our insurance requirements on an ongoing basis to ensure we maintain adequate levels of coverage.

Employees

As of April 28, 2012, we employed approximately 630 full-time and 2,330 part-time personnel. Of our total employees, approximately 110 were based at our corporate headquarters in Philadelphia, Pennsylvania, approximately 110 were based at our distribution center in New Castle, Delaware and approximately 2,740 were store employees. The number of part-time associates fluctuates depending on seasonal needs. We consider our relationship with our employees to be very good. None of our employees belong to a union or are party to any collective bargaining or similar agreement.

Properties

We do not own any real property. Our corporate headquarters are located in Philadelphia, Pennsylvania and are leased under a lease agreement expiring in 2022, with options to renew for two successive five-year periods. Our 421,000 square foot distribution center is located in New Castle, Delaware and is leased under a lease agreement expiring in 2016 with options to renew for two successive five-year periods. We plan to open a second distribution center in the southern U.S. in 2013. As of April 28, 2012, there were 199 Five Below store locations in 17 states. All of our stores are leased from third parties and the leases typically have five to ten year terms with one or more five-year renewal options, and many provide us with the option to terminate early under specified conditions. In addition to future minimum lease payments, some of our store leases provide for additional rental payments based on a percentage of net sales if sales at the respective stores exceed specified levels, as well as the payment of common area maintenance charges, real property insurance and real estate taxes. Many of our lease agreements have defined escalating rent provisions over the initial term and any extensions.

Legal Proceedings

We are subject to various legal proceedings and claims which arise in the ordinary course of our business. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or on our results of operations.

Corporate Information

Five Below was incorporated in Pennsylvania in January 2002 under the name of Cheap Holdings, Inc. We changed our name to Five Below, Inc. in July 2002.

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MANAGEMENT

Executive Officers, Key Employees and Directors

The following table sets forth information concerning our current executive officers, key employees and directors.

Name	Age		Position/Title
David Schlessinger		57	Executive Chairman, Director
Thomas G. Vellios		57	President and Chief Executive Officer, Director
Kenneth R. Bull		49	Chief Financial Officer, Secretary and Treasurer
Jeffrey D. Moore		45	General Merchandise Manager
Eugene F. Rosadino		52	Senior Vice President, Supply Chain
Lisa Surella		49	General Merchandise Manager
Steven J. Collins		43	Director
Andrew W. Crawford		33	Director
David M. Mussafer		48	Director
Howard D. Ross		60	Director
Thomas M. Ryan		59	Director
Ronald L. Sargent		56	Director

Our directors have been selected pursuant to the terms of a shareholders agreement described more fully below. The terms of the shareholders agreement related to the election of directors will terminate upon the closing of the offering.

Executive Officers

David Schlessinger.    Mr. Schlessinger is the co-founder of Five Below and has served as our Executive Chairman since February 2005. Mr. Schlessinger previously served as our President from 2002 to 2005. Mr. Schlessinger has been a director of Five Below since our incorporation in 2002. Previously, Mr. Schlessinger founded Zany Brainy, Inc., a retail children’s educational products company, in 1991 and served as Zany Brainy’s Chief Executive Officer until 1996 and as its Chairman until 1998. He also founded Encore Books, a retail bookstore chain, in 1973 and served as its Chairman and Chief Executive Officer until 1986. Mr. Schlessinger previously served as a director of Destination Maternity Corporation. Mr. Schlessinger’s extensive experience in the management, operations and finance of a retail business as well as his knowledge of our company as a founder has led to the conclusion that he should serve as a director of Five Below.

Thomas G. Vellios.    Mr. Vellios is the co-founder of Five Below and has served as our President and Chief Executive Officer since 2005. Mr. Vellios has been a director of Five Below since our incorporation in 2002. Previously, Mr. Vellios served as President, Chief Executive Officer and a director of Zany Brainy, Inc. Prior to joining Zany Brainy, Mr. Vellios served as Senior Vice President, General Merchandise Manager at Caldor, a regional discount chain and a division of the May Company. Mr. Vellios currently serves as a director of Hot Topic, Inc. Mr. Vellios’ extensive experience in the retail industry, his experience with the management, operations and finance of a retail business, and his knowledge of our company as a founder has led to the conclusion that he should serve as a director of Five Below.

Kenneth R. Bull.    Mr. Bull joined Five Below as Senior Vice President, Finance in 2005 and was later appointed as our Secretary and Treasurer. In 2012, he was promoted to Chief Financial Officer. Previously, Mr. Bull was the Finance Director and Treasurer for Urban Outfitters, Inc., a specialty lifestyle merchandising retailer, from 1999 to 2003, and the Vice President, Finance and Controller for Asian American Partners d/b/a Eagle’s Eye, a wholesaler and retailer of women’s and children’s better apparel from 1991 to 1999.

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Key Employees

Jeffrey D. Moore.    Mr. Moore joined Five Below in 2007 as General Merchandise Manager. Prior to joining Five Below, Mr. Moore was Senior Vice President and General Merchandise Manager with David’s Bridal, a bridal retailer, from 2002 to 2007. Prior to David’s Bridal, he was Senior Vice President and General Merchandise Manager at The Bon-Ton Department Stores, a retail store chain, from 1998 to 2002.

Eugene F. Rosadino.    Mr. Rosadino joined Five Below in 2008 as Senior Vice President, Supply Chain. Prior to joining Five Below, he was Vice President, Supply Chain with Blue Tulip, Inc., a card and gift retail store, from 2005 to 2008. Prior to joining Blue Tulip, Mr. Rosadino held the roles of Chief Operating Officer with 4R Systems, an inventory management consulting firm, and Executive Vice President of inventory management with Zany Brainy, Inc.

Lisa Surella.    Ms. Surella joined Five Below in 2012 as General Merchandise Manager. Prior to joining Five Below, she was the Vice President and Divisional Merchandise Manager, Ladies Apparel with Wal-Mart Stores, Inc., a discount retailer, from 2009 to 2012. Prior to Wal-Mart, she was Senior Vice President and General Merchandise Manager at Lord & Taylor, a specialty-retail department store chain, from 1999 to 2009.

Non-Employee Directors

Steven J. Collins.    Mr. Collins has served as a director since 2010. Mr. Collins, a Managing Director of Advent International, which he joined in 1995, currently serves as a director of Party City Holdings, Inc., Kirkland’s, Inc. and several privately held businesses, including Charlotte Russe Holding, Inc., and previously served as a director of lululemon athletica inc. Mr. Collins’ experience serving as a director of public and private companies and his affiliation with Advent International, whose Series A 8% convertible preferred stock holdings entitle it to elect up to five directors (prior to the closing of this offering as described under “—Board Composition”), led to the conclusion that he should serve as a director of Five Below.

Andrew W. Crawford.    Mr. Crawford has served as a director since 2010. Mr. Crawford is a Principal with Advent International, which he joined in 2003 as an associate and rejoined as a Principal in 2008, following business school. Mr. Crawford currently serves as a director of privately held businesses, including Charlotte Russe Holding, Inc. Mr. Crawford’s experience in private equity fund management, his financial expertise and his affiliation with Advent International, led to the conclusion that he should serve as a director of Five Below.

David M. Mussafer.    Mr. Mussafer has served as a director since 2010. Mr. Mussafer, a Managing Partner of Advent International, which he joined in 1990, currently serves as a director of Party City Holdings, Inc., Vantiv, Inc. and Charlotte Russe Holding Inc. and previously served as a director of lululemon athletica inc. and a number of privately held businesses. Mr. Mussafer’s experience serving as a director of public and private businesses and his affiliation with Advent International, led to the conclusion that he should serve as a director of Five Below.

Howard D. Ross.    Mr. Ross has served as a director since 2005. Mr. Ross, a co-founder of LLR Partners Inc., which manages private equity funds, currently serves as a director of several privately held businesses. Prior to the formation of LLR Partners in 1999, Mr. Ross was a partner in Arthur Andersen LLP, an accounting firm. Mr. Ross’ background in accounting and private equity fund management, his financial expertise and roles on several boards of directors led to the conclusion that he should serve as a director of Five Below.

Thomas M. Ryan.    Mr. Ryan has served as a director since 2011. In 2011, Mr. Ryan became an operating partner of Advent International as a part of its Operating Partner Program. Prior to joining our board of directors, Mr. Ryan served as the Chairman of the board of directors, President and Chief Executive Officer of CVS Caremark Corporation, a retail pharmacy and healthcare corporation, until he retired in 2011. Mr. Ryan became

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the Chief Executive Officer of CVS Corporation in 1998 and he also served as the Chairman of the board of directors of CVS Corporation from 1999 to 2007. In 2007, Mr. Ryan again became the chairman of CVS Caremark Corporation’s board of directors. Mr. Ryan currently serves as a director of Yum! Brands, Inc. and Vantiv, Inc. and previously served as a director of Bank of America Corporation. Mr. Ryan’s experience in the retail industry, as both an executive officer and director of a large retail company, led to the conclusion that he should serve as a director of Five Below.

Ronald L. Sargent.    Mr. Sargent has served as a director since 2004. Mr. Sargent has served as the Chief Executive Officer of Staples, Inc., an office supply company, since 2002 and as Chairman of its board of directors since 2005. Prior to becoming Chairman and Chief Executive Officer, Mr. Sargent held a variety of executive positions at Staples, Inc. since joining the company in 1989. Mr. Sargent currently serves as a director of The Kroger Co. and The Home Depot, Inc. Mr. Sargent’s experience as an executive officer and director of Staples, Inc. as well as his extensive experience in the retail industry led to the conclusion that he should serve as a director of Five Below.

In addition to the information presented above regarding each director’s specific experiences, qualifications, attributes and skills, we believe that all of our directors have a reputation for integrity and adherence to high ethical standards. Each of our directors has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to us and our board. Finally, we value our directors’ experience on other company boards and board committees.

Our executive officers are appointed by our board of directors and serve until their successors have been duly appointed and qualified or their earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

Board Composition

Our business and affairs are managed under the direction of our board of directors, which currently consists of eight members. Upon the closing of this offering, our amended and restated articles of incorporation and amended bylaws will provide that our board of directors will consist of a number of directors, not less than three nor more than eleven, to be fixed exclusively by resolution of the board of directors.

As of the closing of this offering, our amended and restated articles of incorporation will provide for a staggered, or classified, board of directors consisting of three classes of directors, each serving staggered three-year terms, as follows:

• the Class I directors will be Messrs. Ross and Sargent, and their terms will expire at the annual general meeting of shareholders to be held in 2013;

• the Class II directors will be Messrs. Collins, Crawford and Ryan, and their terms will expire at the annual general meeting of shareholders to be held in 2014; and

• the Class III directors will be Messrs. Mussafer, Schlessinger and Vellios, and their terms will expire at the annual general meeting of shareholders to be held in 2015.

Upon expiration of the term of a class of directors, directors for that class will be elected for a three-year term at the annual meeting of shareholders in the year in which that term expires. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation, retirement, disqualification or removal. Any vacancies on our board of directors will be filled only by the affirmative vote of a majority of the directors then in office. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The classification of our board of directors will make it more difficult for a third party to acquire control of us.

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Our shareholders agreement has provided that the holders of our capital stock must agree to vote their shares in favor of the election to our board of directors of five individuals designated by holders of our Series A 8% convertible preferred stock and three individuals designated by holders of our common stock. Messrs. Collins, Crawford, Mussafer, Ross and Ryan are the designees of holders of our Series A 8% convertible preferred stock and Messrs. Sargent, Schlessinger and Vellios are the designees of holders of our common stock. The shareholders agreement, and all of the rights and obligations of our shareholders under the agreement, will be terminated upon the closing of this offering. See “Certain Relationships and Related Party Transactions—Second Amended and Restated Shareholders Agreement.”

Director Independence and Controlled Company Status

Upon the closing of this offering, Advent will continue to own a majority interest in us and we will be a “controlled company” under the rules of The NASDAQ Stock Market LLC. We do not intend to avail ourselves of any of the “controlled company” exemptions under the corporate governance rules of The NASDAQ Stock Market LLC. As such, our board of directors will observe all applicable criteria for independence established by The NASDAQ Stock Market LLC and other governing laws and applicable regulations. No director will be deemed to be independent unless our board of directors determines that the director has no relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Messrs. Collins, Crawford, Mussafer, Ross, Ryan and Sargent are independent as defined under the corporate governance rules of The NASDAQ Stock Market LLC. Of these six independent directors, our board has determined that: (i) Messrs. Ross, Ryan and Sargent, who will comprise our audit committee; (ii) Messrs. Collins, Crawford and Ryan, who will comprise our compensation committee; and (iii) Messrs. Crawford, Mussafer and Sargent, who will comprise our nominating and corporate governance committee, each satisfy the independence standards for those committees established by the applicable rules and regulations of the SEC and The NASDAQ Stock Market LLC.

Board Leadership Structure and Board’s Role in Risk Oversight

Our board of directors has no policy with respect to the separation of the offices of Chief Executive Officer and Chairman of the board of directors. It is the board of directors’ view that rather than having a rigid policy, the board of directors, with the advice and assistance of the nominating and corporate governance committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Currently, our leadership structure separates the offices of Chief Executive Officer and Chairman of the board of directors with Mr. Vellios serving as our Chief Executive Officer and Mr. Schlessinger as Executive Chairman of the board. We believe this is appropriate as it provides Mr. Vellios with the ability to focus on our day-to-day operations while allowing Mr. Schlessinger to lead our board of directors in its fundamental role of providing advice to, and oversight of management. In addition, as Executive Chairman, Mr. Schlessinger remains involved in key matters affecting our business and in implementing our growth strategy.

Our board of directors plays an active role in overseeing management of our risks. Our board of directors regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. Effective upon the closing of this offering, our compensation committee will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Effective upon closing of this offering, our audit committee will oversee management of financial risks. Effective upon the closing of this offering, our nominating and corporate governance committee will be responsible for managing risks associated with the independence of the board of directors. While each committee will be responsible for evaluating certain risks and overseeing the management of such risks, our full board of directors plans to keep itself regularly informed regarding such risks through committee reports and otherwise.

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Committees of the Board of Directors

Our board of directors has established, or will establish prior to the closing of this offering, an audit committee, a compensation committee and a nominating and corporate governance committee. Each committee will operate under a charter that will be approved by our board of directors and will be available on our website, www.fivebelow.com, under the “                            ” section, upon the effective date of this offering.

Audit Committee

Our audit committee oversees our corporate accounting and financial reporting process. The audit committee has the following responsibilities, among others things, as set forth in the audit committee charter that will be effective upon the closing of this offering:

• selecting and hiring our independent registered public accounting firm and approving the audit and non-audit services to be performed by our independent registered public accounting firm;

• evaluating the qualifications, performance and independence of our independent registered public accounting firm;

• monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

• reviewing the adequacy and effectiveness of our internal control policies and procedures;

• overseeing management of financial risks;

• preparing the audit committee report required by the SEC to be included in our annual proxy statement;

• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing with management and the independent registered public accounting firm our interim and year-end operating results;

• approving related party transactions; and

• reviewing whistleblower complaints relating to accounting, internal accounting controls or auditing matters and overseeing the investigations conducted in connection with such complaints.

Our audit committee currently consists of Messrs. Collins, Crawford, Ross and Sargent. Upon the closing of this offering, our audit committee will be composed of Messrs. Ross, Ryan and Sargent. Mr. Ross will serve as the chairperson of the audit committee. All of the members of the audit committee are independent for purposes of serving on the audit committee and meet the requirements for financial literacy under the applicable rules and regulations of the SEC and The NASDAQ Stock Market LLC. Our board has determined that Mr. Ross is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication defined under the applicable rules of The NASDAQ Stock Market LLC. See “—Director Independence.”

Compensation Committee

Our compensation committee reviews and recommends policies relating to compensation and benefits of our officers and employees. The compensation committee has the following responsibilities, among other things, as set forth in the compensation committee’s charter that will be effective upon the closing of this offering:

• reviewing and approving compensation of our executive officers, including annual base salary, annual incentive bonuses, specific goals, equity compensation, employment agreements, severance and change-in-control arrangements and any other benefits, compensation or arrangements;

• reviewing and recommending the terms of employment agreements with our executive officers;

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• reviewing succession planning for our executive officers;

• reviewing and recommending compensation goals, bonus and stock-based compensation criteria for our employees;

• reviewing and recommending the appropriate structure and amount of compensation for our directors;

• overseeing the management of risks relating to our executive compensation plans and arrangements;

• reviewing and discussing annually with management our “Compensation Discussion and Analysis” required by SEC rules;

• preparing the compensation committee report required by the SEC to be included in our annual proxy statement; and

• administering, reviewing and making recommendations with respect to our equity compensation plans.

Our compensation committee currently consists of Messrs. Collins, Mussafer, Ross and Sargent. Upon the closing of this offering, our compensation committee will be composed of Messrs. Collins, Crawford and Ryan. Mr. Collins will serve as the chairperson of the compensation committee. All of the members of the compensation committee are determined to be independent under applicable rules and regulations of the SEC and The NASDAQ Stock Market LLC. See “—Director Independence.”

Nominating and Corporate Governance Committee

The nominating and corporate governance committee is responsible for making recommendations regarding candidates for directorships and the size and composition of our board. Among other matters, the nominating and corporate governance committee is responsible for the following as set forth in their charter that will be effective upon the closing of this offering:

• assisting our board of directors in identifying prospective director nominees and recommending nominees for each annual meeting of shareholders to our board of directors;

• reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our board of directors;

• managing risks associated with the independence of the board of directors;

• evaluating and determining the size and composition of the board of directors;

• overseeing the evaluation of our board of directors and management; and

• recommending members for each board committee of our board of directors.

Messrs. Crawford, Mussafer and Sargent have been elected to serve on our nominating and corporate governance committee upon the closing of this offering. Mr. Mussafer will serve as the chairperson of the nominating and corporate governance committee. All of the members of the nominating and corporate governance committee are determined to be independent under applicable rules and regulations of the SEC and The NASDAQ Stock Market LLC. See “—Director Independence.”

Director Compensation

In fiscal 2011, our directors did not receive compensation for their service as directors. After this offering, each of our non-employee directors who is not affiliated with either Advent or LLR Equity Partners will be paid:

• an annual cash retainer of $40,000;

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• an additional retainer of $15,000 for the audit committee chair and the compensation committee chair and $10,000 for the nominating and corporate governance committee chair; and

• an annual equity grant of $60,000 of restricted stock or restricted stock units.

Each director will have the option to receive some or all of his cash retainer in the form of equity grants. Directors will not receive a fee for attending meetings, but they will be entitled to reimbursement of travel expenses relating to their service.

Compensation Committee Interlocks and Insider Participation

Messrs. Ross and Sargent served as members of the compensation committee throughout fiscal 2011. On May 25, 2011, the board of directors also appointed Messrs. Collins and Mussafer to be members of the compensation committee. Each of Messrs. Ross, Sargent, Collins and Mussafer has relationships with us that require disclosure under Item 404 of Regulation S-K under the Exchange Act. See “Certain Relationships and Related Party Transactions” for more information.

None of these individuals was at any time during fiscal 2011 an officer or an employee of Five Below. In addition, none of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

Code of Business Conduct and Ethics

Upon the closing of this offering, we will adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Once it is adopted, the code of business conduct and ethics will be available on our website at www.fivebelow.com. Disclosure regarding any amendments to the code, or any waivers of its requirements, will be included in a current report on Form 8-K within four business days following the date of the amendment or waiver, unless posting such information on our website will then satisfy the rules of The NASDAQ Stock Market LLC.

Corporate Governance Guidelines

Our board of directors will adopt corporate governance guidelines that serve as a flexible framework within which our board of directors and its committees operate. These guidelines will cover a number of areas including the size and composition of the board, board membership criteria and director qualifications, director responsibilities, board agenda, roles of the Chairman of the board and Chief Executive Officer, meetings of independent directors, committee responsibilities and assignments, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance guidelines will be available on our website at www.fivebelow.com.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

This compensation discussion and analysis provides an overview of our executive compensation program together with a description of the material factors underlying the decisions that resulted in the compensation provided with respect to the fiscal year that ended on January 28, 2012 to our principal executive officer, our principal financial officer and our other most highly compensated executive officer in 2011. These individuals are referred to collectively as the Named Executive Officers.

The following table identifies the Named Executive Officers, as well as the positions held by such individuals during fiscal year 2011:

Name	Position on January 28, 2012
David Schlessinger	Executive Chairman and Founder
Thomas G. Vellios	President, Chief Executive Officer and Founder
Kenneth R. Bull	Senior Vice President, Finance, Secretary and Treasurer

Overview

Our compensation philosophy for our Named Executive Officers has been driven by the need to recruit, develop, motivate and retain top talent both in the short-term and long-term, to create long-term value for the shareholders and to align each Named Executive Officer’s interests with those of our shareholders.

Other factors affecting compensation are:

• Our annual performance;

• Impact of the employee’s performance on our results;

• Our objective to incentivize attainment of our performance goals by providing compensation that can exceed competitive levels upon attainment of such goals; and

• Internal equity and external market competitiveness.

Elements of Our Executive Compensation and Benefits Programs

Consistent with the philosophy that compensation to the Named Executive Officers should be aligned closely with our short and long-term financial performance, a portion of executive compensation is “at risk” and is tied to the completion of certain continued service thresholds with us and/or the attainment of certain financial goals. However, we believe that it is prudent to provide competitive base salaries and other benefits to attract and retain the appropriate management talent in order to achieve our strategic objectives. Accordingly, we provide compensation to our Named Executive Officers through a combination of the following:

• Base salary;

• Annual cash incentives;

• Long-term equity incentives; and

• Retirement (401(k) Plan), health and welfare benefits and limited perquisites.

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Purpose and Philosophy

We follow several principles in the development and administration of the above four main elements of our executive compensation program. In establishing executive compensation, we believe that:

• Our executive compensation programs are aligned with and support the strategic direction of our business;

• We design compensation levels to reflect the level of accountability and future potential of each executive and the achievement of outstanding individual results;

• Our compensation programs link executive compensation to personal creation and maintenance of our long-term equity value (i.e., we pay for improving our overall performance);

• As an executive’s level of responsibility increases, the proportion of compensation “at risk” may increase; however, executive compensation programs should not encourage excessive or unnecessary risks; and

• The design and administration of our compensation programs will reflect best practices to be financially efficient, affordable and legally compliant.

Role of the Compensation Committee

As described in more detail under “Management—Committees of the Board of Directors—Compensation Committee,” the compensation committee operates under a written charter, which sets forth the roles and responsibilities of the compensation committee regarding executive compensation.

Upon the closing of the offering, Messrs. Collins, Crawford and Ryan will be appointed to the compensation committee, all of whom will be independent under the rules and regulations of the SEC and The NASDAQ Stock Market LLC.

Role of Executives in Establishing Compensation

Our board of directors has delegated administration of our executive compensation program to the compensation committee. Our Chief Executive Officer and our Executive Chairman provide recommendations regarding the design of our compensation programs to the compensation committee for all Named Executive Officers, excluding themselves. Upon the compensation committee’s approval, the execution of the elements of the executive compensation programs is the responsibility of the Chief Financial Officer and/or his delegees.

In fiscal year 2011, both our Chief Executive Officer and our Executive Chairman attended each of our compensation committee meetings, but were not present during executive sessions when matters related to them were discussed.

Compensation Consultant, Peer Group Comparison & Benchmarking

Neither we nor the compensation committee currently has any contractual relationships with any compensation consultants. The compensation committee has not utilized any benchmarking in designing or setting executive compensation during the time that we were privately held. From time to time, the compensation committee has worked internally to ascertain best practices in the design of our executive compensation programs. The compensation committee has generally been focused on incentivizing and rewarding internal results and has not generally engaged in any peer group or market review in the design of our executive compensation programs.

Relative Size of Major Compensation Elements

The combination of base salary, annual cash incentives and long-term equity incentives comprises total direct compensation. In setting executive compensation, the compensation committee considers the aggregate

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compensation payable to a Named Executive Officer and the form of that compensation. The compensation committee seeks to achieve the appropriate balance between immediate cash rewards and long-term financial incentives for the achievement of both annual and long-term financial and non-financial objectives.

The compensation committee may decide, as appropriate, to modify the mix of base salary, annual cash incentives, long-term equity incentives and retirement/perquisites to best fit a Named Executive Officer’s specific circumstances. For example, the compensation committee may make the decision to award more cash and not award an equity grant. This provides more flexibility to the compensation committee to reward executive officers appropriately as they near retirement, when they may only be able to partially fulfill the vesting required for equity options. The compensation committee may also increase the amount of equity option grants to an executive officer if the total number of career equity option grants does not adequately reflect the executive’s current position with us or if an above-market compensation package is necessary to attract and retain critical talent. The compensation committee will generally determine to set or adjust the types of compensatory incentive either upon hire of a Named Executive Officer or prior to the commencement of a fiscal year, as appropriate. However, the compensation committee reserves the right to adjust compensatory items during the course of a fiscal year to respond to changes in our performance or as may be needed to retain key personnel. Additionally, the compensation committee may decide to make equity grants, as appropriate, throughout the fiscal year, which may increase the executive’s allocation of compensation toward long-term equity incentives in any given fiscal year.

Base Salary

We provide Named Executive Officers with base salaries to compensate them for services rendered during the year. The compensation committee believes that competitive salaries must be paid in order to attract and retain high quality executives. The compensation committee annually reviews base salary for executive officers and makes adjustments only when necessary based on the executive’s and our performance.

In reviewing the performance of Messrs. Schlessinger and Vellios in fiscal year 2011, the compensation committee determined that the performance of these executives exceeded their respective base salaries. Accordingly, the compensation committee decided to (a) increase Mr. Schlessinger’s annual base salary from $400,000 to $600,000 and (b) increase Mr. Vellios’ annual base salary from $600,000 to $700,000, in each case, effective retroactively as of January 30, 2011. These base salary increases were given retroactive effect because the compensation committee determined that these executives had undertaken extraordinary efforts to support our substantial growth both in size and in sales. Accordingly, the compensation committee believed that such increases and the retroactive effectiveness of such increases were both appropriate and earned. Based on these increases, it is the current intention of the compensation committee that the base salaries of each of Messrs. Schlessinger and Vellios would remain at such levels until at least 2014 (although the compensation committee reserves the right to modify such salaries if the performance of either executive so warrants). Accordingly, each executive’s employment letter agreement was amended as of September 28, 2011 to reflect these base salary increases and to provide that annual review of the base salary of Messrs. Schlessinger and Vellios would not be required to occur again until fiscal year 2014. We refer to these amendments as the Employment Letter Amendments.

In reviewing the performance of Mr. Bull in fiscal year 2011, the compensation committee determined that his performance exceeded his base salary. Accordingly, based upon the compensation committee’s evaluation of his performance, the compensation committee decided to increase Mr. Bull’s annual base salary from $275,000 to $325,000, from $257,269 to $275,000, and from $249,776 to $257,269 effective as of April 1, 2012, September 11, 2011, and March 27, 2011 respectively. The compensation committee also determined that a base salary of $325,000 was appropriate base compensation for a principal financial officer of a company of our size and type.

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Annual Incentive Compensation

We provide cash incentive awards to Named Executive Officers for achieving and exceeding our annual financial goals, which are guided by a plan term sheet, but are otherwise discretionary based on the subjective determination of the compensation committee. The compensation committee does review the recommendations of our Chief Executive Officer and our Executive Chairman, but makes its own determinations on all items of executive compensation. Such subjective determinations will be made based upon numerous factors, including but not limited to, individual performance, contributions to our profitability and growth in size and sales, management of other individuals and ability to lead others to achieve successful individual performances. Awards under our bonus program are designed to motivate and compensate executives for the achievement of our annual business objectives. Our performance goals are generally tied to financial performance measures as determined and approved by the compensation committee; however, in determining final annual bonuses the compensation committee retains full discretion to adjust any such bonuses.

In May 2011, the compensation committee approved our general performance goals and award schedule for fiscal 2011, based on our fiscal 2011 budget. The compensation committee chose to provide bonuses based on the attainment of certain levels of Adjusted EBITDA. The compensation committee determined to use these targets because attainment of Adjusted EBITDA objectives was deemed crucial for our growth and continued profitability. Accordingly, the compensation committee wanted to utilize our incentive compensation program to promote these goals. Pursuant to the general parameters of our bonus program the compensation committee retained the full discretion to increase or decrease awards and no executive, at the time the fiscal 2011 program was established, had a contractual right to be paid any specific bonus regardless of performance. However, on September 28, 2011, pursuant to the Employment Letter Amendments, Messrs. Schlessinger and Vellios received a contractual right to be paid an annual bonus of 40% of such executive’s base salary, if we achieved Adjusted EBITDA of $40.1 million (determined after subtracting all incentive payments made under our incentive compensation program) or 50% of such executive’s base salary, if we achieved Adjusted EBITDA of $42.6 million (determined after subtracting all incentive payments made under our incentive compensation program), in each case, during fiscal 2011.

Based on the general parameters of the annual incentive program, Mr. Bull’s annual target bonus was 20% of his base salary, if we achieved Adjusted EBITDA of $41.2 million with a maximum bonus of 25% of his base salary, if we achieved Adjusted EBITDA of $43.9 million, in each case, during fiscal year 2011. For the purpose of Mr. Bull’s bonus, Adjusted EBITDA was calculated before all incentive payments under our incentive compensation program were made.

On March 19, 2012, the compensation committee reviewed the performance of Messrs. Schlessinger and Vellios in 2011 and determined that based on our substantial growth both in size and in sales, payment of their contractual bonuses would not appropriately recognize such outstanding performance. In this regard, the compensation committee subjectively concluded that the extraordinary contributions and leadership of Messrs. Schlessinger and Vellios were integral to our significant success over such time. Accordingly, the compensation committee exercised its discretion to authorize bonuses in excess of those potentially payable and granted each executive a discretionary, one-time bonus of $3.0 million. At the time of these payments, the compensation committee retained the discretion to authorize cash bonuses in excess of those potentially payable under an annual incentive plan term sheet. Effective as of the closing of this offering, cash bonuses will generally be based on the attainment of certain pre-established performance criteria under an annual performance bonus plan, as described more fully under “—Five Below, Inc. Performance Bonus Plan.” Notwithstanding the foregoing, the compensation committee will retain discretion to offer discretionary bonuses to our Named Executive Officers as our performance, retention concerns and other business needs may dictate.

On April 12, 2012, the compensation committee reviewed our individual incentive bonus program results for fiscal year 2011 performance and determined that because we had incurred certain expenses of a character that had not been contemplated at the time our budgeted fiscal 2011 Adjusted EBITDA was established, it would be equitable to further adjust the Adjusted EBITDA we earned in fiscal 2011 for purposes of measuring

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achievement by our executive officers of their bonus targets. These expenses included consulting fees and the retroactive salary increases for Messrs. Schlessinger and Vellios. After giving effect to such additional adjustments, the compensation committee concluded that we achieved Adjusted EBITDA (as further adjusted as described above) of $44.0 million. With respect to Mr. Bull, the compensation committee awarded Mr. Bull his maximum incentive bonus of 25% of his base salary due to our Adjusted EBITDA (as further adjusted as described above) exceeding $43.9 million.

Bonus performance targets or potential bonus payouts for fiscal 2012 have not yet been determined.

Long-term Equity Incentive Compensation

Equity awards are a vital piece of our total compensation package and are designed to support our long-term strategy, provide a mechanism to attract and retain talent and to create a commonality of interest between management and our shareholders. Awards under the Five Below, Inc. Equity Incentive Plan, or the Equity Incentive Plan, are intended to compensate Named Executive Officers for sustained long-term performance that is aligned with shareholder interests and to encourage retention through vesting schedules. Long term equity incentive awards may take a variety of forms, such as stock options and restricted stock grants. Levels and frequency of awards are determined by the compensation committee. Such awards are designed to reflect a recipient’s level of responsibility and performance.

While initial hire and promotion grants are targeted to be at competitive levels, actual award values will reflect our actual long-term performance (through stock price appreciation and achievement of long-term performance goals). Service-based restricted stock awards can also be granted as appropriate to recognize performance and provide ownership and/or retention focus. Long term incentives have the capacity to be the largest component of executive compensation, if our performance and stock price exceed our expectations.

No awards were made to either Messrs. Schlessinger or Vellios in fiscal year 2011. In fiscal 2011, the compensation committee made two grants of non-qualified stock options to Mr. Bull. Accordingly, Mr. Bull was awarded 25,000 non-qualified stock options with an exercise price of $2.18 per share on May 25, 2011 and 75,000 non-qualified stock options with an exercise price of $2.41 per share on October 18, 2011, respectively. Each grant was made under the Equity Incentive Plan and the exercise price of each grant was based on the fair market value of our stock on the date of grant.

The compensation committee awarded the May 2011 grant because of our financial performance over fiscal year 2010, as well as Mr. Bull’s performance over such time. Specifically, the compensation committee took into account our profitability and sales increases during fiscal year 2010, and Mr. Bull’s individual performance including his leadership and oversight of the finance team, and completion of particular company-wide initiatives such as cost control. The October 2011 grant was part of a broad-based grant made to many of our employees in connection with the Advent transaction to continue to incentivize our employees after the company’s change in control. In general, 50% each of Mr. Bull’s stock options vest and become exercisable two years after grant. The remaining 50% of each of the stock options vest in equal 6.25% increments, every 90 days thereafter, during the third and fourth year after grant. All vesting events are generally contingent upon continuous employment through the applicable vesting date. Additionally, the compensation committee determined that the vesting component of the awards provided additional retention incentives so that we would be more likely to retain Mr. Bull’s services.

Please see “Employee Benefit Plans” below and the discussion of “Five Below, Inc. Amended and Restated Equity Incentive Plan” for a more complete summary of this plan.

Retirement, Health and Welfare Benefits and Other Perquisites

Our Named Executive Officers are entitled to participate in all of our employee benefit plans, including medical, dental, vision, group life and disability insurance and the Five Below 401(k) Retirement Savings Plan. We provide vacation and paid holidays to our Named Executive Officers. Generally, our Named Executive Officers participate in these plans and programs on the same or similar basis as are offered to our other senior employees.

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In addition, in connection with the 2010 Transaction, Messrs. Schlessinger and Vellios incurred legal expenses with respect to their employment agreements and other compensation arrangements. Pursuant to the terms of each executive’s employment agreement, we were obligated to reimburse for these attorney fees. We also made a gross-up payment to each of the executives to cover their respective taxes on income attributable to such reimbursement. As a result, Messrs. Schlessinger and Vellios were paid $48,062 and $47,084, respectively, on April 29, 2011. See the Summary Compensation Table for details regarding the value of perquisites received by our executive officers. The compensation committee does not intend to continue offering “gross ups” in the future, unless warranted by extraordinary circumstances.

Executive Compensation Decisions Occurring after the End of Fiscal Year 2011

On March 1, 2012, the compensation committee made a grant of non-qualified stock options to Mr. Bull because of our fiscal year 2011 financial review, which included our and Mr. Bull’s individual performance over such time. Accordingly, Mr. Bull was awarded 50,000 non-qualified stock options with an exercise price of $3.88 per share. The grant was made under the equity incentive plan and the exercise price was based on the fair market value of our stock on the date of grant.

On March 22, 2012, the compensation committee cancelled options to purchase 2,919,973 shares of common stock made to each of Messrs. Schlessinger and Vellios in exchange for an award of 2,919,973 shares of common stock (of which 1,946,648 were restricted and 973,325 were unrestricted as of the grant date). In general, the forfeiture restrictions applicable to the restricted shares will lapse as to 973,324 shares on each of March 22, 2013 and March 22, 2014, subject to such executive’s continued employment with us as of those dates, as more fully described below in the section entitled “—Option Cancellation Agreements.” The compensation committee had decided that the prior option grants did not appropriately recognize the efforts of Messrs. Schlessinger and Vellios in greatly expanding our sales and profitability, and accelerating our growth. Accordingly, to appropriately recognize those efforts and to further incentivize each of these executives to continue their efforts on behalf of us, the compensation committee granted these shares of restricted stock to each of Messrs. Schlessinger and Vellios. In addition, the compensation committee determined that this stock grant more appropriately aligned Messrs. Schlessinger’s and Vellios’ incentives with the interests of our shareholders.

Additionally, effective April 1, 2012, the compensation committee increased Mr. Bull’s annual base salary to $325,000 in connection with his promotion to the position of Chief Financial Officer. Additionally, the compensation committee approved an increase in Mr. Bull’s severance benefits upon his termination by us without cause from three months to six months of base salary and health benefits continuation. The compensation committee believed that such changes were warranted due to Mr. Bull’s enhanced responsibility and his performance.

Employment Agreements

We have entered into employment letter agreements with each of Messrs. Schlessinger and Vellios. Additionally, effective as of April 16, 2012, we entered into an employment agreement with Mr. Bull. These agreements are further described below in the “Employment Agreements” section. Additionally, the benefits potentially payable under these agreements are more fully described below in the section entitled “—Potential Payments Upon Termination or Change of Control.”

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Executive Compensation

The following table shows the annual compensation paid to or earned by the executive officers for the fiscal year ended January 28, 2012:

Summary Compensation Table

Name & Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)(2)		All Other Compensation ($)(3)		Total ($)
David Schlessinger		2011		600,000		3,000,000		—		—		48,062		3,648,062
Executive Chairman and Founder
Thomas G. Vellios		2011		700,000		3,000,000		—		—		47,554		3,747,554
President, Chief Executive Officer and Founder
Kenneth R. Bull		2011		262,956		68,750		—		121,542		470		453,718
Senior Vice President, Finance, Secretary and Treasurer(1)

(1) On April 12, 2012, Mr. Bull was named Chief Financial Officer.

(2) The amounts in this column, computed in accordance with current Financial Accounting Standard Board guidance for accounting for and reporting of stock-based compensation, represent the aggregate grant-date fair value of each option award. Further detail surrounding the shares awarded, the method of valuation and the assumptions made are set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section under “Critical Accounting Policies and Estimates.” The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the option is exercised. Therefore, there is no assurance the value realized will be at or near the value estimated by the Black-Scholes option pricing model.

(3) The following table itemizes the components of the “All Other Compensation” column:

Name	Reimbursement of Legal Fees and Related Income Taxes ($)	Imputed Income from Long Term Disability Coverage ($)	Total ($)
David Schlessinger	48,062	—	48,062
Thomas G. Vellios	47,084	470	47,554
Kenneth R. Bull	—	470	470

Grants of Plan-Based Awards

The following table shows all grants of awards in fiscal year 2011 to each of the executive officers named in the Summary Compensation Table:

			Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards $/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(1)
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold ($)		Target ($)		Maximum ($)
David Schlessinger		—		—		—		—		—		—		—		—		—		—		—
Thomas G. Vellios		—		—		—		—		—		—		—		—		—		—		—
Kenneth R. Bull(2)		5/25/2011		—		—		—		—		—		—		—		25,000		2.18		27,418
		10/18/2011		—		—		—		—		—		—		—		75,000		2.41		94,125

(1) The amounts in this column, computed in accordance with current Financial Accounting Standard Board guidance for accounting for and reporting of stock-based compensation, represent the aggregate grant-date fair value of each option award. Further detail surrounding the shares awarded, the method of valuation and the assumptions made are set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section under “Critical Accounting Policies and Estimates.” The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the option is exercised. Therefore, there is no assurance the value realized will be at or near the value estimated by the Black-Scholes option pricing model.

(2) These stock options vest upon the following time-based schedule: 50% of the stock options vest and become exercisable on the second anniversary of the grant date and 6.25% every 90 days thereafter.

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Outstanding Equity Awards at Year End Fiscal 2011

The following table details information concerning unexercised stock options, stock options that have not vested and stock awards that have not vested for each of the executive officers named in the Summary Compensation Table as of January 28, 2012:

Name	Option Awards												Stock Awards
	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) (Unexercisable)			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date ($)		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value Unearned of Shares, Units or Other Rights That Have Not Vested ($)
David Schlessinger		456,246	(1)		1,003,740	(1)		—		2.18		10/14/2020		—			—			—		—
		—			1,459,987	(2)		—		2.18		10/14/2020		—			—			—		—
Thomas G. Vellios		456,246	(1)		1,003,740	(1)		—		2.18		10/14/2020		—			—			—		—
		—			1,459,987	(2)		—		2.18		10/14/2020		—			—			—		—
Kenneth R. Bull		—			25,000	(3)		—		2.18		5/25/2021		—			—			—		—
		—			75,000	(3)		—		2.41		10/18/2021		—			—			—		—
		—			—			—		—		—		3,750	(4)		10,575	(5)		—		—
		—			—			—		—		—		6,250	(4)		17,625	(5)		—		—
		—			—			—		—		—		30,000	(4)		84,600	(5)		—		—

(1) These stock options vest upon the following time-based schedule: 25% of the stock options vest and become exercisable on October 14, 2011 and 6.25% of the stock options vest and become exercisable every January 14, April 14, July 14 and October 14 thereafter, commencing on January 14, 2012 and ending on October 14, 2014. Please note that pursuant to the Option Cancellation Agreements, these options were canceled on March 22, 2012.

(2) These stock options vest upon the following performance-based schedule: 33.3%, 33.3% and 33.3% of the stock options vest and become exercisable on the date that (i) the “Purchasers” (as defined in the applicable Investment Agreement dated September 1, 2010) receive proceeds equal to 2.0, 2.5 and 3.0 times the amount of their investment in us, respectively or (ii) the applicable “IRR” interest rate (as defined in the applicable option award agreement) for the Purchasers is greater than or equal to 30%, 40% or 50%, respectively. Notwithstanding the above, these stock options also vest upon the nine month anniversary of an initial public offering, provided that certain of our market cap targets are met and that the individual is still employed on such date. Please note that pursuant to the Option Cancellation Agreements, these options were canceled on March 22, 2012.

(3) These stock options vest upon the following time-based schedule: 50% of the stock options vest and become exercisable on the second anniversary of the grant date and 6.25% of the stock options vest and become exercisable every 90 days thereafter.

(4) These shares are subject to a repurchase option exercisable by us in the event of an employment resignation or termination of employment prior to vesting.

(5) This value uses the most recent independent valuation of $2.82 on November 22, 2011.

Option Exercises and Stock Vested

During fiscal year 2011, Messrs. Schlessinger and Vellios did not exercise any previously issued stock options nor did such individuals vest in any of our stock awards. However, Mr. Bull vested in tranches of 15,000 and 13,750 shares of our stock.

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting			Value Realized on Vesting ($)
David Schlessinger		—		—		—			—
Thomas Vellios		—		—		—			—
Kenneth Bull		— —		— —		15,000 13,750	(1)  (2)		42,300 38,775	(3)  (3)

(1) These shares of restricted stock vested as follows: 3,750 shares on each of April 2, 2011, July 2, 2011, October 2, 2011 and January 2, 2012, respectively.

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(2) These shares of restricted stock vested as follows: 10,000 shares on March 29, 2011 and 1,250 shares on each of June 29, 2011, September 29, 2011 and December 29, 2011, respectively.

(3) This determination uses the most recent independent valuation of $2.82 on November 22, 2011.

Potential Payments Upon Termination or Change of Control

Termination Prior to a Change of Control—Mr. Schlessinger

If we terminate Mr. Schlessinger’s employment without “cause” or Mr. Schlessinger terminates his employment for “good reason” (as such terms are defined below), in either case, prior to a “Change of Control Transaction” (as such term is defined below), Mr. Schlessinger will be entitled to receive:

• severance payments, equal to the greater of: (i) $400,000 or (ii) the greater of (x) base salary in effect on the date of termination or resignation or (y) unless Mr. Schlessinger approved a reduction in his annual base salary, such higher annual base salary in effect prior to termination or resignation, such amount under (i) or (ii), as applicable paid in monthly installments for a period of 12 months;

• monthly payments equal to continued health and dental benefits for a period of up to 18 months, extended an additional 6 months following the expiration of such 18-month period if Mr. Schlessinger was still eligible to receive continued COBRA coverage as of the end of such 18-month period, which we refer to as the Medical Payments; and

• monthly payments equal to a full tax gross up for federal, state and local income taxes based upon highest marginal tax rates solely with respect to each Medical Payment, which we refer to as the Medical Gross Up.

Termination Following a Change of Control—Mr. Schlessinger

If we terminate Mr. Schlessinger’s employment without cause or Mr. Schlessinger terminates his employment for good reason, in either case, after a Change of Control Transaction, Mr. Schlessinger will be entitled to receive:

• severance payments, equal to the greater of: (i) $800,000 or (ii) the greater of (x) base salary in effect on the date of termination or resignation or (y) unless Mr. Schlessinger approved a reduction in his annual base salary, such higher annual base salary in effect prior to termination or resignation, such amount under (i) or (ii), as applicable paid in monthly installments for a period of 24 months;

• the Medical Payments; and

• the Medical Gross Up.

Termination Prior to a Change of Control—Mr. Vellios

If we terminate Mr. Vellios’ employment without “cause” or Mr. Vellios terminates his employment for “good reason” (as such terms are defined below), in either case, prior to a “Change of Control Transaction” (as such term is defined below), Mr. Vellios will be entitled to receive:

• severance payments, equal to the greater of: (i) base salary in effect on the date of termination or resignation or (ii) unless Mr. Vellios approved a reduction in annual base salary, such higher annual base salary in effect prior to termination or resignation, such amount under (i) or (ii), as applicable paid in monthly installments for a period of 12 months;

• the Medical Payment; and

• the Medical Gross Up.

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Termination Following a Change of Control—Mr. Vellios

If we terminate Mr. Vellios’ employment without cause or Mr. Vellios terminates his employment for good reason, in either case, after a Change of Control Transaction, Mr. Vellios will be entitled to receive:

• severance payments, equal to the greater of: (i) base salary in effect on the date of termination or resignation or (ii) unless Mr. Vellios approved a reduction in annual base salary, such higher annual base salary in effect prior to termination or resignation, such amount under (i) or (ii), as applicable paid in monthly installments for a period of 24 months;

• the Medical Payment; and

• the Medical Gross Up.

Pursuant to Messrs. Schlessinger’s and Vellios’ Employment Letter Agreements, “cause” is defined as one of the following:

• the executive’s conviction of (or the entry of a plea of guilty or nolo contendere to) a crime that prevents the executive from effectively managing us or that has a material adverse effect on our reputation or business activities;

• the executive’s gross negligence, dishonesty, misappropriation of funds or other willful misconduct in the course of employment that has a material adverse effect on our reputation or business activities; or

• the executive’s substance abuse, including abuse of alcohol or use of controlled drugs (other than in accordance with a physician’s prescription).

“Good reason” is defined as one of the following:

• a material adverse change in the executive’s title, authority, responsibilities or duties;

• a reduction or other material adverse change in the executive’s base salary or benefits;

• a requirement that the executive report to anyone other than our board of directors;

• a relocation of the executive’s principal offices by more than 25 miles; or

• any other willful action or inaction by us that constitutes a material breach of the applicable Employment Letter Agreement.

However, no event described above will constitute “good reason” unless (i) the executive provides written notice of the event within the 60-day period following its occurrence and (ii) we fail to cure such event within 30 days after receipt of his notice.

A “Change of Control Transaction” is deemed to have occurred if:

• any person or group acquires (in one or more transactions) beneficial ownership of our stock possessing 50% or more of the total power to vote for the election of our board of directors;

• a majority of the members of our board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of our board of directors prior to the date of the appointment or election;

• a merger or consolidation with another corporation where our shareholders immediately prior to such transaction will not beneficially own stock possessing 50% or more of the total power to vote for the election of the surviving corporation’s board of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote) immediately after such transaction;

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• any person or group acquires all or substantially all of our assets;

• we complete a full liquidation or dissolution; or

• our shareholders accept a share exchange, whereby shareholders immediately before such exchange do not (or will not) directly or indirectly own more than 50% of the combined voting power of the surviving entity immediately following such exchange in substantially the same proportion as their ownership immediately before such exchange.

As described more fully below under “—Employment Agreements,” Messrs. Schlessinger and Vellios are also subject to certain restrictive covenants, including non-competition, non-solicitation and confidentiality.

Termination Without Cause—Mr. Bull

If we terminate Mr. Bull’s employment without “cause” (as such term is defined below), Mr. Bull will be entitled to receive:

• base salary continuation for six months based on his base salary in effect on the date of termination less any amounts earned during the applicable six month post termination period, paid in monthly installments (pursuant to his agreement as in effect on the last day of the fiscal year, base salary would only have been continued for three months); and

• monthly payments equal to continued health and dental benefits for a period of up to six months (pursuant to his agreement as in effect on the last day of the fiscal year, these benefits would only have been continued for three months).

Pursuant to Mr. Bull’s new employment agreement, “cause” is defined as one of the following:

• the executive’s alcohol abuse or use of controlled drugs (other than in accordance with a physician’s prescription);

• the executive’s refusal, failure or inability to perform any material obligation or fulfill any duty (other than a duty or obligation relating to confidentiality, noncompetition, nonsolicitation or proprietary rights) to us (other than due to a “disability” as defined in our Equity Incentive Plan), which failure, refusal or inability is not cured by the executive within 10 days after receipt of notice;

• the executive’s gross negligence or willful misconduct in the course of employment;

• any breach by the executive of any obligation or duty to us or any of our affiliates (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition, nonsolicitation or proprietary rights;

• other conduct of the executive involving any type of disloyalty to us or any of our affiliates, including, without limitation, fraud, embezzlement, theft or proven dishonesty; or

• the executive’s conviction of (or the entry of a plea of guilty or nolo contendere to) a felony or a misdemeanor involving moral turpitude.

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Potential Payments

The table below summarizes the payments and benefits that each of Messrs. Schlessinger, Vellios and Bull would have been entitled to receive if his last day of employment with us had been January 28, 2012.

Name	Cash Severance Payment ($)			Accelerated Option Vesting ($)			Health Insurance Coverage			Paid Life Insurance Benefit (6)		Total ($)
David Schlessinger
Voluntary termination for good reason or involuntary termination without cause		600,000			—			39,356	(4)		—		639,356
No termination following a change in control		—			642,394	(2)		—			—		642,394
Voluntary termination for good reason or involuntary termination without cause following a change in control		1,200,000			642,394	(2)		39,356	(4)		—		1,881,750
Death of Named Executive Officer		—			—			—			10,000		10,000
Permanent Disability of Named Executive Officer		—			—			—			—		—
Thomas G. Vellios
Voluntary termination for good reason or involuntary termination without cause		700,000			—			39,356	(4)		—		739,356
No termination following a change in control		—			642,394	(2)		—			—		642,394
Voluntary termination for good reason or involuntary termination without cause following a change in control		1,400,000			642,394	(2)		39,356	(4)		—		2,081,750
Death of Named Executive Officer		—			—			—			10,000		10,000
Permanent Disability of Named Executive Officer		—			—			—			—		—
Kenneth R. Bull
Involuntary termination without cause		68,750	(1)		—			4,919	(5)		—		73,669
No termination following a change in control		—			46,750	(3)		—			—		46,750
Involuntary termination without cause following a change in control		68,750	(1)		46,750	(3)		4,919	(5)		—		120,419
Death of Named Executive Officer		—			—			—			10,000		10,000
Permanent Disability of Named Executive Officer		—			—			—			—		—

(1) This represents the severance payments Mr. Bull was entitled to as of January 28, 2012, the last day of the fiscal year, which were equal to 25% of his annual base salary in effect on January 28, 2012. Pursuant to his employment agreement entered into on April 16, 2012, Mr. Bull is entitled to severance payments, which are equal to 50% of his current annual base salary of $325,000 or a payment that would be equal $162,500.

(2) This represents the accelerated gain on the exercise of previously unvested time-based stock options for 1,003,740 shares, using the most recent independent valuation of $2.82 on November 22, 2011. The next independent valuation after fiscal year 2011 was concluded as of February 21, 2012 ($3.88). In addition, pursuant to the Option Cancellation Agreements, these options were canceled on March 22, 2012.

(3) This represents the accelerated gain on the exercise of previously unvested time-based stock options for 100,000 shares, using the most recent independent valuation of $2.82 on November 22, 2011. The next independent valuation after fiscal year 2011 was concluded as of February 21, 2012 ($3.88).

(4) Messrs. Schlessinger and Vellios are entitled to a continuation of their health and dental benefits for up to 24 months.

(5) Mr. Bull was entitled to a continuation of his health and dental benefits for up to three months as of January 28, 2012. Please note that pursuant to his letter agreement entered into on April 16, 2012, Mr. Bull is currently entitled to a continuation of his health and dental benefits for up to six months.

(6) This represents life insurance premiums under our life insurance program.

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Employee Benefit Plans

Five Below, Inc. Amended and Restated Equity Incentive Plan

We amended and restated our Equity Incentive Plan, effective May 14, 2010, to enable us and our affiliated companies to: (a) recruit and retain highly qualified employees, directors and consultants; (b) provide those individuals with an incentive for productivity; and (c) provide those individuals with an opportunity to share in our growth and value. We approved an amended and restated Equity Incentive Plan on             , 2012, effective prior to the closing of this offering. Accordingly, a summary of the material terms of such version of the Equity Incentive Plan is described below.

The Equity Incentive Plan permits the grant of (i) incentive stock options, or ISOs; (ii) nonqualified stock options, or NQOs and together with ISOs, Options; (iii) restricted stock awards; and (iv) restricted stock units, or RSUs, which we refer to collectively as Awards, as more fully described below.

Prior to this offering, Options to purchase common stock and shares of our common stock were each granted to various participants under the Equity Incentive Plan.

All Awards granted under the Equity Incentive Plan are governed by separate written agreements, or Award Agreements, between us and the participants. No Awards may be granted after the ten-year anniversary of the Equity Incentive Plan’s effective date,             , 2022, although Awards granted before that time will remain valid in accordance with their terms.

A committee of our board of directors will administer the Equity Incentive Plan. This committee will designate each eligible individual to whom an Award is to be granted. The board will delegate the authority to the compensation committee to grant Awards upon such terms and conditions (not inconsistent with the provisions of the Equity Incentive Plan), as it may consider appropriate. Any of our employees, consultants, officers or other service providers, or those of our affiliates, are eligible to participate in the Equity Incentive Plan if selected by the compensation committee. In its discretion, the compensation committee may delegate all or part of its authority and duties with respect to granting Awards to one or more of our officers, provided applicable law so permits.

Subject to certain adjustments, the maximum number of shares of common stock that may be issued under the Equity Incentive Plan in connection with Awards is              (which amount includes shares in connection with awards granted pursuant to the original Equity Incentive Plan prior to this offering). In any calendar year, no participant may receive any Award or any combination of Awards that relate to more than                  shares. In the event of any stock dividend, recapitalization, forward stock split or reverse stock split, reorganization, division, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event that affects our common stock, the compensation committee shall make appropriate adjustment in the number and kind of shares authorized by the Equity Incentive Plan and covered under outstanding Awards as it determines appropriate and equitable. Shares of our common stock subject to Awards that expire unexercised or are otherwise forfeited shall again be available for Awards under the Equity Incentive Plan.

An Option entitles the holder to purchase from us a stated number of shares of common stock. An ISO may only be granted to an employee of ours or our affiliates (provided applicable law so permits). The compensation committee will specify the number of shares of common stock subject to each Option and the exercise price for such Option, provided that the exercise price may not be less than the fair market value of a share of common stock on the date the Option is granted. Notwithstanding the foregoing, if ISOs are granted to any 10% shareholder, the exercise price shall not be less than 110% of the fair market value of common stock on the date the Option is granted. Generally, all or part of the exercise price may be paid (i) in cash, or (ii) with the proceeds received from a broker-dealer whom the holder has authorized to sell all or a portion of the common stock

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covered by the Option, or (iii) with the consent of the compensation committee, in whole or in part in common stock held by the holder and valued at fair market value on the date of exercise, or (iv) by any combination of such methods.

All Options shall be exercisable in accordance with the terms of the applicable Award Agreement. The maximum term of an Option shall be determined by the compensation committee on the date of grant but shall not exceed 10 years (5 years in the case of ISOs granted to any 10% shareholder). In the case of ISOs, the aggregate fair market value (determined as of the date of grant) of common stock with respect to which such ISOs become exercisable for the first time during any calendar year cannot exceed $100,000. ISOs granted in excess of this limitation will be treated as NQOs.

If a participant terminates employment with us (or our affiliates) due to death or disability, the participant’s unexercised Options may be exercised, to the extent they were exercisable on the termination date or on an accelerated basis as determined by the compensation committee, for a period of twelve months from the termination date or until the expiration of the original Option term, if shorter, or for such other period as determined by the compensation committee. If the participant terminates employment with us (or our affiliates) for cause (as defined in the Equity Incentive Plan), all unexercised Options (whether vested or unvested) shall terminate and be forfeited on the termination date. If the participant’s employment terminates for any other reason, any vested but unexercised Options may be exercised by the participant, to the extent exercisable at the time of termination, for a period of 90 days from the termination date (or such time as specified by the compensation committee at the time of grant) or until the expiration of the original Option term, whichever period is shorter. Unless otherwise provided by the compensation committee, any Options that are not exercisable at the time of termination of employment shall terminate and be forfeited on the termination date.

A restricted stock award is a grant of shares of common stock, which may or may not be subject to forfeiture restrictions during a restriction period. The compensation committee will determine the price, if any, to be paid by the participant for each share of common stock subject to a restricted stock award. The compensation committee may condition the expiration of the restriction period, if any, upon: (i) the participant’s continued service over a period of time with us or our affiliates; (ii) the achievement by the participant, us or our affiliates of any other performance goals set by the compensation committee; or (iii) any combination of the above conditions as specified in the Award Agreement. If the specified conditions are not attained, the participant will forfeit the portion of the restricted stock award with respect to which those conditions are not attained, and the underlying common stock will be forfeited to us. At the end of the restriction period, if the conditions, if any, have been satisfied, the restrictions imposed will lapse with respect to the applicable number of shares. During the restriction period, a participant will have the right to vote the shares underlying the restricted stock, however, unless otherwise provided by the compensation committee, all dividends will remain subject to restriction until the stock with respect to which the dividend was issued lapses. The board of directors may, in its discretion, accelerate the vesting and delivery of shares of restricted stock.

RSUs are granted in reference to a specified number of shares of common stock and entitle the holder to receive, on achievement of specific performance goals established by the compensation committee, after a period of continued service or any combination of the above as set forth in the applicable Award Agreement, one share of common stock for each such share of common stock covered by the RSU. The board may, in its discretion, accelerate the vesting of RSUs.

Performance goals may be linked to a variety of factors including the participant’s completion of a specified period of employment or service with us or an affiliated company. Additionally, performance goals can include objectives stated with respect to us, an affiliated company or a business unit and are limited to one or more of the following:

• specified levels of or increases in pre-tax earnings, return on capital, equity measures/ratios (on a gross, net, pre-tax or post-tax basis), including basic earnings per share, diluted earnings per share, total earnings, operating earnings, earnings growth, earnings before interest and taxes, or EBIT, and EBITDA, as the same may be adjusted by any items determined by the compensation committee;

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• comparable store sales or non-comparable store sales;

• comparable store sales or sales growth;

• new store sales;

• store fundraising initiatives;

• new store openings;

• gross margin;

• inventory shrink;

• vendor allowances;

• inventory turns;

• inventory levels;

• distribution center productivity levels;

• customer service levels;

• customer or employee satisfaction;

• employee recruiting and development;

• number and timing of store construction;

• visual merchandising initiatives;

• advertising effectiveness;

• number and timing of lease negotiations;

• development of new markets;

• financial ratios;

• strategic initiatives;

• improvement in or attainment of operating expense levels;

• improvement in or attainment of capital expense levels; and

• individual objectives.

The compensation committee may impose restrictions on the grant, exercise or payment of an Award as it determines appropriate. Generally, Awards granted under the Equity Incentive Plan shall be nontransferable except by will or by the laws of descent and distribution. No participant shall have any rights as a shareholder with respect to shares covered by Options or RSUs, unless and until such Awards are settled in shares of common stock.

No Option shall be exercisable, no shares of common stock shall be issued, no certificates for shares of common stock shall be delivered and no payment shall be made under the Equity Incentive Plan except in compliance with all applicable laws.

The board may amend, suspend or terminate the Equity Incentive Plan and the compensation committee may amend any outstanding Award at any time; provided, however, that no such amendment or termination may adversely affect Awards then outstanding without the holder’s permission.

In the event of a change in control (as generally defined below), the compensation committee may, on a participant-by-participant basis (i) cause any outstanding Awards to become vested and immediately exercisable,

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in whole or in part; (ii) cause any outstanding Option to become fully vested and immediately exercisable for a reasonable period in advance of the change in control and, to the extent not exercised prior to that change in control, cancel that Option upon closing of the change in control; (iii) cancel any unvested Award or unvested portion thereof, with or without consideration; (iv) cancel any Award in exchange for a substitute award; (v) redeem any restricted stock or RSU for cash and/or other substitute consideration with value equal to the fair market value of an unrestricted share on the date of the change in control; (vi) cancel any Option in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of shares subject to that Option, multiplied by the difference, if any, between the fair market value per share on the date of the change in control and the exercise price of that Option; provided that if the fair market value per share on the date of the change in control does not exceed the exercise price of any such Option, the compensation committee may cancel that Option without any payment of consideration; and/or (vii) take such other action as the compensation committee determines to be reasonable under the circumstances; provided that the compensation committee may only use discretion to the extent permitted under Section 409A of the Code.

A “change in control” under the Equity Incentive Plan is generally deemed to have occurred if:

• any person or group acquires (in one or more transactions) beneficial ownership of our stock possessing 50% or more of the total power to vote for the election of our board of directors;

• a majority of the members of our board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of our board of directors prior to the date of the appointment or election;

• a merger or consolidation with another corporation where our shareholders immediately prior to such transaction will not beneficially own stock possessing 50% or more of the total power to vote for the election of the surviving corporation’s board of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote) immediately after such transaction;

• any person or group acquires all or substantially all of our assets;

• we complete a full liquidation or dissolution; or

• our shareholders accept a share exchange, whereby shareholders immediately before such exchange do not (or will not) directly or indirectly own more than 50% of the combined voting power of the surviving entity immediately following such exchange in substantially the same proportion as their ownership immediately before such exchange.

The compensation committee, in its sole discretion, has the authority to determine the application of the foregoing provisions.

Five Below, Inc. Performance Bonus Plan

On May 23, 2012, we approved the Five Below, Inc. Performance Bonus Plan, or the Performance Bonus Plan, effective prior to the closing of this offering, which will be administered by the compensation committee. The purpose of the Performance Bonus Plan will be to benefit and advance our interests, by rewarding selected employees of ours and our affiliates for their contributions to our financial success and thereby motivate them to continue to make such contributions in the future by granting performance-based awards that are fully tax deductible to us. As this Performance Bonus Plan will become effective prior to the closing of the offering, a summary of the material terms of such plan is described below

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Background

Section 162(m) of the Code disallows a deduction to us for any compensation paid to certain named executive officers in excess of $1 million per year, subject to certain exceptions. Among other exceptions, the deduction limit does not apply to compensation that meets the specified requirements for “performance-based compensation.” In general, those requirements include the establishment of objective performance goals for the payment of such compensation by a committee of the board composed solely of two or more outside directors, shareholder approval of the material terms of such compensation prior to payment, and certification by the committee that the performance goals for the payment of such compensation have been achieved.

The board believes that it is in our best interests and those of our shareholders to enhance our ability to attract and retain qualified personnel through performance based incentive, while at the same time obtaining the highest level of deductibility of compensation paid to employees.

Administration

Subject to the other provisions of the Performance Bonus Plan, the compensation committee has the authority to administer, interpret and apply the Performance Bonus Plan, including the authority to select the employees (including employees who are directors) to participate in the Performance Bonus Plan, to establish the performance goals, to determine the amount of incentive compensation bonus payable to any participant, to determine the terms and conditions of any such incentive opportunity; to make all determinations and take all other actions necessary or appropriate for proper administration and operation of the Performance Bonus Plan and to establish and amend rules and regulations relating to the Performance Bonus Plan.

The compensation committee may also delegate to one or more of our executive officers the authority to administer the Performance Bonus Plan with respect to any participants who are not subject to Section 162(m) of the Code.

Eligibility

The Named Executive Officers and such other of our employees as selected by the compensation committee are eligible to participate in the Performance Bonus Plan. The maximum amount of the incentive compensation bonuses payable to any participant under the Performance Bonus Plan in, or in respect of, any single fiscal year shall not exceed $5.0 million. All incentive compensation bonuses paid pursuant to the Performance Bonus Plan will be paid in cash.

Bonus Opportunity and Performance Goals

Bonuses may be payable to a participant as a result of the satisfaction of performance goals in respect of any performance period determined by the committee; provided that, to the extent a participant would be subject to Section 162(m) of the Code, the performance goals will be set in accordance with the regulations under Section 162(m) of the Code. Performance goals, which may vary among and between participants, may include objectives stated with respect to us, an affiliated company or a business unit and such objectives are limited to one or more of the following:

• specified levels of or increases in pre-tax earnings, return on capital, equity measures/ratios (on a gross, net, pre-tax or post-tax basis), including basic earnings per share, diluted earnings per share, total earnings, operating earnings, earnings growth, EBIT, and EBITDA, as the same may be adjusted by any items determined by the compensation committee;

• comparable store sales or non-comparable store sales;

• comparable store sales or sales growth;

• new store sales;

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• store fundraising initiatives;

• new store openings;

• gross margin;

• inventory shrink;

• vendor allowances;

• inventory turns;

• inventory levels;

• distribution center productivity levels;

• customer service levels;

• customer or employee satisfaction;

• employee recruiting and development;

• number and timing of store construction;

• visual merchandising initiatives;

• advertising effectiveness;

• number and timing of lease negotiations;

• development of new markets;

• financial ratios;

• strategic initiatives;

• improvement in or attainment of operating expense levels;

• improvement in or attainment of capital expense levels; and

• individual objectives.

The compensation committee shall provide a threshold level of performance below which no incentive compensation bonus will be paid, as well as a maximum level of performance above which no additional incentive compensation bonus will be paid. It also may provide for the payment of differing amounts for different levels of performance, determined with regard either to a fixed monetary amount or a percentage of the participant’s base salary. The compensation committee shall make such adjustments, to the extent it deems appropriate, to established performance goals and performance thresholds to compensate for, or to reflect, any material changes which may have occurred due to an Extraordinary Event (as defined under the Performance Bonus Plan).

As soon as practicable after the end of each performance period, but before any incentive compensation bonuses are paid to the participants under the Performance Bonus Plan, the compensation committee will certify in writing (i) whether the performance goal(s) were attained and (ii) the amount of the incentive compensation bonus payable to each participant based upon the attainment of such specified performance goals. The compensation committee also may reduce, eliminate, or, with respect only to participants who are not subject to Section 162(m) of the Code, increase the amount of any incentive compensation bonus of any participant at any time prior to payment thereof, based on such criteria as the compensation committee shall determine, including but not limited to individual merit and attainment of, or the failure to attain, specified personal goals established by the compensation committee. Under no circumstances, however, may the compensation committee, with respect solely to a participant who is subject to Section 162(m) of the Code, (a) increase the amount of the incentive compensation otherwise payable to such participant beyond the amount originally established by the

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compensation committee, (b) waive the attainment of the performance goals established and applicable to such participant’s incentive compensation or (c) otherwise exercise its discretion so as to cause any incentive compensation bonus payable to such participant to not qualify as “performance-based compensation” under Section 162(m) of the Code.

All amounts due under the Performance Bonus Plan shall be paid within 2 ¹/2 months of the end of the year in which such incentive compensation is no longer subject to a risk of forfeiture. The Board, without the consent of any participant, may amend or terminate the Performance Bonus Plan at any time. However, no amendment that would require the consent of the shareholders pursuant to Section 162(m) of the Code shall be effective without such consent.

No awards have yet been made under the Performance Bonus Plan.

Employment Agreements

We have existing employment agreements with each of our Named Executive Officers.

Thomas G. Vellios and David Schlessinger

Our employment agreements with Thomas Vellios and David Schlessinger were each entered into on October 14, 2010 and were each subsequently amended on September 28, 2011. We refer to each of these agreements, as amended, as an Employment Letter Agreement (or collectively, as the “Employment Letter Agreements”). These Employment Letter Agreements provide Thomas Vellios and David Schlessinger with an annual base salary of $700,000 and $600,000, respectively. Commencing with fiscal year 2012, each executive is eligible to receive annual incentive bonuses as determined in the discretion of the Board. Each executive is eligible to participate in the benefit plans offered by us and has a right to participate in the most favorable health, welfare and tax-qualified retirement plans that we may offer from time to time.

Pursuant to the Employment Letter Agreements, Messrs. Vellios and Schlessinger were each granted a non-qualified option to purchase 2,919,973 shares of common stock under the Equity Incentive Plan. These options were cancelled in exchange for a grant of restricted stock to each executive pursuant to the terms of the Option Cancellation Agreement, as further described below.

If we were to terminate Thomas Vellios’ employment without “Cause” or if Thomas Vellios terminates his employment for “Good Reason,” then, subject to his execution of an effective release, he would be entitled to receive:

• 12 months of base salary continuation paid in accordance with our normal payroll practices (or 24 months if such termination occurs after a “Change of Control Transaction”); and

• For as long as the executive maintains COBRA continuation coverage under our plan, 18 months of payments equal to the applicable monthly COBRA premium. Such payments would be grossed up for federal, state and local income and employment taxes (if the executive remains on our medical plan for the entire 18 month period, then the medical payments will continue for an additional 6 months and such payments would also be grossed up).

If we were to terminate David Schlessinger’s employment without “Cause” or if David Schlessinger terminates his employment for “Good Reason,” then, subject to his execution of an effective release, he would be entitled to receive:

• The greater of $400,000 or 12 months of base salary continuation, in either case, paid in accordance with our normal payroll practices (or the greater of $800,000 or 24 months if such termination occurs after a “Change of Control Transaction”); and

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• For as long as the executive maintains COBRA continuation coverage under our plan, 18 months of payments equal to the applicable monthly COBRA premium. Such payments would be grossed up for federal, state and local income and employment taxes (if the executive remains on our medical plan for the entire 18 month period, then the medical payments will continue for an additional 6 months and such payments would also be grossed up).

The terms Cause, Good Reason and Change of Control Transaction are more fully described above under “—Potential Payments Upon Termination or Change of Control.”

Under the Employment Letter Agreements, each executive is subject to a non-competition provision for during the term of the executive’s employment with us until (i) the Executive no longer receives the salary continuation (as set forth above), if the executive’s employment is terminated without Cause or the executive terminates his employment for Good Reason or (ii) 18 months after any other termination of employment. Each executive is also subject to non-solicitation provisions, however, such provisions expire upon the closing of this initial public offering, as provided under the Employment Letter Agreements.

Kenneth R. Bull

On April 16, 2012, we entered into a new employment agreement with Mr. Bull. The agreement provides Mr. Bull with an annual base salary of $325,000.

Mr. Bull’s employment with us is “at-will” and can be terminated by either party at any time, for any reason, provided that if Mr. Bull’s employment is terminated by us without “Cause,” then Mr. Bull is entitled to receive six months of base salary continuation and health benefits (offset for any amount Mr. Bull would earn from outside sources during such period).

The term Cause is more fully described above under “—Potential Payments Upon Termination or Change of Control.”

Option Cancellation Agreements

On March 22, 2012, or the Grant Date, we entered into Option Cancellation Agreements with each of Thomas Vellios and David Schlessinger, which we refer to as the Option Cancellation Agreements. Pursuant to the terms of these agreements, each executive agreed to cancel his outstanding option to purchase 2,919,973 shares of common stock in exchange for which each executive received (i) a grant of 973,325 unrestricted shares of common stock and (ii) a grant of 1,946,648 restricted shares of common stock, or the Restricted Stock. The forfeiture restrictions applicable to the Restricted Stock will, subject to such executive’s continued employment with us as of the dates set forth below, lapse according to the following schedule:

• 973,324 of the shares of Restricted Stock shall lapse and become free from risk of forfeiture on March 22, 2013; and

• 973,324 of the shares of Restricted Stock shall lapse and become free from risk of forfeiture on March 22, 2014.

Notwithstanding the foregoing, upon (i) a “Change in Control Transaction,” (ii) such executive’s termination of employment by us without “Cause,” (iii) such executive’s termination of employment with us due to such executive’s death or disability or (iv) such executive’s voluntary termination of employment with us due to “Good Reason,” the forfeiture restrictions underlying such executive’s Restricted Stock will immediately and fully lapse. Upon any other termination of employment not set forth above, all of such executive’s unvested Restricted Stock will be immediately forfeited. The applicable terms above are more fully described above under “—Potential Payments Upon Termination or Change of Control.”

The grant of the Restricted Stock to each executive was further subject to such executive making an election under Section 83(b) within 30 days of the Grant Date and the timely payment by such executive to us of all taxes due upon the making of such election.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Subscription Agreement with Mr. Ryan

Mr. Ryan, a current member of our board of directors, purchased 460,257 shares of our common stock for an aggregate purchase price of $1.1 million in connection with his election to our board of directors (effective as of October 7, 2011). In connection with Mr. Ryan’s investment in our company, he became a party to the second amended and restated shareholders agreement, as amended, and the amended and restated investor rights agreement, as amended, each of which are described below.

Investment by Advent

On October 14, 2010, Advent and Sargent Family Investment, LLC, a limited liability company controlled by Ronald Sargent, a current member of our board of directors, invested $192.9 and $1.1 million, respectively, in Five Below in consideration for 88,785,489 and 506,284 shares of our Series A 8% convertible preferred stock, respectively, and, as a result of such investment, Advent acquired a majority interest in Five Below, which we refer to as the 2010 Transaction. In connection with the 2010 Transaction, on October 13, 2010, all of the then outstanding preferred shares were converted into shares of our common stock and all of our options and warrants were exercised or exchanged for restricted or unrestricted shares of our common stock. As of March 31, 2012, we had 89,291,773 shares of Series A 8% convertible preferred stock outstanding. Prior to the closing of the offering, each of the outstanding shares of Series A 8% convertible preferred stock will convert into 89,291,773 shares of common stock and there will be no shares of preferred stock outstanding.

Second Amended and Restated Shareholders Agreement

In connection with the 2010 Transaction, we entered into a second amended and restated shareholders agreement with the holders of our Series A 8% convertible preferred stock and common stock. In accordance with this agreement, as subsequently amended, the holders of our capital stock agreed to vote their shares in favor of the election to our board of directors of five individuals designated by holders of our Series A 8% convertible preferred stock and three designated by our holders of common stock. Accordingly, Messrs. Mussafer, Collins, Crawford, Ross and Ryan, the designees of holders of our Series A 8% convertible preferred stock, and Messrs. Sargent, Schlessinger and Vellios, the designees of holders of our common stock, have been elected to our board of directors. In addition, our shareholders agreement provides certain rights to certain of our shareholders with respect to our capital stock, including rights of first refusal and drag-along rights in respect of the sale of shares of our capital stock, as well as certain restrictions on the transfer of our shares. The rights of first refusal do not apply to issuances by us in an initial underwritten public offering of our common stock, including this offering. Further, our shareholders agreement contains provisions renouncing any interest or expectancy held by directors affiliated with Advent in certain corporate opportunities. The parties to the agreement have further amended the agreement in connection with this offering. The amendment provides that upon the closing of this offering, all of the provisions related to rights of first refusal, drag-along rights and the designation rights of the holders of our Series A 8% convertible preferred stock will terminate in full and the remaining provisions of such agreement will terminate in full 181 days following the effective date of this registration statement.

Amended and Restated Investor Rights Agreement

In connection with the 2010 Transaction, we entered into an amended and restated investor rights agreement with the holders of our Series A 8% convertible preferred stock and certain of the holders of our common stock, which agreement was subsequently amended. Pursuant to the agreement, certain funds managed by Advent, LLR Partners, Sargent Family Investment, LLC, Blue 9 Fund I, L.P., David Schlessinger and Thomas Vellios have the right to include certain of their shares in this offering. Certain of these shareholders have requested that we include up to an aggregate of              shares of our common stock in this offering. This number may be decreased prior to the effectiveness of this offering by Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc., the representatives of the underwriters in this offering, in their sole discretion. We are obligated to pay all expenses in connection with such registration other than underwriting commissions or discounts resulting from the sale of shares by our shareholders in connection with this registration.

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In addition, the amended and restated investor rights agreement contains registration rights that require us to register shares of our common stock held by the shareholders who are parties to the agreement in the event we register for sale, either for our own account or for the account of others, shares of our common stock in future offerings. The parties to such agreement have agreed to amend this agreement effective upon the closing of this offering. The amended and restated investor rights agreement, as amended, will provide for substantially similar registration rights and will continue to require a shareholder to execute a lock-up agreement with the underwriters in connection with the shareholder’s exercise of his or her registration rights in future offerings. Other provisions in the amended and restated investor rights agreement, including rights of first offer, preemptive rights and information rights will terminate.

Side Letter Agreement

On September 1, 2010, LLR Partners, David Schlessinger and Thomas Vellios entered into a side letter agreement pursuant to which LLR Partners agreed to vote all of their securities of Five Below in favor of the election of Messrs. Schlessinger and Vellios to our board of directors so long as Messrs. Schlessinger and Vellios remained employed by us. This side letter, pursuant to its terms, will terminate upon the closing of this offering.

Loan to Officer

During fiscal 2009, we extended a loan of $250,000 to Thomas Vellios, which was collateralized by a pledge of shares of Five Below common stock held by Mr. Vellios. The loan accrued interest at 4.11% and was payable on an annual basis starting on March 1, 2011. In connection with the 2010 Transaction and 2010 Dividend, Mr. Vellios offset the amount of the dividend due to him by $250,000 plus approximately $7,600 of accrued interest in full satisfaction of the amounts owed under the loan. In connection with the repayment of the loan, the pledge of Mr. Vellios’ shares was released.

Agreements with Management

We and certain of our executive officers have entered into employment agreements. The terms and conditions of certain of these employment agreements are more fully described in “Executive Compensation—Employment Agreements.”

Option Cancellation Agreements

On March 22, 2012, we entered into Option Cancellation Agreements with each of David Schlessinger, our Executive Chairman, and Thomas Vellios, our President and Chief Executive Officer. Pursuant to the terms of these agreements, each executive received (i) a grant of 973,325 unrestricted shares of common stock and (ii) a grant of 1,946,648 restricted shares of common stock, or the Restricted Stock. The forfeiture restrictions applicable to the Restricted Stock will, subject to such executive’s continued employment with us as of the dates set forth below, lapse according to the following schedule:

• 973,324 of the shares of Restricted Stock shall lapse and become free from risk of forfeiture on March 22, 2013; and

• 973,324 of the shares of Restricted Stock shall lapse and become free from risk of forfeiture on March 22, 2014.

Notwithstanding the foregoing, upon (i) a “Change in Control Transaction,” (ii) such executive’s termination of employment by us without “Cause,” (iii) such executive’s termination of employment with us due to such executive’s death or disability or (iv) such executive’s voluntary termination of employment with us due to “Good Reason” (as such terms are defined in the Option Cancellation Agreements), the forfeiture restrictions underlying such executive’s Restricted Stock will immediately and fully lapse. Upon any other termination of employment not set forth above, all of such executive’s unvested Restricted Stock will be immediately forfeited.

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The grant of the Restricted Stock to each executive was further subject to such executive making an election under Section 83(b) within 30 days of the date of grant and the timely payment by such executive to us of all taxes due upon the making of such election.

Indemnification of Officers and Directors

We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under Pennsylvania law. Additionally, we may enter into indemnification agreements with any new directors or executive officers that may be broader in scope than the specific indemnification provisions contained in Pennsylvania law. There is no pending litigation or proceeding naming any of our directors or officers for which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

Our Policies Regarding Related Party Transactions

Upon the closing of this offering, our board of directors will adopt a related party transactions policy for us. Pursuant to the related party transactions policy, we will review all transactions with a dollar value in excess of $120,000 involving us in which any of our directors, director nominees, significant shareholders and executive officers and their immediate family members will be participants, to determine whether such person has a direct or indirect material interest in the transaction. This policy was not in effect when we entered into the transactions described above. All directors, director nominees and executive officers will be required to promptly notify our Executive Chairman of any proposed transaction involving us in which such person has a direct or indirect material interest. Such proposed transaction will then be reviewed by the audit committee to determine whether the proposed transaction is a related party transaction under our policy. In reviewing any related party transaction, the audit committee will determine whether or not to approve or ratify the transaction based on all relevant facts and circumstances, including the following:

• the materiality and character of the related person’s interest in the transaction;

• the commercial reasonableness of the terms of the transaction;

• the benefit and perceived benefit, or lack thereof, to us;

• the opportunity costs of alternate transactions; and

• the actual or apparent conflict of interest of the related person.

In the event that any member of the audit committee is not a disinterested member with respect to the related person transaction under review, that member will be excluded from the review and approval or rejection of such related party transaction and another director may be designated to join the committee for purposes of such review. Whenever practicable, the reporting, review and approval will occur prior to entering into the transaction. If advance review and approval is not practicable, the audit committee will review and may, in its discretion, ratify the related party transaction. After any such review, the audit committee will approve or ratify the transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of us and our shareholders. Our related party transaction policy will be posted under the                          section of our website at www.fivebelow.com.

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PRINCIPAL AND SELLING SHAREHOLDERS

The following table contains information about the beneficial ownership of our common stock as of April 28, 2012 and as adjusted to reflect the sale of shares of our common stock offered by this prospectus, assuming no exercise of the underwriters’ option to purchase additional shares, by:

• each person, or group of persons, who beneficially owns more than 5% of our capital stock;

• each executive officer named in the summary compensation table;

• each of our directors;

• all directors and executive officers as a group; and

• each person selling common stock in connection with this public offering.

For further information regarding material transactions between us and certain of our shareholders, see “Certain Relationships and Related Party Transactions.”

Beneficial ownership and percentage ownership are determined in accordance with the rules and regulations of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to restrictions, options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 28, 2012 are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table or pursuant to applicable community property laws, each shareholder named in the table has sole voting and investment power with respect to the shares set forth opposite such shareholder’s name. Assuming the issuance of              shares of our common stock in this offering, there will be              shares of common stock outstanding after this offering. Beneficial ownership and the percentage of beneficial ownership prior to the offering are based on              shares of common stock outstanding on April 28, 2012 and assume the conversion of our Series A 8% convertible preferred stock into common stock.

The table below assumes the underwriters do not exercise their option to purchase additional shares. Unless otherwise indicated in the footnotes, the address of each of the individuals named below is: c/o Five Below, Inc., 1818 Market Street, Suite 1900, Philadelphia, Pennsylvania 19103.

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Name of Beneficial Owner	Shares Beneficially Owned Prior to the Offering		Percentage of Shares Beneficially Owned Prior to the Offering			Number of Shares Offered	Shares Beneficially Owned After the Offering	Percentage of Shares Beneficially Owner After the Offering
5% Shareholders Not Listed Below:
Funds managed by Advent International Corporation(1)		88,785,489		62.5	%				%
Funds managed by LLR Capital II, LLC(2)		13,636,669		9.6	%				%
Named Executive Officers & Directors:
Kenneth R. Bull		275,000		*	%				%
Steven J. Collins		—		*	%				%
Andrew W. Crawford		—		*	%				%
David M. Mussafer(3)		—		*	%				%
Howard D. Ross(4)		—		*	%				%
Thomas M. Ryan		460,257		*	%				%
Ronald L. Sargent(5)		756,284		*	%				%
David Schlessinger(6)		9,116,110		6.4	%				%
Thomas G. Vellios(7)		8,008,256		5.6	%				%
All executive officers and directors as a group (9 persons)		121,038,065		85.2	%				%
Additional Selling Shareholder:
Blue 9 Fund I, L.P.(8)		4,912,725		3.5	%				%

 * Less than 1%

(1) The funds managed by Advent International Corporation own 62.5% of Five Below, Inc. prior to this offering and all of the shares held by such funds are shares of our Series A 8% convertible preferred stock which will convert into shares of our common stock on a one-for-one basis. This table assumes the conversion has occurred. The direct ownership of the shares of common stock consists of 40,246,481 shares held by Advent International GPE VI Limited Partnership, 23,581,422 shares held by Advent International GPE VI-A Limited Partnership, 2,033,174 shares held by Advent International GPE VI-B Limited Partnership, 2,077,552 shares held by Advent International GPE VI-C Limited Partnership, 1,660,291 shares held by Advent International GPE VI-D Limited Partnership, 4,936,496 shares held by Advent International GPE VI-E Limited Partnership, 7,573,371 shares held by Advent International GPE VI-F Limited Partnership, 4,776,663 shares held by Advent International GPE VI-G Limited Partnership, 1,473,850 shares held by Advent Partners GPE VI 2008 Limited Partnership, 53,307 shares held by Advent Partners GPE VI 2009 Limited Partnership, 115,454 shares held by Advent Partners GPE VI 2010 Limited Partnership, 124,294 shares held by Advent Partners GPE VI—A 2010 Limited Partnership and 133,134 shares held by Advent Partners GPE VI—A Limited Partnership. The funds managed by Advent International Corporation collectively purchased their interest in shares of our capital stock on October 14, 2010. Immediately prior to this offering, the funds managed by Advent International Corporation will beneficially own 88,785,489 shares (or 62.5%) of our common stock, or 62.5% of our common stock on a fully diluted basis. In the offering, Advent International GPE VI Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-A Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-B Limited Partnership will be entitled to sell              shares of our common stock (or a total              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-C Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-D Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-E Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent

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International GPE VI-F Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent International GPE VI-G Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent Partners GPE VI 2008 Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent Partners GPE VI 2009 Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent Partners GPE VI 2010 Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares), Advent Partners GPE VI—A 2010 Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares) and Advent Partners GPE VI—A Limited Partnership will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares). Immediately after this offering, the funds managed by Advent International Corporation will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. If the underwriters exercise in full their option to purchase additional shares, the funds managed by Advent International Corporation will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. Advent International Corporation is the manager of Advent International LLC, which is the general partner of: GPE VI GP Limited Partnership; GPE VI GP (Delaware) Limited Partnership; Advent Partners GPE VI 2008 Limited Partnership; Advent Partners GPE VI 2009 Limited Partnership; Advent Partners GPE VI 2010 Limited Partnership; Advent Partners A Limited Partnership and Advent Partners GPE VI—A 2010 Limited Partnership. GPE VI GP Limited Partnership is the general partner of: Advent International GPE VI Limited Partnership; Advent International GPE VI-A Limited Partnership; Advent International GPE VI-B Limited Partnership; Advent International GPE VI-F Limited Partnership and Advent International GPE VI-G Limited Partnership. GPE VI GP (Delaware) Limited Partnership is the general partner of: Advent International GPE VI-C Limited Partnership; Advent International GPE VI-D Limited Partnership and Advent International GPE VI-E Limited Partnership. Advent International Corporation exercises voting and investment power over the shares held by each of these entities and may be deemed to have beneficial ownership of these shares. With respect to the shares held by funds managed by Advent International Corporation, a group of individuals currently composed of Richard F. Kane, David M. Mussafer and Steven M. Tadler, none of whom have individual voting or investment power, exercise voting and investment power over the shares beneficially owned by Advent International Corporation. Each of Mr. Kane, Mr. Mussafer and Mr. Tadler disclaims beneficial ownership of the shares held by funds managed by Advent International Corporation, except to the extent of their respective pecuniary interest therein. The address of Advent International Corporation and each of the funds listed above is c/o Advent International Corporation, 75 State Street, Floor 29, Boston, MA 02109.

(2) The funds managed by LLR Capital II, LLC own 9.6% of Five Below, Inc. prior to this offering. The direct ownership of the shares of common stock consists of 12,249,939 shares held by LLR Equity Partners II, L.P. and 1,386,730 shares held by LLR Equity Partners Parallel II, L.P., collectively referred to as LLR Equity Partners, prior to the offering. Immediately prior to this offering, LLR Equity Partners will beneficially own 13,636,669 shares (or 9.6%) of our common stock, or 9.6% of our common stock on a fully diluted basis. In the offering, LLR Equity Partners II, L.P. will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares) and LLR Equity Partners Parallel II, L.P. will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares). Immediately after this offering, LLR Equity Partners will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. If the underwriters exercise in full their option to purchase additional shares, LLR Equity Partners will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. LLR Capital II, LLC is the general partner of LLR Capital II, L.P. which is the general partner of each of LLR Equity Partners II, L.P. and LLR Equity Partners Parallel II, L.P. LLR Capital II, LLC exercises voting and investment power over the shares held by each of these entities and may be

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deemed to have beneficial ownership of these shares. With respect to the shares of our common stock held by the LLR, a group of individuals currently composed of Mitchell Hollin, Seth Lehr, Ira Lubert and Howard Ross, none of whom have individual voting or investment power, exercise voting and investment power over the shares beneficially owned by LLR Capital II, LLC and each of the funds mentioned above. Each of Messrs. Hollin, Lehr, Lubert and Ross disclaim beneficial ownership of the shares held by LLR Capital II, LLC, except to the extent of their respective pecuniary interest therein. The address of LLR Capital II, LLC is c/o LLR Capital II, LLC, Circa Centre, 2929 Arch Street, Suite 2700, Philadelphia, PA 19104.

(3) Mr. Mussafer is a member of a group of persons who exercise voting and investment power over the shares of common stock beneficially owned by the funds managed by Advent International Corporation and may be deemed to beneficially own the shares held by these funds. Mr. Mussafer disclaims beneficial ownership of the shares of common stock held by the funds managed by Advent International Corporation, except to the extent of his pecuniary interest therein. Mr. Mussafer’s address is c/o Advent International Corporation, 75 State Street, Floor 29, Boston, MA 02109.

(4) Mr. Ross is a member of a group of persons who exercise voting and investment power over the shares of common stock beneficially owned by the LLR Capital II, LLC and may be deemed to beneficially own the shares held by these funds. Mr. Ross disclaims beneficial ownership of the shares of common stock held by the funds managed by LLR Capital II, LLC, except to the extent of his pecuniary interest therein. Mr. Ross’s address is c/o LLR Capital II, LLC, Circa Centre, 2929 Arch Street, Suite 2700, Philadelphia, PA 19104.

(5) Includes 506,284 shares of our Series A 8% convertible preferred stock owned by Sargent Family Investment, LLC. The shares of our series A 8% convertible preferred stock will convert into shares of our common stock on a one-for-one basis. This table assumes the conversion has occurred. Mr. Sargent, the sole member and manager of Sargent Family Investment, LLC, exercises voting and investment power over the shares beneficially owned by Sargent Family Investment, LLC.

(6) The total shares beneficially owned by Mr. Schlessinger includes 50,500 shares of common stock held by members of his family. The total shares beneficially owned by Mr. Schlessinger prior to the offering includes 1,050,500 shares of common stock held by certain shareholders as to which Mr. Schlessinger has sole voting power pursuant to irrevocable proxies granted by such shareholders. Mr. Schlessinger disclaims beneficial ownership of the shares of common stock subject to such proxies.

(7) Includes 10,000 shares of common stock held by certain shareholders as to which Mr. Vellios has sole voting power pursuant to irrevocable proxies granted by such shareholders. Mr. Vellios disclaims beneficial ownership of the shares of common stock subject to such proxies.

(8) Includes 4,912,725 shares owned by Blue 9 Fund I, L.P. prior to the offering. Immediately prior to this offering, Blue 9 Fund I, L.P. will beneficially own 4,912,725 shares (or 3.5%) of our common stock, or 3.5% of our common stock on a fully diluted basis. In the offering, Blue 9 Fund I, L.P. will be entitled to sell              shares of our common stock (or a total of              shares if the underwriters exercise in full their option to purchase additional shares). Immediately after this offering, Blue 9 Fund I, L.P. will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. If the underwriters exercise in full their option to purchase additional shares, Blue 9 Fund I, L.P. will beneficially own              shares (or     %) of our common stock, or     % of our common stock on a fully diluted basis. Blue 9 Capital, LLC is the general partner of Blue 9 Fund I, L.P. Blue 9 Capital, LLC exercises voting and investment power over the shares held by Blue 9 Fund I, L.P. and may be deemed to have beneficial ownership of these shares. With respect to the shares of our common stock held by Blue 9 Fund I, L.P., Steven Tuttleman exercises voting and investment power over the shares beneficially owned by Blue 9 Capital, LLC. Mr. Tuttleman disclaims beneficial ownership of the shares held by Blue 9 Fund I, L.P., except to the extent of his pecuniary interest therein. The address of Blue 9 Fund I, L.P. is c/o Blue 9 Capital, LLC, 23 Tettemer Road, Erwinna, PA 18920.

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DESCRIPTION OF CAPITAL STOCK

The following description summarizes the terms of our capital stock, our amended and restated articles of incorporation and our amended bylaws. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our forms of amended and restated articles of incorporation and amended bylaws, to be effective upon the closing of this offering, which are included as exhibits to the registration statement of which this prospectus is part.

General

Upon the closing of this offering, our authorized capital stock will consist of              shares of common stock, par value $0.01 per share, and              shares of preferred stock, par value $0.01 per share.

As of May 23, 2012, there were outstanding:

• 52,781,374 shares of our common stock held by 190 shareholders of record;

• 89,291,773 shares of our Series A 8% convertible preferred stock that are convertible into 89,291,773 shares of our common stock; and

• stock options to purchase an aggregate of 2,901,800 shares of our common stock with a weighted average exercise price of $       per share.

Prior to the closing of this offering, we will amend our articles of incorporation to effect a     -for-     reverse stock split of our common stock. Concurrent with the reverse stock split, we will adjust (x) the number of shares subject to and the conversion price of our Series A 8% convertible preferred stock, (y) the number of shares subject to and the exercise price of our outstanding stock option awards under our equity incentive plan and (z) the number of shares subject to and the exercise price of our outstanding warrants, such that the holders of the preferred stock, options and warrants will be in the same economic position both before and after the reverse stock split. The holders of our outstanding common stock will receive              shares of common stock after giving effect to the stock split.

Assuming the underwriters do not exercise their option to purchase additional shares, and after giving effect to the stock split, upon the closing of this offering all of the outstanding shares of our Series A 8% convertible preferred stock will convert into 89,291,773 shares of our common stock.

2012 Dividend

On May 15, 2012, we declared and subsequently paid on May 16, 2012 the 2012 Dividend on shares of our common stock and our Series A 8% convertible preferred stock.

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Common Stock

Voting rights

Holders of our common stock are entitled to one vote for each share for the election of directors and on all other matters submitted to a vote of shareholders, and do not have cumulative voting rights in the election of directors. Whenever corporate action is to be taken by vote of the shareholders, it becomes authorized upon receiving the affirmative vote of a majority of the votes cast by all shareholders present in person or by proxy and entitled to vote on the matter.

Dividend rights

Subject to the preferences applicable to any outstanding preferred stock, holders of common stock are entitled to receive ratably any dividend declared by the board of directors.

Rights upon liquidation

In the event of a liquidation, dissolution or winding up of the company, holders of common stock are entitled to share ratably in the assets remaining after payment of liabilities and the liquidation preferences of any outstanding preferred stock.

Other rights and preferences

Holders of our common stock have no preemptive, subscription, conversion, redemption or sinking fund rights. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future.

Listing

We intend to apply to list our common stock on The NASDAQ Global Select Market under the trading symbol “FIVE.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is                     . Its address is                     , and its telephone number is (        )                     .

Preferred Stock

As of May 23, 2012, we had 89,291,773 shares of Series A 8% convertible preferred stock outstanding. Upon the closing of the offering, the outstanding shares of Series A 8% convertible preferred stock will convert into 89,291,773 shares of common stock and there will be no shares of preferred stock outstanding. Our board of directors has the authority, without further action by the shareholders, to issue up to              shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations, or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Accordingly, our board of directors, without shareholder approval, may issue preferred stock with voting, conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change of control or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock, may adversely affect the voting and other rights of the holders of our common stock, and

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could have the effect of delaying, deferring or preventing a change of control of Five Below or other corporate action. See “—Anti-Takeover Effects of Certain Provisions of Pennsylvania Law and our Amended and Restated Articles of Incorporation and Amended Bylaws.” At present, we have no plans to issue any shares of preferred stock following this offering.

Equity Incentive Awards

Options

As of May 23, 2012, we had outstanding options to purchase 2,901,800 shares of our common stock at a weighted-average price of $       per share, of which no options to purchase shares were vested at such time. We have                      shares remaining available for issuance pursuant to our equity incentive plan.

Restricted Common Stock

In addition, as of May 23, 2012, we had 4,093,515 shares of restricted common stock issued and outstanding. 200,219 of such shares were issued in connection with the 2010 Transaction and pursuant to our equity incentive plan when all of our options were exercised for common shares or restricted common shares on October 13, 2010. 3,893,296 of such shares were issued in connection with the Option Cancellation Agreements to Messrs. Schlessinger and Vellios.

Registration Rights

Pursuant to the existing amended and restated investor rights agreement, certain funds managed by Advent, LLR Partners, Sargent Family Investment, LLC, Blue 9 Fund I, L.P., David Schlessinger and Thomas Vellios have the right to include certain of their shares in this offering. Certain of these shareholders have requested that we include up to an aggregate of              shares of our common stock in this offering. This number may be decreased prior to the effectiveness of this offering by Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc., the representatives of the underwriters in this offering, in their sole discretion. We are obligated to pay all expenses in connection with such registration other than underwriting commissions or discounts resulting from the sale of shares by our shareholders in connection with this registration.

Upon the closing of this offering, shareholders who are parties to the existing amended and restated investor rights agreement, as amended, as well as Messrs. Sargent and Ryan will have the right, subject to various conditions and limitations, to include their shares of our common stock in registration statements relating to our securities. The right to include shares in an underwritten registration is subject to the ability of the underwriters to limit the number of shares included in the offering. By exercising their registration rights and causing a large number of shares to be registered and sold in the public market, these holders could cause the price of the common stock to fall. In addition, any demand to include such shares in our registration statements could have a material adverse effect on our ability to raise needed capital.

Anti-Takeover Effects of Certain Provisions of Pennsylvania Law and our Amended and Restated Articles of Incorporation and Amended Bylaws

Our amended and restated articles of incorporation and our amended bylaws will contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and could make it more difficult to acquire control of us by means of a tender offer, open market purchases, a proxy contest or otherwise. We expect that these provisions will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our shareholders. However, they also give our board of directors the power to discourage acquisitions that some shareholders may favor.

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No Cumulative Voting

As of the closing of this offering, our only issued and outstanding shares of capital stock will be common stock. Each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of directors. Our amended and restated articles of incorporation do not allow for cumulative voting in the election of directors, therefore shareholders holding a majority of the outstanding capital stock entitled to vote will be able to elect all of our directors.

Special Shareholders’ Meetings and Right to Act by Written Consent

According to our amended bylaws, our shareholders are not permitted to call, or to require that the board of directors call, a special meeting of shareholders. Rather, a special meeting of shareholders may only be called by the chairman of our board of directors or our Chief Executive Officer or upon a resolution adopted by a majority of our entire board of directors. In addition, the business permitted to be conducted at any special meeting of shareholders is limited to the business brought before the meeting pursuant to the notice of the meeting given by us.

Our amended bylaws prohibit shareholder action without a meeting through the execution of a written consent or consents thereto by the shareholders, and therefore, any action of shareholders may be taken only at a meeting of the shareholders.

Amendment of Our Amended and Restated Articles of Incorporation and Amended Bylaws

Our amended and restated articles of incorporation and amended bylaws each provide that, unless previously approved by our board of directors, the affirmative vote of at least 80% of the voting power of all of our outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class, would be required to amend or repeal certain provisions of our amended and restated articles of incorporation or amended bylaws. Any amendment to or repeal of certain provisions our amended and restated articles of incorporation or amended bylaws approved by our board of directors would require the affirmative vote of at least 50% of the voting power of all of our outstanding capital stock entitled to vote on such amendment or repeal.

These provisions may have the effect of deterring hostile takeovers, or delaying or preventing changes in control of our management or Five Below, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in our management.

Classified Board; Removal of Directors; Size of Board

Pursuant to our amended and restated articles of incorporation and amended bylaws, directors will be divided into three classes, whose members will serve staggered three-year terms. Because our shareholders do not have cumulative voting rights, our shareholders holding a majority of the outstanding capital stock entitled to vote will be able to elect all of our directors. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time-consuming for shareholders to replace a majority of the directors on a classified board.

Our amended and restated articles of incorporation and amended bylaws provide that, subject to the rights of holders of any preferred stock, any director may be removed from office only for cause by the affirmative vote of

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the holders of at least 80% of the voting power of all of our outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class.

In addition, our amended and restated articles of incorporation and amended bylaws provide that the number of directors on our board will consist of a number of directors, not less than three nor more than eleven, to be fixed exclusively by our board of directors. Newly created directorships resulting from any increase in the number of directors may be filled by the affirmative vote of the directors then in office. Further, any vacancies on our board of directors resulting from death, resignation, or removal from office will also be filed solely by the vote of our remaining directors. Any director elected in accordance with the preceding sentence shall be a director of the same class as the director whose vacancy he or she fills and shall hold office until the next annual meeting of shareholders, and until such director’s successor shall have been duly elected and qualified.

Undesignated Preferred Stock

Our amended and restated articles of incorporation authorize undesignated preferred stock, which makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change the control of Five Below. This may have the effect of deterring hostile takeovers or delaying changes in control or management of Five Below.

Authorized but Unissued Shares

The authorized but unissued shares of our common stock and preferred stock are available for future issuance without shareholder approval, subject to various limitations imposed by The NASDAQ Stock Market LLC. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could make it more difficult, or discourage an attempt, to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Procedures for Shareholder Nominations and Proposals

Our amended bylaws establish advance notice procedures with respect to shareholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee thereof. The advance notice provisions in our amended bylaws could have the effect of delaying shareholder actions that are favored by the holders of a majority of our outstanding voting securities until the next shareholder meeting or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempt to obtain control of us.

Pennsylvania Anti-Takeover Laws

Pursuant to our amended and restated articles of incorporation, we have expressly elected not to be governed by a number of anti-takeover statutes available under Pennsylvania law. We are, however, subject to the following anti-takeover provisions under Pennsylvania law:

• Subchapter F of Chapter 25 of the Pennsylvania Business Corporation Law, or the PBCL, prohibits a “business combination” with an “interested shareholder,” which means a person who (a) is the beneficial owner, directly or indirectly, of shares entitling that person to cast at least 20% of the votes entitled to be cast for the election of directors of a corporation or (b) who is an affiliate or associate of such corporation and was the beneficial owner, directly or indirectly, of shares entitling that person to cast at least 20% of the votes at any time within the five-year period immediately prior to the date in question, unless this business combination or the acquisition by the shareholder or group of shareholders of at least 20% of the voting power of the corporation is approved in advance by our

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board of directors or approved by a certain majority of those shareholders who are not interested shareholders nor affiliates or associates thereof. This provision may discourage open market purchases of our stock or a non-negotiated tender or exchange offer for our stock and, accordingly, may be considered disadvantageous by a shareholder who would desire to participate in any such transaction.

• Pursuant to Section 1715 of the PBCL, our directors are not required to regard the interests of any particular group, including those of the shareholders, as being dominant or controlling in considering our best interests. The directors may consider, to the extent they deem appropriate, such factors as:

• the effects of any action upon any group affected by such action, including our shareholders, employees, suppliers, customers and creditors, and communities in which we have stores, offices or other establishments;

• our short-term and long-term interests, including benefits that may accrue to us from our long-term plans and the possibility that these interests may be best served by our continued independence;

• the resources, intent and conduct of any person seeking to acquire control of us; and

• all other pertinent factors.

Section 1715 further provides that any act of our board of directors, a committee of the board or an individual director relating to or affecting an acquisition or potential or proposed acquisition of control to which a majority of our disinterested directors have assented will be presumed to satisfy the standard of care set forth in the PBCL, unless it is proven by clear and convincing evidence that our disinterested directors did not consent to such act in good faith after reasonable investigation. As a result of this and the other provisions of Section 1715, our directors are provided with broad discretion with respect to actions that may be taken in response to acquisitions or proposed acquisitions of corporate control.

Indemnification and Limitation of Directors and Limitation of Liability

Pennsylvania Business Corporation Law

Sections 1741 through 1750 of Subchapter D, Chapter 17, of the PBCL, contain provisions for mandatory and discretionary indemnification of a corporation’s directors, officers and other personnel, and related matters. As described below, we intend to indemnify our directors, officers and other such personnel to the fullest extent permitted by the PBCL.

Amended Bylaws

Our amended bylaws provide that we may indemnify our directors and officers for monetary damages for any action taken or failure to take any action, unless such director or officer has breached or failed to perform the duties of his or her office under the PBCL, our amended bylaws or our amended and restated articles of incorporation; and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.

In addition, our amended bylaws provide that we shall indemnify our directors and officers for expenses, attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she has acted in good faith and in a manner he or she believed to be in our best interest, or in the case of a criminal proceeding, that he or she had no reasonable cause to believe his or her conduct was unlawful. Such indemnification as to expenses, including attorneys’ fees, is mandatory to the extent the individual is successful on the merits or otherwise in defense of the matter or in defense of any claim, issue or matter therein. Our amended bylaws provide, however, in the case of an action or suit by or in the right of Five Below, that we will not indemnify a director or officer with respect to a matter in which such person has been adjudged to be liable in the performance of his or her duties to us, unless a court of common pleas determines that such person is fairly and reasonably entitled to indemnification. Our amended

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bylaws also provide that we may advance expenses to any director or officer upon our receipt of an undertaking by the director or officer to repay those amounts if it is finally determined that he or she is not entitled to indemnification.

Pursuant to our amended bylaws, we have the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of Five Below or an employee or agent of Five Below, against any liability asserted against such person and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not we would have the power to indemnify him or her against that liability. Accordingly, we maintain directors’ and officers’ liability insurance to provide directors and officers with insurance coverage for losses, including those that arise from claims based on breaches of duty, negligence, error and other wrongful acts and for violations with respect to the Securities Act.

Indemnification Agreements

We have entered into indemnification agreements with our directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Pennsylvania law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions lapse. This may put downward pressure on the market price of our common stock and our ability to raise capital through a future sale of our securities.

Upon the closing of this offering,              shares of common stock will be outstanding. The number of shares outstanding after this offering is based on the number of shares outstanding as of                     , 2012 and assumes the conversion of all shares of preferred stock into common stock, the exercise of all outstanding warrants and no exercise of outstanding stock options. The              shares sold in this offering will be freely tradable without restriction under the Securities Act, unless those shares are purchased by affiliates as that term is defined in Rule 144 under the Securities Act. Persons who may be deemed to be affiliates generally include individuals or entities that control, are controlled by, or are under common control with, us and may include our directors and officers. The remaining              shares of common stock held by existing shareholders are “restricted securities” within the meaning of Rule 144 under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as Rule 701 under the Securities Act, or meet the safe harbor requirements of Rule 144 under the Securities Act, which are summarized below. The remaining shares of common stock held by our existing shareholders upon the closing of this offering will be available for sale in the public market after the expiration of the lock-up agreements described below and under “Underwriting,” taking into account the provisions of Rules 144 and 701 of the Securities Act.

Sales of Restricted Shares and Shares Held by Our Affiliates

Rule 144

In general, under Rule 144, an affiliate who beneficially owns shares that were purchased from us, or any affiliate, at least six months previously, is entitled to sell, upon the expiration of the lock-up agreement described below and in “Underwriting” and within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of 1% of our then-outstanding shares of common stock, which will equal approximately              shares immediately after this offering, or the average weekly trading volume of our common stock on The NASDAQ Global Select Market during the four calendar weeks preceding the filing of a notice of the sale with the SEC. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.

Under Rule 144(b)(1), a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months (including the holding period of any prior owner other than an affiliate), is entitled to sell its shares without complying with the volume limitation or the manner of sale or notice provisions of Rule 144 beginning 90 days after the date of this prospectus, provided current public information about us is available. Such current, public information requirement shall not apply if such shares were beneficially owned for at least twelve months.

Rule 701

Subject to certain limitations on the aggregate offering price of a transaction and other conditions, Rule 701 may be relied upon with respect to the resale of securities originally purchased from us by our employees,

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directors, officers, consultants or advisors prior to the date we become subject to the reporting requirements of the Securities Exchange Act. To be eligible for resale under Rule 701, shares must have been issued in connection with written compensatory benefit plans or written contracts relating to the compensation of such persons. In addition, the SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this offering. Securities issued in reliance on Rule 701 are restricted securities and, subject to the contractual restrictions described below, beginning 90 days after the date of this prospectus, may be sold by persons other than “affiliates,” as defined in Rule 144, subject only to the manner of sale provisions of Rule 144 and by “affiliates” under Rule 144 without compliance with its one-year minimum holding period requirement. Subject to the 180-day lock-up period described below and in “Underwriting,” approximately              shares of our common stock will be eligible for sale in accordance with Rule 701.

Sales under Rules 144 and 701

No precise prediction can be made as to the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. We are unable to estimate the number of our shares that may be sold in the public market pursuant to Rule 144 or Rule 701 (or pursuant to Form S-8, if applicable) because this will depend on the market price of our common stock, the personal circumstances of the sellers and other factors. Nevertheless, sales of significant amounts of our common stock in the public market could adversely affect the market price of our common stock.

Equity Incentive Plan

As of May 23, 2012, we had outstanding options to purchase 2,901,800 shares of our common stock, of which no options to purchase shares were vested. In addition, we had 4,093,515 shares of restricted stock outstanding, of which 200,219 were issued in connection with the 2010 Transaction as a result of the conversion of the options outstanding under the equity incentive plan prior to the 2010 Transaction and 3,893,296 were issued in connection with the Option Cancellation Agreements to Messrs. Schlessinger and Vellios.

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all shares of common stock subject to outstanding stock options and options and other awards issuable under our equity incentive plan. We expect to file the registration statement covering shares offered pursuant to our equity incentive plan shortly after the date of this prospectus, permitting the resale of such shares, subject to compliance with the resale provisions of Rule 144 applicable to affiliates, and subject to any vesting restrictions and lock-up agreements applicable to these shares. Our equity incentive plan is described in more detail under “Executive Compensation—Employee Benefit Plans.”

Lock-Up Agreements

We and the holders of substantially all of our common stock outstanding on the date of this prospectus, including each of our executive officers, directors and selling shareholders, have entered into lock-up agreements with the underwriters providing that we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or hedge any of our shares of common stock, any options or warrants to purchase shares of our common stock, or any securities convertible into, or exchangeable for or that represent the right to receive shares of our common stock, without the prior written consent of Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. for a period of 180 days from the date of this prospectus. The lock-up agreements are subject to customary exceptions, including transfers of shares (i) as a bona fide gift of shares, provided that the donee agrees to be bound in writing by the restrictions described above; (ii) to any trust for the benefit of the lock-up party or the immediate family of the lock-up party, provided that the trustee agrees to be bound in writing by the restrictions described above, and

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provided further that any such transfer shall not involve a disposition for value; (iii) to the underwriters pursuant to the underwriting agreement; (iv) to the Company to satisfy tax withholding obligations in connection with the exercise of stock options or the vesting of restricted stock outstanding as of the date of the lock-up agreement; (v) in transactions relating to shares of stock acquired in open market transactions after the completion of this offering; and (vi) by will or intestate succession, provided the beneficiary or beneficiaries thereof agree to be bound in writing by the restrictions described above, and provided further that any such transfer shall not involve a disposition for value; provided further that, in the cases of (iv), (v) and (vi), no filing under the Exchange Act shall be required or voluntarily made. The 180-day lock-up period may be extended under certain circumstances where we release, or pre-announce a release of, our earnings shortly before or after the termination of the 180-day period, or we announce material news or a material event shortly before the termination of the 180-day period, unless Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. waive, in writing, such extension.

Our amended and restated investor rights agreement also provides that upon the request by underwriters in a registered public offering of our shares of common stock, each shareholder party to such agreement will not directly or indirectly, sell, contract to sell (including without limitation, any short sale), grant any option to purchase, dispose of or otherwise transfer any shares held by such shareholder, without the consent of the underwriters for a period of not more than 180 days following the effective date of the registration statement related to an initial public offering or 90 days following the effective date of the registration statement related to any registration other than the initial public offering. Such shareholders also agreed to execute and deliver the necessary documents to effect such restrictions. In addition, the agreement permits Five Below to impose stop-transfer instructions with respect to such securities until the end of the applicable period.

Registration Rights

Upon the closing of this offering, shareholders who are parties to the amended and restated investor rights agreement, as amended, have the right, subject to various conditions and limitations, to include their shares of our common stock in registration statements relating to our securities. The right to include shares in an underwritten registration is subject to the ability of the underwriters to limit the number of shares included in the offering. By exercising their registration rights and causing a large number of shares to be registered and sold in the public market, these holders could cause the price of the common stock to fall. In addition, any demand to include such shares in our registration statements could have a material adverse effect on our ability to raise needed capital.

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MATERIAL UNITED STATES TAX CONSIDERATIONS

FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

This section summarizes the material U.S. federal income and estate tax considerations relating to the acquisition, ownership and disposition of our common stock by “non-U.S. holders” (defined below) pursuant to this offering. This summary does not provide a complete analysis of all potential U.S. federal income tax considerations relating thereto. The information provided below is based upon provisions of the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions currently in effect. These authorities may change at any time, possibly retroactively, or the Internal Revenue Service, or IRS, might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of our common stock could differ from those described below.

For purposes of this summary, a “non-U.S. holder” is any holder of our common stock, other than a partnership, that is not:

• an individual who is a citizen or resident of the United States;

• a corporation, or other entity taxable as a corporation, created or organized under the laws of the United States, any state therein or the District of Columbia;

• a trust if it (1) is subject to the primary supervision of a U.S. court and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

• an estate whose income is subject to U.S. income tax regardless of source.

If you are an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Such an individual is urged to consult his or her own tax advisor regarding his or her status as a resident alien for U.S. federal income tax purposes under these rules and the U.S. federal income tax consequences of the ownership or disposition of our common stock. If a partnership or other pass-through entity is a beneficial owner of our common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Any partner in a partnership or owner of a pass-through entity holding shares of our common stock should consult its own tax advisor. A partnership that is not formed under the laws of the United States or a state or the District of Columbia is a non-U.S. holder for purposes of the Additional Withholding Rules described below.

This discussion assumes that a non-U.S. holder will hold our common stock as a capital asset (generally, property held for investment). The summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances, or because they are subject to special rules, including, without limitation, if the investor is a former citizen or long-term resident of the United States, “controlled foreign corporation,” “passive foreign investment company,” or partner in a partnership or beneficial owner of a pass-through entity that holds our common stock. Finally, the summary does not describe the effects of any applicable foreign, state or local laws, or, except to the extent discussed below, the effects of any applicable gift or estate tax laws.

INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE OR LOCAL LAWS, AND TAX TREATIES.

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Dividends

We do not expect to declare or pay any dividends on our common stock in the foreseeable future. If we do pay dividends on shares of our common stock, however, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a non-U.S. holder’s adjusted tax basis in shares of our common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of our common stock. See “—Sale of Common Stock.”

Any distribution to the extent treated for U.S. federal income tax purposes as a dividend paid to a non-U.S. holder on our common stock will generally be subject to U.S. withholding tax at a 30% rate. The withholding tax might not apply, however, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. You should consult your tax advisors regarding your entitlement to benefits under a relevant income tax treaty. Generally, in order for us or our paying agent to withhold tax at a lower treaty rate, a non-U.S. holder must certify its entitlement to treaty benefits. A non-U.S. holder generally can meet this certification requirement by providing a Form W-8BEN (or any successor form) or appropriate substitute form to us or our paying agent. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a partnership or other pass-through entity, the certification requirements frequently apply to the partners or other owners rather than to the partnership or other entity, and the partnership or other entity may be required to provide the partners’ or other owners’ documentation to us or our paying agent. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.

If you are a non-U.S. holder (including for this purpose, a partnership) and not an individual, you may be subject to a 30% withholding even if you are eligible to claim the benefits of a tax treaty if you do not comply with certain information reporting rules, described below under Additional Withholding Rules.

Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder are not subject to such withholding tax. To obtain this exemption, a non-U.S. holder must provide us with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits, provided that, if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, such dividends are attributable to a permanent establishment maintained by the non-U.S. holder in the United States. In addition to the graduated tax described above, dividends received by corporate non-U.S. holders that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

Sale of Common Stock

Subject to the rules discussed under Additional Withholding Rules below, non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of our common stock unless:

• the gain (1) is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business and (2) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment (or, in certain cases involving individual holders, a fixed base) maintained by the non-U.S. holder in the United States (in which case the special rules described below apply);

• the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition of our common stock, and certain other

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requirements are met (in which case the gain would be subject to a flat 30% tax, or such reduced rate as may be specified by an applicable income tax treaty, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States); or

• the rules of the Foreign Investment in Real Property Tax Act, or FIRPTA, treat the gain as effectively connected with a U.S. trade or business.

The FIRPTA rules may apply to a sale, exchange or other disposition of our common stock if we are, or were within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period, a “U.S. real property holding corporation,” or USRPHC. In general, we would be a USRPHC if interests in U.S. real estate comprised at least half of our business assets. We do not believe that we are a USRPHC and we do not anticipate becoming one in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if beneficially owned by a non-U.S. holder that actually or constructively owned more than 5% of our outstanding common stock at some time within the five-year period preceding the disposition.

If any gain from the sale, exchange or other disposition of our common stock, (1) is effectively connected with a U.S. trade or business conducted by a non-U.S. holder and (2) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment (or, in certain cases involving individuals, a fixed base) maintained by such non-U.S. holder in the United States, then the gain generally will be subject to U.S. federal income tax at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. If the non-U.S. holder is a corporation, under certain circumstances, that portion of its earnings and profits that is effectively connected with its U.S. trade or business, subject to certain adjustments, may also be subject to a “branch profits tax.” The branch profits tax rate is generally 30%, although an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence might provide for a lower rate.

U.S. Federal Estate Tax

The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of residence provides otherwise.

Backup Withholding and Information Reporting

The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or failing to report interest or dividends on his returns. The backup withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign.

Payments to non-U.S. holders of dividends on common stock generally will not be subject to backup withholding, so long as the non-U.S. holder certifies its nonresident status (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied) or otherwise establishes an exemption. The certification procedures to claim treaty benefits described in “—Dividends” will satisfy the certification requirements necessary to avoid the backup withholding tax as well. We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to these dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.

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Under the Treasury regulations, the payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies, under penalties of perjury, among other things, its status as a non-U.S. holder (and the broker does not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except as noted below. Information reporting, but not backup withholding, will apply to a payment of proceeds, even if that payment is made outside of the United States, if you sell our common stock through a non-U.S. office of a broker that is:

• a U.S. person (including a foreign branch or office of such person);

• a “controlled foreign corporation” for U.S. federal income tax purposes;

• a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or

• a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business;

unless the broker has documentary evidence that the beneficial owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary). Information reporting and backup withholding will apply if you sell our common stock through a non-U.S. office of a broker and:

• the proceeds are transferred to an account maintained by you in the United States,

• the payment of proceeds or the confirmation of the sale is mailed to you at a United States address, or

• the sale has some other specified connection with the United States as provided in Treasury regulations,

unless the broker has documentary evidence that the beneficial owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).

Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.

Additional Withholding Rules

A non-U.S. Holder that is an entity (including, for this purpose, a partnership) may be subject to a U.S. withholding tax at a rate of 30% on payments of dividends, if any, that we declare, and on the gross proceeds on the disposition of our common stock, unless the foreign entity has complied with various U.S. information reporting and due diligence requirements that are generally designed to identify U.S. owners or account holders in the entity. These withholding requirements are expected to be phased in for dividend payments made on or after January 1, 2014, and for payments of gross proceeds from dispositions of our common stock made on or after January 1, 2015. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.

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THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

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UNDERWRITING

We, the selling shareholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Barclays Capital Inc., Jefferies & Company, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers of the offering, and Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. are the representatives of the underwriters.

Underwriters	Number of Shares
Goldman, Sachs & Co.
Barclays Capital Inc.
Jefferies & Company, Inc.
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
UBS Securities LLC
Wells Fargo Securities, LLC
Total

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional              shares from the selling shareholders to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling shareholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase              additional shares.

Paid by the Company

	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Paid by the Selling Shareholders

	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $         per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and holders of substantially all of our common stock on the date of this prospectus, including each of our executive officers, directors and selling shareholders, have agreed with the underwriters, subject to certain

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exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date that is 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing employee benefit plans. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us, the qualified independent underwriter and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

An application will be made to list the common stock on The NASDAQ Global Select Market under the symbol “FIVE.” In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the closing of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on The NASDAQ Global Select Market, in the over-the-counter market or otherwise.

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The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

We and the selling shareholders estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $        .

We and the selling shareholders have agreed to indemnify the several underwriters and Credit Suisse Securities (USA) LLC in its capacity as qualified independent underwriter against certain liabilities, including liabilities under the Securities Act.

Conflicts of Interest

As described under “Use of Proceeds,” we expect to use all or substantially all of the net proceeds we receive from this offering to repay $50.0 million of the outstanding indebtedness under our new term loan facility with a syndicate of lenders. Affiliates of Goldman, Sachs & Co., Barclays Capital Inc., Jefferies & Company, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC are lenders under our new term loan facility and will each receive their pro rata share of such repayment. Because it is possible that each of Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. or their affiliates could receive more than 5% of the proceeds of this offering in connection with the repayment of our new term loan facility, each of Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. is deemed to have a “conflict of interest” under Rule 5121 (“Rule 5121”) of the Financial Industry Regulatory Authority. Accordingly, this offering will be conducted in accordance with Rule 5121. Rule 5121 requires that a “qualified independent underwriter,” meeting certain standards, participate in the preparation of the registration statement and prospectus and exercise the usual standards of due diligence with respect thereto. Credit Suisse Securities (USA) LLC has served as “qualified independent underwriter” within the meaning of Rule 5121 in connection with this offering. To comply with Rule 5121, Credit Suisse Securities (USA) LLC will not confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the transaction from the account holder.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In particular, affiliates of Goldman, Sachs & Co., Barclays Capital Inc. and Jefferies & Company, Inc. are lead arrangers, bookrunners and lenders under our new term loan facility.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant

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Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Each underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorized person, apply to us; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or

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indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Japan

The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the “Financial Instruments and Exchange Law”) and each underwriter has agreed that it will not offer or sell any shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Switzerland

This document as well as any other material relating to the shares which are the subject of the offering contemplated by this prospectus (the “Shares”) does not constitute an issue prospectus pursuant to Articles 652a and/or 1156 of the Swiss Code of Obligations. The Shares will not be listed on the SIX Swiss Exchange and, therefore, the documents relating to the Shares, including, but not limited to, this document, do not claim to comply with the disclosure standards of the listing rules of the SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange. The Shares are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase the Shares with the intention to distribute them to the public. The investors will be individually approached by us from time to time. This document as well as any other material relating to the Shares is personal and confidential and does not constitute an offer to any other person. This document may only be used by those investors to whom it has been handed out in connection with the offering described herein and may neither directly nor indirectly be distributed or made available to other persons without our express consent. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in (or from) Switzerland.

Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for this prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

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VALIDITY OF COMMON STOCK

Pepper Hamilton LLP will pass upon the validity of the shares of common stock offered hereby for us. An attorney with the firm owns an aggregate of 70,000 shares of our common stock. Sullivan & Cromwell LLP will pass upon the validity of the shares of common stock offered hereby for the underwriters.

EXPERTS

The financial statements of Five Below, Inc. as of January 29, 2011 and January 28, 2012, and for each of the fiscal years in the three-year period ended January 28, 2012, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and its exhibits, certain portions of which are omitted as permitted by the rules and regulations of the SEC. For further information pertaining to us and our common stock to be sold in this offering, we refer you to the registration statement, including its exhibits and the financial statements, notes and schedules filed as a part of that registration statement. Statements contained in this prospectus regarding the contents of any contract or other document referred to in those documents are not necessarily complete, and in each instance we refer you to the copy of the contract or other document filed as an exhibit to the registration statement or other document. Each of these statements is qualified in all respects by this reference.

You may read and copy the registration statement and its exhibits and schedules at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You also may obtain information on the operation of the public reference room by calling the commission at 1-800-SEC-0330. The SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, such as Five Below, Inc., that file electronically with the SEC.

Upon the closing of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above. We also maintain a web site at www.fivebelow.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.

120

FIVE BELOW, INC.

Index to Financial Statements

	Page
Audited Financial Statements
Report of KPMG LLP, Independent Registered Public Accounting Firm		F-2
Balance Sheets as of January 29, 2011 and January 28, 2012		F-3
Statements of Operations for Fiscal Years 2009, 2010 and 2011		F-4
Statements of Changes in Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Shareholders’ Deficit for Fiscal Years 2009, 2010 and 2011		F-5
Statements of Cash Flows for Fiscal Years 2009, 2010 and 2011		F-6
Notes to Financial Statements		F-7
Unaudited Financial Statements
Unaudited Balance Sheets as of April 30, 2011, January 28, 2012 and April 28, 2012		F-26
Unaudited Statements of Operations for the Thirteen Weeks Ended April 30, 2011 and April 28, 2012		F-27
Unaudited Statement of Changes in Convertible Preferred Stock and Shareholders’ Deficit for the Thirteen Weeks Ended April 28, 2012		F-28
Unaudited Statements of Cash Flows for the Thirteen Weeks Ended April 30, 2011 and April 28, 2012		F-29
Notes to Unaudited Financial Statements		F-30

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Five Below, Inc.:

We have audited the accompanying balance sheets of Five Below, Inc. (the Company) as of January 29, 2011 and January 28, 2012, and the related statements of operations, changes in redeemable convertible preferred stock, convertible preferred stock and shareholders’ deficit, and cash flows for each of the fiscal years in the three-year period ended January 28, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Five Below, Inc. as of January 29, 2011 and January 28, 2012, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended January 28, 2012, in conformity with U.S. generally accepted accounting principles.

April 17, 2012, except as to note 10,

    which is as of May 23, 2012

/s/    KPMG LLP

Philadelphia, Pennsylvania

F-2

FIVE BELOW, INC.

Balance Sheets

(in thousands, except share and per share data)

	January 29, 2011			January 28, 2012
Assets
Current assets:
Cash and cash equivalents	$	12,153		$	41,293
Income taxes receivable		20			—
Inventories		26,754			38,790
Deferred income taxes		2,899			4,863
Prepaid expenses and other current assets		4,116			7,303
Total current assets		45,942			92,249
Property and equipment, net		29,743			42,040
Deferred income taxes		714			—
Other assets		183			238
	$	76,582		$	134,527
Liabilities and Shareholders’ Deficit
Current liabilities:
Line of credit	$	—		$	—
Accounts payable		10,023			23,588
Income taxes payable		141			9,139
Accrued salaries and wages		2,043			9,254
Other accrued expenses		6,008			7,961
Total current liabilities		18,215			49,942
Note payable		250			250
Deferred rent		15,059			20,933
Deferred income taxes		—			1,306
Total liabilities		33,524			72,431
Commitments and contingencies (note 4)
Preferred stock, $0.01 par value. Authorized 100,000,000 shares; 10,000,000 shares undesignated; 90,000,000 shares designated as Series A 8% Convertible Preferred Stock, $0.01 par value. Issued and outstanding 89,291,773 shares with a liquidation preference of $198,507 and $214,420, respectively		191,855			191,855
Shareholders’ deficit:
Common stock, $0.01 par value. Authorized 200,000,000 shares; issued and outstanding 46,486,735 and 46,961,992, respectively		465			470
Additional paid-in capital		428			3,383
Accumulated deficit		(149,690	)		(133,612	)
Total shareholders’ deficit		(148,797	)		(129,759	)
	$	76,582		$	134,527

See accompanying notes to financial statements.

F-3

FIVE BELOW, INC.

Statements of Operations

(in thousands, except share and per share data)

	Fiscal Year
	2009			2010			2011
Net sales	$	125,135		$	197,189		$	297,113
Cost of goods sold		85,040			131,046			192,252
Gross profit		40,095			66,143			104,861
Selling, general and administrative expenses		33,217			54,339			78,640
Operating income		6,878			11,804			26,221
Interest expense (income), net		73			28			(16	)
Income before income taxes		6,805			11,776			26,237
Income tax (benefit) expense		(4,853	)		4,753			10,159
Net income		11,658			7,023			16,078
Series A 8% Convertible Preferred Stock cumulative dividends		—			(4,507	)		(15,913	)
Accretion of Redeemable Convertible Preferred Stock		(4,250	)		(3,329	)		—
Net income (loss) available to shareholders		7,408			(813	)		165
Less: Net income attributable to participating securities		(3,365	)		—			(109	)
Net income (loss) available to common shareholders	$	4,043		$	(813	)	$	56
Basic income (loss) per common share	$	0.19		$	(0.03	)	$	—
Diluted income (loss) per common share	$	0.19		$	(0.03	)	$	—
Dividends declared per common share	$	—		$	4.58		$	—
Weighted average shares outstanding:
Basic shares		21,539,917			27,954,322			45,964,159
Diluted shares		21,539,917			27,954,322			45,965,631
Unaudited pro forma net income (see note 1)							$	14,159
Unaudited pro forma basic income per common share (see note 1)							$	0.10
Unaudited pro forma diluted income per common share (see note 1)							$	0.10
Unaudited pro forma weighted average shares outstanding (see note 1):
Basic shares								135,255,932
Diluted shares								135,257,404

See accompanying notes to financial statements.

F-4

FIVE BELOW, INC.

Statements of Changes in Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Shareholders’ Deficit

(in thousands, except share and per share data)

	Redeemable Convertible Preferred Stock												Series A  8% Convertible Preferred Stock				Shareholders’ Deficit
																	Common stock				Additional paid-in  capital			Accumulated deficit			Total shareholders’ deficit
	Series A						Series A-1
	Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount
Balance, January 31, 2009		6,173,030		$	17,030			8,006,984		$	16,008			—	$	—		21,515,741	$	215	$	12,928		$	(22,022	)	$	(8,879	)
Issuance of warrants to purchase common stock to professional service providers		—			—			—			—			—		—		—		—		24			—			24
Stock-based compensation expense		—			—			—			—			—		—		—		—		271			—			271
Exercise of options and warrants to purchase common stock		—			—			—			—			—		—		73,928		1		126			—			127
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value		—			1,748			—			—			—		—		—		—		(1,748	)		—			(1,748	)
Accretion of Series A-1 Redeemable Convertible Preferred Stock to redemption value		—			—			—			2,502			—		—		—		—		(2,502	)		—			(2,502	)
Net income		—			—			—			—			—		—		—		—		—			11,658			11,658
Balance, January 30, 2010		6,173,030			18,778			8,006,984			18,510			—		—		21,589,669		216		9,099			(10,364	)		(1,049	)
Issuance of warrants to purchase common stock to professional service providers		—			—			—			—			—		—		—		—		203			—			203
Stock-based compensation expense		—			—			—			—			—		—		—		—		2,104			—			2,104
Exercise of options and warrants to purchase common stock		—			—			—			—			—		—		3,432,538		35		4,957			—			4,992
Redemption of warrants for common stock and cash		—			—			—			—			—		—		3,530,989		35		(10,203	)		—			(10,168	)
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value		—			1,356			—			—			—		—		—		—		(1,356	)		—			(1,356	)
Accretion of Series A-1 Redeemable Convertible Preferred Stock to redemption value		—			—			—			1,973			—		—		—		—		(1,973	)		—			(1,973	)
Conversion of Series A and Series A-1 Redeemable Convertible Preferred Stock to common stock and redemption of fractional shares		(6,173,030	)		(20,134	)		(8,006,984	)		(20,483	)		—		—		17,933,539		179		40,439			—			40,618
Issuance of Series A 8% Convertible Preferred Stock, net of issuance costs of $2,145		—			—			—			—			89,291,773		191,855		—		—		—			—			—
Dividend paid to common shareholders		—			—			—			—			—		—		—		—		(46,068	)		(146,349	)		(192,417	)
Income tax benefit related to exercise of stock options and warrants		—			—			—			—			—		—		—		—		3,226			—			3,226
Net income		—			—			—			—			—		—		—		—		—			7,023			7,023
Balance, January 29, 2011		—			—			—			—			89,291,773		191,855		46,486,735		465		428			(149,690	)		(148,797	)
Issuance of warrants to purchase common stock to professional service providers		—			—			—			—			—		—		—		—		31			—			31
Stock-based compensation expense		—			—			—			—			—		—		—		—		1,197			—			1,197
Exercise of warrants to purchase common stock		—			—			—			—			—		—		15,000		—		33			—			33
Vesting of restricted shares		—			—			—			—			—		—		—		—		491			—			491
Repurchase of unvested restricted shares		—			—			—			—			—		—		—		—		98			—			98
Issuance of common stock		—			—			—			—			—		—		460,257		5		1,105			—			1,110
Net income		—			—			—			—			—		—		—		—		—			16,078			16,078
Balance, January 28, 2012		—		$	—			—		$	—			89,291,773	$	191,855		46,961,992	$	470	$	3,383		$	(133,612	)	$	(129,759	)

See accompanying notes to financial statements.

F-5

FIVE BELOW, INC.

Statements of Cash Flows

(in thousands)

	Fiscal Year
	2009			2010			2011
Operating activities:
Net income	$	11,658		$	7,023		$	16,078
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,660			4,805			7,071
Loss on disposal of property and equipment		5			288			273
Amortization of deferred financing costs		51			28			28
Warrant expense related to a merchandise vendor and professional service providers for services rendered		3			228			49
Stock-based compensation expense		271			2,104			1,197
Deferred income tax (benefit) expense		(5,027	)		(716	)		56
(Increase) decrease in assets:
Income taxes receivable		—			(20	)		20
Inventories		(2,606	)		(10,711	)		(12,036	)
Prepaid expenses and other assets		(645	)		(756	)		(3,270	)
(Decrease) increase in liabilities:
Accounts payable		(1,326	)		3,684			12,481
Income taxes payable		127			2,144			8,998
Accrued salaries and wages		544			544			7,211
Deferred rent		2,204			6,295			6,997
Other accrued expenses		308			105			1,542
Net cash provided by operating activities		9,227			15,045			46,695
Investing activities:
Capital expenditures		(7,285	)		(14,883	)		(18,558	)
Net cash used in investing activities		(7,285	)		(14,883	)		(18,558	)
Financing activities:
Borrowing under long term note payable		—			250			—
Payments under capital lease agreements		(222	)		—			—
Payment of financing costs		(50	)		(43	)		—
Net proceeds from issuance of preferred stock		—			191,855			—
Proceeds from issuance of common stock		—			—			1,110
Proceeds from exercise of and prepayment related to warrants and options to purchase common stock		127			6,852			33
Repurchase of unvested restricted shares		—			—			(140	)
Dividend paid to common shareholders		—			(192,417	)		—
Redemption of warrants		—			(10,168	)		—
Excess tax benefit related to exercise of stock options and warrants		—			3,226			—
Net cash (used in) provided by financing activities		(145	)		(445	)		1,003
Net increase (decrease) in cash and cash equivalents		1,797			(283	)		29,140
Cash and cash equivalents at beginning of year		10,639			12,436			12,153
Cash and cash equivalents at end of year	$	12,436		$	12,153		$	41,293
Supplemental disclosures of cash flow information:
Interest paid	$	83		$	53		$	24
Income taxes paid		47			111			1,157

See accompanying notes to financial statements.

F-6

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

(1) Summary of Significant Accounting Policies

(a) Description of Business

Five Below, Inc. (the Company) is a specialty value retailer offering merchandise targeted at the aspirational teen and pre-teen demographic. The Company offers an edited assortment of products, priced at $5 and below. The Company’s edited assortment of products include select brands and licensed merchandise. The Company believes its merchandise is readily available, and that there are a number of potential vendors that could be utilized, if necessary, under approximately the same terms the Company is currently receiving; thus, it is not dependent on a single vendor or a group of vendors.

The Company is incorporated in the Commonwealth of Pennsylvania and as of January 28, 2012, operated 192 stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Massachusetts, New Hampshire, West Virginia, North Carolina, New York, Connecticut, Rhode Island, Ohio, Illinois, Indiana, and Michigan, each operating under the name “Five Below.” As of January 29, 2011 and January 30, 2010 the Company operated 142 stores and 102 stores, respectively.

(b) Fiscal Year

The Company operates on a 52/53-week fiscal year ending on the Saturday closest to January 31. The period from January 30, 2011 to January 28, 2012 is referred to as Fiscal 2011. The period from January 31, 2010 to January 29, 2011 is referred to as Fiscal 2010. The period from February 1, 2009 to January 30, 2010 is referred to as Fiscal 2009. Fiscal 2011, Fiscal 2010 and Fiscal 2009 included 52 weeks.

(c) Unaudited Pro Forma Presentation

Pro forma net income information gives effect to: (i) income attributable to participating securities; (ii) cumulative dividends related to the Series A 8% Convertible Preferred Stock; and (iii) the $100,000 term loan facility entered into on May 16, 2012 with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders, including the repayment of $50,000 of outstanding indebtedness under the term loan facility with the Company’s proposed initial public offering (IPO) proceeds.

The following is a reconciliation of historical net income to unaudited pro forma net income:

	Fiscal Year 2011
Net income available to common shareholders	$	56
Add:
Income attributable to participating securities		109
Series A 8% Convertible Preferred Stock cumulative dividends		15,913
Less:
Interest expense on new term loan facility, net of tax		(1,616	)
Amortization of deferred financing fees related to new term loan facility, net of tax		(303	)
Unaudited pro forma net income	$	14,159

Pro forma weighted average share data gives effect to the conversion of our outstanding shares of Series A 8% Convertible Preferred Stock into shares of common stock in connection with the closing of the IPO.

F-7 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

The following is a reconciliation of pro forma basic and diluted weighted average common shares outstanding:

	Fiscal Year 2011
Shares used in computing basic income per common share		45,964,159
Adjustment for assumed conversion of Series A 8% Convertible Preferred Stock		89,291,773
Unaudited basic pro forma weighted average shares outstanding		135,255,932
Dilutive effect of securities		1,472
Unaudited diluted pro forma weighted average shares outstanding		135,257,404

(d) Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity date of three months or less when purchased to be cash equivalents. The majority of payments due from banks for third-party credit card and debit card transactions resulting from customer purchases at the Company’s retail stores process within 24 to 48 hours, except for transactions occurring on a Friday, which are generally processed the following Monday. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents in the accompanying balance sheets. Amounts due from banks for these transactions classified as cash equivalents totaled $680 and $1,182 at January 29, 2011 and January 28, 2012, respectively. Book overdrafts, which are outstanding checks in excess of funds on deposit, are recorded within accounts payable in the accompanying balance sheets and within operating activities in the accompanying statements of cash flows.

The Company’s cash accounts are primarily maintained with one financial institution.

(e) Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts payable, and borrowings under a line of credit and a note payable. The Company believes that: (1) the carrying value of cash and cash equivalents and accounts payable are representative of their respective fair value due to the short-term nature of these instruments; (2) the carrying value of the borrowings under the line of credit approximates their fair value because the line of credit’s interest rates vary with market interest rates; and (3) the carrying value of the note payable approximates fair value because its negotiated terms and conditions are consistent with current market rates.

(f) Inventories

Inventories consist of finished goods purchased for resale, including freight, and are stated at the lower of cost or market value, at the individual product level. Cost is determined on a weighted average cost method which approximates a FIFO (first-in, first-out) basis due to the nature of our inventory. Management of the Company reviews inventory levels in order to identify slow-moving merchandise and uses markdowns to clear merchandise. Inventory cost is reduced when the selling price less costs of disposal is below cost. The Company accrues an estimate for inventory shrink for the period between the last physical count and the balance sheet date. The shrink estimate can be affected by changes in merchandise mix and changes in actual shrink trends.

(g) Property and Equipment

Property and equipment are stated at cost. Additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred. The straight-line method of depreciation and amortization is used for financial reporting purposes. The estimated useful lives are three to five years for furniture and fixtures and computers and equipment. Store leasehold improvements are amortized over the shorter of the useful life or the lease term plus assumed extensions, which is generally 10 years.

F-8 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

Property and equipment, net, consists of the following:

	January 29, 2011			January 28, 2012
Furniture and fixtures	$	16,631		$	23,354
Leasehold improvements		23,713			32,275
Computers and equipment		4,484			7,477
Construction in process		1,376			1,638
		46,204			64,744
Less: accumulated depreciation and amortization		(16,461	)		(22,704	)
	$	29,743		$	42,040

Depreciation and amortization expense for property and equipment, which is included in selling, general and administrative expenses in the accompanying statements of operations, was $3,660, $4,805 and $7,071 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively. Amortization expense applicable to property and equipment under capital leases of $73 in Fiscal 2009 is included in such expense.

(h) Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, then an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Based on its most recent analysis, management believes that no impairment of long-lived assets exists as of January 28, 2012.

(i) Deferred Financing Costs

Deferred financing costs (note 3) are amortized to interest expense over the term of the related credit agreement. Amortization expense in Fiscal 2009, Fiscal 2010 and Fiscal 2011 was $51, $28 and $28, respectively.

(j) Other Accrued Expenses

Other accrued expenses consist of the following:

	January 29, 2011		January 28, 2012
Deposit liability related to restricted shares (note 6)	$	1,860	$	1,131
Gift card liability		1,230		1,745
Other		2,918		5,085
	$	6,008	$	7,961

(k) Deferred Rent

Certain of the Company’s operating leases contain either rent holidays and/or predetermined fixed escalations of minimum rentals during the original and/or extended lease terms. For these leases, the Company recognizes the related rent expense on a straight-line basis over the life of the lease and records the difference between the amounts charged to operations and amounts paid as deferred rent. The life of the lease is the initial term plus assumed extensions. Generally, the Company’s store leases have an initial term of ten years or five years and one assumed five-year extension, resulting in a ten-year life. The Company also receives certain lease incentives in conjunction with entering into operating leases. These lease incentives are recorded as deferred rent at the beginning of the lease term and recognized as a reduction of rent expense over the lease term. In addition, certain of the Company’s leases contain future contingent increases in rents. Such increases in rent expense are recorded in the period in which such contingent increases to the rents take place.

F-9 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

(l) Stock Option Plan

The Company measures the cost of employee services received in exchange for stock-based compensation based on the grant date fair value of the employee stock award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must also be recognized. The Company recognizes compensation expense based on the estimated grant date fair value using the Black-Scholes option-pricing model recorded over the vesting period. Stock-based compensation cost recognized and included in expenses, excluding modifications, for Fiscal 2009, Fiscal 2010 and Fiscal 2011 was $271, $2,104 and $1,197, respectively. In addition, during Fiscal 2010, the Company recognized $4,309 of additional compensation expense related to certain modifications of outstanding options (note 6).

(m) Revenue Recognition

Revenue is recognized at the point of sale. Returns are only permitted for damaged or defective goods. To date, returns have been immaterial. Accordingly, no reserve has been recorded. Gift card sales to customers are initially recorded as liabilities and recognized as sales upon redemption for merchandise. Sales tax collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, excluded from sales in the accompanying statements of operations.

(n) Cost of Goods Sold

Cost of goods sold reflects the direct costs of purchased merchandise and inbound freight, as well as store occupancy, distribution and buying expenses. Store occupancy costs include rent, common area maintenance, utilities and property taxes for all store locations. Distribution costs include costs for receiving, processing, warehousing and shipping of merchandise to or from our distribution center and between store locations. Buying costs include compensation expense for our internal buying organization.

(o) Selling, General and Administrative Expenses

Selling, general and administrative expenses includes payroll and other compensation, marketing and advertising expense, depreciation and amortization expense, and other selling and administrative expenses.

(p) Vendor Allowances

The Company receives various incentives in the form of allowances, free product and promotional funds from its vendors based on product purchases and advertising activities. The amounts received are subject to changes in market conditions, vendor marketing strategies and changes in the profitability or sell-through of the related merchandise for the Company. Merchandise allowances are recorded in cost of goods and recognized in the period the related merchandise is sold. Marketing allowances are recorded in selling, general and administrative expenses and are recognized in the period the related advertising occurs to the extent the allowance is a reimbursement that is specific and incremental, and identifiable costs have been incurred by the Company to sell the vendor’s products. To the extent these conditions are not met, these allowances are recorded as merchandise allowances. Total vendor allowances recognized in the accompanying statements of operations during Fiscal 2009, Fiscal 2010 and Fiscal 2011 were $1,003, $1,999 and $2,908, respectively, of which, $893, $1,896 and $2,850 were recorded in cost of goods sold, respectively, and, $110, $103 and $58 were recorded in selling, general and administrative expenses, respectively.

(q) Store Pre-Opening Costs

Costs incurred between completion of a new store location’s construction and its opening (pre-opening costs) are charged to expense as incurred. Pre-opening costs were $1,216, $2,342 and $3,412 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively, and are recorded in the accompanying statements of operations based on the nature of the expense.

F-10 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

(r) Advertising Costs

Advertising costs are charged to expense the first time the advertising takes place. Advertising expenses were $3,920, $6,449 and $9,672 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively. Vendor marketing allowances earned to partially offset these costs were $110, $103 and $58 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively.

(s) Income Taxes

Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

(t) Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

(u) Use of Estimates

The preparation of financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, valuation allowances for inventories, income taxes and stock-based compensation expense.

(v) Reclassifications

In certain instances, amounts previously reported in the Fiscal 2009 and Fiscal 2010 financial statements have been reclassified from selling, general and administrative expenses to cost of goods sold (including store occupancy, distribution costs and buying expenses) to conform with the presentation in the Fiscal 2011 financial statements. The reclassifications had no effect on net income or shareholders’ equity (deficit) as previously reported.

F-11 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

(w) Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. generally accepted accounting principles (GAAP) and international financing reporting standards (IFRS) and change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. ASU No. 2011-04 is effective during interim and annual periods beginning after December 15, 2011. The adoption of the new requirements of ASU No. 2011-04 will not have a material impact on the Company’s financial position or results of operations.

(2) Income (Loss) Per Common Share

Basic income per common share amounts are calculated using the weighted-average number of common shares outstanding for the period. Diluted income per common share amounts are calculated using the weighted-average number of common shares outstanding for the period and include the dilutive impact of preferred stock using the if-converted method and exercise of stock options and warrants as well as assumed lapse of restrictions on restricted stock awards using the treasury stock method.

The two-class method is used to calculate basic and diluted income (loss) per common share since preferred and restricted stock are participating securities under Accounting Standards Codification (ASC) 260 Earnings per share. The two-class method is an earnings allocation formula that determines income per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic income (loss) per common share is computed by dividing net income (loss) attributable to common shares after allocation of income to participating securities by the weighted-average number of common shares outstanding during the year. Diluted income (loss) per common share is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company. The two-class method is the more dilutive method for Fiscal 2009, Fiscal 2010 and Fiscal 2011.

F-12 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

The following table summarizes the potential dilution that could occur if options and warrants to acquire common stock were exercised or converted into common stock and reconciles the weighted average common shares outstanding used in the computations of basic and diluted income (loss) per share:

		Fiscal Year
	2009			2010			2011
Numerator:
Net income	$	11,658		$	7,023		$	16,078
Series A 8% Convertible Preferred Stock cumulative dividends		—			(4,507	)		(15,913	)
Accretion of Redeemable Convertible Preferred Stock		(4,250	)		(3,329	)		—
Net income (loss) available to shareholders		7,408			(813	)		165
Less: Net income attributable to participating securities		(3,365	)		—			(109	)
Net income (loss) available to common shareholders	$	4,043		$	(813	)	$	56
Denominator:
Weighted average common share outstanding-basic		21,539,917			27,954,322			45,964,159
Option and other dilutive securities		—			—			1,472
Weighted average common share outstanding-diluted		21,539,917			27,954,322			45,965,631
Per common share:
Basic income (loss) per common share	$	0.19		$	(0.03	)	$	—
Diluted income (loss) per common share	$	0.19		$	(0.03	)	$	—

As discussed above, the Company is required to use the two-class method to compute basic and diluted income (loss) per common share. In Fiscal 2010, the adjustment to record the increase in redemption value of preferred stock as well as preferred stock dividends (note 5) reduced undistributed earnings, to be allocated between common shares and participating securities, to zero, for purposes of calculating net income per share using the two-class method. As such, net losses were solely attributable to common shareholders.

For Fiscal 2009, Fiscal 2010 and Fiscal 2011, preferred stock that could be converted to 17,933,539, 89,291,773, and 89,291,773 shares of common stock were not included in the computation of diluted earnings per share, as the effect of doing so would have been anti-dilutive.

For Fiscal 2009, Fiscal 2010 and Fiscal 2011, the effects of the assumed exercise of the combined stock options and warrants and vesting of restricted share awards of 6,060,497, 7,053,716 and 8,037,970 shares of common stock, respectively, were excluded from the calculation of diluted net income (loss) as (a) the average stock market price of the related common stock for the periods exceeded the exercise price of the options or warrants, (b) assumed proceeds determined under the treasury stock method resulted in no incremental shares for stock options or restricted stock, or (c) the effect would be antidilutive due to a net loss to common shareholders.

(3) Line of Credit and Note Payable

On August 18, 2006, the Company entered into a Loan and Security Agreement with a bank that included a revolving line of credit with advances tied to a borrowing base. The bank has the right to reduce the borrowing base by establishing reserves. The Loan and Security Agreement has been amended and/or restated several times, the latest on November 29, 2011 (as amended and restated, the Credit Agreement), generally to extend the maturity date, increase maximum borrowings, adjust the applicable interest rates and modify certain definitions.

F-13 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

The Credit Agreement allows maximum borrowings of $20,000 and expires on May 31, 2013. If the Company requests and the bank agrees, the maximum borrowings of $20,000 can be increased to $30,000 in $2,500 increments upon the payment of an additional closing fee of 0.25%. The Credit Agreement provides for interest on borrowings, at the option of the Company, at a prime rate (3.25% at January 28, 2012) plus a margin of 2.0% or a LIBOR-based rate (0.27% at January 28, 2012) plus a margin of 3.0% and a letter of credit fee equal to the LIBOR-based rate plus 2.0%. The Credit Agreement also contains an unused credit facility fee of 0.375% per annum and is subject to a servicing fee of $12 per year.

The borrowing base is 90% of eligible credit card receivables, as defined, plus 85% of the net recovery percentage of eligible inventory, as defined, less established reserves. The Company is required to maintain minimum excess collateral availability, as defined, of 15% of the then effective maximum credit. The Company had approximately $20,000 available on the line of credit for borrowings at January 28, 2012 based upon the borrowing base.

The Credit Agreement is secured by all assets of the Company and contains certain nonfinancial covenants which place restrictions on certain transactions, including, among others, the level of capital expenditures, certain distributions, the sale of certain assets, the merger or consolidation of the Company, incurring certain indebtedness and liens, and changes in the Company’s business or certain officers.

Additionally, the Credit Agreement is subject to payment upon the Company’s receipt of certain proceeds, as defined, including those from the sale of certain assets, income tax refunds, and insurance or settlement proceeds, and is subject to an increase in the interest rate on borrowings and the letter of credit fee of 2% upon an event of default, as defined. Amounts under the Credit Agreement may become due upon certain events of default including among others, failure to comply with the Credit Agreement’s covenants, bankruptcy, default on certain other indebtedness, a change in control, or a material adverse change in the business, assets or prospects of the Company, as defined.

During Fiscal 2009, there were no borrowings or interest expense under the Credit Agreement. During Fiscal 2010, the maximum borrowings and weighted average interest rate under the Credit Agreement were $8,247 and 4.85%, respectively, and interest expense was $53. During Fiscal 2011, there were no borrowings or interest expense under the Credit Agreement.

The Company has incurred costs of approximately $341 in connection with the Credit Agreement and its amendments, which are included in other assets on the accompanying balance sheets. These deferred financing costs are amortized over the term of the Credit Agreement or the related amendment and have a net balance of $66 and $38 as of January 29, 2011 and January 28, 2012, respectively.

On December 10, 2010 the Company entered into a Loan and Security Agreement (the Note) for $250 with a governmental authority. The Note accrues interest at 3.25% and interest is payable monthly. The principal amount and any unpaid and accrued interest is due on April 1, 2013. The Note is collateralized by certain assets of the Company. Additionally, a portion or all of the Note is subject to conversion to a grant upon the Company meeting certain non-financial conditions, as defined.

(4) Commitments and Contingencies

The Company leases property and equipment under non-cancelable operating leases. Certain retail store lease agreements provide for contingent rental payments if the store’s net sales exceed stated levels (percentage rents) and/or contain escalation clauses, which provide for increases in base rental for increases in future

F-14 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

operating costs. Many of the Company’s leases provide for one or more renewal options for periods ranging from five to seven years. The Company’s operating lease agreements, including assumed extensions which are generally those that take the lease to a ten-year term, expire through 2022.

The Company’s minimum rental commitments under operating lease agreements, including assumed extensions, as of January 28, 2012, are as follows:

	Retail stores		Corporate office and distribution center		Total
Fiscal year:
2012	$	28,553	$	2,097	$	30,650
2013		30,759		2,426		33,185
2014		30,245		2,688		32,933
2015		29,654		2,953		32,607
2016		28,061		1,372		29,433
Thereafter		104,794		4,445		109,239
	$	252,066	$	15,981	$	268,047

Rent expense, including base and contingent rent under operating leases, was $11,912, $16,871 and $23,607 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively. Contingent rents were $82, $349 and $490 in Fiscal 2009, Fiscal 2010 and Fiscal 2011, respectively.

The Company has employment agreements with certain key employees that provide for, among other things, salary, bonus, severance, and change-in-control provisions. The severance and change of control provisions under these agreements provide for additional payments upon employee separation of up to approximately $3,400.

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, the outcome of such actions will not have a material adverse effect on the Company’s financial condition or results of operations.

The Company has other purchase commitments of $1,739 as of January 28, 2012, consisting primarily of inventory purchase orders.

(5) Shareholders’ Equity

The Company is authorized to issue 200,000,000 shares of $0.01 par value common stock and 100,000,000 shares of $0.01 par value preferred stock. The holders of the common stock are entitled to one vote per share of common stock and are entitled to receive dividends if declared by the board of directors. The preferred stock may be issued from time to time in series as designated by the board of directors. The designations, powers, preferences, voting rights, privileges, options, conversion rights, and other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof shall be designated by the board of directors. As of January 28, 2012, the board of directors has designated 90,000,000 shares of preferred stock as Series A 8% Convertible Preferred Stock.

F-15 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

Preferred Stock

In Fiscal 2005, Fiscal 2006 and Fiscal 2007, the Company issued an aggregate of 6,173,030 shares of Series A Redeemable Convertible Preferred Stock (the Series A Preferred Stock) for aggregate cash proceeds of $13,020, net of aggregate offering costs of $252. In connection with the offerings, the Company also issued warrants to originally purchase 399,865 shares of common stock at $2.15 per share (see below). The relative fair value of the warrants ($396 in aggregate) was recorded as additional paid-in capital and was being accreted to the Series A Preferred Stock through its earliest redemption dates. The offering costs incurred in connection with the issuances were also being accreted to the Series A Preferred Stock through its earliest redemption dates.

In Fiscal 2008, the Company issued an aggregate of 8,006,984 shares of Series A-1 Redeemable Convertible Preferred Stock (the Series A-1 Preferred Stock) for aggregate cash proceeds of $16,298, net of aggregate offering costs of $917. In connection with the offerings, the Company also issued warrants to purchase 3,037,938 shares of common stock at $1.70 per share. The relative fair value of the warrants ($1,442) was recorded as additional paid-in capital and was being accreted to the Series A-1 Preferred Stock through its earliest redemption dates. The offering costs incurred in connection with the issuances were also being accreted to the Series A-1 Preferred Stock through its earliest redemption dates.

In connection with the Fiscal 2008 offerings, the per share exercise price for warrants previously issued during the Company’s prior Series A Preferred Stock offerings was reduced from $2.15 per share to $1.70 per share and the number of shares of common stock for which such warrants were exercisable was increased by a factor of approximately 1.26 so that the aggregate exercise price of the warrants remained unchanged and the warrants were entitled to purchase 505,698 shares of common stock. Warrants to purchase 12,647 shares of common stock were exercised in July 2010.

Also in Fiscal 2008, as a result of a modification to the conversion ratio of the outstanding Series A Preferred Stock, the fair value of a beneficial conversion feature in the amount of $1,011 was recorded and was being accreted to the Series A Preferred Stock through its earliest redemption dates.

On October 13, 2010, the holders of the Series A and A-1 Preferred Stock converted all of their outstanding shares of Series A and A-1 Preferred Stock into the Company’s common stock according to the conversion ratio specified in the Company’s then amended and restated Certificates of Designations. As a result, 6,173,030 shares and 8,006,984 shares of Series A Preferred Stock and Series A-1 Preferred Stock, respectively, were converted into 17,933,539 shares of common stock.

On October 14, 2010, the holders of the warrants to purchase common stock issued in connection with the Series A and A-1 Preferred Stock exchanged their warrants for (i) the number of shares of common stock equal to the purchase of the number of shares underlying such warrants, and (ii) an amount of cash equal to $4.579622329 per share less the aggregate exercise price of such warrant. As a result, the warrants were exchanged for 3,530,989 shares of common stock and net cash of $10,168.

On October 14, 2010, the Company issued 89,291,773 shares of Series A 8% Convertible Preferred Stock for cash proceeds of $191,855, net of offering costs of $2,145.

Under the Company’s second amended and restated Certificate of Designations, each share of the Series A 8% Convertible Preferred Stock is convertible into one share of common stock, subject to adjustment as defined. The holders of the Series A 8% Convertible Preferred Stock may designate the election of five members of the

F-16 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

Company’s board of directors, or, if the board of directors is comprised of greater than eight directors, a majority of the directors. Upon the approval of the majority of the holders of the Series A 8% Convertible Preferred Stock or effective upon the closing of a qualified public offering, as defined, all shares of Series A 8% Convertible Preferred Stock will automatically convert into common stock. Each holder of the Series A 8% Convertible Preferred Stock is entitled to one vote for each share of common stock into which the shares of the Series A 8% Convertible Preferred Stock held are convertible. The Series A 8% Convertible Preferred Stock is entitled to receive cumulative dividends of 8% of its original issue price of $2.17 per share per year compounded annually and payable in cash when and if declared by the Company’s board of directors; however, the Company shall not pay, unless otherwise consented to by the holders of Series A 8% Convertible Preferred Stock, any dividends on common stock unless an equal amount of dividends per share (on an as converted basis) is simultaneously paid to the holders of the Series A 8% Convertible Preferred Stock. Cumulative dividends in arrears as of January 28, 2012 were $20,420 ($0.23 per share). The outstanding shares of the Series A 8% Convertible Preferred Stock are also entitled to certain anti-dilution rights, as defined.

In the event of any liquidation, dissolution, or winding up of the Company, as defined, or deemed liquidation event, as defined, the holders of the Series A 8% Convertible Preferred Stock will be entitled to receive the greater of the original issue price of $2.17 per share plus any accrued and unpaid dividends, or the amount that would have been paid if the Series A 8% Convertible Preferred Stock was converted to common stock, before any payment is made to the common shareholders. The Series A 8% Convertible Preferred Stock is presented outside of shareholders’ equity (deficit) since its redemption under certain circumstances is beyond the control of the Company’s management.

Approval of the holders of a majority of the shares of the Series A 8% Convertible Preferred Stock is required for, among other items, the authorization, issuance, or redemption of stock, changes in the Company’s Articles of Incorporation or By-laws, changes in the senior management and incurrence of debt or participation in certain transactions above a certain threshold.

Common Stock

The Company’s Executive Chairman of the Board and the CEO were co-founders of the Company and own a combined 10,223,920 shares of the Company’s outstanding common stock at January 28, 2012.

A shareholder of the Company’s common stock has executed an irrevocable proxy appointing David Schlessinger, Executive Chairman of the Board of the Company, as proxy. The proxy is empowered, and may exercise the irrevocable proxy, to vote the shares at any time and at any meeting of the shareholders of the Company, however called, including written actions by consent of shareholders. The irrevocable proxy is effective upon execution (with subscription agreement) and terminates, with respect to the designated shares, upon the earlier of (i) the longest period of time allowable under applicable law from the execution date and (ii) a transfer of such designated shares after the closing of an underwritten public offer for cash on a firm commitment basis pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, covering the sale of the Company’s capital stock, as defined.

Certain shareholders of the Company’s common stock have each executed an irrevocable proxy appointing David Schlessinger as proxy, while certain other shareholders of the Company’s common stock have each executed an irrevocable proxy appointing Thomas Vellios as proxy. In each case, the proxy is empowered, and may exercise the irrevocable proxy, to vote the shares at any time and at any meeting of the shareholders of the Company, however called, including written actions by consent of shareholders. The irrevocable proxy is

F-17 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

effective upon execution (with subscription agreement) and terminates, with respect to the designated shares, upon the earlier of (i) the fifth (5^th) anniversary of the date of the proxy and (ii) a transfer of such designated shares after the closing of an underwritten public offer for cash on a firm commitment basis pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, covering the sale of the Company’s capital stock, as defined.

The Company and its shareholders have entered into an Amended and Restated Investors Rights Agreement and a Second Amended and Restated Shareholders Agreement, which provide for, among others, certain registration, information, first refusal, co-sale, observer, bring along and board of director voting rights. The Second Amended and Restated Shareholders Agreement also provides for certain restrictions and obligations with respect to the stock of the Company held by the Company’s shareholders, including limits on the transfer of stock held by shareholders.

In connection with a common stock sale that closed in 2004, the Company issued warrants to purchase 67,648 shares of common stock at a price of $1.70 per share. The fair value of these warrants is included in additional paid-in capital in the accompanying financial statements. The warrants were exercised in September 2009.

In January 2007, the Company granted warrants to purchase 120,000 shares of common stock at an exercise price of $2.15 per share to a merchandise vendor and professional service provider. Warrants to purchase 100,000 shares of common stock expired unexercised in January 2008 and the remaining warrants to purchase 20,000 shares of common stock were exercised in October 2010. The fair value of the warrants ($46) was recorded as expense in Fiscal 2006.

In March 2008, the Company granted warrants to purchase 126,628 shares of common stock at an exercise price of $2.15 per share to professional service providers and a merchandise vendor. Warrants to purchase 100,000 shares of common stock issued to the merchandise vendor expired unexercised in April 2009. Warrants to purchase 5,000 and 21,628 shares of common stock to professional service providers were exercised in September 2009 and October 2010, respectively. The fair value of the warrants ($41) was recorded as expense in Fiscal 2007.

In February 2009 and May 2009, the Company granted warrants to purchase 40,000 and 5,000 shares of common stock, respectively, at an exercise price of $1.70 per share to professional service providers. The warrants were exercised in October 2010. The fair value of the warrants ($21) and ($3) was recorded as expense in Fiscal 2008 and Fiscal 2009, respectively.

In May 2010, the Company granted warrants to purchase 80,000 shares of common stock at an exercise price of $3.96 per share to professional service providers that were exercised in October 2010. The fair value of the warrants ($203) was recorded as expense in Fiscal 2010.

On October 13, 2010, the board of directors declared a cash dividend of $4.58 per share, or $196,726 in the aggregate, which was paid on October 14, 2010 to shareholders of record on October 13, 2010. Of this amount, $4,309 was recorded as additional compensation expense (note 6).

In February 2011, the Company granted warrants to purchase 40,000 shares of common stock at an exercise price of $2.18 per share to professional service providers, of which 15,000 were exercised in November 2011. The fair value of the warrants ($25) was recorded as expense in Fiscal 2010.

In May 2011, the Company granted warrants to purchase 9,000 shares of common stock at an exercise price of $2.18 per share to a professional service provider. The fair value of the warrants ($6) was recorded as expense in Fiscal 2011.

F-18 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

As of January 28, 2012, there were warrants to purchase 34,000 shares of common stock at an exercise price of $2.18 per share outstanding.

In November 2011, the Company issued 460,257 shares of common stock for cash proceeds of $1,110 to an incoming member of the Company’s board of directors.

(6) Common Stock Options

Effective July 26, 2002, the Company adopted the 2002 Equity Incentive Plan (the Plan) pursuant to which the Company’s board of directors may grant stock options and restricted shares to officers, directors, key employees, and professional service providers. The Plan, as amended as of October 13, 2010, increases the number of shares available for issuance under the Plan to 13,632,159 shares of authorized but unissued common stock. All stock options have a term not greater than 10 years. Stock options vest and become exercisable in whole or in part, in accordance with vesting conditions set by the Company’s board of directors. Options granted to date generally vest over four years from the date of grant.

On August 25, 2010, the Company’s board of directors agreed to allow option holders, as of that date, to exercise, during a twenty day offer period, all options issued and outstanding under the Plan, regardless if those options were vested and exercisable (Vested Options) or were not currently vested and exercisable (Unvested Options). The Company recorded $4,309 of additional compensation cost in Fiscal 2010 to reflect the incremental value associated with the modification of the options, which was primarily related to the value of the dividends received by the exercisers before the original vesting date (see below).

On October 13, 2010, the holders of the stock options exercised all of their outstanding Vested and Unvested Options to purchase shares of the Company’s common stock. The Unvested Options were exercised for restricted shares of common stock that have the same vesting schedule as the Unvested Options that were exercised for those shares. The restricted shares are subject to repurchase by the Company should the option holder’s employment be terminated prior to the vesting at a purchase price equal to the lesser of: (i) the exercise price paid for the restricted shares, and (ii) the fair market value of the restricted shares at the time of repurchase. For accounting purposes, as the shares remain subject to their original vesting provisions, the early exercises are being recorded as if the original options remain outstanding until the respective shares vest. Exercise proceeds received prior to the shares vesting are recorded as a deposit liability in other accrued expenses on the accompanying balance sheets. As of January 29, 2011 and January 28, 2012, $1,860 and $1,131 respectively, was recorded as a deposit liability. Due to the modification of the options to allow early exercise, dividends received by the exercisers before the original vesting date were recorded as additional compensation expense.

F-19 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

The following table summarizes the activity related to the restricted shares of common stock:

	Number of shares			Deposit liability
Unvested, issued upon option exercises on October 13, 2010		940,811		$	1,933
Vested		(61,042	)		(73	)
Unvested, January 29, 2011		879,769			1,860
Vested		(392,072	)		(491	)
Repurchases upon employee termination		(77,502	)		(238	)
Unvested, January 28, 2012		410,195		$	1,131

Stock option activity under the Plan was as follows:

	Shares available for grant			Options outstanding			Weighted average exercise price		Weighted average remaining contractual term
Balance at January 31, 2009		290,160			2,202,347		$	1.18
Granted		(351,000	)		351,000			1.20
Forfeited		121,834			(121,834	)		1.20
Exercised		—			(1,280	)		1.20
Balance at January 30, 2010		60,994			2,430,233			1.18		6.9
Increase in authorized shares		10,982,159			—			—
Granted		(7,016,446	)		7,016,446			2.39
Forfeited		19,469			(19,469	)		1.34
Exercised		—			(3,253,263	)		1.96
Balance at January 29, 2011		4,046,176			6,173,947			2.18		9.7
Granted		(1,766,800	)		1,766,800			2.43
Forfeited		345,500			(345,500	)		2.21
Exercised		—			—			—
Balance at January 28, 2012		2,624,876			7,595,247			2.24		9.0
Exercisable at January 28, 2012					—

Included in the options granted during Fiscal 2010 and outstanding as of January 28, 2012 are options to purchase 2,919,973 shares of common stock, which vest incrementally only upon the achievement of certain performance targets including achieving targeted internal rates of return for the Company’s preferred shareholders or the Company achieving certain market capitalization levels subsequent to an initial public offering. As of January 28, 2012, no compensation expense has been recognized for these options since the Company’s management determined that the performance targets were not probable of achievement at that date. Subsequent to January 28, 2012, these options were cancelled (note 11).

F-20 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

The fair value of each option award granted to employees, including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Fiscal Year
	2009			2010			2011
Expected volatility		50.0	%		50.0	%		50.0	%
Risk-free interest rate		2.9	%		1.8	%		2.0	%
Expected life of options		7.0 years			7.0 years			7.0 years
Expected dividend yield		—			—			—

The Company uses the simplified method to estimate the expected term of the option. Expected volatility is based upon historical volatility analysis of public company peers, and the risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The per-share weighted average grant-date fair value of stock options granted to employees, including outside directors, in Fiscal 2009, Fiscal 2010 and Fiscal 2011 was $0.50, $1.18 and $1.24 respectively. The total intrinsic value of stock options exercised during Fiscal 2009, Fiscal 2010 and Fiscal 2011 was zero, $15,621 and zero, respectively.

As of January 28, 2012, there was $10,624 of total unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Plan, excluding options that vest upon the achievement of performance targets. That cost is expected to be recognized over a weighted average vesting period of 2.3 years.

The Company currently uses authorized and unissued shares to satisfy option award exercises.

(7) Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Through January 31, 2009, due to the uncertainty of the Company’s ability to realize the benefit of the net deferred tax asset, the net deferred tax assets were fully offset by a valuation allowance. The determination that the full valuation allowance was required was based largely on the history of losses experienced by the Company and the cumulative losses experienced for the three years ended January 31, 2009.

As of January 30, 2010, the Company re-evaluated the realizability of the deferred tax assets. Based upon significant Fiscal 2010 pretax income, the Company had net cumulative pretax income for the three years ended January 30, 2010. Based upon the achievement of the cumulative pretax income for the three years ended January 30, 2010 and the Company’s estimates of projected future profitability, management believed that it was more likely than not that the benefit of its net deferred tax assets would be realized and therefore reversed the valuation allowance against its net deferred tax assets. Accordingly, the Company recognized a deferred tax benefit of $7,419 related to the reduction of the valuation allowance in Fiscal 2009.

F-21 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

As of January 28, 2012, no valuation allowance has been provided for net deferred tax assets as management continues to believe that it is more likely than not that the Company will realize the deferred tax assets at January 28, 2012.

The components of the income tax (benefit) expense are as follows:

	Fiscal Year
	2009			2010			2011
Current:
Federal	$	127		$	4,080		$	6,979
State		47			1,389			3,124
		174			5,469			10,103
Deferred:
Federal		2,078			(673	)		1,434
State		314			(43	)		(1,378	)
		2,392			(716	)		56
Adjustments to the beginning-of-year valuation allowance		(7,419	)		—			—
Income tax (benefit) expense	$	(4,853	)	$	4,753		$	10,159

The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

	Fiscal Year
	2009			2010			2011
Statutory federal tax rate		34.0	%		34.0	%		35.0	%
State taxes, net of federal benefit		5.7			5.7			5.6
Other		(2.0	)		0.7			(1.9	)
Changes in valuation allowance		(109.0	)		—			—
		(71.3	)%		40.4	%		38.7	%

F-22 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

Significant components of deferred tax assets and liabilities consist of the following:

	January  29, 2011			January  28, 2012
Deferred tax assets:
Net operating loss carryforwards	$	1,110		$	—
Inventories		1,412			1,920
Alternative minimum tax credits		225			—
Deferred revenue		56			71
Accrued bonus		—			2,907
Deferred rent		6,093			9,000
Other		342			381
Deferred tax assets		9,238			14,279
Deferred tax liabilities:
Property and equipment		(5,098	)		(10,404	)
Other		(527	)		(318	)
Deferred tax liabilities		(5,625	)		(10,722	)
	$	3,613		$	3,557

The Company had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets at January 29, 2011 or January 28, 2012, and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the statement of operations for Fiscal 2009, Fiscal 2010 or Fiscal 2011.

The Company files a federal income tax return as well as state tax returns. The Company’s U.S. federal income tax returns for the years ended January 30, 2010 and thereafter remain subject to examination by the U.S. Internal Revenue Service (IRS). State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination.

(8) Related-Party Transactions

During Fiscal 2009, the Company extended a loan of $250 to an officer. The loan accrued interest at 4.11% and was payable on an annual basis with the first interest payment due on March 1, 2011. The loan required mandatory prepayments of the full principal amount and unpaid accrued interest upon the occurrence of certain events as defined in the related agreement. The loan was collateralized by a pledge of common stock of the Company owned by the officer. On October 13, 2010, the principal of $250 and interest was paid in full. Interest income recognized on this loan totaled $8.

During the first six months of Fiscal 2009, the Executive Chairman of the Board of the Company provided his services to the Company on a full-time basis without receiving cash compensation. Beginning in August 2009, the Executive Chairman of the Board of the Company started to receive compensation for such services.

During Fiscal 2009, Fiscal 2010 and Fiscal 2011, the Company incurred fees of $247, $1,759 and $479, respectively, related to services provided by certain shareholders and professional service firms for which certain shareholders are partners.

F-23 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

(9) Employee Benefit Plan

Effective February 1, 2007, the Company implemented the Five Below 401(k) Retirement Savings Plan for all employees who have at least one year of service, worked at least 1,000 hours, and are 21 years of age. Employees can contribute up to the maximum amount allowed under law. The Company may make discretionary matching and profit sharing contributions, which vest over a period of five years from each employee’s commencement of employment with the Company. The Company did not make any discretionary contributions in Fiscal 2009, Fiscal 2010 or Fiscal 2011.

(10) Segment Reporting

The Company evaluates performance internally and manages the business on the basis of one operating segment; therefore, it has only one reportable segment. All of the Company’s identifiable assets are located in the United States.

The following sets forth data for the following groups of products – leisure, fashion and home, and party and snack. The percentage of net sales represented by each product group is as follows:

Sales by Product Group	Percentage of Sales
	Fiscal Year
	2009			2010			2011
Leisure		51.7	%		50.5	%		50.5	%
Fashion and home		31.7			33.1			33.0
Party and snack		16.6			16.4			16.5
Total		100.0	%		100.0	%		100.0	%

Leisure includes items such as sporting goods, games, toys, media, books, electronic accessories, and arts and crafts.

Fashion and home includes items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options.

Party and snack includes items such as party and seasonal goods, greeting cards, candy and other snacks, and beverages.

(11) Subsequent Events

From January 29, 2012 to April 17, 2012, the Company committed to 18 new store leases that were not included in the Company’s minimum rental commitments table in note 4. Minimum rental commitments under these leases are as follows:

	Retail stores
Fiscal year:
2012	$	1,278
2013		2,651
2014		2,706
2015		2,706
2016		2,706
Thereafter		15,361
	$	27,408

F-24 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(in thousands, except store, share, per share and price data)

In February 2012, warrants to purchase 29,000 shares of common stock were exercised.

In March 2012, options to purchase 5,839,946 shares of common stock granted during Fiscal 2010, including options to purchase 2,919,973 shares that were to vest upon the achievement of performance targets (note 6), were cancelled and an equal number of restricted shares were granted. One-third of the shares vested in March 2012 and the remaining two-thirds vest in equal installments on the first and second anniversary of the grant. As a result, the Company estimates that it will record total future compensation expense of approximately $17,600 in connection with the cancellation and grant, including an estimated $5,400 on the date of the modification and the remainder on a straight-line basis over the two-year vesting period.

In March 2012, the Company granted warrants to purchase 32,500 shares of common stock at an exercise price of $3.88 per share to professional service providers.

In March 2012, the Company granted options to purchase 1,142,000 shares of common stock at an exercise price of $3.88 per share to Company employees.

In March 2012, warrants to purchase 7,500 shares of common stock were exercised.

In April 2012, warrants to purchase 20,000 shares of common stock were exercised.

The Company has evaluated subsequent events from the balance sheet date through April 17, 2012, the date at which the financial statements were available to be issued, and determined there are no other items requiring disclosure.

F-25

FIVE BELOW, INC.

Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

	April 30, 2011			January 28, 2012			April 28, 2012			Pro Forma April 28, 2012
										Unaudited (see note 1)
Assets
Current assets:
Cash and cash equivalents	$	9,131		$	41,293		$	14,503		$	12,027
Income taxes receivable		79			—			7,400			7,400
Inventories		38,456			38,790			51,531			51,531
Deferred income taxes		2,960			4,863			4,911			4,911
Prepaid expenses and other current assets		4,999			7,303			10,706			10,706
Total current assets		55,625			92,249			89,051			86,575
Property and equipment, net		33,638			42,040			44,441			44,441
Deferred income taxes		630			—			—			—
Other assets		162			238			449			3,474
	$	90,055		$	134,527		$	133,941		$	134,490
Liabilities and Shareholders’ Deficit
Current liabilities:
Line of credit	$	—		$	—		$	—		$	—
Accounts payable		18,356			23,588			22,496			22,496
Income taxes payable		521			9,139			1,019			1,019
Accrued salaries and wages		835			9,254			1,436			1,436
Other accrued expenses		9,644			7,961			11,235			11,235
Total current liabilities		29,356			49,942			36,186			36,186
Note payable		250			250			250			100,250
Deferred rent		15,878			20,933			22,258			22,258
Deferred income taxes		—			1,306			5,708			5,708
Total liabilities		45,484			72,431			64,402			164,402
Commitments and contingencies (note 4)
Preferred stock, $0.01 par value. Authorized 100,000,000 shares; 10,000,000 shares undesignated; 90,000,000 shares designated as Series A 8% Convertible Preferred Stock, $0.01 par value. Issued and outstanding 89,291,773 shares with a liquidation preference of $202,376, $214,420 and $218,588, respectively		191,855			191,855			191,855			—
Shareholders’ deficit:
Common stock, $0.01 par value. Authorized 200,000,000 shares; issued and outstanding 46,486,735, 46,961,992, 52,781,374 and 142,073,147 (proforma) shares, respectively.		465			470			528			1,421
Additional paid-in capital		942			3,383			11,925			190,963
Accumulated deficit		(148,691	)		(133,612	)		(134,769	)		(222,296	)
Total shareholders’ deficit		(147,284	)		(129,759	)		(122,316	)		(29,912	)
	$	90,055		$	134,527		$	133,941		$	134,490

See accompanying notes to financial statements.

F-26

FIVE BELOW, INC.

Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

	Thirteen weeks ended
	April 30, 2011			April 28, 2012
Net sales	$	47,427		$	71,829
Cost of goods sold		32,840			48,809
Gross profit		14,587			23,020
Selling, general and administrative expenses		12,926			24,985
Operating income (loss)		1,661			(1,965	)
Interest income, net		(3	)		(37	)
Income (loss) before income taxes		1,664			(1,928	)
Income tax expense (benefit)		665			(771	)
Net income (loss)		999			(1,157	)
Series A 8% Convertible Preferred Stock cumulative dividends		(3,869	)		(4,168	)
Net loss attributable to common shareholders	$	(2,870	)	$	(5,325	)
Basic loss per common share	$	(0.06	)	$	(0.11	)
Diluted loss per common share	$	(0.06	)	$	(0.11	)
Weighted average shares outstanding:
Basic shares		45,664,835			47,458,718
Diluted shares		45,664,835			47,458,718
Unaudited pro forma net loss				$	(1,619	)
Unaudited pro forma basic loss per common share				$	(0.01	)
Unaudited pro forma diluted loss per common share				$	(0.01	)
Unaudited pro forma weighted average shares outstanding:
Basic shares					136,750,491
Diluted shares					136,750,491

See accompanying notes to financial statements.

F-27

FIVE BELOW, INC.

Statement of Changes in Convertible Preferred Stock and Shareholders’ Deficit

(Unaudited)

(in thousands, except share and per share data)

	Series A 8% Convertible Preferred Stock				Shareholders’ Deficit
					Common stock						Additional paid- in capital		Accumulated deficit			Total shareholders’ deficit
	Shares		Amount		Shares			Amount
Balance, January 28, 2012		89,291,773	$	191,855		46,961,992		$	470		$	3,383	$	(133,612	)	$	(129,759	)
Issuance of warrants to purchase common stock to professional service providers		—		—		—			—			43		—			43
Stock-based compensation expense		—		—		5,839,950			58			6,272		—			6,330
Exercise of warrants to purchase common stock		—		—		66,500			1			200		—			201
Vesting of restricted shares related to stock option exercises		—		—		—			—			498		—			498
Repurchase of unvested restricted shares related to stock option exercises		—		—		(87,068	)		(1	)		4		—			3
Excess tax benefit related to restricted shares		—		—		—			—			1,525		—			1,525
Net loss		—		—		—			—			—		(1,157	)		(1,157	)
Balance, April 28, 2012		89,291,773	$	191,855		52,781,374		$	528		$	11,925	$	(134,769	)	$	(122,316	)

See accompanying notes to financial statements.

F-28

FIVE BELOW, INC.

Statements of Cash Flows

(Unaudited)

(in thousands)

	Thirteen weeks ended
	April 30, 2011			April 28, 2012
Operating activities:
Net income (loss)	$	999		$	(1,157	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,434			2,107
Amortization of deferred financing costs		7			7
Warrant expense related to professional service providers for services rendered		25			43
Stock-based compensation expense		294			6,330
Deferred income tax expense		23			4,354
Changes in operating assets and liabilities:
Income tax receivable		(59	)		(7,400	)
Inventories		(11,702	)		(12,741	)
Prepaid expenses and other assets		(869	)		(3,621	)
Accounts payable		7,580			(799	)
Income taxes payable		380			(8,120	)
Accrued salaries and wages		(1,208	)		(7,818	)
Deferred rent		411			1,555
Other accrued expenses		4,266			3,562
Net cash provided by (used in) operating activities		1,581			(23,698	)
Investing activities:
Capital expenditures		(4,576	)		(4,801	)
Net cash used in investing activities		(4,576	)		(4,801	)
Financing activities:
Proceeds from exercise of warrants to purchase common stock		—			201
Repurchase of unvested restricted shares related to stock option exercises		(27	)		(17	)
Excess tax benefit related to restricted shares		—			1,525
Net cash (used in) provided by financing activities		(27	)		1,709
Net decrease in cash and cash equivalents		(3,022	)		(26,790	)
Cash and cash equivalents at beginning of period		12,153			41,293
Cash and cash equivalents at end of period	$	9,131		$	14,503

See accompanying notes to financial statements.

F-29

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

(1) Summary of Significant Accounting Policies

(a) Basis of Presentation

As used herein, the “Company” means Five Below, Inc. except as expressly indicated or unless the context otherwise requires. The balance sheets as of April 30, 2011 and April 28, 2012, statements of operations for the thirteen weeks ended April 30, 2011 and April 28, 2012, the statements of cash flows for the thirteen weeks ended April 30, 2011 and April 28, 2012 and the statement of changes in convertible preferred stock and stockholders’ deficit for the thirteen weeks ended April 28, 2012 have been prepared by the Company in conformity with U.S. generally accepted accounting principles (GAAP) for interim reporting and are unaudited. In the opinion of management, the financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations and cash flows for the thirteen weeks ended April 30, 2011 and April 28, 2012. The balance sheet at January 28, 2012, presented herein, has been derived from the audited balance sheet included in this Form S-1, but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the financial statements and footnotes thereto included within this Form S-1 for the fiscal year ended January 28, 2012. The results of operations for the thirteen weeks ended April 30, 2011 and April 28, 2012 are not necessarily indicative of operating results for the full year.

(b) Unaudited Pro Forma Presentation

The April 28, 2012 balance sheet has been prepared on a pro forma basis reflecting: (1) the payment of a dividend on May 16, 2012 of $0.70 per share on shares of common stock (including restricted shares) and Series A 8% Convertible Preferred Stock totaling $99,451; (2) the $100,000 term loan facility entered into on May 16, 2012 with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders; and (3) the conversion of all outstanding shares of the Company’s Series A 8% Convertible Preferred Stock into shares of common stock in connection with the closing of Company’s proposed initial public offering (IPO).

Pro forma net income gives effect to: (i) income attributable to participating securities; (ii) cumulative dividends related to the Series A 8% Convertible Preferred Stock; and (iii) the $100,000 term loan facility entered into on May 16, 2012 with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders, including the repayment of $50,000 of outstanding indebtedness under the term loan facility with the IPO proceeds.

The following is a reconciliation of historical net loss to unaudited pro forma net loss:

	Thirteen weeks ended April 28, 2012
Net loss attributable to common shareholders	$	(5,325	)
Add:
Series A 8% Convertible Preferred Stock cumulative dividends		4,168
Less:
Interest expense on new term loan facility, net of tax		(386	)
Amortization of deferred financing fees related to new term loan facility, net of tax		(76	)
Unaudited pro forma net loss	$	(1,619	)

Pro forma weighted average share data gives effect to the conversion of our outstanding shares of Series A 8% Convertible Preferred Stock into shares of common stock in connection with the closing of the IPO.

F-30 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

The following is a reconciliation of pro forma basic and diluted weighted average common shares outstanding:

	Thirteen weeks ended April 28, 2012
Shares used in computing basic loss per common share		47,458,718
Adjustment for assumed conversion of Series A 8% Convertible Preferred Stock		89,291,773
Unaudited basic pro forma weighted average shares outstanding		136,750,491
Dilutive effect of securities		—
Unaudited diluted pro forma weighted average shares outstanding		136,750,491

(c) Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in ASU No. 2011-04 result in common fair value measurement and disclosure requirements in U.S. generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) and change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. ASU No. 2011-04 is effective during interim and annual periods beginning after December 15, 2011. The adoption of the new requirements of ASU No. 2011-04 did not have an impact on the Company’s financial position or results of operations.

(2) Income (Loss) Per Common Share

Basic income (loss) per common share amounts are calculated using the weighted-average number of common shares outstanding for the period. Diluted income (loss) per common share amounts are calculated using the weighted-average number of common shares outstanding for the period and include the dilutive impact of preferred stock using the if-converted method and exercise of stock options and warrants as well as assumed lapse of restrictions on restricted stock awards using the treasury stock method.

The two-class method is used to calculate basic and diluted income (loss) per common share since preferred and restricted stock are participating securities under Accounting Standards Codification (ASC) 260 Earnings per share. The two-class method is an earnings allocation formula that determines income per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic income (loss) per common share is computed by dividing net income (loss) attributable to common shares after allocation of income to participating securities by the weighted-average number of common shares outstanding during the year. Diluted income (loss) per common share is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company.

F-31 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

The following table summarizes the potential dilution that could occur if options and warrants to acquire common stock were exercised or converted into common stock and reconciles the weighted average common shares outstanding used in the computations of basic and diluted loss per share:

	Thirteen weeks ended
	April 30, 2011			April 28, 2012
Numerator:
Net income (loss)	$	999		$	(1,157	)
Series A 8% Convertible Preferred Stock cumulative dividends		(3,869	)		(4,168	)
Net loss attributable to common shareholders	$	(2,870	)	$	(5,325	)
Denominator:
Weighted-average common shares outstanding - basic		45,664,835			47,458,718
Weighted-average common share outstanding - diluted		45,664,835			47,458,718
Per common share:
Basic loss per common share	$	(0.06	)	$	(0.11	)
Diluted loss per common share	$	(0.06	)	$	(0.11	)

For the thirteen weeks ended April 30, 2011 and April 28, 2012, preferred stock that could be converted to 89,291,773 shares of common stock were not included in the computations of diluted earnings per share, as the effect of doing so would have been anti-dilutive.

For the thirteen weeks ended April 30, 2011 and April 28, 2012, the effects of the assumed exercise of the combined stock options and warrants and vesting of restricted share awards of 6,986,004 and 7,031,478 shares of common stock, respectively, were excluded from the calculation of diluted net loss as the effect would be antidilutive due to a net loss attributable to common shareholders.

(3) Financing Transactions, Line of Credit and Note Payable

Financing Transactions

On May 16, 2012, the Company entered into a $100,000 term loan facility with Goldman Sachs Bank USA as administrative agent for a syndicate of lenders (the Term Loan Facility). The Company used the net proceeds from the Term Loan Facility and cash on hand to pay a dividend on its common and preferred stock (note 5), totaling approximately $99,451. On the same day, the Company amended and restated its existing senior secured revolving credit facility with Wells Fargo Bank, National Association, which is described below under “—Line of Credit.” The Company refers to the Term Loan Facility, the revolving credit facility, as amended and restated, and related transactions as the “Financing Transactions.”

The Term Loan Facility provides for a term loan of $100,000 and matures on the earlier of (i) May 16, 2015 and (ii) the date on which such facility is accelerated following the occurrence of an event of default; provided, that if no initial public offering occurs prior to May 16, 2013, the term loan facility shall mature on the earlier of May 16, 2014 and (ii) the date on which such facility is accelerated following the occurrence of an event of

F-32 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

default. The Term Loan Facility provides for interest on borrowings, at the option of the Company, at an alternate base rate which is the greater of (i) the administrative agent’s prime rate in effect on such day and (ii) the federal funds effective rate in effect on such day plus 0.50% with a 2.00% floor, plus a margin of 3.25%, or a LIBOR-based rate with a 1.00% floor plus a margin of 4.25%; provided, that if no initial public offering occurs prior to May 16, 2013 and the Company’s consolidated net leverage ratio is greater than 2.00 to 1.00, the applicable margin for the alternate base rate shall be 4.75% and for the LIBOR-based rate shall be 5.75%. The credit agreement for the Term Loan Facility includes a financial covenant of a maximum consolidated net leverage ratio. The credit agreement for the Term Loan Facility includes a maximum consolidated net leverage ratio financial covenant, the calculation of which allows the Company to net up to $10,000 of its cash and cash equivalents against its indebtedness. The Company’s leverage ratio must not exceed 3.25x for the testing periods in calendar year 2012, 2.75x to 2.50x for the testing periods in calendar year 2013, 2.00x for the testing periods in calendar year 2014 and 1.75x thereafter.

The credit agreement for the Term Loan Facility also includes customary negative and affirmative covenants including, among others, limitations on the Company’s ability to: (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or other restricted payments; (vi) engage in mergers or consolidations; or (vii) change its business.

The Term Loan Facility is subject to repayment upon the receipt of certain proceeds, including those from the sale of certain assets, insurance proceeds and indebtedness not otherwise permitted. The term loan facility is also subject to repayment of $50,000 upon the receipt of proceeds from an initial public offering.

Amounts under the credit agreement for the Term Loan Facility may become due upon certain events of default including, among others, failure to comply with the credit agreement’s covenants, bankruptcy, default on certain other indebtedness or a change in control. The default rate under the term loan facility is 2.00% per annum.

All obligations under the Term Loan Facility are secured by substantially all of the Company’s assets.

The Company has incurred costs of $3,025 in connection with the Term Loan Facility, which will be amortized over the term of the loan.

As of May 21, 2012, the Company was in compliance with the financial covenant and other covenants applicable to it under the credit agreement the Term Loan Facility.

Line of Credit

As of April 28, 2012, the Company was in compliance with the covenants applicable to it under the Loan and Security Agreement. During the thirteen weeks ended April 28, 2012, there were no borrowings under the Credit Agreement.

The Company’s Credit Agreement was amended and restated again on May 16, 2012 (as amended and restated, the Revolving Credit Facility), subsequent to the end of the first quarter of 2012. The Revolving Credit Facility allows maximum borrowings of $20,000 with advances tied to a borrowing base and expires on the earliest to occur of (i) May 16, 2017, (ii) the date which is 45 days prior to the maturity date of the Term Loan Facility or (iii) upon the occurrence of an event of default. The Revolving Credit Facility may be increased to

F-33 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

$30,000 upon certain conditions. The Revolving Credit Facility includes a $5,000 sublimit for the issuance of letters of credit. The borrowing base is 90% of eligible credit card receivables plus 90% of the net recovery percentage of eligible inventory less established reserves.

The Revolving Credit Facility provides for interest on borrowings, at the option of the Company, at (a) a prime rate plus a margin of (i) 0.75% if excess availability is greater than or equal to 75%, (ii) 1.0% if excess availability is less than 75% but greater than or equal to 33% or (iii) 1.25% if excess availability is less than 33% or (b) a LIBOR-based rate plus a margin of (i) 1.75% if excess availability is greater than or equal to 75%, (ii) 2.00% if excess availability is less than 75% but greater than or equal to 33% or (iii) 2.25% if excess availability is less than 33%. The Revolving Credit Facility further provides for a letter of credit fee equal to the LIBOR-based rate plus (i) 1.75% if excess availability is greater than or equal to 75%, (ii) 2.00% if excess availability is less than 75% but greater than or equal to 33% or (iii) 2.25% if excess availability is less than 33%. The Revolving Credit Facility also contains an unused credit facility fee of 0.375% per annum and is subject to a servicing fee of $12 per year.

The Revolving Credit Facility includes a covenant which requires the Company to maintain minimum excess collateral availability of no less than the greater of (i) 10% of the then effective maximum credit and (ii) $3,000.

The Revolving Credit Facility also includes customary negative and affirmative covenants including, among others, limitations on the Company’s ability to (i) incur additional debt; (ii) create liens; (iii) make certain investments, loans and advances; (iv) sell assets; (v) pay dividends or make distributions or other restricted payments; (vi) engage in mergers or consolidations; or (vii) change the business.

Additionally, the Revolving Credit Facility is subject to payment upon the receipt of certain proceeds, including those from the sale of certain assets and is subject to an increase in the interest rate on borrowings and the letter of credit fee of 2.0% upon an event of default. Amounts under the Revolving Credit Facility may become due upon certain events of default including among others, failure to comply with the Revolving Credit Facility covenants, bankruptcy, default on certain other indebtedness or a change in control.

All obligations under the Revolving Credit Facility are secured by substantially all of the Company’s assets.

Note Payable

On December 10, 2010 the Company entered into a Loan and Security Agreement (the Note) for $250 with a governmental authority. At May 13, 2012, a portion of the Note was converted to a grant upon the Company meeting certain non-financial conditions. Of the $250 note, $200 was granted as income and $50 was paid back in full along with interest outstanding.

(4) Commitments and Contingencies

The Company leases property and equipment under non-cancelable operating leases. Certain retail store lease agreements provide for contingent rental payments if the store’s net sales exceed stated levels (percentage rents) and/or contain escalation clauses, which provide for increases in base rental for increases in future operating costs. Many of the Company’s leases provide for one or more renewal options for periods ranging from five to seven years. The Company’s operating lease agreements, including assumed extensions which are generally those that take the lease to a ten-year term, expire through 2022.

F-34 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

The Company’s minimum rental commitments under operating lease agreements, including assumed extensions, as of April 28, 2012, are as follows:

	Retail stores		Corporate office and distribution center		Total
Fiscal year:
Remaining 2012	$	23,439	$	1,584	$	25,023
2013		33,890		2,426		36,316
2014		33,468		2,688		36,156
2015		32,877		2,953		35,830
2016		31,284		1,372		32,656
Thereafter		123,002		4,445		127,447
	$	277,960	$	15,468	$	293,428

Rent expense, including base and contingent rent under operating leases, was $4,983 and $6,873 for the thirteen weeks ended April 30, 2011 and April 28, 2012, respectively. Contingent rents were $99 and $110 for the thirteen weeks ended April 30, 2011 and April 28, 2012, respectively.

The Company has employment agreements with certain key employees that provide for, among other things, salary, bonus, severance, and change-in-control provisions. The severance and change of control provisions under these agreements provide for additional payments upon employee separation of up to approximately $3,400.

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, the outcome of such actions will not have a material adverse effect on the Company’s financial condition or results of operations.

The Company has other purchase commitments of $600 as of April 28, 2012, consisting primarily of inventory purchase orders.

(5) Shareholders’ Equity

Preferred Stock

As of April 28, 2012, the Company had outstanding 89,291,773 shares of Series A 8% Convertible Preferred Stock, which are entitled to receive cumulative dividends of 8% of its original issue price of $2.17 per share per year compounded annually and payable in cash when and if declared by the Company’s board of directors; however, the Company shall not pay, unless otherwise consented to by the holders of Series A 8% Convertible Preferred Stock, any dividends on common stock unless an equal amount of dividends per share (on an as converted basis) is simultaneously paid to the holders of the Series A 8% Convertible Preferred Stock. Cumulative dividends in arrears as of April 28, 2012 were $24,588 ($0.28 per share).

In the event of any liquidation, dissolution, or winding up of the Company, as defined, or deemed liquidation event, as defined, the holders of the Series A 8% Convertible Preferred Stock will be entitled to

F-35 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

receive the greater of the original issue price of $2.17 per share plus any accrued and unpaid dividends, or the amount that would have been paid if the Series A 8% Convertible Preferred Stock was converted to common stock, before any payment is made to the common shareholders. The Series A 8% Convertible Preferred Stock is presented outside of shareholders’ equity (deficit) since its redemption under certain circumstances is beyond the control of the Company’s management.

Common Stock

In March 2012, options to purchase 5,839,946 shares of common stock granted during Fiscal 2010, including options to purchase 2,919,973 shares that were subject to time-based and performance based vesting, were cancelled and an equal number of restricted shares were granted. One-third of the shares vested in March 2012 and the remaining two-thirds vest in equal installments on the first and second anniversary of the grant.

In connection with the cancellation and grant, total compensation expense of $17,400 including $5,300 on the date of the modification and the remainder on a straight-line basis over the two-year vesting period.

In March 2012, we granted warrants to purchase 32,500 shares of common stock at an exercise price of $3.88 per share to professional service providers. During the thirteen weeks ended April 28, 2012 66,500 warrants were exercised. No warrants remain outstanding at April 28, 2012.

Dividends

On May 15, 2012, the Company declared and subsequently paid on May 16, 2012 a dividend of $0.70 per share on shares of common stock (including restricted shares) and Series A 8% Convertible Preferred Stock totaling $99,451.

(6) Common Stock Options

Effective July 26, 2002, the Company adopted the 2002 Equity Incentive Plan (the Plan) pursuant to which the Company’s board of directors may grant stock options and restricted shares to officers, directors, key employees, and professional service providers. The Plan, as amended as of October 13, 2010, increases the number of shares available for issuance under the Plan to 13,632,159 shares of authorized but unissued common stock. All stock options have a term not greater than 10 years. Stock options vest and become exercisable in whole or in part, in accordance with vesting conditions set by the Company’s board of directors. Options granted to date generally vest over four years from the date of grant.

On August 25, 2010, the Company’s board of directors agreed to allow option holders, as of that date, to exercise, during a twenty day offer period, all options issued and outstanding under the Plan, regardless if those options were vested and exercisable (Vested Options) or were not currently vested and exercisable (Unvested Options).

On October 13, 2010, the holders of the stock options exercised all of their outstanding Vested and Unvested Options to purchase shares of the Company’s common stock. The Unvested Options were exercised for restricted shares of common stock that have the same vesting schedule as the Unvested Options that were exercised for those shares. The restricted shares are subject to repurchase by the Company should the option holder’s employment be terminated prior to the vesting at a purchase price equal to the lesser of: (i) the exercise price paid for the restricted shares, and (ii) the fair market value of the restricted shares at the time of repurchase. For accounting purposes, as the shares remain subject to their original vesting provisions, the early exercises are

F-36 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

being recorded as if the original options remain outstanding until the respective shares vest. Exercise proceeds received prior to the shares vesting are recorded as a deposit liability in other accrued expenses on the accompanying balance sheets. As of April 28, 2012, $613 was recorded as a deposit liability.

The following table summarizes the activity related to the restricted shares of common stock:

	Number of shares			Deposit liability
Unvested, January 28, 2012		410,195		$	1,131
Vested		(159,255	)		(498	)
Repurchases upon employee termination		(9,562	)		(20	)
Unvested, April 28, 2012		241,378		$	613

Stock option activity under the Plan was as follows:

	Shares available for grant			Options outstanding			Weighted average exercise price		Weighted average remaining contractual term
Balance at January 28, 2012		2,624,876			7,595,246			2.24		9.0
Granted		(1,152,000	)		1,152,000			3.87
Forfeited		10,502			(10,500	)		3.88
Cancelled		5,839,946			(5,839,946	)		2.18
Exercised		—			—			—
Balance at April 28, 2012		7,323,324			2,896,800			2.99		9.5
Exercisable at April 28, 2012					—

The fair value of each option award granted to employees, including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Thirteen Weeks Ended
	April 30, 2011			April 28, 2012
Expected volatility		50.0	%		50.0	%
Risk-free interest rate		2.9	%		1.5	%
Expected life of options		7.0 years			7.0 years
Expected dividend yield		—			—

The Company uses the simplified method to estimate the expected term of the option. Expected volatility is based upon historical volatility analysis of public company peers, and the risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The per-share weighted average grant-date fair value of stock options granted to employees, including outside directors, at April 30, 2011 and April 28, 2012 was $1.00 and $1.51 respectively.

As of April 28, 2012, there was $3,943 of total unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average vesting period of 3.58 years.

F-37 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

(7) Income Taxes

The following table summarizes the Company’s income tax expense (benefit) and effective tax rates for the thirteen weeks ended April 30, 2011 and April 28, 2012:

	Thirteen Weeks Ended
	April 30, 2011			April 28, 2012
Income (loss) before income taxes		1,664			(1,928	)
Income tax expense (benefit)		665			(771	)
Effective tax rate		40.0	%		40.0	%

The effective tax rates for the thirteen weeks ended April 30, 2011 and April 28, 2012 were based on the Company’s forecasted annualized effective tax rates, adjusted for discrete items that occurred within the periods presented.

For the thirteen weeks ended April 30, 2011 and April 28, 2012, total income taxes paid were $261 and $8,870, respectively.

The Company had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets at April 30, 2011, January 28, 2012 or April 28, 2012, and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the statement of operations for the thirteen weeks ended April 30, 2011 or April 28, 2012.

The Company files a federal income tax return as well as state tax returns. The Company’s U.S. federal income tax returns for the years ended January 30, 2010 and thereafter remain subject to examination by the U.S. Internal Revenue Service (IRS). State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination.

(8) Related-Party Transactions

During the thirteen weeks ended April 30, 2011 and April 28, 2012, the Company incurred fees of $96 and $271, respectively, related to services provided by certain shareholders and professional service firms for which certain shareholders are partners.

F-38 (Continued)

FIVE BELOW, INC.

Notes to Financial Statements

(Unaudited)

(in thousands, except store, share, per share and price data)

(9) Subsequent Events

In addition to subsequent events included in notes 3, 4 and 5, we note the following.

From April 29, 2012 to May 23, 2012, the Company committed to 4 new store leases that were not included in the Company’s minimum rental commitments table in note 4. Minimum rental commitments under these leases are as follows:

	Retail stores
Fiscal year:
Remaining 2012	$	339
2013		837
2014		837
2015		837
2016		837
Thereafter		5,110
	$	8,797

On May 23, 2012, the Company’s board of directors, in accordance with the Company’s plan documents, approved an equitable adjustment to all options outstanding at the date of the Company’s dividend declaration to reflect the dividend value received by the Company’s common and preferred shareholders. The exercise price of each outstanding option was reduced by $0.70. The Company does not expect this adjustment to impact our results of operations.

The Company has evaluated subsequent events from the balance sheet date through May 23, 2012, the date at which the financial statements were available to be issued, and determined there are no other items requiring disclosure.

F-39

             Shares

Five Below, Inc.

Common Stock

PROSPECTUS

Goldman, Sachs & Co.

Barclays

Jefferies

Credit Suisse

Deutsche Bank Securities

UBS Investment Bank

Wells Fargo Securities

Through and including                     , 2012 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except the SEC registration fee, the FINRA filing fee and The NASDAQ Global Select Market listing fee.

	Amount to be Paid
SEC registration fee	$	17,190
FINRA filing fee		15,500
The NASDAQ Global Select Market listing fee			*
Blue sky fees and expenses			*
Printing and engraving expenses			*
Legal fees and expenses			*
Accounting fees and expenses			*
Transfer agent and registrar fees and expenses			*
Miscellaneous fees and expenses			*
Total	$	4,000,000

* To be updated by amendment.

Item 14. Indemnification of Officers and Directors.

Sections 1741 through 1750 of Subchapter D, Chapter 17, of the PBCL, contain provisions for mandatory and discretionary indemnification of a corporation’s directors, officers and other personnel, and related matters.

Under Section 1741 of the PBCL, subject to certain limitations, a corporation has the power to indemnify directors and officers under certain prescribed circumstances against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with an action or proceeding, whether civil, criminal, administrative or investigative (other than derivative or corporate actions), to which any such officer or director is a party or is threatened to be made a party by reason of such officer or director being a representative of the corporation or serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, so long as the director or officer acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, such officer or director had no reasonable cause to believe his conduct was unlawful.

Section 1742 of the PBCL permits indemnification in derivative and corporate actions if the director or officer acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, except in respect of any claim, issue or matter as to which the officer or director has been adjudged to be liable to the corporation unless and only to the extent that the proper court determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the officer or director is fairly and reasonably entitled to indemnity for the expenses that the court deems proper.

Under Section 1743 of the PBCL, indemnification is mandatory to the extent that the officer or director has been successful on the merits or otherwise in defense of any action or proceeding referred to in Section 1741 or 1742 of the PBCL.

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Section 1744 of the PBCL provides that, unless ordered by a court, any indemnification under Section 1741 or 1742 of the PBCL shall be made by the corporation only as authorized in the specific case upon a determination that the officer or director met the applicable standard of conduct, and such determination must be made by (i) the board of directors by a majority vote of a quorum of directors not parties to the action or proceeding, (ii) if a quorum is not obtainable, or if obtainable and a majority vote of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the shareholders.

Section 1745 of the PBCL provides that expenses (including attorneys’ fees) incurred by a director or officer in defending any action or proceeding referred to in Subchapter D of Chapter 17 of the PBCL may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation. Except as otherwise provided in the corporation’s bylaws, the PBCL provides that advancement of expenses must be authorized by the board of directors.

Section 1746 of the PBCL provides generally that the indemnification and advancement of expenses provided by Subchapter D of Chapter 17 of the PBCL shall not be deemed exclusive of any other rights to which an officer or director seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding that office. In no event may indemnification be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness.

Section 1747 of the PBCL grants a corporation the power to purchase and maintain insurance on behalf of any director or officer against any liability incurred by him in his capacity as officer or director, whether or not the corporation would have the power to indemnify him against that liability under Subchapter D of Chapter 17 of the PBCL.

Sections 1748 and 1749 of the PBCL extend the indemnification and advancement of expenses provisions contained in Subchapter D of Chapter 17 of the PBCL to successor corporations in fundamental changes and to officers and directors serving as fiduciaries of employee benefit plans.

Section 1750 of the PBCL provides that the indemnification and advancement of expenses provided by, or granted pursuant to, Subchapter D of Chapter 17 of the PBCL shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer shall inure to the benefit of the heirs and personal representatives of such person.

The goal of the aforementioned provisions of the PBCL and those of our amended bylaws, described below, is to limit the monetary liability of our officers and directors to us and to our shareholders and provide for indemnification of our officers and directors for liabilities and expenses that they may incur in such capacities.

Our third amended bylaws provide that we may indemnify our directors and officers for monetary damages for any action taken or failure to take any action, unless:

• such director or officer has breached or failed to perform the duties of his or her office under the PBCL, our amended bylaws or our amended and restated articles of incorporation; and

• the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.

In addition, our amended bylaws provide that we shall indemnify our directors and officers for expenses, attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she has acted in good faith and in a manner he or she believed to be in our best interest, or in the case of a criminal proceeding, that he or she had no reasonable cause to believe his or her conduct was unlawful. Such indemnification as to expenses, including attorneys’ fees, is

II-2

mandatory to the extent the individual is successful on the merits or otherwise in defense of the matter or in defense of any claim, issue or matter therein. Our amended bylaws provide, however, in the case of an action or suit by or in the right of the Company, that we will not indemnify a director or officer with respect to a matter in which such person has been adjudged to be liable in the performance of his or her duties to us, unless a court of common pleas determines that such person is fairly and reasonably entitled to indemnification. Our amended bylaws also provide that we may advance expenses to any director or officer upon our receipt of an undertaking by the director or officer to repay those amounts if it is finally determined that he or she is not entitled to indemnification.

We maintain directors’ and officers’ liability insurance to provide directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, error and other wrongful acts and for violations with respect to the Securities Act.

We have entered, and intend to continue to enter, into separate indemnification agreements with our directors and executive officers to provide indemnification to our directors and executive officers under certain circumstances for acts or omissions that may not be covered by directors’ and officers’ liability insurance, and may, in some cases, be broader than the specific indemnification provisions contained under the PBCL.

At present, there is no pending litigation or proceeding involving one or more of our directors or executive officers regarding which indemnification is sought.

The form of underwriting agreement attached hereto as Exhibit 1.1 provides for indemnification by the underwriters named in this registration statement of our executive officers, directors and us, and by us of the underwriters named in this registration statement, for certain liabilities, including liabilities arising under the Securities Act, in connection with matters specifically provided in writing for inclusion in this registration statement.

Item 15. Recent Sales of Unregistered Securities.

During the three years preceding the filing of this registration statement, we issued unregistered securities in the following transactions. None of these transactions involved underwriters, underwriting discounts or commissions, or any public offering, and we believe that each transaction was exempt from the registration requirements of the Securities Act, as described below.

(a) Issuances of Common Stock

• On October 13, 2010, we issued 2,449,080 shares of common stock to 84 holders in exchange for and in exercise of all issued and outstanding compensatory warrants and all vested options to purchase our common stock in connection with the 2010 Transaction on a one-for-one basis, offsetting the strike price for each holder. In addition, we issued 940,811 shares of common stock to 79 holders, in amounts equal to the unvested portion of such holder’s options. Also, on October 13, 2010, we issued 17,933,539 shares of common stock to 30 shareholders in connection with the conversion of 6,173,030 shares and 8,006,984 shares of Series A and Series A-1 redeemable convertible preferred stock, respectively, held by such shareholders. On October 14, 2010 we issued 3,530,989 shares to 30 shareholders in exchange for all remaining then-outstanding common stock warrants.

• On November 22, 2011, we issued 460,257 shares of common stock to an incoming director at a price of $2.41 a share and a total purchase price of approximately $1.1 million.

• On November 29, 2011, we issued 15,000 shares of common stock to a consultant in connection with the exercise of warrants issued to him as compensation for services he provided to the Company. The exercise price was $2.18 per share and resulted in aggregate cash proceeds to the Company equal to $32,700.

II-3

• On February 23, 2012, we issued 29,000 shares of common stock to a consultant in connection with the exercise of warrants issued to him as compensation for services he provided to the Company. The exercise price was $2.18 and resulted in aggregate cash proceeds to the Company equal to $63,220.

• On March 22, 2012, we issued a total of 5,839,946 shares of restricted common stock to the Founders in exchange for the cancellation for each Founder’s option agreement, on a one-for-one basis.

• On March 29, 2012, we issued 7,500 shares of common stock to one of our consultants in connection with the exercise of warrants issued to him as compensation for services provided to the Company. The exercise price was $3.88 and resulted in aggregate cash proceeds to the Company equal to $29,100.

• On April 9, 2012, we issued 20,000 shares of common stock to one of our consultants in connection with the exercise of warrants issued to him as compensation for services provided to the Company. The exercise price was $3.88 for the remaining shares and resulted in aggregate cash proceeds to the Company equal to $77,600.

• On April 13, 2012, we issued 10,000 shares of common stock to one of our consultants in connection with the exercise of warrants issued to him as compensation for services provided to the Company. The exercise price was $2.18 for half of the shares and $3.88 for the remaining shares and resulted in aggregate cash proceeds to the Company equal to $30,300.

(b) Issuances of Preferred Stock

• On October 14, 2010, the Company issued 89,291,773 shares of Series A 8% convertible preferred stock, at a per share price of approximately $2.17, for gross cash proceeds of $194.0 million, to funds managed by Advent and to Sargent Family Investments, LLC, a limited liability company controlled by one of our directors.

(c) Issuances of Warrants to Purchase Common Stock

• On February 26, 2009, we issued warrants to purchase a total of 40,000 shares of common stock at an exercise price of $1.70 per share to four service providers to the Company.

• On May 22, 2009, we issued a warrant to purchase 5,000 shares of common stock at an exercise price of $1.70 per share to a service provider to the Company.

• On May 27, 2010, we issued warrants to purchase 80,000 shares of common stock at an exercise price of $3.96 per share to six service providers to the Company.

• On February 22, 2011, we issued warrants to purchase 40,000 shares of common stock at an exercise price of $2.18 per share to three service providers to the Company.

• On May 25, 2011, we issued a warrant to purchase 9,000 shares of common stock at an exercise price of $2.18 per share to a service provider to the Company.

• On March 1, 2012, we issued warrants to purchase 32,500 shares of common stock at an exercise price of $3.88 per share to three service providers to the Company.

(d) Stock Option Grants

• On February 26, 2009, we granted stock options to purchase a total of 25,000 shares of common stock at an exercise price of $1.20 per share to two employees pursuant to our equity incentive plan.

• On May 22, 2009, we granted stock options to purchase a total of 263,500 shares of common stock at an exercise price of $1.20 per share to 33 employees pursuant to our equity incentive plan.

• On November 19, 2009, we granted stock options to purchase a total of 62,500 shares of common stock at an exercise price of $1.20 per share to 14 employees pursuant to our equity incentive plan.

• On May 27, 2010, we granted stock options to purchase a total of 342,500 shares of common stock at an exercise price of $3.96 per share to 51 employees and one director pursuant to our equity incentive plan.

II-4

• On June 30, 2010, we granted stock options to purchase a total of 500,000 shares of common stock at an exercise price of $3.96 per share to two employees, both of whom were also directors, pursuant to our equity incentive plan.

• On October 14, 2010, we granted stock options to purchase a total of 5,839,946 shares of common stock at an exercise price of $2.18 per share to two employees, both of whom were also directors, pursuant to our equity incentive plan.

• On November 23, 2010, we granted stock options to purchase a total of 334,000 shares of common stock at an exercise price of $2.18 per share to 21 employees pursuant to our equity incentive plan.

• On February 22, 2011, we granted stock options to purchase a total of 75,000 shares of common stock at an exercise price of $2.18 per share to nine employees pursuant to our equity incentive plan.

• On May 25, 2011, we granted stock options to purchase a total of 434,250 shares of common stock at an exercise price of $2.18 per share to 81 employees pursuant to our equity incentive plan.

• On September 1, 2011, we granted stock options to purchase a total of 102,750 shares of common stock at an exercise price of $2.41 per share to 28 employees pursuant to our equity incentive plan.

• On October 18, 2011, we granted stock options to purchase a total of 781,800 shares of common stock at an exercise price of $2.41 per share to 120 employees pursuant to our equity incentive plan.

• On November 22, 2011, we granted stock options to purchase a total of 373,000 shares of common stock at an exercise price of $2.82 per share to seven employees pursuant to our equity incentive plan.

• On March 1, 2012, we granted stock options to purchase a total of 911,000 shares of common stock at an exercise price of $3.88 per share to 145 employees pursuant to our equity incentive plan.

• On March 30, 2012, we granted stock options to purchase a total of 231,000 shares of common stock at an exercise price of $3.88 per share to 12 employees pursuant to our equity incentive plan.

• On May 23, 2012, we granted stock options to purchase a total of 5,000 shares at an exercise price dependent on the pricing of this offering to an employee pursuant to our equity incentive plan.

The conversions of preferred stock and exchanges of warrants described in paragraph (a) above were exempt securities transactions pursuant to Section 3(a)(9) of the Securities Act. Each of the recipients of securities in these transactions had or were given adequate access, through employment, business or other relationships, to information about us.

The offers, sales and issuances of the securities described in paragraph (b) were exempt from registration under the Securities Act under Section 4(2) of the Securities Act and Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of these securities were accredited investors within the meaning of Rule 501 of Regulation D of the Securities Act, who were acquiring the applicable securities for investment and not distribution. Each recipient represented that they could bear the risks of the investment.

The issuances of the securities described in paragraphs (a), (c) and (d) were exempt from registration under the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation. The recipients of such options were our employees or directors, who received the securities under our equity incentive plan and the recipients of such warrants were service providers to the Company. Each recipient of securities in these transactions had adequate access, through employment or business relationships, to information about us.

II-5

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
3.1	Second Amended and Restated Articles of Incorporation of Five Below, Inc., as currently in effect
3.2	Third Amended and Restated Certificate of Designations, Preferences, Limitations and Special Rights of the Series A 8% Convertible Preferred Stock of Five Below, Inc., as currently in effect
3.3†	Second Amended Bylaws of Five Below, Inc., as amended, as currently in effect(1)
3.4*	Third Amended and Restated Articles of Incorporation of Five Below, Inc., to be in effect upon the closing of this offering
3.5*	Third Amended Bylaws, to be in effect upon the closing of this offering
4.1*	Form of Specimen Stock Certificate
5.1*	Opinion of Pepper Hamilton LLP
10.1†	Investment Agreement, dated September 1, 2010, by and among Five Below, Inc., the Founders signatory thereto, the Significant Common Shareholders signatory thereto and the Purchasers signatory thereto(1)
10.2†	Amendment No. 1 to the Investment Agreement, dated October 14, 2010, by and among Five Below, Inc., the Purchasers signatory to the Investment Agreement and Sargent Family Investment, LLC(1)
10.3†	Amended and Restated Investor Rights Agreement, dated September 1, 2010, by and among Five Below, Inc., the Significant Common Shareholders signatory thereto, the Series A Preferred Shareholders signatory thereto and the Other Holders party thereto and any other Persons signatory thereto from time to time(1)
10.4†	First Amendment to Amended and Restated Investor Rights Agreement, dated October 14, 2010, by Five Below, Inc.(1)
10.5	Second Amendment to Amended and Restated Investor Rights Agreement, dated May 23, 2012, by and among Five Below, Inc., the Significant Common Shareholders signatory thereto and the Series A Preferred Shareholders signatory thereto
10.6†	Second Amended and Restated Shareholders Agreement, dated September 1, 2010, by and among Five Below, Inc. and the Shareholders party thereto and any other Persons signatory thereto from time to time(1)
10.7†	First Amendment to Second Amended and Restated Shareholders Agreement, dated October 14, 2010, by Five Below, Inc.(1)
10.8†	Second Amendment to Second Amended and Restated Shareholders Agreement, dated November 22, 2011, by and among Five Below, Inc. and the Consenting Shareholders signatory thereto(1)
10.9	Third Amendment to Second Amended and Restated Shareholders Agreement, dated May 23, 2012, by and among Five Below, Inc. and the Shareholders party thereto and any other Persons signatory thereto from time to time
10.10†	Five Below, Inc. Equity Incentive Plan(1)
10.11†	Amendment 2010-1 to the Five Below, Inc. Equity Incentive Plan(1)
10.12†	Form of Non-Qualified Stock Option Agreement (Employees)(1)
10.13†	Form of Non-Qualified Stock Option Agreement (Executives)(1)
10.14†	Form of Award Agreement for Restricted Shares under the Five Below, Inc. Equity Incentive Plan(1)

II-6

Exhibit Number	Description
10.15*	Five Below, Inc. Amended and Restated Equity Incentive Plan
10.16*	Five Below, Inc. Performance Bonus Plan
10.17	Form of Director and Officer Indemnification Agreement
10.18†	Letter Employment Agreement, dated October 14, 2010, by and between David Schlessinger and Five Below, Inc.(1)
10.19†	Amendment to Employment Agreement, dated September 28, 2011, by and between David Schlessinger and Five Below, Inc.(1)
10.20†	Letter Employment Agreement, dated October 14, 2010, by and between Thomas Vellios and Five Below, Inc.(1)
10.21†	Amendment to Employment Agreement, dated September 28, 2011, by and between Thomas Vellios and Five Below, Inc.(1)
10.22†	Letter Employment Agreement, dated April 16, 2012, by and between Kenneth R. Bull and Five Below, Inc.(1)
10.23†	Non-Qualified Stock Option Agreement, dated October 14, 2010, by and between David Schlessinger and Five Below, Inc.(1)
10.24†	Non-Qualified Stock Option Agreement, dated October 14, 2010, by and between Thomas Vellios and Five Below, Inc.(1)
10.25†	Option Cancellation Agreement, dated March 22, 2012, by and between David Schlessinger and Five Below, Inc.(1)
10.26†	Option Cancellation Agreement, dated March 22, 2012, by and between Thomas Vellios and Five Below, Inc.(1)
10.27	Lease Agreement, dated April 1, 2007, by and between Twin Spans Business Park, LLC and Five Below, Inc., as amended
10.28	Credit Agreement, dated as of May 16, 2012, among Five Below, Inc. and the Lenders Party thereto, and Goldman Sachs Bank USA, Barclays Bank PLC and Jefferies Finance, LLC, collectively as lead arrangers and lead bookrunners and, individually, as administrative agent and collateral agent, syndication agent, and documentation agent, respectively, and Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Trust Company Americas, UBS Securities LLC and Wells Fargo Bank, National Association, as arrangers and bookrunners
10.29	Security Agreement, dated as of May 16, 2012, among Five Below, Inc. and Goldman Sachs Bank USA
10.30	Second Amended and Restated Loan and Security Agreement, dated May 16, 2012, by and between Five Below, Inc. and Wells Fargo Bank, National Association.
10.31	Lien Subordination and Intercreditor Agreement, dated as May 16, 2012, among Wells Fargo, National Association, Goldman Sachs Bank USA and Five Below, Inc.
10.32	Five Below, Inc. Compensation Policy for Non-Employee Directors
23.1	Consent of KPMG LLP
23.2*	Consent of Pepper Hamilton LLP (to be included in the opinion filed as Exhibit 5.1 hereto)
24.1†	Power of Attorney (included on the signature page of the Registration Statement on Form S-1 (File No. 333-180780) filed with the Commission on April 18, 2012)(1)

* To be filed by amendment.

† Previously filed.

(1) Previously filed as an exhibit to the registrant’s Registration Statement on Form S-1 (File No. 333-180780) filed with the Commission on April 18, 2012.

II-7

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c) The undersigned Registrant hereby undertakes that:

(1) For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

(i) that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(A) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(B) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(C) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(D) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

The undersigned registrant hereby further undertakes that:

If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

II-8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Philadelphia, Pennsylvania, on the 23^rd day of May, 2012.

FIVE BELOW, INC.
By:	/s/    David Schlessinger
	Name: David Schlessinger
	Title:    Executive Chairman

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    David Schlessinger David Schlessinger	Executive Chairman	May 23, 2012
* Thomas Vellios	President, Chief Executive Officer and Director (Principal Executive Officer)	May 23, 2012
* Kenneth R. Bull	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	May 23, 2012
* Steven Collins	Director	May 23, 2012
* Andrew Crawford	Director	May 23, 2012
* David Mussafer	Director	May 23, 2012
* Howard Ross	Director	May 23, 2012
* Thomas Ryan	Director	May 23, 2012
* Ronald Sargent	Director	May 23, 2012

*	/s/    David Schlessinger
	Name:	David Schlessinger
	Title:	Attorney-in-Fact

II-9

EXHIBIT INDEX

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
3.1	Second Amended and Restated Articles of Incorporation of Five Below, Inc., as currently in effect
3.2	Third Amended and Restated Certificate of Designations, Preferences, Limitations and Special Rights of the Series A 8% Convertible Preferred Stock of Five Below, Inc., as currently in effect
3.3†	Second Amended Bylaws of Five Below, Inc., as amended, as currently in effect(1)
3.4*	Third Amended and Restated Articles of Incorporation of Five Below, Inc., to be in effect upon the closing of this offering
3.5*	Third Amended Bylaws, to be in effect upon the closing of this offering
4.1*	Form of Specimen Stock Certificate
5.1*	Opinion of Pepper Hamilton LLP
10.1†	Investment Agreement, dated September 1, 2010, by and among Five Below, Inc., the Founders signatory thereto, the Significant Common Shareholders signatory thereto and the Purchasers signatory thereto(1)
10.2†	Amendment No. 1 to the Investment Agreement, dated October 14, 2010, by and among Five Below, Inc., the Purchasers signatory to the Investment Agreement and Sargent Family Investment, LLC(1)
10.3†	Amended and Restated Investor Rights Agreement, dated September 1, 2010, by and among Five Below, Inc., the Significant Common Shareholders signatory thereto, the Series A Preferred Shareholders signatory thereto and the Other Holders party thereto and any other Persons signatory thereto from time to time(1)
10.4†	First Amendment to Amended and Restated Investor Rights Agreement, dated October 14, 2010, by Five Below, Inc.(1)
10.5	Second Amendment to Amended and Restated Investor Rights Agreement, dated May 23, 2012, by and among Five Below, Inc., the Significant Common Shareholders signatory thereto and the Series A Preferred Shareholders signatory thereto
10.6†	Second Amended and Restated Shareholders Agreement, dated September 1, 2010, by and among Five Below, Inc. and the Shareholders party thereto and any other Persons signatory thereto from time to time(1)
10.7†	First Amendment to Second Amended and Restated Shareholders Agreement, dated October 14, 2010, by Five Below, Inc.(1)
10.8†	Second Amendment to Second Amended and Restated Shareholders Agreement, dated November 22, 2011, by and among Five Below, Inc. and the Consenting Shareholders signatory thereto(1)
10.9	Third Amendment to Second Amended and Restated Shareholders Agreement, dated May 23, 2012, by and among Five Below, Inc. and the Shareholders party thereto and any other Persons signatory thereto from time to time
10.10†	Five Below, Inc. Equity Incentive Plan(1)
10.11†	Amendment 2010-1 to the Five Below, Inc. Equity Incentive Plan(1)
10.12†	Form of Non-Qualified Stock Option Agreement (Employees)(1)
10.13†	Form of Non-Qualified Stock Option Agreement (Executives)(1)
10.14†	Form of Award Agreement for Restricted Shares under the Five Below, Inc. Equity Incentive Plan(1)
10.15*	Five Below, Inc. Amended and Restated Equity Incentive Plan
10.16*	Five Below, Inc. Performance Bonus Plan
10.17	Form of Director and Officer Indemnification Agreement

Exhibit Number	Description
10.18†	Letter Employment Agreement, dated October 14, 2010, by and between David Schlessinger and Five Below, Inc.(1)
10.19†	Amendment to Employment Agreement, dated September 28, 2011, by and between David Schlessinger and Five Below, Inc.(1)
10.20†	Letter Employment Agreement, dated October 14, 2010, by and between Thomas Vellios and Five Below, Inc.(1)
10.21†	Amendment to Employment Agreement, dated September 28, 2011, by and between Thomas Vellios and Five Below, Inc.(1)
10.22†	Letter Employment Agreement, dated April 16, 2012, by and between Kenneth R. Bull and Five Below, Inc.(1)
10.23†	Non-Qualified Stock Option Agreement, dated October 14, 2010, by and between David Schlessinger and Five Below, Inc.(1)
10.24†	Non-Qualified Stock Option Agreement, dated October 14, 2010, by and between Thomas Vellios and Five Below, Inc.(1)
10.25†	Option Cancellation Agreement, dated March 22, 2012, by and between David Schlessinger and Five Below, Inc.(1)
10.26†	Option Cancellation Agreement, dated March 22, 2012, by and between Thomas Vellios and Five Below, Inc.(1)
10.27	Lease Agreement, dated April 1, 2007, by and between Twin Spans Business Park, LLC and Five Below, Inc., as amended
10.28	Credit Agreement, dated as of May 16, 2012, among Five Below, Inc. and the Lenders Party thereto, and Goldman Sachs Bank USA, Barclays Bank PLC and Jefferies Finance, LLC, collectively as lead arrangers and lead bookrunners and, individually, as administrative agent and collateral agent, syndication agent, and documentation agent, respectively, and Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Trust Company Americas, UBS Securities LLC and Wells Fargo Bank, National Association, as arrangers and bookrunners
10.29	Security Agreement, dated as of May 16, 2012, among Five Below, Inc. and Goldman Sachs Bank USA
10.30	Second Amended and Restated Loan and Security Agreement, dated May 16, 2012, by and between Five Below, Inc. and Wells Fargo Bank, National Association.
10.31	Lien Subordination and Intercreditor Agreement, dated as May 16, 2012, among Wells Fargo, National Association, Goldman Sachs Bank USA and Five Below, Inc.
10.32	Five Below, Inc. Compensation Policy for Non-Employee Directors
23.1	Consent of KPMG LLP
23.2*	Consent of Pepper Hamilton LLP (to be included in the opinion filed as Exhibit 5.1 hereto)
24.1†	Power of Attorney (included on the signature page of the Registration Statement on Form S-1 (File No. 333-180780) filed with the Commission on April 18, 2012)(1)

* To be filed by amendment.

† Previously filed.

(1) Previously filed as an exhibit to the registrant’s Registration Statement on Form S-1 (File No. 333-180780) filed with the Commission on April 18, 2012.

EX-3.1

Exhibit 3.1

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

FIVE BELOW, INC.

A Business-stock domestic corporation

(15 Pa.C.S. § 1306)

ARTICLE ONE

The name of the corporation is: Five Below, Inc. (the “Corporation”).

ARTICLE TWO

The location and address of this Corporation’s registered office in this Commonwealth of Pennsylvania is: 1818 Market Street Street, Suite 1900, Philadelphia, Pennsylvania, 19103 and the county of venue is Philadelphia County.

The corporation is incorporated under the provisions of the Business Corporation Law of 1988, as amended (the “BCL”).

ARTICLE THREE

A. AUTHORIZED SHARES

The authorized capital stock of the Corporation shall consist of the following: (i) Two Hundred Million shares (200,000,000) of common stock, $.01 par value (the “Common Stock”), and (ii) One Hundred Million shares (100,000,000) of undesignated preferred stock, $.01 par value (the “Preferred Stock”), the rights and preferences of which may be designated by the Corporation’s Board of Directors (the “Board of Directors”).

B. COMMON STOCK

B.1. Dividends, Distributions. Subject to the rights and preferences applicable to the holders of capital stock ranking senior to the Common Stock at any time, if any, the holders of shares of Common Stock shall be entitled to receive such dividends or distributions, payable in cash or otherwise, as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefore, provided that the holders of outstanding shares of Common Stock, if any, shall be entitled to share equally, on a per share basis, in such dividends or distributions.

B.2. Voting Rights. Except as otherwise required by law, the holders of the Common Stock shall be entitled to one vote per share of Common Stock for the election of directors and on all other matters for which a vote of common shareholders is required.

C. PREFERRED STOCK

C.1. Preferred Stock Designation. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to provide for the issuance of shares of Preferred Stock in series and, by filing a certificate pursuant to the applicable law of the Commonwealth of Pennsylvania (hereinafter referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences, voting rights, privileges, options, conversion rights and other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:

(a) the designation of the series, which may be by distinguishing number, letter or title;

(b) the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding);

(c) whether dividends, if any, shall be cumulative or noncumulative and the dividend rate of the series;

(d) the dates at which dividends, if any, shall be payable;

(e) the redemption rights and price or prices, if any, for shares of the series;

(f) the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series;

(g) the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

(h) whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion price or prices or rate or rates, any adjustments thereof, the date or dates as of which such shares shall be convertible and all other terms and conditions upon which such conversion may be made;

(i) restrictions on the issuance of shares of the same series or of any other class or series; and

(j) the voting rights, if any, of the holders of shares of the series.

Except as may be provided in these Articles of Incorporation or in a Preferred Stock Designation, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes.

-2-

C.2. Treatment of Liquidation Preference under Section 1551 of the BCL. Notwithstanding the provisions of the BCL, including, without limitation, Section 1551 of the BCL, to the extent any shareholders of the Corporation have preferential rights upon dissolution of the Corporation that are superior to the rights of any other shareholders of the Corporation, such preferential rights and any amounts due as a result thereof shall be excluded as a liability and for all other purposes under Section 1551(b) of the BCL. Without limiting the generality of the foregoing, the liquidation preference of the Series A 8% Preferred Stock, par value $0.01 per share, of the Corporation (the “Series A 8% Preferred Stock”), shall be excluded as a liability and for all other purposes under Section 1551(b) of the BCL with respect to any distribution made by or to be made by the Corporation.

ARTICLE FOUR

For so long as there are shares of Series A 8% Preferred Stock issued and outstanding, in addition to any affirmative vote required by any Preferred Stock Designation, the affirmative vote of the holders of Common Stock and Preferred Stock (voting together as a single class) holding the Requisite Share Percentage shall be required to authorize any action by the Corporation involving (a) the acquisition of the Corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation) that results in the Corporation’s shareholders immediately prior to such transaction not holding more than fifty percent (50%) of the voting power of the surviving or continuing entity, or (b) a sale, conveyance or disposition of all or substantially all of the assets of the Corporation in any transaction or series of related transactions, unless the Corporation’s shareholders immediately prior to such transaction or transactions will, as a result of such sale, conveyance or disposition hold more than fifty percent (50%) of the voting power of the purchasing entity.

For purposes hereof, “Requisite Share Percentage” means an amount equal to (i) until October 14, 2011, more than seventy-five percent (75%) of the voting power represented by the then issued and outstanding shares of Common Stock and Preferred Stock, (ii) from October 15, 2011 through October 14, 2012, more than seventy percent (70%) of the voting power represented by the then issued and outstanding shares of Common Stock and Preferred Stock, and (iii) for all periods after October 14, 2012, more than fifty percent (50%) of the voting power represented by the then issued and outstanding shares of Common Stock and Preferred Stock. For purposes hereof, the Requisite Share Percentage shall be calculated on an as-converted basis, assuming that all shares of Preferred Stock then issued and outstanding shall have been converted into Common Stock pursuant to the terms of the applicable Preferred Stock Designation.

ARTICLE FIVE

The Corporation shall be entitled to treat the person in whose name any share of its capital stock is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.

ARTICLE SIX

The Corporation shall have perpetual existence.

-3-

ARTICLE SEVEN

To the fullest extent permitted by the BCL, as the same exists or may hereinafter be amended:

A.1. A director of this Corporation shall not be liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director.

A.2. The Corporation shall indemnify any director or officer and may indemnify any employee or agent who was or is a party (other than a party plaintiff suing on his or her own behalf) or is threatened to be made a party to, or testifies in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding to the full extent permitted by law; provided, that no indemnification shall be provided in any case where the act or failure to act giving rise to the claim for indemnification by such person is determined by a court to have constituted willful misconduct or recklessness. The Corporation shall adopt bylaws and may enter into agreements with any such person for the purpose of providing for such indemnification.

A.3. The Corporation shall pay expenses incurred by a director or officer and may pay expenses incurred by an employee or agent in defending or testifying in any action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, and such expenses shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that such director, officer, employee or agent is not entitled to be indemnified by the Corporation against such expenses as authorized by this Article Seven, and the Corporation shall adopt bylaws and may enter into agreements with such persons for the purpose of providing for such advances.

A.4. The indemnification and advancement of expenses provided by this Article Seven shall not be deemed exclusive of any other rights to which any person may be entitled under any agreement, vote of shareholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding an office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. Section 1728 of the BCL, or any successor section, shall be applicable to any provision of these Articles, contract or transaction authorized by the directors under this Section A.4.

A.5. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article Seven or otherwise.

-4-

ARTICLE EIGHT

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation, subject to any affirmative vote that may be required by any Preferred Stock Designation.

ARTICLE NINE

The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed herein and by the laws of the Commonwealth of Pennsylvania, and all rights conferred upon shareholders herein are granted subject to this reservation.

ARTICLE TEN

The shareholders of the Corporation shall not be entitled to cumulate their votes for the election of directors.

ARTICLE ELEVEN

The Corporation expressly elects not to be governed by Section 2538 (Adoption of Transactions with Interested Shareholders) and the provisions contained in Subchapters E (Control Transactions), G (Control-Share Acquisitions), H (Disgorgement by Certain Controlling Shareholders for Employees Terminated Following Attempts to Acquire Control), I (Severance Compensation for Employees Terminated Following Certain Control-Share Acquisitions) and J (Business Combination Transactions – Labor Contracts) of Chapter 25 of the BCL.

-5-

EX-3.2

Exhibit 3.2

THIRD AMENDED AND RESTATED

CERTIFICATE OF DESIGNATIONS, PREFERENCES, LIMITATIONS

AND SPECIAL RIGHTS OF

THE SERIES A 8% CONVERTIBLE PREFERRED STOCK

OF

FIVE BELOW, INC.

(THIS “AMENDED AND RESTATED CERTIFICATE”)

Description and Designation of Series A 8% Convertible Preferred Stock.

1. Designation. A total of Ninety Million (90,000,000) shares of the Corporation’s Preferred Stock shall be designated as the “Series A 8% Convertible Preferred Stock.” The Series A 8% Convertible Preferred Stock is referred to herein as the “Series A Preferred Stock.”

2. Cash Dividends. From and after the date of the issuance of any shares of Series A Preferred Stock, dividends at the rate of 8.0% of the Series A Original Issue Price (as defined below) per share per annum shall accrue on such shares of Series A Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock) (the “Accruing Dividends”). Accruing Dividends shall accrue from day to day, whether or not declared, shall be cumulative, shall compound on an annual basis and shall be paid in cash; provided however, that except as set forth in Section 3.1, such Accruing Dividends shall be payable only when, as, and if declared by Supermajority Board Approval and the Corporation shall be under no obligation to pay such Accruing Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to obtaining any consents required elsewhere in the Articles of Incorporation) the holders of a majority of the Series A Preferred Stock then outstanding consent to the payment by the Corporation of such dividend(s). In the event that holders of a majority of the Series A Preferred Stock then outstanding consent to such dividend(s), the holders of Series A Preferred Stock shall simultaneously receive a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to that dividend per share of Series A Preferred Stock as would equal the product of (x) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock, and (y) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend; provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series A Preferred Stock pursuant to this Section 2 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend. The “Series A Original Issue Price” shall mean $2.1726525682883. The Series A Original Issue Price shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock. As used herein “Supermajority Board Approval” means, if there are seven (7) members of the Corporation’s Board of Directors, the approval of five (5) of the seven (7) members of the Board of Directors, and if there are more or less than seven (7) members of the Corporation’s Board of Directors, the approval of that number of members representing at least two-thirds (rounded up to the nearest whole number) of the members of the Board of Directors.

3. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

3.1 Payments to Holders of Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Series A Original Issue Price, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock pursuant to Section 5 immediately prior to such liquidation, dissolution or winding up (the amount payable pursuant to this sentence is hereinafter referred to as the “Series A Liquidation Amount”). If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under this Section 3.1, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

3.2 Payments to Holders of Common Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment of all preferential amounts required to be paid to the holders of shares of Series A Preferred Stock, the remaining assets of the Corporation available for distribution to its shareholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

3.3 Deemed Liquidation Events.

3.3.1 Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least a majority of the outstanding shares of Series A Preferred Stock elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event:

(a) an acquisition of the Corporation by an unaffiliated entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation), or the effectuation by the Corporation or its shareholders of a transaction or series of transactions, in each case, that results in the Corporation’s shareholders immediately prior to such transaction not holding at least fifty percent (50%) of the voting power of the surviving or continuing entity or the Corporation by reason of such transaction or series of related transactions, as applicable, except any such sale, merger or consolidation involving the Corporation in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (provided that, for the purpose of this Section 3.3.1, all shares of Common Stock issuable upon exercise of Options (as defined below) outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged); or

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(b) the sale, transfer, or other disposition, in a single transaction or series of related transactions, by the Corporation of all or substantially all the assets of the Corporation.

3.3.2 Effecting a Deemed Liquidation Event.

(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in
Section 3.3.1(a) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the shareholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Section 3.1 and 3.2.

(b) In the event of a Deemed Liquidation Event referred to in Section 3.3.1(b) if the Corporation does not effect a dissolution of the Corporation under the Pennsylvania Business Corporation Law of 1988, as amended (“PBCL”) within 90 days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Series A Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Series A Preferred Stock, and (ii) if the holders of at least a majority of the then outstanding shares of Series A Preferred Stock so request in a written instrument delivered to the Corporation not later than 120 days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its shareholders (the “Available Proceeds”), to the extent legally available therefor, no later than the 150th day after such Deemed Liquidation Event, to redeem all outstanding shares of Series A Preferred Stock at a price per share equal to the Series A Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series A Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Series A Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor. Prior to the distribution or redemption provided for in this Section 3.3.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

3.3.3 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such Deemed Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person or entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.

3.4 Treatment of Series A Liquidation Amount under Section 1551 of the PBCL. Notwithstanding the provisions of Section 1551 of the PBCL, the Series A Liquidation Amount shall be excluded as a liability and for all other purposes under Section 1551(b) with respect to any distribution made by or to be made by the Corporation.

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4. Voting.

4.1 General. On any matter presented to the shareholders of the Corporation for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter. Except as provided by law or Section 4.1, or as expressly set forth in any other provisions of the Articles of Incorporation, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class.

4.2 Election of Directors. For so long as shares of Series A Preferred Stock are outstanding, the holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect four (4) directors of the Corporation (the “Series A Directors”); provided that if the size of the Corporation’s Board of Directors is not fixed at seven (7), then the holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect the lowest number of directors that would constitute a majority of the members of the Corporation’s Board of Directors. Any director elected as provided in the preceding sentence may be removed without assigning any cause by, and only by, the affirmative vote of the holders of the shares of Series A Preferred Stock entitled to elect such director or directors, given either at a special meeting of such shareholders duly called for that purpose or pursuant to a written consent of such shareholders. If the holders of shares of Series A Preferred Stock fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first sentence of this Section 4.2, then any directorship not so filled shall remain vacant until such time as the holders of the Series A Preferred Stock elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by shareholders of the Corporation other than by the holders of the shares of Series A Preferred Stock. At any meeting held for the purpose of electing a Series A Director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the Series A Preferred Stock shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Section 4.2, a vacancy in any directorship filled by the holders of shares of Series A Preferred shall be filled only by vote or written consent in lieu of a meeting of such holders or directors elected by the holders of shares of Series A Preferred pursuant to this Section 4.2.

4.3 Series A Preferred Stock Protective Provisions. At any time when shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class:

4.3.1 amend, change, alter, repeal or modify (i) the designations, powers, preferences, rights or qualifications, limitations or restrictions of the Series A Preferred Stock (including, but not limited to, by recapitalization, merger, consolidation or otherwise) or (ii) any provision of the Articles of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock;

4.3.2 authorize or issue (a) any class or series of capital stock of the Corporation or (b) any bonds, debentures, notes or other obligations convertible into or exchangeable for, or having optional rights to purchase, capital stock of the Corporation, in the case of (a) or (b), ranking, either as to payment of dividends or distribution of assets under Section 3, senior to or on parity with the Series A Preferred Stock;

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4.3.3 incur, create, suffer to exist, issue, assume, guarantee or otherwise become directly liable, contingent or otherwise with respect to indebtedness for borrowed money of more than Ten Million Dollars ($10,000,000), individually;

4.3.4 consummate, enter into, or be party to, any transaction with a value of greater than Ten Million Dollars ($10,000,000) involving (i) the acquisition of another person, entity or asset by the Corporation using the Corporation’s cash or capital stock as consideration, or (ii) the disposition of the Corporation’s assets;

4.3.5 change, alter, repeal or modify the Corporation’s equity incentive plan or the adoption of new equity-based compensation arrangements;

4.3.6 redeem, repurchase or acquire the Corporation’s capital stock or other securities of the Corporation, except for repurchases or other acquisitions of shares of Common Stock of the Corporation from employees, consultants or directors of the Corporation upon such the termination of such person’s employment or services with the Corporation pursuant to the terms and conditions of agreements approved by the Board of Directors which provide the Corporation the right to repurchase such shares upon termination of employment or services; or

4.3.7 make any decision affecting the appointment or removal of senior officers of the Corporation.

5. Optional Conversion.

The holders of the Series A Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

5.1 Right to Convert.

5.1.1 Conversion Ratio. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series A Original Issue Price by the Series A Conversion Price (as defined below) in effect at the time of conversion. The “Series A Conversion Price” shall initially be equal to the Series A Original Issue Price. Such initial Series A Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

5.1.2 Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A Preferred Stock.

5.2 Cash in Lieu of Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

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5.3 Mechanics of Conversion.

5.3.1 Notice of Conversion. In order for a holder of Series A Preferred Stock to voluntarily convert shares of Series A Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series A Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series A Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series A Preferred Stock represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Series A Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series A Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, and (ii) pay in cash such amount as provided in Section 5.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion.

5.3.2 Reservation of Shares. The Corporation shall at all times when the Series A Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series A Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to the Articles of Incorporation. Before taking any action which would cause an adjustment reducing the Series A Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Series A Conversion Price.

5.3.3 Effect of Conversion. All shares of Series A Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and shall not be entitled to the payment of any dividends that have accrued on such shares through the Conversion Time and remain unpaid, and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 5.2. Any shares of Series A Preferred Stock so

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converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of shares of Series A Preferred Stock accordingly.

5.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the Series A Conversion Price shall be made for any accrued but unpaid Accruing Dividends on the Series A Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

5.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series A Preferred Stock pursuant to this Section 5. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

5.4 Adjustments to Series A Conversion Price for Diluting Issues.

5.4.1 Special Definitions. For purposes of this Section 5, the following definitions shall apply:

(a) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(b) “Series A Original Issue Date” shall mean October 14, 2010.

(c) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

(d) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 5.4.3, deemed to be issued) by the Corporation after the Series A Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

(i) shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock;

(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 5.5, 5.6, 5.7 or 5.8;

(iii) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation;

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(iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;

(v) shares of Common Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors of the Corporation;

(vi) shares of Common Stock, Options or Convertible Securities issued pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board of Directors of the Corporation;

(vii) shares of Common Stock, Options or Convertible Securities issued to banks or other financial institutions, pursuant to a debt financing approved with Supermajority Board Approval; or

(viii) shares of Common Stock, Options or Convertible Securities issued pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board of Directors of the Corporation.

5.4.2 No Adjustment of Series A Conversion Price. No adjustment in the Series A Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series A Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

5.4.3 Deemed Issue of Additional Shares of Common Stock.

(a) If the Corporation at any time or from time to time after the Series A Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

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(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Series A Conversion Price pursuant to the terms of Section 5.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Series A Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Series A Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Series A Conversion Price to an amount which exceeds the lower of (i) the Series A Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Series A Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Series A Conversion Price pursuant to the terms of Section 5.4.4 (either because the consideration per share (determined pursuant to Section 5.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Series A Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series A Original Issue Date), are revised after the Series A Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Section 5.4.3(a) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Series A Conversion Price pursuant to the terms of Section 5.4.4, the Series A Conversion Price shall be readjusted to such Series A Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Series A Conversion Price provided for in this Section 5.4.3 shall be effected at the

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time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Section 5.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Series A Conversion Price that would result under the terms of this Section 5.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Series A Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

5.4.4 Adjustment of Series A Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall at any time after the Series A Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 5.4.3), without consideration or for a consideration per share less than the Series A Conversion Price in effect immediately prior to such issue, then the Series A Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

CP₂ = CP₁* (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

(a) “CP₂” shall mean the Series A Conversion Price in effect immediately after such issue of Additional Shares of Common Stock

(b) “CP₁” shall mean the Series A Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

(c) “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Series A Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

(d) “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP₁ (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP₁); and

(e) “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

5.4.5 Determination of Consideration. For purposes of this Section 5.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(a) Cash and Property: Such consideration shall:

(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

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(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

(i) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

5.4.6 Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Series A Conversion Price pursuant to the terms of Section 5.4.4, then, upon the final such issuance, the Series A Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

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5.5 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Series A Original Issue Date effect a subdivision of the outstanding Common Stock, the Series A Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series A Original Issue Date combine the outstanding shares of Common Stock, the Series A Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this Section shall become effective at the close of business on the date the subdivision or combination becomes effective.

5.6 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Series A Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series A Conversion Price then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series A Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series A Conversion Price shall be adjusted pursuant to this Section as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series A Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event.

5.7 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 2 do not apply to such dividend or distribution, then and in each such event the holders of Series A Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event.

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5.8 Adjustment for Merger or Reorganization, etc. Subject to the provisions of Section 3.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Sections 5.4, 5.6 or 5.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series A Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 5 with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Series A Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock.

5.9 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price pursuant to this Section 5, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series A Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series A Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A Preferred Stock.

5.10 Notice of Record Date. In the event:

(a) the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series A Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on

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which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series A Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

6. Mandatory Conversion.

6.1 Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least One Hundred Million Dollars ($100,000,000) of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least majority of the then outstanding shares of Series A Preferred Stock (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Series A Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate and (ii) such shares may not be reissued by the Corporation.

6.2 Procedural Requirements. All holders of record of shares of Series A Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Series A Preferred Stock pursuant to this Section 6. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Series A Preferred Stock shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series A Preferred Stock converted pursuant to Section 6.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender the certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 6.2. As soon as practicable after the Mandatory Conversion Time and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Series A Preferred Stock, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided in Section 5.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series A Preferred Stock converted. Such converted Series A Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of shares of Series A Preferred Stock accordingly.

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7. Redeemed or Otherwise Acquired Shares. Any shares of Series A Preferred Stock that are redeemed or otherwise acquired by the Corporation (including by conversion thereof) shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. For so long as shares of Series A Preferred Stock are issued and outstanding, neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Series A Preferred Stock following redemption.

8. Waiver. Any of the rights, powers, preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding.

9. Notices. Any notice required or permitted by the provisions of this Amended and Restated Certificate to be given to a holder of shares of Series A Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the PBCL, and shall be deemed sent upon such mailing or electronic transmission.

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EX-10.5

Exhibit 10.5

SECOND AMENDMENT

TO

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THIS SECOND AMENDMENT, dated May 23, 2012 (this “Amendment”), to the Amended and Restated Investor Rights Agreement, dated September 1, 2010 (the “Original Investor Rights Agreement”), as amended by the First Amendment to Amended and Restated Investor Rights Agreement, dated October 14, 2010 (together with the Original Investor Rights Agreement, the “Investor Rights Agreement”), is made by and among Five Below, Inc., a Pennsylvania corporation (the “Company”), and the undersigned shareholders of the Company (the “Holders”).

BACKGROUND

A. The Company has filed a registration statement with the U.S. Securities and Exchange Commission under the Securities Act in order to undertake the Initial Public Offering of the Company’s common stock.

B. In connection with the Initial Public Offering, the Holders desire to enter into this Amendment in order to amend and terminate certain provisions of the Investor Rights Agreement as set forth below.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows:

AGREEMENT

1. Amendment of the Investor Rights Agreement – Effective Immediately. Effective upon the date of this Amendment, the Investor Rights Agreement shall be amended as follows:

a. The definition of “Advent Funds” is hereby deleted and replaced in its entirety with the following:

“Advent Funds” means Advent-Five Below Acquisition Limited Partnership.

b. The contact information for the Company set forth in Section 5.2 of the Investor Rights Agreement is hereby deleted and replaced in its entirety with the following:

Five Below, Inc.

1818 Market Street

Suite 1900

Philadelphia, PA 19103

Attn: David Schlessinger and Thomas Vellios

Fax: 215.546.8099

Email: dschlessinger@fivebelow.com; tvellios@fivebelow.com

2. Amendment of the Investor Rights Agreement – Effective Immediately Prior to Initial Public Offering. Effective immediately prior to, and conditioned upon, the closing of the Initial Public Offering, the Investor Rights Agreement shall be amended as follows:

a. The information reflected in Exhibit A to the Investor Rights Agreement is hereby deleted in its entirety and replaced with the information set forth in Annex 1 hereto.

b. The definition of “Registrable Securities” is hereby deleted and replaced in its entirety with the following:

“Registrable Securities” shall mean (a) the Conversion Shares, (b) shares of Common Stock held by each of the following and his or its Affiliates: Blue 9 Fund I, L.P., LLR Equity Partners II, L.P., LLR Equity Partners Parallel II, L.P., Advent-Five Below Acquisition Limited Partnership, Sargent Family Investment, LLC, Thomas Vellios, David Schlessinger, Thomas Ryan and Ronald Sargent; and (c) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of shares described in clauses (a) and (b). Notwithstanding the foregoing, Registrable Securities shall not include any securities which (x) have been sold by a Person to the public pursuant to a registration statement declared effective pursuant to the Securities Act, or (y) have been sold in a private transaction in which all or a portion of the transferor’s rights under this Agreement are not assigned.

c. The definition of “Significant Common Shareholder” is hereby deleted and replaced in its entirety with the following:

“Significant Common Shareholder” shall mean each of the following and his or its Affiliates: Blue 9 Fund I, L.P., LLR Equity Partners II, L.P., LLR Equity Partners Parallel II, L.P., Advent-Five Below Acquisition Limited Partnership, Sargent Family Investment, LLC, Thomas Vellios, David Schlessinger, Thomas Ryan and Ronald Sargent.

d. The reference to “thirty (30) days” in Section 2.2(c) is hereby replaced with “five (5) Business Days” and the reference to “thirty-day period” in Section 2.2(c) is hereby replaced with “five (5) Business Day period”.

e. The reference to “thirty (30) days” in Section 2.3(b) is hereby replaced with “five (5) Business Days”.

f. Section 2.12(b) of the Investor Rights Agreement is hereby deleted and replaced in its entirety with the following:

(b) The obligations of the Company to register shares of Registrable Securities under Sections 2.2, 2.3 or 2.4 shall terminate with respect to the shares held by a party to this Agreement upon the time at which all shares of Registrable Securities held or entitled to be held upon conversion by such party may be sold immediately under Rule 144 without regard to any volume limitations thereunder.

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3. Termination of Investor Rights Agreement Provisions. Effective immediately prior to, and conditioned upon, the closing of the Initial Public Offering, all of the provisions of Section 3, Section 4 (excluding Section 4.5 thereof (Confidentiality)) and Section 5.4 of the Investor Rights Agreement shall terminate in full and cease to be of any force and effect.

4. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Investor Rights Agreement.

5. Expiration Date. Notwithstanding any provision herein to the contrary, if the Initial Public Offering does not close prior to December 31, 2012, the provisions of Sections 2 and 3 of this Amendment shall become null and void and of no further force and effect.

6. Governing Law. This Amendment and the parties’ rights and obligations hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Pennsylvania or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Pennsylvania.

7. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties and their respective successors and permitted assigns. No party may assign its rights, duties or obligations under this Amendment without the prior written consent of the other parties.

8. Counterparts. This Amendment may be executed in any number of separate counterparts, all of which shall constitute one agreement. Execution and delivery of this Amendment may be effected by pdf, facsimile or other electronic transmission of signature pages.

9. Amendments. This Amendment may be amended, modified or terminated, and any provision hereof waived, only in a writing signed by each of the parties hereto.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Second Amendment to be duly executed and delivered on the date and year first above written.

Five Below, Inc.
By:	/s/ Kenneth R. Bull
Name:	Kenneth R. Bull
Title:	Chief Financial Officer, Secretary and Treasurer
/s/ David Schlessinger
David Schlessinger
/s/ Thomas Vellios
Thomas Vellios
LLR Equity Partners II, L.P.
LLR Equity Partners Parallel II, L.P.
By:	LLR Capital II, L.P., its General Partner
	By:	LLR Capital II, LLC, its General Partner
		By:	/s/ Howard D. Ross
		Name:	Howard D. Ross
		Title:	Member
Advent-Five Below Acquisition Limited Partnership
By:	Advent-Five Below GP LLC, its General Partner
By:	/s/ Michael Ristaino
Name: Michael Ristaino
Title: President

[Second Amendment to Five Below Investor Rights Agreement]

ANNEX 1

SCHEDULE OF HOLDERS

SIGNIFICANT COMMON SHAREHOLDERS
1.	David Schlessinger c/o Five Below, Inc. 1818 Market Street Suite 1900 Philadelphia, PA 19103 Fax:      215.546.8099 E-mail: dschlessinger@fivebelow.com
2.	Thomas Vellios c/o Five Below, Inc. 1818 Market Street Suite 1900 Philadelphia, PA 19103 Fax:      215.546.8099 E-mail: tvellios@fivebelow.com
3.	LLR Equity Partners II, L.P. c/o LLR Equity Partners, L.P. Cira Centre 2929 Arch Street Philadelphia, PA 19104-2868 Attention: Howard D. Ross Fax: E-mail: hross@llrpartners.com With a copy to (which copy shall not constitute notice): Pepper Hamilton LLP 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 Attention: Barry M. Abelson Fax:      215.689.4803 E-mail: abelsonb@pepperlaw.com
4.	LLR Equity Partners Parallel II, L.P. c/o LLR Equity Partners, L.P. Cira Centre 2929 Arch Street Philadelphia, PA 19104-2868 Attention: Howard D. Ross Fax: E-mail: hross@llrpartners.com

	With a copy to (which copy shall not constitute notice): Pepper Hamilton LLP 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 Attention: Barry M. Abelson Fax:      215.689.4803 E-mail: abelsonb@pepperlaw.com
5.	Blue 9 Fund I, L.P. c/o Blue 9 Capital, LLC 23 Tettemer Road Erwinna, PA 18920 Attention: Steven Tuttleman Fax:      212.798.0401 E-mail: instar@earthlink.net With a copy to (which copy shall not constitute notice): Blank Rome LLP One Logan Square 130 North 18th Street Philadelphia, PA 19103-6998 Attention: Steven Dubow Fax:      215.832.5755 E-mail: Dubow@BlankRome.com
6.	Thomas Ryan
7.	Ronald Sargent 500 Staples Drive Framingham, MA 07102 Email: Ron.Sargent@staples.com
8.	Advent-Five Below Acquisition Limited Partnership c/o Advent International Corporation 75 State Street, Floor 29 Boston, Massachusetts 02109 Attn: Steven Collins, Andrew Crawford Fax:      617.951.0568, 212.461.6503 E-mail: scollins@adventinternational.com               acrawford@adventinternational.com

	with a copy to (which copy shall not constitute notice): Weil, Gotshal & Manges LLP 100 Federal Street Boston, Massachusetts 02110 Attention: Marilyn French Fax:      617.772.8333 E-mail: marilyn.french@weil.com
9.	Sargent Family Investment, LLC 500 Staples Drive Framingham, MA 07102 Email: Ron.Sargent@staples.com

SERIES A 8% CONVERTIBLE PREFERRED SHAREHOLDERS
1.	Advent-Five Below Acquisition Limited Partnership c/o Advent International Corporation 75 State Street, Floor 29 Boston, Massachusetts 02109 Attn: Steven Collins, Andrew Crawford Fax:      617.951.0568, 212.461.6503 E-mail: scollins@adventinternational.com              acrawford@adventinternational.com with a copy to (which copy shall not constitute notice): Weil, Gotshal & Manges LLP 100 Federal Street Boston, Massachusetts 02110 Attention: Marilyn French Fax:      617.772.8333 E-mail: marilyn.french@weil.com
2.	Sargent Family Investment, LLC 500 Staples Drive Framingham, MA 07102 Email: Ron.Sargent@staples.com

EX-10.9

Exhibit 10.9

THIRD AMENDMENT

TO

SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

THIS THIRD AMENDMENT, dated May 23, 2012 (this “Amendment”), to the Second Amended and Restated Shareholders Agreement, dated September 1, 2010 (the “Original Shareholders Agreement”), as amended by the First Amendment to Second Amended and Restated Shareholders Agreement, dated October 14, 2010 (the “First Amendment”), and as amended by the Second Amendment to Second Amended and Restated Shareholders Agreement, dated November 22, 2011 (together with the Original Shareholders Agreement and the First Amendment, the “Shareholders Agreement”), is made by and among Five Below, Inc., a Pennsylvania corporation (the “Company”), and the undersigned shareholders of the Company (the “Holders”).

BACKGROUND

A. The Company has filed a registration statement with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended, in order to undertake the Initial Public Offering of the Company’s common stock.

B. In connection with the Initial Public Offering, the Holders desire to enter into this Amendment in order to amend and terminate certain provisions of the Shareholders Agreement as set forth below.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows:

AGREEMENT

1. Amendment of the Shareholders Agreement. Effective upon the date of this Amendment, the Shareholders Agreement shall be amended as follows:

a. The definition of “Advent Funds” is hereby deleted and replaced in its entirety with the following:

“Advent Funds” means Advent-Five Below Acquisition Limited Partnership.

b. The following defined term is hereby added to the Shareholders Agreement after the definition of “Advent Funds” and before the definition of “Board of Directors”:

“Affiliate” shall mean any Person who is an “affiliate” as defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.

c. The definition of “Significant Common Shareholder” is hereby deleted and replaced in its entirety with the following:

“Significant Common Shareholder” shall mean each of the following and his or its Affiliates: Blue 9 Fund I, L.P., LLR Equity Partners II, L.P., LLR

Equity Partners Parallel II, L.P., Advent-Five Below Acquisition Limited Partnership, Sargent Family Investment, LLC, Thomas Vellios, David Schlessinger, Thomas Ryan and Ronald Sargent.

d. Section 4.1 of the Shareholders Agreement is hereby deleted and replaced in its entirety with the following:

4.1 Term.

(a) This Agreement shall terminate upon the occurrence of any of the following events:

(i) excluding the consummation of the transactions contemplated by the Investment Agreement, the liquidation or dissolution of the Company, or a merger, recapitalization, reorganization or sale of all or substantially all of the assets of the Company which will result in the Shareholders immediately prior to such event not holding at least fifty percent (50%) of the voting power of the surviving, continuing or purchasing entity immediately after such event; or

(ii) a Qualified Public Offering.

(b) This Agreement, or any provision hereof, may be terminated upon the written agreement of (i) the Company, (ii) the Advent Funds, and (iii) the Common Shareholders holding a majority of the then outstanding shares of Common Stock (exclusive of any shares of Common Stock held by the Advent Funds), voting as a separate class.

e. The contact information for the Company set forth in Section 4.5 of the Shareholders Agreement is hereby deleted and replaced in its entirety with the following:

Five Below, Inc.

1818 Market Street

Suite 1900

Philadelphia, PA 19103

Attn: David Schlessinger and Thomas Vellios

Fax: 215.546.8099

Email: dschlessinger@fivebelow.com; tvellios@fivebelow.com

f. Section 4.19 of the Shareholders Agreement is hereby deleted and replaced in its entirety with the following:

4.19 Lock-Up. If requested in writing by the underwriters in connection with the Initial Public Offering, each Shareholder which held 250,000 or more shares of Registrable Securities as of May 15, 2012 agrees not to, directly or indirectly, sell, contract to sell (including without limitation, any short sale), grant any option to purchase, dispose of or otherwise transfer any shares of Registrable Securities (other than shares of Common Stock being registered in the Initial Public Offering), without the consent of such underwriters, for a period of not more than one hundred eighty (180) days following the effective date of the registration statement filed under the

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Securities Act relating to the Initial Public Offering. Each such Shareholder agrees to execute and deliver such documents, agreements and instruments as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing. In order to enforce the rights and obligations under this Section 4.19, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each such Shareholder (and the Registrable Securities of every other Person subject to the foregoing restrictions) until the end of such period.

2. Termination of Shareholders Agreement Provisions.

a. Effective immediately prior to, and conditioned upon, the closing of the Initial Public Offering, all of the provisions of Article II, Article III, Section 4.2, Section 4.3 and Section 4.7 of the Shareholders Agreement shall terminate in full and cease to be of any force and effect.

b. Section 4.19 of the Shareholders Agreement shall terminate in full and cease to be of any force and effect one hundred eighty one (181) days following the effective date of the registration statement filed under the Securities Act relating to the Initial Public Offering.

c. The remaining provisions of the Shareholders Agreement shall terminate in full and cease to be of any force and effect on and after the date that no member on the Board of Directors is an employee, officer or director of Advent International Corporation or its Affiliates (which, for purposes of this provision, shall not include the portfolio companies in which funds controlled by Advent International Corporation have invested).

3. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Shareholders Agreement.

4. Expiration Date. Notwithstanding any provision herein to the contrary, if the Initial Public Offering does not close prior to December 31, 2012, the provisions of Section 1c., Section 1f. and Section 2 of this Amendment shall become null and void and of no further force and effect and the definition of “Significant Common Shareholder” and Section 4.19 of the Shareholders Agreement shall automatically be amended to restore the language of the definition of “Significant Common Shareholder” and Section 4.19 of the Shareholders Agreement as in effect immediately prior to this Amendment.

5. Governing Law. This Amendment and the parties’ rights and obligations hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania, without giving effect to any choice of law or conflict of law rules or provisions (whether of the Commonwealth of Pennsylvania or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Pennsylvania.

6. Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties and their respective successors and permitted assigns. No party may assign its rights, duties or obligations under this Amendment without the prior written consent of the other parties.

7. Counterparts. This Amendment may be executed in any number of separate counterparts, all of which shall constitute one agreement. Execution and delivery of this Amendment may be effected by pdf, facsimile or other electronic transmission of signature pages.

8. Amendments. This Amendment may be amended, modified or terminated, and any provision hereof waived, only in a writing signed by each of the parties hereto.

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[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Third Amendment to be duly executed and delivered on the date and year first above written.

Five Below, Inc.
By:	/s/ Kenneth R. Bull
Name:	Kenneth R. Bull
Title:	Chief Financial Officer, Secretary and Treasurer
/s David Schlessinger
David Schlessinger
/s/ Thomas Vellios
Thomas Vellios
LLR Equity Partners II, L.P.
LLR Equity Partners Parallel II, L.P.
By:	LLR Capital II, L.P., its General Partner
	By:	LLR Capital II, LLC, its General Partner
		By:	/s/ Howard D. Ross
		Name:	Howard D. Ross
		Title:	Member
Advent-Five Below Acquisition Limited Partnership
By:	Advent-Five Below GP LLC, its General Partner
By:	/s/ Michael Ristaino
Name: Michael Ristaino
Title: President

[Third Amendment of Five Below Shareholders Agreement]

EX-10.17

Exhibit 10.17

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made as of this [—] day of [—], 2010, by and between Five Below, Inc., a Pennsylvania corporation (the “Company”), and [—] (“Indemnitee”).

BACKGROUND

The Company and Indemnitee recognize the prevalent risk of corporate shareholder litigation, in general, subjecting directors to the risk of expensive litigation.

The Company’s Board of Directors has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Company’s Second Amended and Restated By-laws (the “Bylaws”) and Amended and Restated Articles of Incorporation (“Articles of Incorporation”) require indemnification of the directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the Pennsylvania Business Corporation Law (“PBCL”). The By-laws, Articles of Incorporation and the PBCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board of Directors, officers and other persons with respect to indemnification;

Given the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

This Agreement is a supplement to and in furtherance of the By-laws and Articles of Incorporation and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Indemnitee does not regard the protection available under the By-laws and Articles of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified.

Indemnitee has certain rights to indemnification and/or insurance provided by [Advent] and certain of its affiliates (collectively, the “Fund Indemnitors”) which Indemnitee and the Fund Indemnitors intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board of Directors.

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as an director from and after the date hereof, the parties hereto agree as follows:

1. Indemnification.

(a) Third Party and Derivative Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, claim, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding (each a “Proceeding”), whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company or any affiliate of the Company) in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director, officer, trustee, fiduciary, employee or agent of the Company, or any affiliate of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, trustee, fiduciary, employee or agent of any other enterprise (“Corporate Status”), in each case whether or not he is acting or serving in any such capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement, against expenses (including reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding) (“Expenses”), and all liabilities and loss, including, judgments, penalties, fines and amounts paid in settlement (if such settlement is approved pursuant to Section 2(f)) actually and reasonably incurred by Indemnitee in connection with such Proceeding so long as the Indemnitee’s actions or omissions are not determined, in a final judicial determination (as to which all rights of appeal have been exhausted or lapsed), to have constituted willful misconduct or recklessness.

(b) Mandatory Indemnification. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 0 or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by Indemnitee in connection therewith. For purposes of this Section 1(b), the term “successful on the merits or otherwise” shall include (i) any termination, withdrawal, or dismissal (with or without prejudice) of any Proceeding against Indemnitee without any express finding of liability or guilt against him, or (ii) the expiration of a reasonable period of time after the making of any claim or threat of a Proceeding without the institution of the same and without any promise or payment made to induce a settlement. The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(c) Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

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(d) Indemnification of Appointing Stockholder. If (i) Indemnitee is or was affiliated with one or more private equity funds that has invested in the Company (an “Appointing Stockholder”), and (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of Appointing Stockholder’s appointment of or affiliation with Indemnitee, including, without limitation, any claim of misappropriation or infringement of intellectual property relating to the Company, any alleged false or misleading statement or omission made by the Company (or on its behalf) or its employees or agents, or any allegation of inappropriate control or influence over the Company or its Board of Directors, officers, equity holders or debt holders, then the Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall apply to any such indemnification of Appointing Stockholder. The rights provided to the Appointing Stockholder under this Section 1(d) shall (i) be suspended during any period during which the Appointing Stockholder does not have a representative on the Company’s Board of Directors and (ii) terminate on an initial public offering of the Company’s Common Stock; provided, however, that in the event of any such suspension or termination, the Appointing Stockholder’s rights to indemnification will not be suspended or terminated with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension or termination regardless of whether the Proceeding arises before or after such suspension or termination. The Company and Indemnitee agree that the Appointing Stockholder is an express third party beneficiary of the terms of this Section 1(d).

2. Expenses and Indemnification Procedure.

(a) Advancement of Expenses. Notwithstanding any provision of this Agreement to the contrary, but subject to Section 2(b), the Company shall advance all reasonable out-of-pocket Expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any Proceeding referenced in Section 1(a) within ten (10) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. This Section 2(a) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9 hereof.

(b) Undertaking to Repay Expenses. In the event that it shall ultimately be determined that Indemnitee is not entitled to be indemnified for the Expenses paid by the Company pursuant to Section 2(a) or otherwise or was not entitled to be fully indemnified, Indemnitee shall repay to the Company such amount of the advanced Expenses or the appropriate portion thereof. Any advances and undertakings to repay pursuant to this Section 2(a) shall be unsecured and interest free.

(c) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Company at the following address (or such other address as the Company may from time to time designate in writing to Indemnitee). Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

Five Below, Inc.

1616 Walnut Street

Suite 400

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Philadelphia, PA 19103

Attn: David Schlessinger and Thomas Vellios

Fax: 215.546.8099

E-mail: dschlessinger@fivebelow.com; tvellios@fivebelow.com

With a copy to (which copy shall not constitute notice):

Pepper Hamilton LLP

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, PA 19103

Attn: Barry M. Abelson

Fax: 215.689.4803

E-mail: abelsonb@pepperlaw.com

Notice shall be deemed received on the third business day after the date postmarked if sent by domestic certified or registered mail, properly addressed; otherwise, notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

(d) Procedure. Any indemnification provided for in Section 1 and this Section 2 shall be made as promptly as practicable, but in no event later than 45 days after receipt of the written request of Indemnitee, coupled with appropriate documentation to support the requested payment. If a claim under this Agreement, under any statute, or under any provision of the Articles of Incorporation or Bylaws providing for indemnification is not paid in full by the Company within 45 days after receipt of a fully documented written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 13, Indemnitee shall also be entitled to be paid for the Expenses of bringing such action. The Company shall not oppose Indemnitee’s right to seek any such action. It shall be a defense to any such action (other than an action brought to enforce a claim for Expenses incurred in connection with any Proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company, and Indemnitee shall be entitled to receive interim payments of Expenses pursuant to Section 2(a), and the Company shall promptly make such interim payments of Expenses, unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. Each of the parties hereto intend that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including, at the election of the Board of Directors, its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including, at the election of the Board of Directors, its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not, as the case may be, met the applicable standard of conduct. The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 2 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.

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(e) Notice to Insurers. If, at the time of the receipt of a notice of claim pursuant to Section 2(b), the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(f) Selection of Counsel. If the Company shall be obligated under Section 1 or Section 2 to pay the Expenses of any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding (other than a Proceeding involving criminal proceedings, in which case the Indemnitee shall be entitled to assume the defense of such Proceeding and the Company shall have the right to employ separate counsel at Company’s expenses), with counsel consented to by indemnittee, such consent not being unreasonably withheld, upon the delivery to Indemnitee of written notice within five (5) business days following receipt of notice from Indemnitee pursuant to Section 2(b); provided that (x) the Company shall have acknowledged in writing to the Indemnitee its unqualified obligation to indemnify the Indemnitee as provided hereunder, (y) the Company must conduct such defense actively and diligently thereafter to preserve its rights in this regard. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of any other counsel subsequently incurred by Indemnitee with respect to the same Proceeding; provided that (i) Indemnitee shall have the right to employ separate counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the reasonable fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

(g) Settlements. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on Indemnitee, or which does not provide for a full, unqualified and final release of all claims asserted against Indemnitee, without Indemnitee’s written consent. Neither the Company nor the Indemnitee will unreasonably withhold consent to any proposed settlement so long as such proposed settlement provides for a full, unqualified and final release of all claims asserted against Indemnitee and does not impose any penalty or limitation on Indemnitee. If the Company settles a claim that is made jointly against the Company and any directors or officers, the Company shall use commercially reasonable efforts to settle the entire claim on behalf of all parties named in the complaint.

(h) Change in Control.

(i) If, at any time subsequent to the date of this Agreement, there is a Change in Control, then upon the request of Indemnitee, the Company shall cause the determination of indemnification and advances required by Section 2 to be made by a third party (mutually agreed upon by the parties or failing such agreement, as determined by the Chief Judge of the Federal District Court for the Eastern District of Pennsylvania). The fees and expenses incurred by the third party in making the determination of indemnification and advances shall be borne solely by the Company.

(ii) For purposes of this Agreement, a “Change in Control” shall mean (i) a merger or consolidation of the Company with any other entity, or an acquisition by any third party of securities of the Company representing more than fifty percent of the combined voting power of the Company’s then outstanding securities, other than a merger or consolidation which would result in the voting securities of

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the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the Board or other governing body of such surviving entity, or (ii) the approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

(i) Primacy of Indemnification. The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by the Fund Indemnitors. The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Articles of Incorporation or Bylaws (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 2(i).

3. Additional Indemnification Rights.

(a) Scope. Notwithstanding any other provision of this Agreement, the Company shall indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Articles of Incorporation, the Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Pennsylvania corporation to indemnify a member of its board of directors, such changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Pennsylvania corporation to indemnify a member of its board of directors, such changes (to the extent not otherwise required by such law, statute or rule to be applied to this Agreement) shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Non-exclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which an Indemnitee may be entitled under the Articles of Incorporation, Bylaws, any agreement, any vote of shareholders or disinterested directors, the Pennsylvania Business Corporation Law of 1988, as amended, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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4. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director, officer, employee or agent of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of any other enterprise) and shall continue thereafter, so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that Indemnitee was a director, officer, employee or agent of the Company or serving in any other capacity referred to herein.

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines or penalties actually or reasonably incurred by him in the investigation, defense, appeal or settlement of any Proceeding, but not for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines or penalties to which Indemnitee is entitled.

6. Mutual Acknowledgment. Each of the Company and Indemnitee acknowledges that, in certain instances, federal law or public policy may override applicable state law and prohibit the Company from indemnifying its directors under this Agreement or otherwise. For example, each of the Company and Indemnitee acknowledges that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations.

7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of directors’ and officers’ liability insurance, Indemnitee shall be insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by an affiliate of the Company.

8. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense (such as by counterclaim, cross-claim or third-party claim), except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or

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otherwise as required under the Pennsylvania Business Corporation Law of 1988, as amended, but such indemnification or advancement of Expenses may be provided by Company in specific cases if the Board of Directors, at its sole discretion, finds it to be appropriate;

(b) Lack of Good Faith. To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was made in bad faith or was frivolous;

(c) Insured Claims. To indemnify Indemnitee for Expenses or liabilities of any type whatsoever (including judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of officers’ and directors’ liability insurance maintained by the Company except with respect to any excess beyond the amount paid under any insurance policy; provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 2(i);

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Exchange Act, or any similar successor statute;

(e) Illegal Activity. To indemnify Indemnitee if a court of competent jurisdiction finally adjudges that such indemnification is illegal, including by virtue of such indemnification being in violation of public policy or any provision of law.

10. Interpretation; Construction of Certain Phrases.

(a) The headings of particular provisions of this Agreement are inserted for convenience only and will not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement. The words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b) For purposes of this Agreement:

(i) references to the “Company” shall include, in addition to the resulting or surviving corporation, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent entity, or is or was serving at the request of such constituent entity as a director, officer, employee or agent of any other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent entity if its separate existence had continued;

(ii) references to any “other enterprise” shall include any corporation, trust, partnership, joint venture, or other entity;

(iii) references to “fines” shall include any excise taxes or penalties assessed on Indemnitee with respect to an employee benefit plan;

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(iv) references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries;

(v) references to “affiliates” shall mean any entity which, directly or indirectly, is in the control of, is controlled by, or is under common control with, the Company; and

(vi) references to “Sections” or “clauses” shall be to Sections or clauses of this Agreement.

11. Counterparts; .pdf or Facsimile Signatures. This Agreement may be executed in any number of counterparts (including by .pdf or facsimile signature), each of which shall be deemed to be an original and all of which together shall constitute one and the same document.

12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and Indemnitee and Indemnitee’s estate, heirs, legal representatives and assigns.

13. Attorneys’ Fees. If any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action was made in bad faith or was frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action was made in bad faith or was frivolous.

14. Notice. All notices, requests, demands, consents and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service). The address for notice to the Company shall be as set forth in Section 2(b), and the address for notice to Indemnitee shall be as set forth on the signature page of this Agreement, or as subsequently modified in a notice given in accordance with this Section 14.

15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the Commonwealth of Pennsylvania for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement. Any action or proceeding instituted under or to enforce this Agreement shall be brought only in the state courts of the Commonwealth of Pennsylvania.

16. Subrogation. Except as provided in Section 2(i), in the event of payment under this Agreement, Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee (other than the Fund Indemnitors), who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable Company effectively to bring suit to enforce such rights.

17. Choice of Law. This Agreement shall be governed by and its provisions construed in accordance with the laws of the Commonwealth of Pennsylvania, as applied to contracts between Pennsylvania residents entered into and to be performed within Pennsylvania.

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18. Enforcement. The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

19. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

20. [Prior Agreement. Notwithstanding any contrary provision contained herein, this Agreement supersedes and replaces any and all prior written indemnification agreements between the Indemnitee and the Company.]

[Signature page follows]

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

FIVE BELOW, INC.

By:

Name:

Title:

INDEMNITEE

Address for Notice:

EX-10.27

Exhibit 10.27

LEASE SUMMARY PAGE

1. Landlord:	Twin Spans Business Park, LLC, or its assigns 29 E. Commons Boulevard. Suite 100 New Castle, Delaware 19720
2. Tenant:	Five Below. Inc.
	1616 Walnut Street Suite 400 Philadelphia, PA 19103 ATTN: Legal Department
3. Property:	350 Anchor Mill Road (Twin Spans VII) - New Castle, Delaware 19720
4. Premises:
Unit No.:	Size 204,496 sq. ft.
	Initial Term:
	Approximately 125,000 sq. ft. will be utilized by Tenant during Year 1
	Approximately 175,000 sq. ft. will be utilized by Tenant during Year 2
	Option Terms:
	Approximately 204,496 sq. ft. Years 3-5
	Approximately 204,496 sq. ft. Years 6-8
	Although the Premises is approximately 204,496 square feet, Tenant will be utilizing the Premises in stages as described above. For purposes of this Lease. whenever the word Premises is used, it shall only pertain to that portion of the 204,496 square foot space that is actually being utilized by Tenant for the Permitted Use and Tenant’s obligations with respect to the Premises, including but not limited to heating and cooling, maintenance and repairs. etc., shall only be applicable to that portion of the 204,496 square foot space that is actually being utilized by Tenant for the Permitted Use at that time.
5. Building:	350 Anchor Mill Road - Twin Spans VII Twin Spans Business Park County:     New Castle                         State: DE
6. Permitted Parking Area (if any): Fifteen (15) trailer spaces shall be exclusive to Tenant as shown on the Site Plan. 160 car parking spaces of which 100 shall be for the exclusive use of Tenant (which exclusive spaces are identified on the Site Plan). Landlord agrees that upon the request of Tenant, it shall mark Tenant’s exclusive spaces to prevent the use of same by others.
7. Outside Storage Area (if any): None

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8. Lease Term:     Two (2) Years     (plus any partial month from the Commencement Date until the first day of the next full calendar month after the Commencement Date during the Term).

9. Commencement Date:     June 1, 2007

10. Expiration Date:             May 31, 2009

11. Base Rent: See Attached Rent Schedule

12. Property Operating Charge is: Included in Base Rent

x	Real Estate Taxes	¨	Real Estate Tax Increase only
x	Insurance	¨	Insurance Increase only
x	Common Area Maint.	¨	Common Area Maint. Increase only

13. Base Rent Escalator:	See Attached Rent Schedule
14. Date(s) of Escalation:	See Attached Rent Schedule

15. Renewal Notice Period:         Two Hundred Seventy (270) Days

16. Late Charge:         Five percent (5%) per month administrative fee plus applicable interest charges after thirty (30) days late at the Interest Rate, as defined in the Lease.

17. Renewal:     Two (2)     renewal term (s) of      Three (3) years each.

18. Renewal Rent:         Per attached Rent Schedule

19. Expansion Option: Tenant will have_first option on Zenith space as shown on the attached plan (which space is in addition to the 204,496 square feet which comprises the Premises) if/when it becomes available. Option to rent on Zenith space shall be “as is” at the then current Five Below rent rate (the “Expansion Option”), Landlord will notify Tenant of the availability within 10 days of the space officially becoming available for Lease from the Landlord. Tenant shall exercise option within 15 business days or option shall expire and terminate without further notice. If Tenant exercises the Expansion Option, the parties shall memorialize such option through a Lease Amendment. If Tenant exercises option to expand in the adjacent Zenith space. Landlord agrees, at its sole cost, to create 10’ x 10’ opening in demising wall at a mutually agreed upon location if Tenant exercises the Zenith option.

20. Permitted Use: Storage and distribution facility and uses incidental thereto, including office, administration and warehouse uses.

21. Broker representing Tenant: CB Richard Ellis per separate agreement

21. Riders and Addenda: Service Rider, Rent Schedule, Rules and Regulations, Floor Plan, Site Plan, Schedule of Landlord Improvements, Rider of Landlord Improvements, Rider of Performance Penalties, Subordination. Nondisturbance and Attornment Agreement.

23. Security Deposit: None

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TABLE OF CONTENTS

	PAGE
ARTICLE 1 TERM; RENEWAL		1
ARTICLE 2 RENT		2
ARTICLE 3 ESCALATION OF BASE RENT		3
ARTICLE 4 USE OF PREMISES		4
ARTICLE 5 SERVICES		5
ARTICLE 6 REPAIRS		5
ARTICLE 7 SURRENDER OF PREMISES		6
ARTICLE 8 NO ALTERATIONS		.6
ARTICLE 9 NO LANDLORD LIABILITY		7
ARTICLE 10 NO ASSIGNMENT OR SUBLETTING		8
ARTICLE 11 CASUALTY LOSS		9
ARTICLE 12 INDEMNIFICATION AND INSURANCE		10
ARTICLE 13 INCREASE IN LANDLORD’S INSURANCE		11
ARTICLE 14 CONDEMNATION		12
ARTICLE 15 LANDLORD’S RIGHT TO ENTRY		12
ARTICLE 16 DEFAULT; REMEDIES		13
ARTICLE 17 NO CONTINGENCY; WAIVER OF PERFORMANCE		15
ARTICLE 18 PERFORMANCE OF TENANT’S COVENANTS		15
ARTICLE 19 SUBORDINATION		15
ARTICLE 20 NOTICE		16
ARTICLE 21 ESTOPPEL CERTIFICATE		16
ARTICLE 22 HOLDING OVER		17
ARTICLE 23 BROKERS		17
ARTICLE 24 GOVERNING LAW		17
ARTICLE 25 CAPTIONS		17
ARTICLE 26 INTEGRATION		17
ARTICLE 27 RIDERS		18
ARTICLE 28 RULES AND REGULATIONS		18
ARTICLE 29 NO OPTION TO LEASE		18
ARTICLE 30 HAZARDOUS SUBSTANCES		18
ARTICLE 31 OTHER COMPLIANCE		19
ARTICLE 32 MISCELLANEOUS		19

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INDUSTRIAL LEASE FORM

THIS LEASE made this     day of         ,         between Landlord as identified and having the address set forth on the Lease Summary Page attached to and made a part of this Lease (the “Summary”) and Tenant as identified and having the address set forth on the Summary. In the event of any conflict between the provisions of this Lease or the Summary, the provisions of the Summary shall govern and control.

WITNESSETH, that Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, all that certain space described in Exhibit A attached hereto and made a part hereof (herein designated as the “Premises”), being the Unit identified on the Summary and containing the approximate rentable square footage set forth on the Summary, together with the non-exclusive access to all Common Areas of the building (the “Building”) and the business park (the “Park”) in which the Premises is located, as they may exist for common usage from time to time, plus all of Landlord’s rights, privileges and easements in, to, over and upon adjoining public and private land, highways, roads and streets required for ingress to and egress from the Premises. The Premises are a portion of the Building identified on the Summary located at the address set forth on the Summary. As used herein the term “Common Areas” shall mean collectively all grounds, utilities, roadways, drive aisles, entrances, exits, and parking areas associated with the Building and the Park, made available for the nonexclusive use of all occupants (including Tenant), their respective employees and invitees during the Term, together with the rights to Permitted Parking Area identified on the Summary, all upon the terms and conditions that follow. Except as otherwise expressly provided herein, Tenant accepts the Premises, Building and Common Areas in their “AS IS” condition and state of repair, without relying on any representation, covenant or warranty by Landlord other than as expressly set forth in this Lease. Landlord and Tenant stipulate and agree to the rentable square footage set forth in Summary without regard to actual measurements. Although the Premises is approximately 204,496 square feet, Tenant will be utilizing the Premises in stages as described in the Summary. For purposes of this Lease, whenever the word Premises is used, it shall only pertain to that portion of the 204,496 square foot space that is actually being utilized by Tenant for the Permitted Use at that time, and Tenant’s obligations with respect to the Premises including but not limited to heating and cooling, maintenance and repairs, etc. shall only be applicable to that portion of the 204,496 square foot space that is actually being utilized by Tenant for the Permitted Use at that time.

ARTICLE 1 TERM; RENEWAL

1.01 Term. The term of this Lease is the Lease Term set forth on the Summary, beginning at 12:01 a.m. (prevailing time) on the Commencement Date set forth on the Summary and ending, without the necessity of further notice from either party to the other, at midnight (prevailing time) on the Expiration Date set forth on the Summary. If the Building or Premises is under construction or to be built, then the Premises shall be substantially complete on the date that the Premises are complete except for minor or insubstantial details of construction, decoration or mechanical adjustment that remain to be done, and that will be done by Landlord promptly. Notwithstanding the foregoing, substantial completion shall not occur until: (a) any common areas necessary for Tenant’s use are fully useable and operational; (b) the Premises are in full compliance with all laws; (c) a temporary or final certificate of occupancy or other similar governmental approval has been issued for the Premises, certifying that all governmental requirements have been satisfied and Tenant may use the Premises for the Permitted Use.

1.02 Delay in Commencement. Except as set forth elsewhere in this Lease to the contrary, Landlord shall not be liable to Tenant if Landlord does not deliver possession of the Premises to Tenant on the Commencement Date. Landlord’s nondelivery of the Premises to Tenant on that date shall not affect this Lease or the obligation of Tenant under this Lease. However, the Commencement Date shall

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be delayed until possession of the Premises is delivered to Tenant. The Lease Term shall be extended for a period equal to the delay in delivery of possession of the Premises to Tenant, plus the number of days necessary to end the Lease Term on the last day of a month. Upon actual delivery of possession of the Premises to Tenant, Landlord and Tenant shall, upon such delivery, execute a commencement letter setting forth the Commencement Date and Expiration Date of the Lease.

1.03 Early Occupancy. If Tenant occupies the Premises prior to the Commencement Date, Tenant’s occupancy of the Premises shall be subject to all of the provisions of this Lease, except payment of Base Rent and any other charges. Early occupancy of the Premises shall not advance the Expiration Date of this Lease.

1.04 Renewal. Provided Tenant is not in default of this Lease, after any applicable notice and cure period, the term of the Lease may be extended for the number of renewal terms set forth on the Summary, each for the number of years set forth on the Summary, as follows: Each renewal term may be exercised by Tenant giving written notice to the Landlord no later than the number of days specified in the Renewal Notice Period on the Summary prior to the expiration of the then current lease term. Upon any valid exercise of any such rights of renewal, the terms of this Lease (as amended) shall remain in full force and effect unless otherwise agreed, except that the Base Rent for each renewal term shall be the Renewal Rent as provided on the Summary. References in this Lease to the term shall be deemed to apply to any then current term, including any renewal term validly exercised.

ARTICLE 2 RENT

2.01 Amount, Time and Manner of Payment. Upon the Commencement Date, but subject to any free Rent periods, any rent credits due Tenant, plus damages (including holdover rent for Tenant’s other distribution center which Landlord has agreed to pay), based upon Landlord’s failure to deliver the Premises within the time frames set forth elsewhere in this Lease, Tenant shall pay Landlord the Base Rent in the amount stated on the Summary for the first month of the Lease unless the Commencement Date is other than the first day of the month, in which case the Tenant shall pay an amount which represents the prorated amount of rent due until the first day of the next month and the final payment shall also be prorated if the Lease ends on a day other than the last day of the month. Such prorations shall be calculated using a 365-day year. All other payments of the Base Rent shall be due on the first day of the month each month thereafter. Tenant shall pay Landlord the Base Rent, in advance, without offset, notice, deduction, abatement or prior demand, except as set forth in this Lease to the contrary. The Base Rent shall be payable at Landlord’s address shown on the Summary or at such other place as Landlord may designate in writing.

2.02 Other Charges Payable by Tenant. Included in the Base Rent is Tenant’s Proportionate Share (as defined on the Summary) of Property Operating Costs, or the increase of same. Tenant is paying for those Property Operating Costs as they are included in the Base Rent specified on the Summary in addition to those specified on the Service Rider, and aside from payment of Base Rent, Tenant is not obligated to pay anything further for Property Operating Costs.

A. The term Property Operating Costs as used in this Lease shall mean the sum of the costs on the Summary which Tenant is paying in the Base Rent, some of which are:

(1) Landlord’s cost for operation and maintenance of the Property, including landscaping and lawn services, lighting of the common area(s), maintenance, repairs and resurfacing of any associated parking lot and roadways, sprinkler system and other common areas, painting and cleaning services of the common areas and facilities, private maintenance assessments, amortized improvement

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and replacement costs, capital, electricity (other than for tenant spaces), reasonable property management fees, and other recurring expenses necessarily and reasonably incurred by Landlord in the proper operation and maintenance of the common areas of the Building of which the Premises is a part and of the land upon which the Building is situate, any and all of which shall be referred to as “Common Area Maintenance”;

(2) Cost of fire, hazard, rent, liability and other insurance maintained by Landlord for the Building of which the Premises is a part and for the common areas, which shall be referred to as “Insurance Premiums”; and

(3) Real estate taxes and assessments payable by Landlord with respect to the Building of which the Premises is a part and the land on which such Building is situate. Real Estate Taxes, as used herein, shall mean all taxes, assessments, and public charges of every kind and nature whatsoever, general and special, extraordinary as well as ordinary, foreseen and unforeseen, which may be levied, assessed or imposed upon the land, Building, and all improvements located upon the tax parcel of which the Premises is a part, and all costs and fees, including attorney’s fees, incurred by Landlord in contesting any of the above and/or negotiating with public authorities as to any of the above, any and all of which shall be referred to as “Real Estate Taxes”. A copy of the assessing authority’s bill for such Real Estate Taxes, submitted by Landlord to Tenant, shall be sufficient evidence of the amount of taxes assessed or levied against the parcel or real property to which such bill relates.

B. Tenant shall be responsible for and pay as part of the Base Rent all taxes that may be assess or imposed by any lawful authority in respect of the occupancy and use by the Tenant of the Premises leased hereunder or imposed on any rents reserved hereunder (whether minimum annual rent or additional rent), any and all of which shall be referred to as “Other Taxes”. Without in any way limiting the generality of the foregoing.

Property Operating Costs shall not include any franchise or net income taxes, any interior painting of leased space, or any work or service performed for any Tenant at the cost of such Tenant.

It is agreed that the Tenant’s Proportionate Share of the Property Operating Costs for the remaining period of the calendar year in which the Lease first becomes operative is the sum shown on the Summary as the Initial Property Operating Charge.

C. Tenant shall be responsible for all utility charges related to the space. Said utilities will be metered separately and billed directly to the Tenant from the utility provider.

2.03 Late Charge. All payments of Base Rent (which include Tenant’s share of Property Operating Costs (together, the “Rent”) shall be due on the first (1st) of each month in advance. If any portion of the Rent is not so paid to and received by the Landlord before the fifth (5th) of each month, Late Fees (as set forth in the Summary) in addition to the Rent shall be due in the amount of five percent (5%) of the Rent until both the Rent and all such late fees are received by Landlord; however, no late charge shall be due until Tenant fails to pay any portion of Rent on or before the fifth (5^th) business day after receipt by Tenant of a notice from Landlord advising Tenant that such payment is past due.

2.04 Security Deposit. Intentionally Deleted.

ARTICLE 3 ESCALATION OF BASE RENT

See attached Rent Schedule

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ARTICLE 4 USE OF PREMISES

4.01 Use. Tenant may use and occupy the Premises for the permitted purpose set forth on the Summary and for no other purpose, except with the prior written consent of Landlord. Tenant shall not conduct or permit any auctions or sheriff’s sales at the Premises. Tenant shall not use or permit the use of any portion of the Property for outdoor storage or installations outside of the Premises except Tenant shall be permitted to have an outdoor picnic area and smoke area for Tenant’s employees. Tenant may use all Common Areas only for their intended purposes. Landlord shall have exclusive control of all Common Areas at all times; provided, however, the Common Areas shall remain substantially as shown on Exhibit A, and Landlord shall not do or permit anything which would (i) materially affect access to or visibility of the Premises, (ii) materially reduce the parking spaces serving the Premises, or (iii) materially affect ingress and egress to the Premises or Tenant’s loading docks.

4.02 Compliance. Tenant will comply with all valid requirements of law and of all duly constituted public authorities and with the requirements of the local Board of Fire Underwriters (or other body exercising similar functions) and with all restrictive covenants of record, now or hereafter in force, so far as the same may relate to the use, alteration or condition of the Premises during the Term relating to Tenant’s particular use of the Premises. To the extent in Landlord’s control, Landlord shall have the sole responsibility to comply, at Landlord’s sole cost and expense, with all requirements of law and of all duly constituted public authorities and with the requirements of the local Board of Fire Underwriters relating to the structural and mechanical features of the Premises and the Building.

4.03 Nuisance. Tenant will not commit, or permit to be committed, waste on the Premises or maintain, or permit to be maintained, a nuisance thereon or any other activity (including, without limitation, maintaining electromagnetic rays or fields) which injures, endangers or unreasonably interferes with the peaceful enjoyment of any co-tenant in the Building, of Landlord, or of any neighbor of the Premises or the Building.

4.04 Quiet Possession. If Tenant pays the Base Rent and complies with all other terms of this Lease after all applicable and required notice and cure periods, Tenant may occupy and enjoy the Premises for the full Lease Term, subject to the provisions of the Lease, without interruption by Landlord or anyone claiming by, from or under Landlord. To the best of Landlord’s knowledge as of the date hereof and on the Commencement Date that: (a) Landlord has fee simple title to the Project, (b) all applicable zoning and land uses laws allow the Permitted Use; and (c) the Premises is not and shall not be subject to any leases, tenancies, agreements, liens, encumbrances, covenants, restrictions or laws which will prohibit the Permitted Use, diminish any of Tenant’s rights or increase any of Tenant’s obligations.

4.05 Tenant’s Right To Go Dark. If Tenant ceases operating in the Premises for a continuous period in excess of thirty (30) days, Landlord shall thereafter have the right as its sole remedy, to terminate this Lease by serving notice of termination on Tenant, which termination shall become effective on the thirtieth (30th) day following Tenant’s receipt of such termination notice. However, if Tenant reopens prior to the effective termination of this Lease, then said notice shall be deemed null and void and the Lease shall continue in full force and effect as if such notice had never been given. In the event of a termination hereunder, the parties hereto shall automatically be released from any and all liability of whatever kind for the terminated portion of the unexpired Term. Nothing herein shall be deemed to affect Tenant’s obligation to pay Rent until the effective date of said termination by the Landlord. Periods of closing of the Premises (a) caused by rebuilding, remodeling and/or repair; (b) due to casualty, or condemnation, war, acts of God or other events beyond Tenant’s control; (c) consented to by Landlord in writing; or (d) occurring during that period of time commencing thirty (30) days after Tenant has a signed letter of intent to assign or sublet the Premises (which letter of intent shall also be delivered to Landlord)

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and continuing until an assignee or sublessee opens for business in the Premises (not to exceed ninety (90) days after Landlord has received a copy of the letter of intent); shall be exempted from the provisions of this Section and shall give the Landlord no right to terminate as set forth herein. If Tenant ceases operating in the Premises and Landlord has not terminated this Lease, Tenant shall inspect the premises on a regular basis and upon Landlord’s request, report the findings of its inspections to Landlord. If Tenant fails to conduct such inspections, Landlord shall have right, upon notice to Tenant, to perform such inspections, but in no event more than one inspection per week, and bill Tenant an amount not to exceed One Hundred Dollars ($100.00) per inspection.

ARTICLE 5 SERVICES

5.01 Responsibility to Furnish. The parties agree that each shall, subject to the further provisions hereof, furnish and/or pay for the services and items identified and assigned to them on the Service Rider hereto and made a part hereof.

5.02 Interruption of Services. Landlord shall, not be liable for any failure to furnish the services and items assigned to it above if such failure is due to a shortage of materials, supplies, labor, services or other cause beyond its reasonable control. Furthermore, Landlord reserves the right to interrupt, curtail, or suspend the services required to be furnished by Landlord under this Article 5 when the necessity therefor arises by reason of accident, emergency, mechanical breakdown, or when required or recommended by any law, order or regulation of any federal, state, county or municipal authority, or for any other cause beyond the reasonable control of Landlord. Landlord shall use reasonable diligence to complete all repairs of Landlord hereunder or other necessary work as quickly as possible so that Tenant’s inconvenience resulting therefrom may be for as short a period of time as circumstances will permit. Unless due primarily or solely to the negligence or willful misconduct of Landlord, no diminution or abatement of Rent or other payment due hereunder shall or will be claimed by Tenant as a result therefrom, nor shall this Lease or any of the obligations of Tenant hereunder be affected or reduced by reason of such interruption, curtailment or suspension, and if any interruption of utility services caused solely by Landlord’s acts or omissions shall continue for more than thirty six (36) hours, then Rent shall be abated thereafter to the first day of such interruption and shall continue until full use of the Premises is restored.

ARTICLE 6 REPAIRS

6.01 Tenant. Tenant shall, at its expense, make such repairs and replacements to the non-structural, interior portions of the Premises and the fixtures and appurtenances therein to keep the same in a good, orderly and safe condition and state of repair and subject to Section 11.05, such repairs and replacements to the Premises as necessitated in whole or in part by the neglect or misuse of Tenant or its agents, servants, visitors or licensees, or by the use of the Premises in a manner contrary to the purpose for which the same are leased to Tenant, as and when needed to preserve them in good working order and condition. Subject to Section 11.05, all damage or injury to the Building, the Premises or to its fixtures, appurtenances or equipment caused by the negligence or willful misconduct of Tenant, whether directly or indirectly, shall be repaired or replaced immediately (at Landlord’s option, by Landlord at Tenant’s cost payable upon demand) and such repairs or replacements shall leave the affected areas in quality and class equal to the original work or installations.

6.02 Landlord. Landlord shall make those repairs and replacements, identified in the Service Rider, necessary to keep in good order and repair the Premises and the Building, including Landlord’s equipment, except any repairs of Tenant’s trade fixtures, property or installations not occasioned solely by

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Landlord’s gross negligence or willful misconduct and except for repairs and replacements that Tenant is obligated to make pursuant to the provisions of this Lease. Landlord’s obligation to maintain, repair and replace includes the roof, gutters, down spouts, frames, floor slab, exterior walls, foundation, footings and all structural portions of the Premises, all plumbing and other utility lines serving the Premises wherever located, plus any heating, ventilation and air conditioning system, or other Building system, equipment or fixture serving the Premises. If Tenant becomes aware of any condition that is Landlord’s responsibility to repair, Tenant shall promptly notify Landlord of the condition. Landlord shall make all repairs (i) as promptly as possible and with all due diligence; and (ii) at such times and in such a manner as to cause the least possible inconvenience to Tenant. Landlord shall also make any and all repairs which may be necessary by reason of any defects in Landlord’s Work or any structural defects. Landlord’s repair and maintenance obligations shall also include the obligations set forth in Section 6.01 for those portions of the 218,000 square foot space not then being used by Tenant.

6.03 Service Contract: Intentionally Deleted.

ARTICLE 7 SURRENDER OF PREMISES

7.01 Tenant shall surrender the Premises to Landlord at the termination of this Lease broom clean and in the same condition as they were at the beginning of the term, reasonable wear and tear and damage by fire or other casualty not due to the misuse or neglect by Tenant or Tenant’s agents, servants, visitors or licensees excepted. Prior to the expiration or termination of this Lease, Tenant shall remove from the Property all furniture, trade fixtures, equipment, wiring and cabling (unless Landlord directs Tenant otherwise as it relates to wiring and cabling), and all other personal property installed by Tenant or its assignees or subtenants. Tenant shall repair any damage resulting from such removal and shall restore the Property to good order and condition. Any of Tenant’s personal property not removed as required shall be deemed abandoned, and Landlord, at Tenant’s expense, may remove, store, sell or otherwise dispose of such property in such manner as Landlord may see fit and/or Landlord may retain such property or sale proceeds as its property. If Tenant does not return possession of the Premises to Landlord in the condition required under this Lease, Tenant shall pay Landlord the reasonable costs incurred by Landlord in putting the Premises in the condition so required, which obligation shall survive expiration or termination of this Lease.

ARTICLE 8 NO ALTERATIONS

8.01 Except for non-structural alterations that (i) do not exceed $25,000 per year and do not require a permit, (ii) are not visible from the exterior of the Premises, (iii) do not affect any Building system or the structural strength of the Building, (iv) do not require penetrations into the floor, ceiling or walls, and (v) do not require work within the walls, below the floor or above the ceiling, Tenant shall not make any alterations, additions or improvements to the Premises without the prior written consent of Landlord not to be unreasonably withheld or delayed if said alterations or improvements will not diminish the value of or affect the structural integrity of the Premises. In no event shall any structural change or any change or modification to the structure, heating, electrical or plumbing systems be undertaken by Tenant or employee or agent of Tenant without Landlord’s prior written consent. Any approved alterations, additions or improvements shall be done in accordance with the applicable laws and ordinances of any public authority having jurisdiction over the Building and in accordance with the building and zoning rules and regulations of any such authority. Landlord’s consent to any such alterations, additions, or improvements shall not create responsibility on the part of Landlord for the completeness, sufficiency or compliance with applicable laws, ordinances and regulations. Tenant hereby expressly assumes full responsibility for all damages and injuries that may directly or indirectly result to any person or property in connection with any alterations, additions or improvements and shall hold

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Landlord harmless and indemnify Landlord with respect thereto. Notwithstanding the foregoing, any alterations necessary to install portions of Tenant’s racking system and/or install an automated conveyor system, including drilling below the floor or within walls, shall be permitted without the need for Landlord consent.

With respect to any alterations made by or on behalf of Tenant that require a permit (whether or not the alteration requires Landlord’s consent): (i) not less than 10 days prior to commencing any alteration, Tenant shall deliver to Landlord the plans, specifications and necessary permits for the alteration, together with certificates evidencing that Tenant’s contractors and subcontractors have adequate insurance coverage naming Landlord and any management entity as their interests may appear as additional insureds, (ii) intentionally omitted, and (iii) the alteration shall be constructed with new materials, in a good and workmanlike manner, and in compliance with the plans and specifications delivered to, and, if required above, approved by Landlord.

All alterations, improvement, additions or Building fixtures, whether installed before or after the execution of this Lease, shall remain upon the Premises at the expiration or sooner termination of this Lease and shall become the property of Landlord. Tenant’s signs, trade fixtures, displays, furniture, furnishings, inventory, racking system, conveyor system, merchandise and equipment shall remain the property of Tenant and may be removed from the Premises at any time during the Term, provided that any damage caused by such removal shall be repaired by Tenant.

In making any approved alterations, additions or improvements, Tenant shall promptly pay all contracts, materialmen and laborers so as to minimize the possibility of a lien attaching to the Building, or attaching to any portion of the real property on which said Building is located, and should any such lien be made or filed, Tenant shall bond against or discharge the same of record within ten (10) days after Tenant receives notice that it is filed. In allowing for alterations, additions, improvements, additions or fixtures by Tenant, this Lease or Landlord’s subsequent consent to said work shall not be deemed to constitute Landlord’s written consent or requirement for the purposes of rendering the Premises, the Building or other property of Landlord liable to such liens.

8.02 Signs. Except for (i) an awning with Tenant’s trade name to be placed above the picnic area, (ii) a professionally manufactured trade name and logo sign placed above the entrance to the Premises, and (iii) directional signage as may be needed to direct drivers to the loading docks, Tenant shall not place, plant, install or attach any sign to the exterior of the Premises or to the interior or exterior of the Building without Landlord’s prior written consent and except as allowed by applicable laws, ordinances and regulations. Tenant shall maintain all signs and awnings installed by Tenant in good condition. Tenant shall remove its signs and awnings at the termination of this Lease, and shall repair any resulting damage, and shall restore the Premises to its condition existing prior to the installation of Tenant’s signs, subject to normal wear and tear.

ARTICLE 9 NO LANDLORD LIABILITY

9.01 Except for Landlord’s gross negligence or willful misconduct, Landlord and Landlord’s agents, servants and employees shall not be liable for, and Tenant hereby releases Landlord and Landlord’s agents, servants and employees from, all claims for damage to person or property (including loss or interruption of business) sustained by Tenant, or any person claiming through Tenant, resulting from any fire, accident, or occurrence or condition in or upon the Premises or the Building, including but not limited to such claims for damage resulting from (i) any defect in or failure of plumbing, sprinkler systems (if any), heating or air conditioning equipment, elevators (if any), electrical wiring or installation thereof, water pipes, stairs, railing or walks; (ii) any equipment or appurtenances becoming out of repair;

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(iii) the bursting, leaking or running of any tubing, radiant panel, electrical fixture, valve, fitting, tank, washstand, water closet, waste pipe, drain or any other pipe or tank in, upon or about the Premises or the Building; (iv) the backing up of any sewer pipe or downspout; (v) the escape of steam or hot or cold water; (vi) water, snow or ice being upon or coming through the roof of the Building or any other place upon or near the Premises or otherwise; (vii) the falling of any fixture, plaster or stucco; (viii) broken glass; (ix) any act or omission of co-tenants or other occupants of the Building or the exercise of any rights by Landlord under this Lease; (x) any act or omission of parties other than Landlord, its employees or agents.

ARTICLE 10 NO ASSIGNMENT OR SUBLETTING

10.01 Tenant shall not assign, mortgage, pledge or encumber this Lease, or sublet the whole or any part of the Premises, without on each occasion first obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord’s failure to respond within thirty (30) days of Tenant’s request shall be deemed a consent to Tenant’s request. Notwithstanding the foregoing, no consent shall be required for an assignment or sublease by Tenant to (a) any person or entity controlling Tenant, controlled by Tenant or under common control with Tenant (a “Tenant Affiliate”); (b) a merger where Tenant is the surviving entity; (c) in connection with Tenant’s sale of substantially all of the assets of the business, and sale of merchandise and equipment, conducted by it at the Premises, or (d) any corporation or entity which shall acquire all or substantially all of the stock or all or substantially all of the assets of Tenant as a result of a consolidation, merger or sale. Tenant shall provide notice of such transfer to Landlord at least 15 days prior to the effective date, subject to any confidentiality requirements, and in the case of an assignment or sublease, shall deliver to Landlord certificates of insurance evidencing compliance with the insurance requirements of Tenant under this Lease. In the event of any assignment of this Lease made with or without Landlord’s consent, Tenant shall, nevertheless, remain liable for the performance of all of the terms, conditions and covenants of this Lease and prior to any assignment that requires Landlord’s consent being effective, any assignee shall execute and deliver to Landlord an assumption of liability agreement in form reasonably satisfactory to Landlord, including an assumption by the assignee of all of the obligations of Tenant and the assignee’s ratification of and agreement to be bound by all the provisions of this Lease, including any warrants of attorney to confess judgment, if any. Any assignment or subletting requiring, but made without Landlord’s consent, shall be void and of no effect at Landlord’s option. If Tenant shall request the consent of Landlord to any assignment of this Lease, or subletting of all or part of the Premises, Tenant shall pay and deliver to Landlord as Additional Rent, a fee of Two Thousand Dollars ($2,000.00) representing Landlord’s costs related thereto including Landlord’s reasonable attorney’s fees, prior to Landlord being required to deliver any consent or rejection. Without limitation, Tenant agrees that Landlord’s consent shall not be considered unreasonably withheld if (i) the proposed transferee is an existing tenant of Landlord or an affiliate of Landlord, (ii) the business or business reputation of the proposed transferee or creditworthiness of the proposed transferee is reasonably unacceptable to Landlord, (iii) Landlord or an affiliate of Landlord has comparable space available for lease by the proposed transferee or (iv) Tenant is then in default under this Lease after applicable and required notice and cure periods, or any act or omission has occurred which would constitute a default with the giving of notice and/or the passage of time. Landlord’s acceptance of Rent from any person or entity shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer. In no event shall Tenant be permitted to assign this Lease or sublet the Premises primarily for the storage of Hazardous Materials.

10.02 The provisions of Section 10.01 notwithstanding, if Tenant proposes to sublet all of the Premises or assign this Lease (other than as permitted without consent), Landlord may terminate this Lease, either conditioned on execution of a new lease between Landlord and the proposed subtenant or assignee or without that condition. If Tenant proposes to enter into a sublease of less than all of the

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Premises (other than as permitted without consent), Landlord may amend this Lease to remove the portion of the Premises to be transferred, either conditioned on execution of a new lease between Landlord and the proposed subtenant or without condition.

If Tenant requests Landlord’s consent to an assignment or subletting, Tenant shall provide Landlord along with Tenant’s request, current financial statements of the transferee certified by an executive officer of the transferee, a complete copy of the proposed assignment or sublease documents, and any other information Landlord reasonably requests, so as to enable Landlord to make a reasoned decision regarding consent to such transaction.

10.03 Notwithstanding anything to the contrary contained in this Lease, Tenant may seek to raise capital for expansion of its business by transferring or issuing stock of Tenant and that any such transfer or issuance, including, without limitation, selling its outstanding voting stock to the public through listing on a “national securities exchange” as defined in the Securities Exchange Act of 1934, shall be permitted without Landlord’s prior consent or approval.

10.04 In the event of an assignment under this Article 11, Tenant shall remain liable and obligated under all the terms of this Lease.

ARTICLE 11 CASUALTY LOSS

11.01 Total Destruction. In the event that the Premises are totally destroyed or so damaged by fire or other casualty that the same cannot, in Landlord’s reasonable opinion, be repaired or restored within two hundred seventy (270) days, this Lease shall absolutely cease and terminate as of the date of such casualty, and the Rent shall abate for the balance of the term. If a casualty occurs, Landlord shall use good faith efforts to find comparable warehouse space for Tenant’s use.

11.02 Partial Destruction. If the damage caused as described above be only partial and such that the Premises can be restored within a reasonable time to their condition immediately prior to the damage, the Landlord shall restore the same with reasonable promptness, reserving the right to enter upon the Premises for that purpose, and this Lease shall remain in full force and effect. The Landlord also reserves the right to enter upon the Premises upon reasonable advance notice, whenever necessary to repair damage caused by fire or other casualty to the Building, using good faith efforts not to render the Premises or a part thereof untenantable. In either event the Rent shall be apportioned and suspended during the time the Premises or other portion of the Building have been damaged by casualty, taking into account the proportion of the Premises rendered untenantable and the duration of the Landlord’s repair and restoration. If a dispute arises as to the amount of Rent due under this Section 11.02, Tenant agrees to pay the full amount claimed by Landlord under protest, and Tenant shall have the right, however, to proceed by law (or arbitration in accordance with the rules of the American Arbitration Association) to recover the excess payment, if any, as well as all legal fees and reasonable costs incurred in contesting such abatement.

11.03 Election to Repair. Landlord shall notify Tenant within thirty (30) days after such casualty of Landlord’s good faith estimate of the time needed to restore the Premises and/or the Building, as the case may be. If such estimated time exceeds two hundred seventy (270) days from the date of casualty, Tenant shall have the right to terminate this Lease, provided Tenant’s termination notice is sent within thirty (30) days after Tenant receives Landlord’s good faith estimate. If Tenant does not exercise such right of termination as provided in the immediately preceding sentence, Landlord shall, at its sole cost and expense, commence to repair the damage and, thereafter, shall diligently and continuously pursue completion of such repairs. If Landlord fails to so complete the repairs within the estimated

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completion date, Tenant shall have the right and option, upon no less than thirty (30) days’ prior notice to Landlord to cancel this Lease, provided, however, should Landlord complete such restoration prior to the expiration of such thirty (30) day period, Tenant’s termination notice shall be deemed null and void and of no further force and effect, and this Lease shall continue. Notwithstanding the foregoing, Landlord shall have the right to terminate this Lease by notice to Tenant given within thirty (30) days of such casualty (i) if the casualty is not the type of casualty for which Landlord is required to maintain insurance under the terms of this Lease, and (ii) more than twenty percent (20%) of the Premises has been destroyed.

11.04 No Liability. Landlord shall not be liable for any damage, compensation of claim by reason of inconvenience or annoyance arising from the necessity of repairing any portion of the Building, the interruption in the use of the Premises or the termination of this Lease by reason of the destruction of the Premises.

11.05 Mutual Waiver of Subrogation. Each of the parties hereby releases the other and waives any claim against the other, to the extent of each party’s insurance coverage which such party is obligated to obtain pursuant to this Lease (or such additional coverage maintained by such party), from any and all liability for any loss or damage that may be inflicted upon the property of such party even if such loss or damage shall be brought about by the fault or negligence of the other party, its agents or employees. Each party shall procure from each of its insurers under all policies of insurance a waiver of all rights of subrogation which said insurer might otherwise have against the other party hereto, said waiver to be in writing and for the express benefit of such other party and its directors, officers, and employees.

ARTICLE 12 INDEMNIFICATION AND INSURANCE

12.01 Subject to Section 11.05 above, and except to the extent caused by the gross negligence or willful misconduct of Landlord or its agents or employees, Tenant will indemnify, defend, and hold harmless Landlord and its agents from and against any and all third party claims, actions, damages, liability and expense (including fees of attorneys, investigators and experts) which may he asserted against, imposed upon, or incurred by Landlord or its agents and arising out of or in connection with loss of life, personal injury or damage to property in the Premises or arising out of the occupancy or use of the Property by Tenant or its agents or employees and occasioned wholly or in part by any tortious act or omission of Tenant or its agents or employees, during the Term. Third party claims include claims of Tenant’s employees and invitees. Tenant’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease. Subject to Section 11.05 above, and except to the extent caused by the gross negligence or willful misconduct of Tenant or its agents or employees, Landlord will indemnify, defend, and hold harmless Tenant and its agents from and against any and all third party claims, actions, damages, liability and expense (including fees of attorneys, investigators and experts) which may he asserted against, imposed upon, or incurred by Tenant or its agents and arising out of or in connection with loss of life, personal injury or damage to property in the Project and occasioned wholly or in part by any tortious act or omission of Landlord or its agents or employees, during the Term. Landlord’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease.

12.02 Tenant will keep in full force and effect, at its sole cost and expense, as long as this Lease remains in effect: (i) commercial general liability insurance, with respect to the Leased Premises and Tenant’s use thereof in financially solvent companies providing, on an occurrence basis, a minimum combined single limit of Two Million Dollars ($2,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate on a “per location” basis, and (ii) fire and extended coverage insurance on Tenant’s personal property, including inventory, trade fixtures, floor coverings, furniture and other

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property, and Tenant’s leasehold improvements, with coverage for perils as set forth under the “Causes of Loss-Special Form” or equivalent property insurance policy in an amount equal to the full insurable replacement cost of the property insured. Tenant will further deposit certificates thereof, with Landlord. The policy shall be endorsed to provide that it is primary to and not contributory to any policies carried by Landlord and to provide that it shall not be cancelable or reduced without the insurer endeavoring to provide at least 30 days prior notice to Landlord. Tenant shall deliver to Landlord on or before the Commencement Date or any earlier date on which Tenant accesses the Premises, and at least 30 days prior to the date of each policy renewal, a certificate of insurance evidencing such required coverage. If the nature of Tenant’s operation is such as to place any or all of its employees under the coverage of local worker’s compensation or similar statutes, Tenant shall also keep in force, at its sole cost and expense, so long as this Lease remains in effect, insurance affording statutory coverage and containing statutory limits. If Tenant shall not comply with its covenants made in this Section after ten (10) days notice from Landlord, Landlord may cause insurance as aforesaid to be issued; and in such event Tenant agrees to, pay, as addition rent, the premium for such insurance upon Landlord’s demand. Tenant shall also maintain business interruption insurance for a minimum period of six (6) months.

12.03 As part of Property Operating Charge, Landlord will keep in full force and effect: (i) commercial general liability insurance, with respect to the Project in financially solvent companies providing, on an occurrence basis, a minimum combined single limit of Two Million Dollars ($2,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the aggregate on a “per location” basis, and (ii) fire and extended coverage insurance on the Building and all improvements made thereto (excluding Tenant’s personal property) with coverage for perils as set forth under the “Causes of Loss-Special Form” or equivalent property insurance policy in an amount equal to the full insurable replacement cost of the property insured. The policy shall be endorsed to provide that it shall not be cancelable or reduced without the insurer endeavoring to provide at least 30 days prior notice to Tenant. Landlord shall deliver to Tenant on or before the Commencement Date or any earlier date on which Tenant accesses the Premises, and at least 30 days prior to the date of each policy renewal, a certificate of insurance evidencing such required coverage.

12.04 Nothing contained in this Article shall prohibit either party hereto from obtaining a policy or policies of blanket insurance which may cover other property of such party, provided that any such blanket policy (a) expressly allocates to the properties to be insured hereunder not less than the amount of insurance required pursuant to this Lease, and (b) shall not diminish the obligations of such party so that the proceeds from the blanket policy will be less than the proceeds that would be available if the required insurance was obtained under policies separately insuring such risks.

ARTICLE 13 INCREASE IN LANDLORD’S INSURANCE

13.01 In the event Tenant’s occupancy causes any increase of premiums for the fire, boiler and/or casualty rates on the Premises or the Building above the standard and customary rate for the type of tenancy and use of the Premises, the Tenant shall pay, as additional rent, the addition premium on the fire, boiler and/or casualty insurance policies by reason thereof. Bills for such additional premiums shall be rendered by Landlord to Tenant at such times as Landlord may elect, and shall be due from, and payable by Tenant when rendered, and the amount thereof shall be deemed to be and shall be paid as additional rent. Notwithstanding anything to the contrary contained herein, Landlord acknowledges and agrees that as long as Tenant uses the Premises for the Permitted Use as described in the Summary, it shall not be responsible for payment of an increase in Landlord’s insurance as provided herein.

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ARTICLE 14 CONDEMNATION

14.01 If the whole of the Building shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, or a deed given in lieu thereof (a “Taking”) then the term of this Lease shall cease and terminate as of the date of title vesting in such proceeding and all rentals shall be paid up to that date and Tenant shall have no claim against Landlord or the condemning authority in respect to any compensation for such Taking awarded the Landlord, whether through a negotiated settlement or through formal condemnation proceedings. The compensation awarded for a Taking shall belong to Landlord. Except for any relocation benefits to which Tenant may be entitled, Tenant hereby assigns all claims against the condemning authority to Landlord, including, but not limited to, any claim relating to the value of Tenant’s leasehold estate. Notwithstanding the foregoing, Tenant shall have the right to claim any compensation as may be separately awarded or receivable by Tenant in Tenant’s own right on account of any costs or loss Tenant may suffer for the removal of its merchandise, furniture, fixtures or equipment, the loss of the unamortized value of the improvements made pursuant to this Lease or any other element of special damage separately recoverable by the Tenant at Tenant’s expense and with no adverse impact on Landlord.

If any part of the Project shall be acquired or condemned as aforesaid, and in the event that in Tenant’s reasonable business judgment, such partial taking or condemnation shall render the Premises unsuitable for the business of Tenant, then the term of this Lease shall cease and terminate as of the date of title vesting in such proceeding, all Rent shall be paid up to that date and Tenant shall have no claim against Landlord or the condemning authority and assigns to Landlord any compensation for such Taking awarded the Landlord, whether through a negotiated settlement or through a formal condemnation proceeding, provided, however, that Rent shall be adjusted to the date of such termination. In the event of a partial Taking or condemnation that is not extensive enough to render the entire Premises unsuitable for the business of the Tenant, the Landlord shall promptly restore the remaining portion of the Premises to its condition as nearly as possible as existed at the time of such condemnation less the portion lost in the taking, and this Lease shall continue in full force and effect and Rent shall be proportionately abated based upon the extent and duration of any interference with Tenant’s use and enjoyment of the Premises occasioned by such taking or sale and any repairs or alterations resulting therefrom and shall thereafter adjusted on the basis of the number of square feet taken on a pro rata basis.

ARTICLE 15 LANDLORD’S RIGHT TO ENTRY

15.01 Landlord and persons designated by it have the right to enter the Premises at reasonable business hours and upon reasonable advance notice to Tenant to examine the same and to do such work as Landlord is obligated to do under the terms hereof or to do such work as Landlord shall deem necessary for the safety or preservation of the Premises or Building; provided, however, that, except in the case of an emergency, the same shall not interfere unreasonably with the conduct of Tenant’s business, although even in an emergency, Landlord shall use good faith, diligent efforts not to interfere with the conduct of Tenant’s business.

15.02 Landlord shall have the right to display a “For Sale” sign at any time, and also, after notice of either party of its intention to terminate this Lease, or at any time within nine (9) months prior to the expiration of this Lease, a “For Rent” sign, or both “For Rent” and “For Sale” signs; and all of said signs may be placed upon the exterior part of the Premises and/or Building as Landlord may elect and may contain such matter as Landlord shall require. Prospective purchasers, lenders or tenants authorized by Landlord may inspect the Premises at reasonable business hours upon reasonable advance notice to Tenant.

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ARTICLE 16 DEFAULT; REMEDIES

16.01 In the event that during the term of this Lease (regardless of the pendency of any bankruptcy, reorganization, receivership, insolvency or other proceedings, at law, in equity, or before any administrative tribunal, that has prevented or might prevent compliance by Tenant with the terms of this Lease): (a) intentionally deleted; (b) Tenant shall fail to pay when due any Rent or any other amount to be paid to Landlord under this Lease where such failure shall continue for a period of five (5) business days after notice from Landlord that such payment is past due; such failure to pay shall constitute a default under this Lease; (c) Tenant enters into or permits any assignment or sublease in violation of this Lease; (d) Tenant defaults under Section 19, 21 or 22 of this Lease and such default continue for fifteen (15) days after notice from Landlord; (e) Tenant shall be in default in the observance or performance of any of Tenant’s covenants, agreements or obligations hereunder, other than payment obligations, and such default shall not be cured within twenty (20) days after Landlord shall have given to Tenant written notice specifying such default or defaults; provided, however, that if the nature of such failure is such that more than twenty (20) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said twenty (20) day period and thereafter diligently prosecutes such cure to completion; or (f) (i) Tenant is adjudicated a bankrupt or insolvent; or (ii) Tenant shall file a bill in equity or otherwise initiate proceedings for the appointment of a receiver of Tenant’s assets; or (iii) Tenant shall file any proceedings in bankruptcy or for reorganization or an arrangement under any federal or state law; or (iv) if any proceedings in bankruptcy or for the appointment of a receiver shall be instituted by any creditor of Tenant under any state or federal law; or (v) Tenant shall make an assignment for the benefit of its creditors; or (vi) if Tenant is levied upon and is about to be sold out upon the Premises under executions or other legal process; then in any such event Landlord shall have the right, in addition to any other rights or remedies Landlord may have under this Lease and at law and in equity, at its election pursuant to court order (aa) upon notice to Tenant, to accelerate and recover Base Rent due hereunder for the six (6) month period following delivery of Landlord’s acceleration notice, such amounts to be discounted to present value at an assumed discount rate of six percent (6%), and upon payment of all sums due hereunder, Tenant shall receive a credit or a rebate at the end of each six (6) month rental period, against accelerated Base Rent paid by Tenant hereunder, of any rent actually paid to Landlord by a replacement tenant in a re-letting of the Premises during each such six (6) month period, and Landlord shall be entitled to accelerate and recover Base Rent and other amounts which will come due for each subsequent six (6) month period, discounted to present value at an assumed discount rate of six percent (6%), (bb) to recover all Base Rent and additional rent, if any, that is due and payable, and/or (cc) intentionally deleted (dd) to reenter the Premises and remove all persons and all or any property therefrom, either by summary dispossession proceedings or by any suitable action or proceeding at law or by force or otherwise, without being liable to indictment, prosecution or damages therefor, and repossess and enjoy the Premises, together with all additions, alterations and improvements; and/or (ee) to terminate this Lease, without any right on the part of the Tenant to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken after the Tenant has been dispossessed from the Premises; and/or (ff) to pursue any other remedy available at law or in equity. Upon recovering possession of the Premises by reason of, based upon, or arising out of a default on the part of Tenant, Landlord may, at Landlord’s option, either terminate this Lease or make such alterations and repairs as may be necessary in order to relet the Premises and relet the Premises or any part or parts thereof, either in Landlord’s name or otherwise, for a term or terms that may at Landlord’s option be less than or exceed the period that would otherwise have constituted the balance of the term of this Lease and at such rent or rents and upon such other terms and conditions as in Landlord’s sole discretion may seem advisable and to such person or persons as may in Landlord’s discretion seem best; upon each such reletting all rents received by Landlord from such reletting shall be applied: first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses incurred by Landlord in returning the Premises to the condition required of Tenant at the expiration of the

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Term and performing the maintenance requirements of Tenant under this Lease, plus reasonable brokerage fees and attorney’s fees; third, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future rent as it may become due and payable hereunder. If such rentals received from such reletting during any month shall be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of the Premises or making of alteration and/or improvements thereto or the reletting thereof shall be construed as an election on the part of the Landlord to terminate this Lease unless written notice of such intention be given to Tenant. Provided Landlord uses commercially reasonable efforts to mitigate damages, including reletting the Premises and collecting rental therefrom, Landlord shall not be liable in any way whatsoever for failure to relet the Premises or, in the event that the Premises or any part or parts thereof are relet, for failure to collect the rent thereof under such reletting. Tenant, for Tenant and Tenant’s successors and assigns, hereby irrevocably constitutes and appoints Landlord to be Tenant’s and its agent to collect the rents due and to become due under all subleases of the Premises or any parts thereof without in any way affecting Tenant’s obligation to pay any unpaid balance of rent due hereunder. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach.

16.02 Tenant or Landlord, as the case may be, shall, upon demand therefor, reimburse the prevailing party for all costs and expenses, including reasonable attorney’s fees, incurred by the prevailing party and awarded by the court in such action in taking any action to enforce obligations under this Lease and to exercise any of Landlord’s or Tenant’s rights and remedies.

16.03 BOTH LANDLORD AND TENANT HEREBY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO UNDER OR IN CONNECTION WITH THE LEASE.

16.04 Anything in the Lease to the contrary notwithstanding, Tenant agrees that it shall look solely to the estate and property of Landlord in the land and building comprising the Project of which the Premises are a part (subject to the prior rights of any mortgagee of the Building) for the collection of any judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default or breach of Landlord with respect to any of the terms, covenants and conditions of this Lease to be observed or performed by Landlord, and no other assets of Landlord or any partner, member or shareholder of Landlord shall be subject to levy, execution or other procedures for the satisfaction of Tenant’s remedies; however, if Landlord defaults in performance of any obligation imposed on it by this Lease and does not cure such default within twenty (20) days after notice from Tenant (or does not within said period commence and thereafter diligently proceed to cure such default), Tenant, without waiver or prejudice to any other right or remedy it may have at law, shall have the right, at any time thereafter, to cure such default for the account of Landlord, and Landlord shall reimburse Tenant upon invoice for any reasonable amount paid and any expense or contractual liability so incurred, including reasonable counsel fees. Tenant’s right to cure shall be limited to the Premises. In the event of emergencies, or where necessary to prevent injury to persons or damage to property, Tenant may cure a default by Landlord before the expiration of the waiting period, but after giving such written or oral notice to the other party as is practical under the circumstances.

16.05 No payment by Tenant or receipt or acceptance by Landlord of a lesser amount than the total amount due Landlord under this Lease shall be deemed to be other than on account, nor shall any endorsement or statement on any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of Rent due, or Landlord’s right to pursue any other available remedy.

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16.06 Notwithstanding anything to the contrary contained in this Lease, Landlord waives any lien rights it may have against Tenant’s property under statute, common law or otherwise.

ARTICLE 17 NO CONTINGENCY; WAIVER OF PERFORMANCE

17.01 The failure of either party to insist upon a strict performance of any of the terms, conditions and covenants herein shall not be deemed a waiver of any rights or remedies that such party may have and shall not be deemed a waiver of any subsequent breach or default in the terms, conditions and covenants herein contained.

ARTICLE 18 PERFORMANCE OF TENANT’S COVENANTS

18.01 Tenant agrees that it will perform all of the covenants, conditions and agreements herein expressed on its part to be performed and complied with, and that Tenant will immediately upon receipt of written notice, where notice of nonperformance or noncompliance is required by the Lease, commence to comply with the requirements of such notice and further, if Tenant shall violate any covenant, condition of agreement herein, and fail to cure such violation within twenty (20) days after notice from Landlord (or does not within said period commence and thereafter diligently proceed to cure such default), Landlord may at its option do or cause to be done any or all of the things provided by this Lease and in so doing Landlord shall have the right to cause its agents, employees, and contractors to enter upon the Premises, and provided good faith efforts are made not to interfere with the operation of Tenant’s business, Landlord shall have no liability to Tenant for any loss or damage resulting in any way from such action; and Tenant agrees to pay an additional rent within the lesser of any period expressly provided elsewhere in this Lease or ten (10) days of demand any monies paid or expenses reasonably incurred by Landlord in taking such action, including reasonable counsel fees, any such sum to be collectible from Tenant as additional rent. In the event of emergencies, or where necessary to prevent injury to persons or damage to property, the expiration of the twenty (20) day period referenced above may be reduced based upon the type and extent of such emergency.

ARTICLE 19 SUBORDINATION

19.01 This Lease is and shall be subject and subordinate at all times to all underlying leases and to the lien of any mortgage and/or other encumbrances that may now or hereafter affect such leases or the Premises, and also to all renewals, modifications, consolidations and replacements of said underlying leases and mortgages or other encumbrances, without the necessity of any further instrument or act on the part of Tenant to effectuate such subordination, but conditioned upon Landlord, Tenant and the holder of . any mortgages or encumbrance to execute a subordination, non-disturbance and attornment agreement reasonably acceptable to such parties. Tenant agrees to attorn to the lessor or to any holder of any mortgage or other encumbrance to which this Lease is subordinate and to any purchaser or other party claiming from or through the holder. The lessor, mortgagee or other holder, and a purchaser at foreclosure or otherwise claiming from or through the holder (each, a “Successor”), shall not be liable for any obligations of Landlord except those arising while such person is owner of the Premises. Tenant shall, execute and deliver upon demand such further reasonable instrument or instruments confirming such subordination of this Lease to all underlying leases and to the lien of any such mortgage and/or other encumbrances as shall be desired by any mortgagee or by any other person. Notwithstanding the foregoing, any holder of any mortgage may at any time subordinate its mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such mortgage without regard to their respective dates of execution and delivery and in that event such mortgagee shall have the same rights with respect to this Lease as though it had been executed prior to the

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execution and delivery of the mortgage and had been assigned to such mortgagee. Tenant agrees to be subordinate to the lien of any mortgagee, ground lessor or other party whose title might hereafter become superior to the title of Landlord subsequently placed upon the Premises after the date of this Lease, (hereinafter referred to as the “Subsequent Mortgagee”), provided Tenant, Landlord and the Subsequent Mortgagee first execute an agreement in form and substance reasonably satisfactory to the parties thereto, which agreement shall incorporate, provisions to the following effect: (a) that such Subsequent Mortgagee shall at all times, including, but not limited to, any foreclosure or other repossession proceedings, recognize, permit and continue the tenancy of Tenant and its successor and assigns in the Premises and assume the obligations of Landlord under the provisions of this Lease; and (b) that such Superior Mortgagee shall require that any purchaser acquiring the Shopping Center shall assume the obligations of Landlord under this Lease so that the rights of Tenant or those holding under Tenant shall not be interfered with or affected.

19.02 No Successor shall be (i) liable for any act or omission of a prior landlord, (but shall be subject to any rental offsets or defenses against a prior landlord, or (ii) bound by payment of Rent more than one month in advance or liable for any other funds paid by Tenant to Landlord unless such funds actually have been transferred to the Successor by Landlord.

ARTICLE 20 NOTICE

20.01 Any notice, consent or other communication under this Lease shall be in writing and addressed to Landlord or Tenant at their respective addresses set forth in the Summary (or to such other party an/or address as either may designate by notice to the other) with a copy to any mortgagee or other party designated by Landlord. Each notice or other communication shall be deemed given if sent by prepaid overnight delivery service or by certified mail, return receipt requested, postage prepaid, with delivery in any case evidenced by a receipt, and shall be deemed to have been given on the day of actual delivery to the intended recipient or on the business day delivery is refused. The giving of notice by Landlord’s or Tenant’s attorneys, representatives and agents under this Section shall be deemed to be the acts of Landlord or Tenant as the case may be.

ARTICLE 21 ESTOPPEL CERTIFICATE

21.01 Either party agrees at any time and from time to time, within fifteen (15) days after the other party’s written request, to execute, acknowledge and deliver a written instrument in recordable form certifying that his Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full force and effect as modified and stating the modifications) and the dates to which Base Rent have been paid in advance, if any, and stating whether or not, to be the best knowledge of the responding party, the requesting party is in default in the performance of any covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which the responding party may have knowledge, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser of the fee or any mortgagee thereof or any assignee of Landlord’s or Tenant’s interest in this Lease or of any mortgagee upon the fee of the Premises, or any part thereof, or any subtenant or lender of Tenant.

21.02 Within 10 days after Landlord’s request from time to time, Tenant shall furnish to Landlord, Landlord’s mortgagee, prospective mortgagee and/or prospective purchaser reasonably requested financial information.

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ARTICLE 22 HOLDING OVER

22.01 If Tenant remains in possession of the Premises after the expiration or termination of this Lease, Tenant’s occupancy of the Premises shall be that of a tenancy at will. Tenant’s occupancy during any holdover period shall otherwise he subject to the provisions of this Lease (unless clearly inapplicable), except that the Base Rent shall be 150% the monthly Base Rent payable for the last full month immediately preceding the holdover. No holdover or payment by Tenant after the expiration or termination of this Lease shall operate to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise. Any provision in this Lease to the contrary notwithstanding, any holdover by Tenant that is not remedied within fifteen (15) days after notice from Landlord to Tenant, shall constitute a default on the part of Tenant under this Lease entitling Landlord to exercise, without obligation to provide Tenant any further notice or cure period, all of the remedies available to Landlord in the event of a Tenant default.

ARTICLE 23 BROKERS

23.01 Tenant represents and warrants to Landlord that Tenant has dealt with no broker, agent or other intermediary in connection with this Lease other than Landlord’s leasing agent (if any) and the Tenant’s Broker identified in the Summary, if any, and that insofar as Tenant knows, no other broker, agent or other intermediary negotiated this Lease or introduced Tenant to Landlord or brought the Building to Tenant’s attention for the lease of space therein. Both parties agrees to indemnify, defend and hold the other and its partners, employees, agents, their officers and partners, harmless from and against any claims made by any broker, agent or other intermediary other than Landlord’s leasing agent and the Tenant’s Broker, with respect to a claim for broker’s commission or fee or similar compensation brought by any person in connection with this Lease, provided that Landlord or Tenant, as the case may be has not in fact retained such broker, agent or other intermediary. In addition, Landlord shall have no obligation to the Tenant’s Broker unless it is evidenced by a written agreement between Landlord and the Tenant’s Broker. Landlord hereby acknowledges its obligation to pay a commission to Tenant’s Broker, CB Richard Ellis, pursuant to a separate agreement.

ARTICLE 24 GOVERNING LAW

24.01 This Lease shall be governed and construed under the laws of the State of Delaware without regard to principles of conflicts of law. This Lease is a rental agreement for an industrial property and is therefore by definition not subject to the Landlord-Tenant Code (the “Code”) and is exempted. Exclusive jurisdiction for all claims and disputes in connection with this Lease shall be vested in the federal and state courts in the State of Delaware.

ARTICLE 25 CAPTIONS

25.01 The captions and headings used herein are for convenience and reference only and shall not constitute a part of this Lease, nor shall they affect the meaning, construction or effect of this Lease.

ARTICLE 26 INTEGRATION

26.01 This Lease (including the Summary) and the Addenda and/or Riders attached hereto, if any, are intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between parties having been incorporated herein. No course of prior dealings between parties, or their officers, employees, agents or affiliates shall be relevant, or admissible to determine the meaning of any of the terms of this

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Lease, No representations, undertakings or agreements have been made or relied upon in the making of this Lease other than those specifically set forth herein. This Lease can only be modified in writing executed by both parties to the Lease. All of the terms, definitions, conditions and covenants set forth on the Summary are incorporated into the text of the Lease by reference.

ARTICLE 27 RIDERS

27.01 The Riders and/or Addenda attached hereto and made a part hereof are identified on the Summary.

ARTICLE 28 RULES AND REGULATIONS

28.01 EXHIBIT B attached hereto, captioned “Rules and Regulations of the Building”, is made a part hereof and any default by Tenant of any of the provisions thereof, or of any other further reasonable rules and regulations as Landlord may adopt from time to time, which are not cured within applicable notice and cure periods set forth in Section 16.01(e) shall be considered to be a default under the terms of this Lease

ARTICLE 29 NO OPTION TO LEASE

29.01 The submission of this Lease for examination does not constitute a reservation of or option for the Premises and this Lease becomes effective as a lease only upon execution thereof by Landlord and Tenant.

ARTICLE 30 HAZARDOUS MATERIALS

30.01 As used herein:

“Environmental Laws” means all present or future federal, state or local laws, ordinances, rules or regulations of the federal Environmental Protection Agency and comparable state agency) relating to the protection of human health or the environment.

“Hazardous Materials” means pollutants, contaminants, toxic or hazardous wastes or other materials the removal of which is required or the use of which is regulated, restricted, or prohibited by any Environmental Law.

30.02 Tenant agrees that (i) no activity will be conducted on the Premises that will use or produce any Hazardous Materials, except for activities which are part of the ordinary course of Tenant’s business and are conducted in accordance with all Environmental Laws (“Permitted Activities”); (ii) the Premises will not be used for storage of any hazardous Materials, except for materials used in the Permitted Activities which are properly stored in a manner and location complying with all Environmental Laws; (iii) no portion of the Premises or Property will be used by Tenant or Tenant’s agents for disposal of Hazardous Materials, (iv) Upon request by Landlord, Tenant will deliver to Landlord copies of all Material Safety Data Sheets and other written information prepared by manufacturers, importers or suppliers of any chemical; and (v) Tenant will immediately notify Landlord of any violation by Tenant or Tenant’s agents of any Environmental Laws or the release or suspected release of Hazardous Materials in, under or about the Premises, and Tenant shall immediately deliver to Landlord a copy of any notice, filing or permit sent or received by Tenant with respect to the foregoing. If at any time during or after the Term, any portion of the Property is found to be contaminated by Tenant or Tenant’s agents or subject to conditions prohibited in this Lease caused by Tenant or Tenant’s agents, Tenant will indemnify, defend and hold Landlord harmless from all claims, demands, actions, liabilities,

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costs, expenses, attorneys’ fees, damages and obligations of any nature arising from or as a result thereof, and Landlord shall have the right to direct remediation activities, all of which shall be performed at Tenant’s cost. Tenant’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease.

30.03 Except as set forth in the preceding Section, Landlord, at its sole cost and expense, shall be responsible for and shall comply with all Environmental Laws with respect to the presence or removal of Hazardous Materials. Landlord shall indemnify, defend and hold Tenant harmless from all claims, demands, actions, liabilities, costs, expenses, attorneys’ fees, damages and obligations of any nature arising from or as a result of Landlord’s removal or introduction of such Hazardous Materials and only for such claims, demands, actions, liabilities, costs, expenses, attorneys’ fees, damages and obligations of any nature not arising from Tenant’s occupancy or caused by Tenant, its employees, agents, invitees (while in the Premises), and licensees. Notwithstanding the foregoing, Landlord shall not be required to indemnify, defend and hold Tenant harmless as aforesaid if the Hazardous Materials were not introduced into the Property by Landlord, its employees, contractors or agents. Landlord’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease. Landlord represents and warrants to the Tenant that to the best of Landlord’s knowledge the Project is in compliance with Environmental Laws.

ARTICLE 31 OTHER COMPLIANCE

31.01 As used herein, “Laws” means all laws, ordinances, rules, order, regulations, guidelines and other requirements of federal, state or local governmental authorities or of any private association or contained in any restrictive covenants or other declarations or agreements, now or subsequently pertaining to the Property or the use and occupation of the Property. Tenant will, at its expense, promptly comply with all Laws now or subsequently pertaining to Tenant’s specific use of the Premises or Tenant’s use or occupancy. Tenant will pay any taxes or other charges by any authority on Tenant’s property or trade fixtures or relating to Tenant’s use of the Premises. Neither Tenant nor its Agents shall use the Premises in any manner that under any Law would require Landlord to make any alteration to or in the Building or Common Areas (without limiting the foregoing, Tenant shall not use the Premises in any manner that would cause the Premises or the Property to be deemed a “place of public accommodation” under the ADA if such use would require any such alteration). Tenant shall be responsible for compliance with the ADA, and any other Laws regarding accessibility, with respect to the Premises. “ADA” means the Americans With Disabilities Act of 1990 (42 U.S.C. § 1201 et seq.), as amended and supplemented from time to time.

31.02 Tenant will comply, and will cause its agents, contractors and employees to comply, with the Rules and Regulations.

ARTICLE 32 MISCELLANEOUS

32.01 As used herein, the neuter gender shall be construed as feminine or masculine gender, as the case may be.

32.02 Subject to the provisions of Article 10 above, this Agreement shall bind and benefit the parties hereto and their respective executors, administrators, heirs, successors and assigns.

32.03 In the event that “Landlord” or “Tenant” shall consist of more than one person or entity, the obligations of Landlord and Tenant shall be the joint and several obligations of all persons or entities identified as “Landlord” and “Tenant” respectively.

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32.04 Any provision or provisions of the Lease that shall be invalid, void or illegal shall in no way effect, impair or invalidate any other provision hereof, and the remaining provisions hereof shall remain in full force and effect.

32.05 Should any mortgage holder require modification of this Lease, which modification will not bring about any increased cost or expense to Tenant or in any other way substantially change the rights and obligations of Tenant hereunder, Tenant agrees that this Lease will be so modified.

32.06 Tenant shall not record, or permit to be recorded, this Lease or any Memorandum thereof in the Office of the Recorder of Deeds or any other public record office. This Lease consists of the Lease Summary Page, the Industrial Lease Form, Exhibit A, the Rules and Regulations, the Service Rider, the Security by Tenant (if any), the Guaranty (if any) and the Riders and Addenda listed on the Lease Summary Page, all of which are incorporated by reference into this Lease.

32.07 Tenant represents and warrants to Landlord that: (a) Tenant is duly formed, validly existing and in good standing under the laws of the state under which Tenant is organized, and qualified to do business in the state in which the Property is located, and (b) the person(s) signing this Lease are duly authorized to execute and deliver this Lease on behalf of Tenant.

32.08 Landlord shall provide an area within reasonable proximity to the rear of the Premises for placement of a dumpster for Tenant’s trash, and with access for trash removal services.

32.09 Tenant shall have the right, without Landlord’s consent, to finance and to secure trade fixtures, furnishings, equipment, machinery, signs and other personal property. Landlord shall execute and deliver a reasonable waiver or subordination agreement that does not confer any additional rights to other parties beyond those rights herein in connection with Tenant’s leasing and financing of Tenant’s trade fixtures, furnishings, equipment, machinery, signs and other personal property within fifteen (15) days after Tenant’s request.

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IN WITNESS WHEREOF, the parties have cause this Lease to be executed under seal as of the date first above written.

	SEALED AND DELIVERED IN THE PRESENCE OF:	LANDLORD: TWIN SPANS BUSINESS PARK, LLC
/s/		By:	/s/
		Name: Thomas J. Hanna
		Title: Authorized Agent
		TENANT FIVE BELOW, INC.
/s/		By:	/s/
		Name: Thomas Vellios
		Title: CEO

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SERVICE RIDER

The following identifies the services and items to be furnished and/or paid for by Landlord (“L”) or Tenant (“T”):

		Furnish	Pay
1.	Heat	L	T (Direct)
2.	Air Conditioning	L	T (Direct)
3.	Electricity	L	T (Direct)
4.	Water	L	T (Direct)
5.	Sewer Charge	L	T (Direct)
6.	Clearing of ice and snow from sidewalks immediately in front of Premises entrance; sanding and/or salting	T	T
7.	Replacement of broken window glass	T	T (Direct)
8.	Janitor and cleaning	T	T (Direct)
9.	Window Washing	T	T (Direct)
10.	Heating, ventilating, air conditioning service and repair	L	L
11.	HVAC Replacement (Warehouse heaters & wall mounted HVAC office units) not related to Tenant’s failure to maintain the units.	L	L
12.	HVAC Replacement (Warehouse heaters & wall mounted HVAC office units) caused by Tenant’s failure to maintain or regularly service	L	L
13.	Roof Maintenance & Repairs	L	L
14.	Structural Repairs	L	L
15.	Parking Lot Maintenance including plowing, snow removal, sanding, salting and resurfacing	L	L

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16.	Rubbish Removal	T	T (Direct)
17.	Lawn/Shrub care	L	L
18.	Ordinary Repairs & Maintenance, Non-Structural, Interior	T	T (Direct)
19.	Ordinary repairs and maintenance, Exterior	L	L
20.	Light Bulbs & Light Fixture	T	T (Direct)
21.	Overhead door repair and Maintenance	L	L (Direct)
22.	Annual / Quarterly Fire Code Inspections	L	L
23.	Quarterly HVAC Equipment Service	T	T(Direct)
24.	All maintenance costs or expenses incurred in maintaining, resurfacing and/or controlling the Common Areas	L	L
25.	Costs incurred pursuant to any easements, restrictions, covenants or conditions relating to or otherwise affecting the Premises, Building or the Park	L	L

Furnish shall mean: To provide the equipment or control the delivery of the particular utility or activity either by doing the activity or contracting with an outside vendor.

Pay shall mean: Direct payment or payment as part of the Property Operating Costs (POC), all as provided in the Lease.

In the event of any conflict between this Service Rider and Lease (which includes the Summary), the Lease shall prevail.

This Service Rider is intended for ease of reference and does not change any of the provisions of the Lease.

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Exhibit B

Rules and Regulations

First: Tenant, it’s agents or employees, shall not in any way obstruct the sidewalks, parking area or areas, entry passages, corridors, halls, lobbies or stairways, or use the same in any other way than as a means of passage to and from their respective offices, nor permit anything to be done in the Premises, nor bring or keep anything therein which shall conflict with the regulation of the Fire Department or the fire laws or with any insurance policy on the building or any part of thereof, or with any rules or ordinances established by the Board of Health; and they shall not make or permit any improper noises in the Building (beyond customary noises relative to the operation of a warehouse and distribution center), nor throw substances of any kind out of the windows or doors or down the passages or skylights in the Building, or in the halls or passageways, nor sit on nor place anything upon the windowsills, nor bring into nor keep within the Building any animal, and subject to Section 11.05 of the Lease, Tenant agrees that it will pay any damage caused by the negligence and willful conduct of it, its agents or employees, to the common areas of the Building, grounds or environs in which the Premises are a part, as well as to any areas outside of such Building designated by Landlord for use by Tenant.

Second: The water closets and urinals shall not be used for any purpose other than for which they were constructed and no plaster of paris, sweepings, rubbish, ashes, newspapers or any substances of any kind shall be thrown into them. Waste and excessive or unusual use of water or heat provided by Landlord will not be allowed.

Third: No sign advertisement or notice except Tenant’s identification signage shall be inscribed, planted or affixed on any part of the outside or inside of the Building without the written consent of the Landlord. Tenant, its employees and agents, shall not solicit business in the parking or other common areas of the Building nor shall Tenant, its employees or agents, distribute any handbills or other advertising matter in the Building or on the Property.

Fourth: No boring or cutting of walls, woodwork or wires shall be done without the written consent of Landlord, Landlord hereby approving such work to enable Tenant to install its racking system (and possibly a conveyor system in the future) in the Premises.

Fifth: Landlord will not be responsible for loss of any such safe or property from any clause, but all damage done to the Building by moving or maintaining such safe or property shall be repaired at the expense of Tenant.

Sixth: Two (2) keys to the Premises shall be furnished by Landlord; however Tenant shall have the right to change and install new locks.

Seventh: The requirements of Tenant will be attended to only upon application in writing at the office of or notice address of the Landlord. The agents or employees of Landlord shall not perform any work or do anything outside their regular duties, unless under special instruction in writing from the office of the Landlord.

Eighth: Heating of the Building is required to prevent sprinkler damage and other plumbing damage. It is the responsibility of the Tenant to see that there is always sufficient heat in the Premises to minimize any such damage.

Ninth: Waste and unnecessary use of electricity and other utilities is prohibited.

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Tenth: The Premises shall not be used for lodging or sleeping purposes.

Eleventh: Landlord reserves the right to make such other or further reasonable rules and regulations as in its judgment may from time to time be needed and desirable for the safety, care and cleanliness of the Building, and for the preservation of the good therein; provided such rules and regulations shall (a) not interfere with Tenant’s use and enjoyment of the Premises, (b) be uniformly applied and enforced without discrimination among all tenants of the Project, and (c) not increase any of Tenant’s obligations, or adversely impact any of Tenant’s rights, set forth in this Lease.

Twelfth: Tenant shall not conduct, directly or indirectly, any auction upon the Premises or permit any other person to conduct an auction upon the Premises. Tenant further agrees that it will not permit gambling to be conducted in or upon the Premises or use the Premises for any immoral or illegal purpose whatsoever. Beyond such odors and noises customary for the operation of a warehouse and distribution center, Tenant agrees not to make any unusual noises in the Building or permit any of its servants, agents or employees to do so, and agrees not to cause any unusual odors to be produced upon the Premises.

Thirteenth: Tenant must take strict care not to leave the Premises exposed to the elements.

Fourteenth: All glass, locks and trimmings in or upon the doors and windows belonging to the Premises shall be kept whole, and whenever any part thereof shall be broken, the same shall be immediately replaced or repaired and put in order, and shall be left whole or in good repair.

Fifteenth: After normal business hours, if the Building is in charge of a night watchman, every person entering or leaving the Building is expected to be questioned by said watchman and may be required to register with the watchman when entering and leaving the Building.

Sixteenth: Tenant agrees, at the termination of the tenancy, to remove the locks that Tenant installed in the Premises.

Seventeenth: Provided all such parking areas are reasonably proximate to the Premises, Landlord specifically reserves the right to direct Tenant and employees to park in specific areas or to move or change their designated parking area, either permanently or temporarily, so as to allow for repairs, snow removal or sanding, etc. No motor vehicles shall be stored or left abandoned on such areas, and Landlord shall have the right to have any such vehicle towed away or otherwise removed at the expense of the vehicle owner Tenant.

Eighteenth: Tenant shall lower and close the blinds or drapes when necessary because of the sun’s position whenever the air conditioning system is in operation.

Tenant Initial:	Date:
Landlord Initial:	Date: 3/27/07

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Exhibit C

Layout Plan

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Rider of Landlord Improvements

Landlord shall complete at Landlord’s sole cost the following improvements to the building and the Premises, which shall be constructed in accordance with the interior layout plan showing the location of the office space, bathrooms, dock door locations, racking system, etc., attached to this Lease as Exhibit C. Landlord shall warrant and guarantee all of Landlord’s work against defects in workmanship or defects in materials for a period of one (1) year from the Commencement Date.

Base Building:

1. New Construction, Modern warehouse.

2. Conventional steel frame building with block and siding veneer.

3. 30’-32’ clear ceiling height. Tenant will have the ability to rack class II Commodity to 28’ high off of floor slab.

4. 6” fibermesh reinforced concrete slab using 3500 Ib mix.

5. Glass storefront entry system.

6. 2000 Amp electric service to the Building.

7. 5 Ib collateral roof load.

8. ESFR Sprinkler System.

9. Fully adhered rubber membraned roof system – no skylights are envisioned, however some metal halide light fixtures may include acrylic (transparent) lenses that help further increase the light specification.

10. Exterior lighting will be 2 foot candles.

11. There will be two (2) sets of bathrooms located in the office area, one set accessible to the office and one set accessible to the warehouse area.

12. Telephone demark will be located in the mechanical room.

13. The Building will have approximately 160 employee parking spaces, of which 100 shall exclusively be for Tenant’s employees.

14. All utilities shall be separately metered or submetered.

Specialties:

1. 1,500-2,000 square feet of finished offices budgeted at $40 per square foot (“psf”); provided, however, if, while Landlord is pricing out the work, it is determined the price for such offices exceeds $40 psf, Landlord shall provide notice to Tenant and Tenant shall have the right to revise its plans so as to bring the costs for finished offices down to $40 psf.

2. 20 dock doors total, aprons, levelers and seals all where previously agreed above and shown on plans provided by Tenant. Landlord to provide allowance at market value for Tenant to purchase the 14 portable dock plates, which allowance shall be taken as a rent credit commencing July 16, 2007. Landlord will provide swing arm dock lights at all dock locations. No dock locks are included.

3. Standard warehouse lights (25 foot candles) and heat (55 degrees F inside while 0 F degrees outside) including inside the office area.

4. Fifteen (15) trailer spaces shall be exclusive to Tenant as shown on the Site Plan.

5. One dock to be a drive in dock, the location of such dock to be mutually agreed upon between the parties.

a) Office Area – 1,500 – 2,000 sq. ft.

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• Floor plan to be created by Tenant with total cost not to exceed $40 psf; provided, however, if, while Landlord is pricing out the work, it is determined the price exceeds $40 psf, Landlord shall provide notice to Tenant and Tenant shall have the right to revise its plans so as to bring the costs down to $40 psf. Standard warehouse office HVAC, lights and finishes. Tenant to provide telephone, security and data systems and equipment at Tenant’s sole cost and expense.

b) Warehouse Area- +/-125,000 sq. ft. initially (o be expanded as set forth in the Lease and Summary)

• Standard warehouse heat engineered at 55 degrees F inside while 0 degrees F outside. Standard warehouse lights at 25 foot candles – Landlord to incorporate lighting plan into Tenant’s racking plan.

• Tenant will pay for the heat only for the portion of the Premises being utilized by Tenant. In order to keep heating costs low, Landlord, at Landlord’s sole expense, will install a temporary poly curtain to separate the portion of the Premises actually being used by Tenant during the initial Term, which will significantly help towards minimizing tenant’s heating expense for the unused portion of the Premises. After the first year of the initial Term, Landlord, at Landlord’s sole expense shall move the temporary poly curtain so as to incorporate the approximately 50,000 additional square feet of the Premises that will be used by Tenant during the second year of the initial Term, and if Tenant exercises the first option, Landlord, at Landlord’s sole expense shall move the temporary poly curtain so as to incorporate the approximately 28,000 additional square feet of the Premises that will be used by Tenant thereafter. Furthermore, Landlord will not operate (or will zone accordingly) heat or lights within remaining unoccupied portion of the Premises until Tenant expands into the space.

• Landlord shall deliver 20 dock doors, of which, 6 will be equipped with mechanical dock levelers and shelter/seals. The location of the dock doors shall be as shown on plans provided to Landlord by Tenant. An allowance, representing market cost for portable dock plates at the remaining 14 dock doors, will be provided by Landlord. Dock seals/shelters to be provided at the 14 portable dock plate docks. Dock locks are not included but dock lights are.

Landlord shall warrant all building systems are in good working order and conform to current codes. Landlord shall warrant the building complies with current ADA standards at the time of Certificate of Occupancy.

Tenant agrees to comply with all governmental regulations regarding its manner of use.

Landlord and Tenant agree to reasonably cooperate with the other in laying out Tenant’s space plan, including but not limited to office floor plan, racking plan, lighting plan and shipping receiving plan.

c) Concrete pad to be installed by Landlord for Tenant for an outdoor picnic area and smoke area for Tenant’s employees, the size and location to be agreed upon between the parties, but in close proximity to the entrance to the Premises.

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Rider of Performance Penalties

No later than June 1, 2007, Landlord shall deliver the Premises to Tenant substantially completed, and at a minimum, adequate for racking and installation of Tenant’s other fixtures and equipment as well as setting up the office that will be in the Premises (including running of computer lines), which shall be deemed to include that any governmental approval that is needed to install the racking, Tenant’s other fixtures and equipment and set up the office (including running of computer lines) has been obtained by Landlord (Tenant and Landlord to cooperate with Tenant’s racking vendor to meet rack assemble schedule), and all drive aisles, parking areas, loading docks shall be complete so as to allow deliveries of Tenant’s fixtures and equipment (including the racking system) to be made to the Premises. Tenant acknowledges that the pouring of the cement floor by Landlord will occur in stages, and agrees that as long as the pouring of the cement and subsequent hardening and curing of same does not interfere with or delay Tenant’s installation of Tenant’s furniture and fixtures, including the racking system, so that the Tenant’s entire racking system can be fully installed and working in the Premises no later than June 20, 2007, then no liability will accrue against Landlord. Landlord shall deliver to Tenant not less than four (4) weeks prior to June 1, 2007, a schedule of when the cement is to be poured for the different portions of the Premises.

No later than July 1, 2007, all work required of Landlord under this Lease shall be fully completed so as to enable Tenant to begin shipping and receiving for Tenant’s entire chain of retail locations, which shall be deemed to include that any governmental approval that is needed to permit Tenant to operate in the Premises for the Permitted Use, including a certificate of occupancy, has been obtained by Landlord and delivered to Tenant.

July 1-July 15 free rent (worth +/-$25,520.00). Rent start on July 16, 2007, subject to rent credits to be taken for the market cost for portable dock plates referenced elsewhere in this Lease.

If the aforementioned deadlines for Landlord’s Work as described therein, shall not be completed as aforesaid, time being of the essence, Landlord shall abate the rent on a 2:1 ratio (two day abatement for every one day of late delivery) for every date late on delivering the space ready for racking by June 1, 2007, (so that the Tenant’s entire racking system can be fully installed and working in the Premises no later than June 20, 2007), and ready for shipping and receiving by July 1, 2007. Landlord will also pay to Tenant Tenant’s holdover rent at Tenant’s current location in Liberty Property Trust owned building in Commodore 322 Business Park – Tenant’s current rent estimated to be $5.47 psf gross on +/-60,000 sq. ft. If for any reason Landlord fails to timely deliver possession of the Premises to Tenant by August 1, 2007 adequate for racking as aforesaid (including all governmental approvals), and by September 1, 2007, to enable Tenant to begin shipping and receiving for Tenant’s entire chain of retail locations (including all governmental approvals), Tenant may, either (a) terminate this Lease at any time thereafter prior to delivery as aforesaid, or (b) not terminate this Lease, but to continue to abate Rent until the Premises are so delivered, and Landlord shall continue to be responsible for payment of Tenant’s holdover rent as aforesaid for such additional periods.

Landlord’s holdover rent reimbursement obligation would be as follows:

100% of the monthly rent for the month of June 2007.

150% times monthly for month of July, 2007.

200% times the monthly thereafter.

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Landlord shall commence and pursue Landlord’s Work to in a good and workmanlike manner and in compliance with all applicable codes, laws, regulations and ordinances. Landlord shall provide Tenant with at least fifteen (15) days prior notice of the actual Commencement Date.

Landlord shall complete all punchlist items within five (5) days. If Landlord fails to complete such punchlist items within such five (5) day period, Tenant may complete same and Landlord shall reimburse Tenant within ten (10) days of receipt of an invoice. If Landlord fails to pay Tenant within such ten (10) day period, such unpaid amount shall accrue interest at a rate equal to the lesser of (i) twelve percent (12%) per annum, or (ii) the highest rate permitted by law, (the “Interest Rate”) until such time as the amount due is paid, and Tenant may deduct such amount (together with interest at the “Interest rate”) from any and all Rent thereafter becoming due to Landlord until the amount due Tenant is fully recovered.

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RENT SCHEDULE

	Monthly Rent
Initial Term:
6-01-07 - 6-30-07		Free
7-01-07 - 7-15-07		Free
7-16-07 - 7-31-07	$	26,344.00
8-01-07 - 5-31-08	$	51,041.67
6-01-08 - 5-31-09	$	74,666.67
First Renewal Term:
6-01-09 - 5-31-10	$	89,467.00
6-01-10 - 5-31-11	$	89,467.00
6-01-11 - 5-31-12	$	89,467.00
Second Renewal Term:
6-01-12 - 5-31-13	$	95,431.47
6-01-13 - 5-31-14	$	95,431.47
6-01-14 - 5-31-15	$	95,431.47

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Initials:     Landlord Tenant DS

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Landlord shall be obligated to obtain a fully executed Subordination, Non-Disturbance and Attornment Agreement substantially in the form attached from Landlord’s lender and Tenant agrees to reasonably negotiate any revisions requested by Landlord’s lender.

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Initials:     Landlord Tenant DS

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated             , 2006 (the “Agreement”), between WACHOVIA BANK, NATIONAL ASSOCIATION (“Bank”), a national banking association, having an office at 123 South Broad Street, Philadelphia, Pennsylvania 19109-1199 and                                 , a                     (“Tenant”).

BACKGROUND

A. As security for a loan made by Bank to                     (“Landlord”) Landlord gave Bank (the “First Mortgage”) Mortgage shall be referred to as the “Security Instrument”), constituting a first lien against the Property described on Schedule “A” attached hereto (the “Property”).

B. Tenant has entered into the Lease dated                     (the “Lease”) covering that specific portion of the Property as identified on Exhibit “    ” of the Lease (the “Leased Premises”).

C. Bank has requested that the Lease be subordinated to the lien of the Security Instrument and that Tenant agree to attorn to the purchaser of the Property at foreclosure of the Security Instrument in the event of such foreclosure, or to Bank prior to foreclosure in the event Bank elects to collect the rents and other sums due and becoming due under the Lease, and Tenant is willing to so attorn, if Bank will recognize Tenant’s rights under the Lease, on the terms and conditions hereinafter provided.

AGREEMENT

NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants herein contained, and intending to be legally bound, hereby agree as follows:

1. SUBORDINATION OF LEASE.

The Lease is and shall be subject and subordinate to the lien of the Security Instrument and to all renewals, modifications, consolidations, replacements and extensions thereof, to the full extent of the principal amount and other sums secured thereby and interest thereon, as if the Lease had been executed and delivered after the execution, delivery and recording of the Security Instrument.

2. ATTORNMENT.

Tenant agrees that it will attorn to and recognize: (i) Bank, whether as mortgagee in possession or otherwise; (ii) any purchaser at a foreclosure sale under the Security Instrument; (iii) any transferee who acquires possession of or title to the Property, whether by deed in lieu of foreclosure or other means; and (iv) the successors and assigns of such purchasers and/or transferees (each of the foregoing parties, a “Successor”), as its landlord for the unexpired balance (and any extensions, if exercised) of the term of the Lease upon the same terms and conditions as set forth in the Lease. Such attornment shall be effective and self-operative without the execution of any further instruments by any party hereto; provided, however, that Tenant will, upon request by Bank or any Successor, execute a written agreement attorning to Bank or such Successor, affirming Tenant’s obligations under the Lease, and agreeing to pay all rent and other sums due or to become due to Bank or such Successor.

3. NON-DISTURBANCE.

So long as Tenant complies with Tenant’s obligations under this Agreement and is not in default under any of the terms, covenants or conditions of the Lease, after applicable notice and cure periods, Bank will not disturb Tenant’s use, possession and enjoyment of the Leased Premises nor will the

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leasehold estate of Tenant be affected or Tenant’s rights under the Lease be impaired, in any foreclosure action, sale under a power of sale, transfer in lieu of the foregoing, or the exercise of any other remedy pursuant to the Security Instrument.

4. ASSIGNMENT OF LEASES.

Tenant acknowledges that it has been advised that Landlord is assigning the Lease and the rents thereunder to Bank pursuant to an Absolute Assignment of Leases and Rents from Landlord to Bank (the “Assignment”). Tenant agrees that if Bank, pursuant to the Assignment, and whether or not it becomes a mortgagee in possession, shall give notice to Tenant that Bank has elected to require Tenant to pay to Bank the rent and other charges payable by Tenant under the Lease, Tenant shall, until Bank shall have cancelled such election, be similarly bound to Bank and shall similarly attorn to Bank and shall thereafter pay to Bank all rent and other sums payable under the Lease. Any such payment shall be made notwithstanding any right of defense or counterclaim which Tenant may have against Landlord, or any right to terminate the Lease. TENANT REQUIRE’S LANDLORD’S ACKNOWLEDGMENT THAT IT AGREES TO THE TERMS OF THIS SECTION 4.

5. LIMITATION OF LIABILITY.

5.1. In the event that Bank succeeds to the interest of Landlord under the Lease, or title to the Property, then Bank and any Successor shall assume and be bound by the obligations of Landlord under the Lease which accrue from and after such party’s succession to Landlord’s interest in the Leased Premises, but Bank and such Successor shall not be: (i) liable for any act or omission of any prior landlord (including Landlord); (ii) liable for the retention, application or return of any security deposit to the extent not paid over to Bank; (iii) subject to any defenses which Tenant might have against any prior landlord (including Landlord), (iv) bound by any rent or additional rent which Tenant might have paid for more than the current month to any prior landlord (including Landlord); (v) intentionally omitted; or (vi) obligated to cure any defaults of any prior landlord under the Lease which occurred prior to the date on which Bank or such Successor succeeded to Landlord’s interest under the Lease, unless such default continues to exist while the Bank or such successor is landlord. Nothing in this section shall be deemed to waive any of Tenant’s rights and remedies against any prior landlord.

5.2. Tenant agrees that any person or entity which at any time hereafter becomes the landlord under the Lease, including without limitation, Bank or any Successor, shall be liable only for the performance of the obligations of the landlord under the Lease which arise during the period of its or their ownership of the Leased Premises and shall not be liable for any obligations of the landlord under the Lease which arise prior to or subsequent to such ownership. Tenant further agrees that any such liability shall be limited to the interest of Bank or such Successor in the Property, and Tenant shall not be able to enforce any such liability against any other assets of Bank or such Successor.

6. RIGHT TO CURE DEFAULTS.

Tenant agrees to give notice to Bank of any default by Landlord under the Lease, specifying the nature of such default, and thereupon Bank shall have the right (but not the obligation) to cure such default, and (if Tenant is entitled to terminate the Lease or abate any rent payable thereunder by reason of such default) Tenant shall not terminate the Lease or abate the rent payable thereunder by reason of such default unless and until it has afforded Bank thirty (30) days after Bank’s receipt of such notice to cure such default and a reasonable period of time in addition thereto (i) if the circumstances are such that said default cannot reasonably be cured within said thirty (30) day period and Bank has commenced and is diligently pursuing such cure, or (ii) during and after any litigation action including a foreclosure, bankruptcy, possessory action or a combination thereof. It is specifically agreed that Tenant shall not require Bank to cure any default which is not susceptible of cure by Bank.

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7. TENANT’S AGREEMENTS.

Tenant hereby covenants and agrees that: (i) Tenant shall not pay any rent or additional rent under the Lease more than one month in advance; (ii) Tenant shall have no right to appear in any foreclosure action under the Security Instrument; (iii) Tenant shall not cancel or terminate the Lease without Bank’s prior written consent (except as permitted by the terms of the Lease), and any attempted cancellation or termination of the Lease without such consent shall be of no force or effect as to Bank; (iv) Tenant shall not voluntarily subordinate the Lease to any lien or encumbrance (other than the Security Instrument) without Bank’s prior written consent; (v) Tenant shall not assign the Lease or sublet all or any portion of the Leased Premises (except as permitted by the terms of the Lease) without Bank’s prior written consent; (vi) this Agreement satisfies any requirement, in the Lease relating to the granting of a non-disturbance agreement; and (vii) Tenant shall deliver to Bank, from time to time and within twenty (20) days from the date of request, a written statement in form and substance satisfactory to Bank certifying to certain matters relating to the Lease.

8. MISCELLANEOUS.

8.1. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. Nothing contained in this Agreement shall in any way affect or impair the lien created by the Security Instrument, except as specifically set forth herein.

8.2. Modifications. This Agreement may not be supplemented, amended or modified unless set forth in writing and signed by the parties hereto.

8.3. Notices. All notices and communications under this Agreement shall be in writing and shall be given by either (a) hand delivery, (b) first class mail (postage prepaid), or (c) reliable overnight commercial courier (charges prepaid) to the addresses listed in this Agreement. Notice shall be deemed to have been given and received: (i) if by hand delivery, upon delivery; (ii) if by mail, three (3) calendar days after the date first deposited in the United States mail; and (iii) if by overnight courier, on the date scheduled for delivery. A party may change its address by giving written notice to the other party as specified herein.

8.4. Governing Law. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have duly executed and delivered this Subordination, Non-Disturbance and Attornment Agreement as of the day and year first above written.

WITNESS:	TENANT:
WITNESS/ATTEST:
	By:
Name:	Name:
Title:	Title:

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	BANK:
ATTEST:	WACHOVIA BANK, NATIONAL ASSOCIATION
	By:
Name:	Name:
Title:	Title:
[Corporate Seal]

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State of Delaware:

County of                     :

I certify that before me appeared this day,                    , a person known to me, who after being sworn said he/she is                                         , of                    and is duly authorized to act on behalf of said                    , that the seal affixed to the foregoing instrument is the seal of said                    and that said Instrument was signed and sealed by him/her on behalf of said                    , and being informed of the contents, thereof, acknowledged execution of the foregoing instrument on behalf of said                    .

Witness my hand and official seal, this            day of                    :

	Notary Public
	Notary Seal
	(Printed Name of Notary)
My Commission Expires:

State of Delaware:

County of                      :

I certify that before me appeared this day,                    , a person known to me, who after being sworn said he/she is                    of Wachovia Bank, National Association, a national banking association, and is duly authorized to act on behalf of said Bank, that the seal affixed to the foregoing instrument is the seal of said Bank and that said instrument was signed and sealed by him/her on behalf of said Bank, and being informed of the contents thereof, acknowledged execution of the foregoing instrument on behalf of said Bank.

Witness my hand and official seal, this     day of                    .

	Notary Public
	Notary Seal
	(Printed Name of Notary)
My Commission Expires:

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SCHEDULE A

DESCRIPTION OF PROPERTY

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COMMENCEMENT CERTIFICATE

This Commencement Certificate is dated this 11 day of September, 2007, by and between Twin Spans Business Park, LLC (“Landlord”) and Five Below, Inc. (“Tenant”).

WHEREAS, pursuant to a Lease Agreement dated April 2, 2007, (“Lease”) Landlord leased to Tenant and Tenant leased from Landlord the premises commonly known as 350 Anchor Mill Road, Twin Spans Business Park, New Castle, Delaware, 19720 (the “Premises”).

WHEREAS, Tenant agrees to reimburse Landlord for fifty percent of certain improvements to the Premises, in particular, the Fire Protection System, at a total cost of $35,525.00. Tenant will reimburse Landlord $17,762.50 as additional rent in the Initial Term.

1. The Commencement Date of the Lease is July 2, 2007, and the Lease shall continue as provided for therein up to and including June 30, 2009.

2. Base Rent and any other additional charges due under the terms of the Lease shall commence on August 1, 2007 pursuant to the rent schedule attached hereto and made a part hereof, and subject to the rent credit set forth in paragraph 4 below.

3. Tenant hereby acknowledges that, to the best of Tenant’s knowledge as of the date hereof, and subject to outstanding punchlist items, addressing the lack of room for trailers to leave the dock doors without having to drive on to the unpaved area to exit the property, and latent defects, if any, the Premises are suitable for the purposes for which the same are leased, and that Landlord has fully complied with Landlord’s delivery obligations contained in the lease. The Lease and all of the terms, covenants, conditions and agreements thereof are hereby in all respects ratified, confirmed and approved. Tenant and Landlord each

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hereby affirm that, to the best of their knowledge, on the date hereof no breach or default by either party has occurred, and that the Lease, and all of its terms, conditions, covenants, agreements and provisions are in full force and effect with no defenses or offsets thereto, and Tenant hereby releases Landlord of and from all liabilities, claims, controversies, causes of action and other matters in connection with the establishment of the Commencement Date. There are no penalties due to Tenant as of the date hereof.

4. Landlord will issue credit to Tenant for fourteen (14) 72” aluminum dock plates for a total credit of $12,830.00.

TENANT: Five Below, Inc.
	By:
LANDLORD: Twin Spans Business Park, LLC
	By:

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Five Below, Inc.

RENT SCHEDULE

Initial Term:	Monthly Rent		Additional Rent		Total Rent
7-02-07 - 7-31-07		Free
8-01-07 - 6-30-08	$	51,041.67	$	772.28	$	51,813.95
7-01-08 - 6-30-09	$	74,666.67	$	772.28	$	75,438.95
First Renewal Term:
7-01-09 - 6-30-10	$	89,467.00
7-01-10 - 6-30-11	$	89,467.00
7-01-11 - 6-30-12	$	89,467.00
Second Renewal Term:
7-01-12 - 6-30-13	$	95,431.47
7-01-13 - 6-30-14	$	95,431.47
7-01-14 - 6-30-15	$	95,431.47

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ADDENDUM TO LEASE AGREEMENT

This addendum:dated 10/8/07 shall be attached to and made part of the Lease Agreement between Twin Spans Business Park, LLC (“Landlord”) and Five Below, Inc. (“Tenant”) dated April 1, 2007 for the premises commonly known as 350 Anchor Mill Road, Suite 2, Twin Spans Business Park, New Castle, DE 19720, is made upon the following terms and conditions:

Whereas the parties hereto desire to amend said Lease Agreement for the purpose of leasing an additional +/- 10,000 square feet at 350 Anchor Mill Road at $4.90 per SF, Gross. The additional monthly rent is $4,083.33. The term of the lease for the additional +/- 10,000 sq ft shall be on a month to month basis with a commencement date of 10/9/07.

Landlord or Tenant may terminate this Lease Addendum with thirty (30) days prior notice.

Except as hereinabove specifically provided to the contrary, all of the terms, covenants, conditions and agreements in the Lease Agreement dated April 1, 2007 remain in full force and effect, and all subsequent amendments made to and including this date are hereby acknowledged, ratified and confirmed by the parties hereto.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written.

Witness:
By:		Twin Spans Business Park, LLC
	By:	Thomas J. Hanna, Authorized Agent
By:		Five Below, Inc.
	By:	Kenneth R. Bull

ADDENDUM II TO LEASE AGREEMENT

This Addendum II dated 10/31/08, 2008 shall be attached to and made part of the Lease Agreement between Twin Spans Business Park, LLC (“Landlord”) and Five Below, Inc. (“Tenant”) dated April 1,2007 for the premises commonly known as 350 Anchor Mill Road, Suite 2, Twin Spans Business Park, New Castle, DE 19720, is made upon the following terms and conditions:

Whereas the parties hereto desire to amend said Lease Agreement as a result of the Tenant’s desire to extend the Lease and to expand Tenant’s Leased Premises. The renewal term will be effective July 1, 2009 through March 31, 2010. Tenant’s space will increase to 204,496 square feet effective July 1, 2009. The Rent will be $82,066.84 per month, effective July 1,2009.

Monthly Rent Schedule

7-1-09 – 3-31-10 $82,066.84

Except as hereinabove specifically provided to the contrary, all of the terms, covenants, conditions and agreements in the Lease Agreement dated April 1, 2007 remain in full force and effect, and all subsequent amendments made to and including this date are hereby-acknowledged, ratified and confirmed by the parties hereto.

There are no options to renew, implied or otherwise, beyond March 31, 2010.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written.

Witness:
By:	Twin Spans Business Park, LLC
	By:	Thomas J. Hanna
By:	Five Below, Inc.
	By:	CHAIRMAN

ADDENDUM III TO LEASE AGREEMENT

This Addendum III dated August 10, 2009 shall be attached to and made part of that certain Lease Agreement (the “Lease Agreement”) between Twin Spans Business Park, LLC (“Landlord”) and Five Below, Inc. (“Tenant”) dated April 1, 2007 for the premises commonly known as 350 Anchor Mill Road, Suite 2, Twin Spans Business Park, New Castle, DE 19720. In consideration of the mutual entry into this Addendum III by both Landlord and Tenant, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, this Addendum III is made upon the following terms and conditions:

Landlord and Tenant hereby desire to amend the Lease Agreement to extend the term of the Lease Agreement from April 1, 2010 to June 30, 2010 (the “First Extension”). The gross monthly Rent shall remain at the current rate in the Lease Agreement of $82,066.84.

If at the end of the First Extension, Tenant desires to further extend the term of the Lease Agreement, Tenant shall have the option to so extend the term of the Lease Agreement from July 1, 2010 through December 31, 2010 at the current gross monthly Rent of $82,066.84 (the “Second Extension”); provided, however that Tenant must provide Landlord with written notice of Tenant’s desire to exercise the Second Extension on or before June 1, 2010.

Except as hereinabove specifically provided to the contrary, all of the terms, covenants, conditions and agreements in the Lease Agreement dated April 1, 2007 remain in full force and effect, and all subsequent amendments and Addendums made to and including this date are hereby acknowledged, ratified and confirmed by the parties hereto.

There are no options to renew, implied or otherwise, beyond December 31, 2010.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written.

Witness:
By: MARGE BILLINGSLEY	Twin Spans Business Park, LLC
	By:	Thomas J. Hanna, Authorized Agent
By: GENE ROSADINO	Five Below, Inc.
	By:	KENNETH R. BULL

ADDENDUM IV TO LEASE AGREEMENT

This Addendum IV dated August 10, 2009 shall be attached to and made part of that certain Lease Agreement (the “Lease Agreement”) between Twin Spans Business Park, LLC (“Landlord”) and Five Below, Inc. (“Tenant”) dated April 1, 2007 for the premises commonly known as 350 Anchor Mill Road, Suite 2, Twin Spans Business Park, New Castle, DE 19720. In consideration of the mutual entry into this Addendum IV by both Landlord and Tenant, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, this Addendum IV is made upon the following terms and conditions:

Whereas the parties hereto desire to amend said lease agreement for the purpose of leasing +/- 20,000-40,000 square feet at 499 Ships Landing Way, Twin Spans Business Park. The term of the lease for the additional +/- 20,000-40,000 sq ft shall be 20,000 sq ft from September 15, 2009 – October 14, 2009 at a rental rate of $7,350 per month and 40,000 sq ft from October 15, 2009 to December 15, 2009 at a rental rate of $14,700 per month.

Tenant shall pay for utility charges.

Except as hereinabove specifically provided to the contrary, all of the terms, covenants, conditions and agreements in the Lease Agreement dated April 1, 2007 remain in full force and effect, and all subsequent amendments made to and including this date are hereby acknowledged, ratified and confirmed by the parties hereto.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written.

Witness:
By: MARGE BILLINGSLEY		Twin Spans Business Park, LLC
	By:	Thomas J. Hanna, Authorized Agent
By: GENE ROSADINO		Five Below, Inc.
	By:	KENNETH R. BULL

LEASE MODIFICATION AGREEMENT

THIS LEASE MODIFICATION AGREEMENT (“Agreement”), made this 3^rd day of November, 2009 by and between TWIN SPANS BUSINESS PARK, LLC (“Landlord”) and FIVE BELOW, INC. (“Tenant”).

W I T N E S S E T H:

R-l. Landlord and Tenant entered into a Lease Agreement dated April 1, 2007 (the “Original Lease”), as subsequently amended by that certain Addendum to Lease Agreement dated October 8, 2007, by that certain Addendum II to Lease Agreement dated October 31, 2008, by that certain Addendum III to Lease Agreement dated August 10, 2009, and by that certain Addendum IV to Lease Agreement dated August 8, 2009 (collectively the “Lease”) pursuant to which Tenant leased from Landlord approximately 204,496 square feet (the “Original Premises”) in a building (the “Building”) located at the Twin Spans Business Park, New Castle, Delaware, with an address of 350 Anchor Mill Road – Twin Spans VII. As used in this Amendment, the term “Lease” shall mean the “Lease, as amended hereby,” unless there is an express reference to the Original Lease or the context requires it to mean the Original Lease; and

R-2. The Term of the Lease is currently set to expire June 30, 2010, however Tenant has the right to extend the Term through January 31, 2011.

R-3. Tenant now desires to lease from Landlord the remainder of the Building, comprising approximately 216,795 square feet of additional space (“Adjacent Premises”) as shown on the Site Plan attached hereto as Exhibit A, in accordance with the following terms and conditions.

R-4. The parties desire to amend said Lease in certain respects as hereinafter provided.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby reciprocally acknowledged, the parties agree as set forth below.

1. Recitals. Each of the foregoing recitals and representations form a material part of this Agreement and are incorporated herein by this reference.

2. Expansion of Original Premises. Commencing on the date upon which the Landlord delivers the Adjacent Premises to Tenant (hereinafter, the “Effective Date”), Landlord shall and does hereby demise and lease unto Tenant, and Tenant hereby leases and takes from Landlord, the Adjacent Premises for the Term at the rental and upon the covenants and conditions hereinafter set forth. As of the Effective Date, the Original Premises shall be expanded to include the Adjacent Premises, and all references in the Lease to the “Premises” shall include both the Original Premises and the Adjacent Premises both of which shall be referred to herein as the “Expanded Premises.” Upon delivery of the Adjacent Premises by Landlord, the Premises shall be deemed to be 421,291 square feet. It is understood and agreed upon by and between Landlord and Tenant that all of the terms and conditions of the Lease shall apply to the Adjacent Premises as though the Adjacent Premises were originally a portion of the Premises as defined in the Lease.

3. Floor Area. From and after the Effective Date, the Floor Area of the Premises shall be deemed to be 421,291 square feet.

4. Lease Summary. Upon the Effective Date, the Lease Summary Page attached to the Original Lease shall be deleted in its entirety and replaced with the Lease Summary Page attached to this Agreement.

5. Landlord’s Work. Landlord covenants to perform the work set form in the Office Plan attached to this Agreement as Exhibit B and the Building Specifications attached to this Agreement as Exhibit C (collectively, “Landlord’s Work”). All costs and expenses incurred in performing Landlord’s Work, including all costs and expenses associated with architectural, engineering, space planning and permits required for Landlord to perform Landlord’s Work (in both the Original and Adjacent Premises) and deliver the Adjacent Premises to Tenant in the condition required under this Agreement shall be borne directly by Landlord. Landlord shall perform Landlord’s Work in accordance with the Plans and Specifications prepared by Landlord (“Landlord’s Plans”) and in accordance with law, and shall perform such work in good and workmanlike condition using new materials.

During the pendency of Landlord’s Work, Landlord shall not unreasonably interfere with Tenant’s operations in the Original Premises.

6. Plans and Specifications for Landlord’s Work – (a) Within thirty (30) days after the date that this Agreement is executed, Landlord shall, at its sole cost and expense, prepare and provide Tenant, for Tenant’s approval, four (4) copies of Landlord’s Plans on a CD-ROM or DVD-ROM in any Autocad format, showing in detail all interior and exterior alterations and improvements that Landlord will make to perform Landlord’s Work in accordance with the Office Plan attached to this Agreement as Exhibit B and the Building Specifications attached to this Agreement as Exhibit C. Landlord’s Plans shall be prepared such that Landlord’s Work, if completed in accordance with Landlord’s Plans, shall be in accordance with all laws. Landlord’s Plans shall also be in accordance with all requirements of all applicable governmental authorities for submission to obtain a building permit.

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(b) Tenant shall review Landlord’s Plans and approve or disapprove of the same within ten (10) business days after Tenant’s receipt thereof from Landlord. If Tenant disapproves of any part of Landlord’s Plans, Tenant shall promptly notify Landlord thereof and shall indicate in reasonable detail to Landlord the nature of such revisions as must be made for them to be approved. Landlord shall make such modifications within five (5) business days after receipt of Tenant’s comments, and Tenant, within five (5) business days of receipt, shall either approve or disapprove the revised Landlord’s Plans. The aforesaid procedure for submitting and responding shall continue until Landlord’s Plans are approved. The parties agree to use good faith efforts to resolve any differences.

7. Landlord Construction Timeline – (a) Landlord shall perform Landlord’s Work in accordance with the following schedule:

Landlord represents and warrants to Tenant that on or before execution of this Agreement, Landlord will enter into a relocation agreement (the “Zenith Relocation Agreement”) with the existing tenant of the Adjacent Premises (“Zenith”), which agreement shall require Zenith to vacate the Adjacent Premises no later than February 11, 2010, a copy of which shall be attached to this Agreement as Exhibit D;

By a date no later than March 1, 2010, Landlord shall deliver the Adjacent Premises to Tenant with all of Landlord’s Work fully completed and Landlord shall deliver to Tenant’s temporary Certificate of Occupancy verifying completion of Landlord’s Work so as to enable Tenant to commence early occupancy and material handling installation in both the Original Premises and Adjacent Premises.

(b) Notwithstanding anything to the contrary set forth in the Lease or this Agreement, if for any reason Landlord fails to deliver to Tenant a copy of fully executed Zenith Relocation Agreement on or before the execution of this Agreement, then in such event, Tenant shall have the right, within thirty (30) days thereafter, to terminate this Agreement upon written notice to Landlord, and in such event, the terms and conditions of the Original Lease, as amended by the four (4) Addendums referenced in Recital R-1 of this Agreement shall remain in full force and effect.

(c) Notwithstanding anything to the contrary set forth in the Lease or this Agreement or the Zenith Relocation Agreement, if for any reason Landlord has not commenced raising the roof of the location into which Zenith is to be relocated by January 1, 2010, Tenant shall have the right, within thirty (30) days thereafter, to terminate this Agreement upon written notice to Landlord, and in such event, the terms and conditions of the Original Lease, as amended by the four (4) Addendums referenced in Recital R-1 of this Agreement shall remain in full force and effect.

(d) Notwithstanding anything to the contrary set forth in the Lease or this Agreement or the Zenith Relocation Agreement, if for any reason Landlord’s Work as set forth in this Agreement is not complete and the Adjacent Premises is not delivered to Tenant (including delivery by Landlord of a temporary Certificate of Occupancy verifying completion of Landlord’s Work) by March 1, 2010. Tenant shall be entitled to liquidated damages of two (2) days of free Base Rent for each day (including March 1, 2010) thereafter that the Landlord’s Work as set forth in this Agreement is not complete and the Adjacent Premises is not delivered to Tenant (including delivery by Landlord of a temporary Certificate of Occupancy verifying completion Landlord’s Work). Tenants shall be entitled to commence such abatement on the Commencement Date . If Tenant terminates this Agreement in accordance with Section 7(e) below, Tenant shall not be entitled to the liquidated damages referenced in this Section 7(d).

(e) Notwithstanding anything to the contrary set forth in the Lease or this Agreement or the Zenith Relocation Agreement, if for any reason Landlord’s Work as set forth in this Agreement is not complete and the Adjacent Premises is not delivered to Tenant (including delivery by Landlord of a temporary Certificate of Occupancy verifying completion of Landlord’s Work) by April 1, 2010. Tenant shall have the right to terminate this Agreement upon written notice to Landlord given within thirty (30) days thereafter, and in such event, the terms and conditions of the Original Lease, as amended by the four (4) Addendums referenced in Recital R-1 of this Agreement shall remain in full force and effect.

(f) Notwithstanding anything to the contrary set forth in the Lease or this Agreement or the Zenith Relocation Agreement, if for any reason Landlord’s Work is not completed in accordance with Landlord’s Plans and/or Landlord’s Work is not completed within the scheduled construction timeline, Tenant, upon written notice to Landlord given within thirty (30) days of any breach, shall have the right, but not the obligation to take over performance of Landlord’s Work (or portions of Landlord’s Work at the discretion of Tenant) and perform same. Landlord shall reimburse Tenant for all of Tenant’s reasonable costs incurred as a result thereof within fifteen (15) days of Tenant’s presentation to Landlord of an invoice setting forth the portion of Landlord’s Work performed by Tenant. Should Landlord fail to reimburse Tenant within such fifteen (15) day period, Tenant may deduct such amount (together with interest at the Interest Rate) from any and all Base Rent thereafter becoming due to Landlord until the amount due Tenant shall be fully recovered.

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(g) Tenant shall have the right to inspect Landlord’s Work at all times. Tenant shall use good faith efforts to minimize interference in the performance by Landlord of Landlord’s Work.

(h) Landlord, as part of Landlord’s Work, shall obtain and deliver to Tenant a final Certificate of Occupancy as soon as possible upon substantial completion of the material handling installation in both the Original Premises and Adjacent Premises by Tenant. Tenant shall reasonably cooperate with Landlord in obtaining the final Certificate of Occupancy.

8. Tenant’s Work. Tenant shall be responsible for the design, permitting and construction of Tenant’s furniture, fixtures and equipment inside the Premises. Tenant may enter the Adjacent Premises while Landlord is performing Landlord’s Work to install its fixtures and equipment, provided such entry or installation does not unreasonably interfere with or delay the orderly construction and completion of Landlord’ s Work by Landlord. Such early entry shall not constitute acceptance of possession of the Adjacent Premises by Tenant. Tenant shall coordinate the installation of any fixtures or equipment with Landlord’s general contractor.

9. Signage. Section 8.02 of the Original Lease is hereby modified as follows:

“Tenant shall also be permitted to place signage on the glass entry of the Premises, the monument and park directories. Such signage shall be installed in accordance with local signage code. Landlord agrees to be responsible for the costs of signage, not to exceed One Thousand and 00/100 Dollars ($1,000.00) in total.”

10. Broker. Landlord agrees to pay a commission to Cushman & Wakefield, Inc., (“Broker”) pursuant to the terms of a separate agreement. Landlord shall indemnify and hold Tenant harmless against any claim (including reasonable attorneys’ fees) for, any commission due the Broker or any other entity claiming a commission or fee with respect to this Agreement arising out of its relationship with Landlord. Tenant shall indemnify and hold Landlord harmless against any claim (including reasonable attorneys’ fees) for, any commission due any entity claiming a commission or fee with respect to this Agreement arising out of its relationship with Tenant. In the event that Landlord fails to fully pay the Broker within sixty (60) days after the date for payment set forth in such separate agreement, then, upon notice from the Broker to Tenant, Tenant shall have the right to pay such commission to Broker and abate such payment against Base Rent thereafter becoming due to Landlord until the amount due Broker is fully paid. Landlord hereby releases Tenant from liability for any such Base Rent payments made by Tenant to the Broker pursuant to Broker’s request, and agrees that all such payments shall be credited to Tenant under the Lease as amended by this Agreement as if such payments were made directly to Landlord.

11. Subordination and Non-Disturbance. Within thirty (30) days of mutual execution of this Agreement, Landlord shall deliver to Tenant the written consent of ING USA Annuity and Life Insurance Company (“Mortgagee”) to the entry into this Agreement by Landlord and Tenant and the terms and conditions contained herein. Notwithstanding anything to the contrary set forth in the Lease or this Agreement, if for any reason Landlord has not delivered to Tenant the written consent of Mortgagee within such thirty (30) day period, Tenant shall have the right to terminate this Agreement within thirty (30) days thereafter upon written notice to Landlord, and in such event, the terms and conditions of the Original Lease, as amended by the four (4) Addendums referenced in Recital R-l of this Agreement shall remain in full force and effect.

12. Warehouse Sale. Tenant shall have the right to conduct a Warehouse Sale at the Premises from time to time, not to exceed one (1) sale every twelve (12) calendar month period, provided that at least thirty (30) days written notice is given to Landlord by Tenant. Any such sale shall be in accordance with all rules, regulations, laws and ordinances.

13 Hazardous Materials. The Landlord’s indemnification contained in Section 30.03 of the Lease shall be expanded to include the Adjacent Premises, and Landlord further represents and warrants to Tenant that as of the date of this Agreement and upon completion of Landlord’s Work and delivery of the Adjacent Premises to Tenant, the Adjacent Premises is and shall remain free of any and all Hazardous Materials.

14. Defined Terms. Terms that are defined in the Lease shall have the same meanings when such terms are used in this Agreement.

15. Time is of the Essence. Time is of the essence with respect to each and every obligation arising under this Agreement and the Lease.

16. Confirmation of Terms. All of the terms, covenants and conditions of the Lease, except as are herein modified and amended, shall remain in full force and effect and are hereby adopted and reaffirmed by the parties hereto. If there is a conflict between the terms of the Original Lease as modified by the four (4) Addendums referenced above and this Agreement, the terms of this Agreement shall control.

17. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same document, and when each of the parties hereto has executed one or more of such counterparts and delivered a signed counterpart of the signature page to the other, this Agreement shall be deemed fully executed and effective in accordance with its terms.

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THIS LEASE MODIFICATION AGREEMENT shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, devisees, legatees, successors and assigns.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have set their hands and seals the day and date set forth above.

WITNESS:		LANDLORD: TWIN SPANS BUSINESS PARK, LLC
By:		By:		(SEAL)
Printed Name:	[ILLEGIBLE]	Name:	Thomas J. Hanna
Title:		Title:	Authorized Agent
WITNESS:		TENANT: FIVE BELOW, INC., a Pennsylvania corporation
By:		By:		(SEAL)
Printed Name:	KENNETH R. BULL	Printed Name:	THOMAS VELLIOS
Title:	SENIOR VP & SECRETARY	Title:	CEO

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LEASE SUMMARY PAGE

1 . Landlord:	Twin Spans Business Park LLC
	29 E. Commons Boulevard. Suite 100 New Castle, Delaware 19720
2. Tenant:	Five Below, Inc.
	1616 Walnut Street Suite 400 Philadelphia, PA 19103 ATTN: Real Estate Department
with a copy to:	Five Below, Inc. 1616 Walnut Street Suite 400 Philadelphia, PA 19103 Attn: Lease Administration
with another copy to:	Deborah Harry & Associates 47 Churchill Drive Elverson, PA 19520 Attn: Deborah Harry, President
3 . Property:	350 Anchor Mill Road (Twin Spans VII) - New Castle, Delawarel9720
4. Premises: Unit No.:	Size 421,291 sq.ft.
5. Building:	350 Anchor Mill Road - Twin Spans VII Twin Spans Business Park County: New Castle State: DE

6. Permitted Parking Area (if any): A minimum of thirty (30) trailer spaces shall be exclusive to Tenant as shown on the Site Plan. 150 car parking spaces, all for the exclusive use of Tenant. Landlord agrees that upon the request of Tenant, it shall mark Tenant’s exclusive spaces to prevent the use of same by others.

7. Outside Storage Area (if any): None

8. Amended Lease Term: 72 full calendar months.

9. Commencement Date: May 1, 2010

10. Expiration Date: April 30, 2016

11. Base Rent: See Attached Rent Schedule

12. Property Operating Charge is: Included in Base Rent

x Real Estate Taxes

x Insurance

x Common Area Maint/Operating Expenses

13. Base Rent Escalator: See Attached Rent Schedule

14. Date(s) of Escalation: See Attached Rent Schedule

15. Renewal Notice Period: Two Hundred Seventy (270) Days

16. Late Charge: Five percent (5%) per month administrative fee plus applicable interest charges after thirty (30) days late at the Interest Rate, as defined in the Lease.

17. Renewal: Two (2) renewal term(s) of Five (5) years each.

18. Renewal Rent: Per attached Rent Schedule

19. Intentionally Omitted.

20. Permitted Use: Storage and distribution facility and uses incidental thereto, including office, administration and warehouse uses:

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21. Broker representing Tenant: Cushman & Wakefield, Inc. per separate agreement

22. Riders and Addenda; Rent Schedule, Zenith Termination Agreement (Exhibit D), Site Plan (Exhibit A), Space Plan. Office Plan (Exhibit B). Building Specifications (Exhibit C). Consent of Mortgagee to the Agreement

23. Security Deposit: None

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RENT SCHEDULE

Date	Occupancy (SF)	Base Rent (PSF/Gross)		Total Monthly Rental		Total Annual Rental
5/1/2010 - 4/30/2011	421,296	$	2.95	$	103,569	$	1,242,827
5/1/2011 - 4/30/2011	421,296	$	3.95	$	138,557	$	1,662,684
5/1/2012 - 4/30/2013	421,296	$	4.09	$	143,472	$	1,721,665
5/1/2013 - 4/30/2014	421,296	$	4.46	$	156,721	$	1,880,647
5/1/2014 - 4/30/2015	421,296	$	4.96	$	174,136	$	2,089,628
5/1/2015 - 4/30/2016	421,296	$	5.11	$	179,402	$	2,152,823

The above stated gross rents are inclusive of all Taxes, Insurance, Common Area Maintenance/Operating Expenses or any other Property Operating Charges and are not subject to any other change. Tenant shall pay the cost of utilities consumed in the Premises, which shall be metered separately and billed directly to the Tenant.

Base Rent during the First Renewal Period:

Date	Occupancy (SF)	Base Rent (PSF/Gross)		Total Monthly Rental		Total Annual Rental
5/1/2016 - 4/30/201 7	421,296	$	5.25	$	184,335	$	2,212,025
5/1/2017 - 4/30/2018	421,296	$	5.39	$	189,405	$	2,272,856
5/1/2018 - 4/30/2019	421,296	$	5.54	$	194,613	$	2,335,359
5/1/2019 - 4/30/2020	421,296	$	5.70	$	199,965	$	2,399,582
5/1/2020 - 4/30/2021	421,296	$	5.85	$	205,464	$	2,465,570

The above stated gross rents are inclusive of all Taxes, Insurance, Common Area Maintenance/Operating Expenses or any other Property Operating Charges and are not subject to any other change. Tenant shall pay the cost of utilities consumed in the Premises, which shall be metered separately and billed directly to the Tenant.

Base Rent during the Second Renewal Period (5/1/2021 – 4/30/2026): ninety five percent (95%) of market rent determined as follows:

Within thirty (30) days after Tenant has delivered its notice of the exercise of the Second Renewal Period, Landlord shall deliver a notice setting forth Landlord’s determination of the “market rent” for the Second Renewal Term. If Tenant disagrees with Landlord’s determination of “market rent”, then Tenant shall notify Landlord in writing of such objection within thirty (30) days after receiving the aforementioned notice. Upon Landlord’s receipt of such objection notice, Landlord and Tenant shall negotiate in good faith in an effort to agree on market rent for the Second Renewal Period; however, if Landlord and Tenant cannot agree on market rent for any reason within thirty (30) days after the date that Landlord received Tenant’s objection notice, then within fifteen (15) business days thereafter, both Landlord and Tenant shall each appoint an independent MAI certified appraiser, each appraiser having at least ten (10) years experience in the Philadelphia metropolitan area, to establish the market rent, and shall notify the other in writing of the appointment. If the two appraisers do not agree upon the market rent within thirty (30) days after the date of the appointment of the second appraiser, the two appraisers shall select a third independent MAI certified appraiser with the required credentials The third appraiser shall, within fifteen (15) days of his or her appointment, select as the market rent either (i) the market rent proposed by Landlord’s appraiser or (ii) the market rent proposed by Tenant’s appraiser, or (iii) an amount in between the market rent determined by the two appraisers. Once the market rent has been determined, the parties shall enter into an amendment reflecting the Base Rent for the Second Renewal Period as ninety five percent (95%) of the market rent as determined above. Notwithstanding the foregoing, within thirty (30) days after the determination of market rent (whether determined between Landlord and Tenant without the use of appraisers, whether determined using the two appraiser method set forth above, or whether determined by using the third appraiser as set forth above), Tenant shall have thirty (30) days from the date of any such determination of market rent, to notify Landlord that it rescinds its exercise of the Second Renewal (“Renewal Rescission Notice”), and in such event, this Lease shall terminate nine (9) full calendar months from the date of the Renewal Rescission Notice. In such event, the Monthly Base Rent for such nine (9) month period shall be the same as the Monthly Base Rent payable by Tenant in the fifth (5^th) year of the First Renewal Period.

The above stated gross rents are inclusive of all Taxes, Insurance, Common Area Maintenance/Operating Expenses or any other Property Operating Charges and are not subject to any other change. Tenant shall pay the cost of utilities consumed in the Premises, which shall be metered separately and billed directly to the Tenant.

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EXHIBIT C

Five Below (FB)

Building Specifications

Twin Spans Business Park,

Newcastle, Delaware

Distribution Center Expansion

September 30,2009

Table of Contents
Section 1	General Requirements
Section 2	Main Warehouse Building
Section 3	Finished Office Spaces
Section 4	Site Specifications

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General Requirements

1.1 Initial Space and Building Configuration

Existing Building Space Square Feet	204,496
New Building Square Feet	421,291
Office Square Feet	7,329 s.f.
Truck Docks	40 Dock high doors 1 grade level door

1.2 Documents and Guarantees

The Landlord shall have a complete set of certified, final working drawings and specifications prepared in conformance with these outline documents and shall furnish all labor, materials, equipment and supervision necessary for the execution and completion of the work, except for any work related to Tenant’s Fixtures, Furnishings or Equipment Design services include independent design architect, mechanical engineer, and electrical engineer.

The Contractor shall guarantee all work to be free from defects of workmanship for one (1) year.

1.3 Permits and Licensing Fees

The Landlord shall give to the proper authorities all notices as required by law relative to the work of this project, apply and pay for all federal, state and local permits and Contractor’s licenses required for construction.

1.4 Codes

The Landlord-shall be responsible for complying with all building codes and dimensional requirements of zoning ordinances applicable to the building including local city ordinances. The Landlord shall comply with seismic codes, Americans with Disabilities Act and the Occupational Safety and Health Act Provisions applicable to construction sites.

1.5 Workmanship

The design and construction of this facility will be in accordance with standard practices of the construction industry and will be performed in a workmanlike manner.

1.6 Insurance

The Landlord shall have their Contractor maintain the following insurance coverage for this project with limits as required by law or up to $5,000,000.00 when discretionary.

A Workmen’s Compensation Insurance.

B. Comprehensive Public Liability Insurance - including Auto Liability, Complete Operations, Contingent Liability, Contractor’s Operations and Broad Form Contractual Liability.

C. Builder’s Risk Insurance - “All Risk” Form included by landlord: Landlord shall be responsible for deductible losses.

D. Additional insurance to be agreed to in the lease negotiation.

1.7 Scope of Work

The landlord shall furnish all labor, material tools and equipment to construct the expanded distribution center as per these general outline specifications. This work shall include but is not limited to all items listed in this document and the approved office layout plan.

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1.8 Field Supervision

The Landlord’s contractor shall have a full time employee who shall act as field superintendent until substantial completion of the project. The field superintendent shall be experienced and shall be familiar with the specified materials and systems. The field superintendent shall be responsible for adequately planning and executing the field work including scheduling and directing subcontractors on the job site, maintaining on-site records required by governmental authorities, being responsible for the layout and dimensional control of the structures of the project and monitoring the completed work for compliance with the contract drawings and specifications.

1.9 Clean-up

The Landlord shall be responsible at all times to keep the premises free from excessive accumulations of waste materials and/or rubbish. Periodically, the Landlord shall remove all rubbish and waste materials from the building and at the completion of the project, all debris, tools, scaffolding and surplus materials; shall be removed and the project shall be left in a “broom clean” condition. The landlord is wholly responsible for the proper disposal of all construction waste within local, state and federal laws.

Structure

2.1 Structure

The building system will conform to all applicable building regulations.

The Landlord has installed an ADA compliant direct access into the premises.

Floor mounted and bolted bollards shall be installed at the inside jambs of all dock doors, sprinkler risers, interior ‘ roof drain, office areas and electrical panels using method and materials that is consistent with the floor mounted bollards that currently exist within the existing Five Below space.

The bollards shall project 3’-6” above grade or finished floor. They will be capped and painted OSHA yellow.

The landlord shall relocate electrical panels, which are currently located on the demising wall, to the closest column or rack upright in accordance to code, and shall remove the demising wall without unreasonable disruption to the i tenants operation. The landlord shall patch and repair the floor, wall and ceiling after wall is removed.

2.2 Exterior Wails

Landlord to install new main exterior entrance double doors and windows to be Kawneer 451T exposed mullion framing system or equal. Aluminum thresholds shall be provided for all exterior doors. Exterior glass doors shall have standard commercial 1/4” tempered glass consistent with the glass doors that exist on the existing Five Below office space entry system. The color of glass and aluminum frames to be determined in final building design.

Landlord shall install a “sunbrella” type awning above the new entrance to the office.

2.3 Roof

Roofing shall be warranted by the manufacturer for 8 remaining years from the date of this agreement on labor and materials (full replacement roof guarantee). The landlord will assume responsibility for all roof maintenance, repair and issues.

2.4 Floor Slabs and Foundations

Floor slab will be inspected by tenant and all slabs that are unstable shall be stabilized by Landlord or removed and replaced by landlord. If for some reason repairs are required to be made to the floor slab, Landlord shall make such repairs in a manner consistent with those repairs that were previously made to the existing Five Below slab within the shipping and receiving areas.

The landlord has sealed the floor slab with one coat Seal Hard liquid floor sealer/hardener or equal.

2.5 Truck Docks

All 9’ -0” x 10’ -0” dock doors shall have a 24 ga.galvanized flush steel face and a polystyrene core. The doors will be finished with a factory-applied, baked-on primer. A total of ten (10) loading dock security gates shall be installed.

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All 40 existing loading dock doors within the Adjacent Premises shall have a 7’-0” wide x 8’-0” deep, 30,000 Ib., electrically operated dock leveler that have all been tested and are in good working order. Loading dock configuration and equipment within the existing Tenant leased premises shall remain “as is”.

Dock scissor arm lights, dock bumpers and dock shelters to be provided at each dock door within the Adjacent Premises. All dock equipment shall be inspected by the tenant and repaired or replaced by the Landlord if defective.

2.6 Heating, Ventilation and Air Conditioning

The building will be heated and cooled to the design criteria which conform to ASHRAE 90-80 energy conservation

code requirements.

a Design:         50 degrees F interior at 0 degrees F exterior.

b. Heating:

Heating is accomplished by means of joist hung gas direct fired industrial unit heaters, or roof or wall mounted Cambridge units capable of offsetting building infiltration and heat loss. Outside air will be introduced at a constant rate of .21 air changes/hour for employee ventilation and exfiltration.

2.7 Electrical Power

An electrical system will be designed to include an electrical service, main power distribution, warehouse lighting and exterior lighting. The electrical service to be sized at 3,000 amp, 480/277 volt, three phase, four-wire main switchboard. Existing electrical equipment and hardware shall be reused so long as the Tenant’s design intent and electrical needs are met We offer the following guidelines as a minimum standard:

Distribution:

Zenith space currently has 32 battery charger locations at 480 volt 30 amp each

5 Below space currently has 10 battery charger locations at.480 volt 9 amp each

Tenant supplied and installed Battery Chargers – 1-480V, 400 amp panel or equivalent or as necessary to accommodate Tenant’s loads.

Power – 4-480V/150 amp panels or equivalent or as necessary to accommodate Tenant’s loads.

Tenant supplied and installed Conveyor -1-480V 200 amp panel or equivalent or as necessary to accommodate Tenant’s loads.

Lighting – 1-480V/277V, 600 amp panel or equivalent or as necessary to accommodate Tenant’s loads.

Receptacles – Landlord shall install ten (10) total 110V convenience outiets throughout the Tenant racking areas, locations to be mutually agreed upon.

Two electric meters will exist. All utility usage for the building shall be metered separately and billed directly to the Tenant.

2.8 Lighting

A. Warehouse Area Lighting

1. Warehouse lighting to be 40 foot candles at the conveyor area to be achieved by lowering existing light fixtures and 30 foot candles elsewhere at 36” AFF using T-5 fixtures in a lighting pattern to achieve designated lighting levels in the aisle (as pertenants racking plan). Rack aisle lighting will be individually controlled by motion sensors.

2. Emergency and exit lighting fixtures will be provided to meet all code requirements for the shell building.

2.9 Plumbing - Intentionally Omitted

2.10 Fire Protection

A complete fire protection sprinkler system to be provided throughout the facility shell and office area. The system is to be designed in accordance with NFPA Standards, applicable local codes. The wet pipe automatic sprinkler system to include all piping, valves, risers, fittings, post indicator valves, check valves, fire department connections, contacts for fire protection monitoring, flow switches, supports, anchors, hangers, sprinkler heads, accessories, test connections, drains, testing, inspections, design and engineering, permits and fees, approval by all governmental and fire department agencies, and any other items required for the complete design and installation of the wet pipe system.

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Fire Protection Contractor will provide all calculations, installation drawings, etc., required to obtain insurance agency approvals and deliver them to the owner. Each system shall be hydraullcally calculated to meet the demand for the different areas of the building occupancy.

The warehouse area will be designed with an ESFR system.

2.11 Fire Alarm Equipment

Provide fire alarm equipment for the shell building and office area as required by code

Finished Office Spaces

Design and build a new 7,329 s.f. office and bathroom areas including the layout of all offices, rooms and open areas with room sizes, door schedules, finish schedules, and power plans. See exhibit to lease amendment for new office layout plan.

3.1 Walls

Office partition walls to be 5/8” gypsum wallboard over 3-5/8” metal studs 24” on center. Wallboard to be taped, sanded and painted with a primer coat and two (2) coats of flat latex paint. All interior office walls shall run above ceiling grid at a height of no less than 8 feet 6 inches.

Walls around washrooms, conference rooms, offices and lunchrooms shall be insulated.

All toilet room plumbing walls to be full height ceramic tile. Remaining toilet room walls to be half height ceramic tile wainscoting with remaining walls covered with vinyl wall coverings.

3.2 Flooring

Office vestibule and toilet room floors will be furnished with ceramic tile and base.

32 oz. carpet to be installed in the office areas.

Vinyl composite tile to be installed in all other areas.

3.3 Ceiling

Office suspended grid ceilings to be 5/8” x 24” x 48” fissured scored at 24” “Second Look 2” type tile The ceiling height to be no less than 8 feet 6 inches.

3.4 Doors, Frames

Doors in metal stud and drywall partitions to be 1-3/4” solid core “A” grade Birch veneer. Insulated metal doors at exterior locations will be provided with appropriate sill and weather stripping.

3.5 Window Sills

Plastic laminate or painted finish wood window sills will be provided at all exterior office windows.

3.6 Finish Hardware

All door hardware shall be as manufactured by Schlage or an equal commercial grade hardware with its function appropriate for its intended usage.

3.7 HVAC

Design

Winter outdoor design conditions:

Dry-bulb temperature:	0°F
Summer outdoor design conditions:
Dry-bulb temperature:	95°F
Wet-bulb temperature:	76°F

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Indoor design conditions during occupied periods:

Winter: 70°F                        Summer: 70°F/50% RH

The office will be heated, ventilated and air conditioned by means of packaged rooftop units with gas heat. 15% outside air will be provided through air conditioning equipment. Office space and employee break room to have independent thermostats.

Direct exhaust will be provided from the toilet rooms through an exhaust fan to the outside of the building.

3.8 Electrical Power

An electrical system is designed to accommodate Tenant’s needs or loads and shall include an electrical service main power distribution. Office requirements include:

• one 277V panel, 200 amp lighting

• one 75 KVA transformer, 120V, 225 amp panel

• one 150 amp, 480V panel for A/C

• all necessary feeders

The above is a general guideline. Landlord shall deliver the same or equivalent or as necessary to accommodate projected loads, and so long as tenant’s design intent and electrical needs are met, with all being installed per code.

3.9 Lighting/Receptacles

A. General office areas shall receive an average of approximately 75 footcandles. Office footcandle levels are measured at tops of desks. Lighting in the office area shall be 3-lamp recessed 2’ X 4’, fluorescent fixtures with prismatic lenses. All lighting in the office area shall be switched local. Duplex wall outlets and telephone wall outlets will be provided throughout the office area.

3.10 Plumbing

(1) Men’s	4 Water Closets 3 Urinal 3 Lavatories
(1) Women’s	6 Water Closets 3 Lavatories
(1) Driver’s	1 water closet 1 Lavatory

Floor or wall mounted toilet partitions and toilet accessories are included at washrooms.

Plumbing fixtures will be floor mounted, first quality, flush valve, white vitreous china.

Automatic flush valves to be installed on urinals.

3.11 Fire Protection

The office area will be designed for ordinary hazard (up to 130 s. f. per head)

Heads shall be placed in approximate center of ceiling tiles (+/- two inches).

3.12 Lunch Rooms/Meeting Rooms, Seating for 150

Kitchenette with sink

Electric hookup for appliances/vending machines

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Site Specifications

4.1 Grading and Earthwork

Guard rails or curbing to be installed around parking area bordering retention pond.

4.2 Outdoor Seating Area

The landlord will install a picnic area to support seating for 25 employees. The picnic area with be constructed of a concrete slab on grade and shall be fenced.

4.3 Exterior Lighting

Wall and pole mounted area lights are included for illumination of the exterior parking and dock areas. Exterior lights will be controlled by both a photocell and a time clock. Exterior lighting will provide full coverage of all parking, building perimeter, and outdoor seating area.

Walkways/car parking area             2 foot candles

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Exhibit D

LEASE MODIFICATION AGREEMENT

This Lease Modification Agreement (this “Agreement”) is made and entered into as of this 16th day of October, 2009 by and between Twin Spans Business Park, LLC (“Landlord”) and Zenith Products Corporation (“Tenant”).

WHEREAS, the parties entered into a certain Lease Agreement dated December 1, 2006 as the same was amended by that certain Addendum thereto of the same date (the “Original Lease”), as subsequently amended by that certain Addendum II to Lease Agreement dated May 2, 2007, and those certain Addendums to Lease Agreement dated August 15, 2008, March 31, 2009, and April 30,2009 (the Original Lease and all Addendums, collectively, the “Anchor Road Lease”) pursuant to which the Tenant leased from Landlord 216,795 square feet in a building commonly known as 350 Anchor Mill Road, Twin Spans Business Park, New Castle, Delaware 19720 (“Anchor Mill Road”) and additional square footage in temporary space as from time to time was agreed to by the parties located in a portion of Ships Landing Way (as hereinafter defined). As used in this Agreement, the term “Lease” shall mean the Anchor Road Lease, as amended by this Agreement, unless there is an express reference to the Original Lease or the context requires it to mean the Original Lease; and

“WHEREAS, the parties hereto intend to further amend the Anchor Road Lease to change the “Premises” thereunder as a result of the Landlord’s desire to relocate the Tenant’s 216,795 square feet operation currently located at Anchor Mill Road, which together with the aforementioned temporary space is the “Premises” under the Original Lease, to a new location at 499 Ships Landing Way, Twin Spans Business Park, New Castle, Delaware 19720 (“Ships Landing Way”), which on the Commencement Date (as hereinafter defined) shall be the “Premises” under the Lease. The building at 499 Ships Landing Way contains approximately 235,000 square feet; and

WHEREAS, Landlord agrees to be responsible for all reasonable costs associated with Tenant’s relocation to Ships Landing Way, tentatively estimated by Tenant for Landlord’s planning purposes only to be [                          ] which Landlord has considered and agrees is a reasonable estimate based on current known circumstances; provided, however, that such estimate is not intended to establish a limit on Landlord’s responsibility for costs and expenses of such relocation that may be actually incurred by either party. The Landlord may elect to perform any of these tasks in order to defray costs. The Tennant agrees to provide the Landlord the opportunity to perform these tasks. The general categories of costs and expenses to be incurred are anticipated to include but shall not be limited to the following:

1. IT (Cable runs for computers & phones)

2. Location Preparation (floor painting, storage rack labeling, operational signage and required safety equipment)

3. Product Move (labor and trucking)

4. Additional equipment rental (lift equipment, drop trailers)

5. Legal fees

6. Security system (Burglar Alarm, Camera System, Remote Entry & Card Access Control)

WHEREAS, Landlord agrees to renovate Ships Landing Way as more particularly provided herein; and

WHEREAS, Tenant desires to lease Ships Landing Way as provided herein.

NOW THEREFORE, in consideration of the recitals and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby reciprocally acknowledged, Landlord and Tenant agree as follows:

1. Term. The initial term of the Lease for Ships Landing Way, as the Premises under the Lease, shall be [                ] years. The initial term of the Lease shall commence on the date (the “Commencement “Date”) that is 30 days after the last to occur of Tenant’s receipt of the Certificate of Occupancy for Ships Landing Way, full availability of all pick line racks, and completion of all tenant fit-outs and renovations to Tenant’s satisfaction, as more particularly provided in Section 5 hereof (collectively referred to as “Delivery of Premises”). Tenant agrees to fully vacate Anchor Mill Road by the Commencement Date. Notwithstanding anything contained herein to the contrary, the Commencement Date shall not be later than February 11, 2010 provided that the Delivery of Premises has occurred by December 31,2009. The parties hereto agree that until the Commencement Date, Tenant and Landlord shall be governed by the terms of the Anchor Road Lease for Anchor Mill Road and that at no time will Tenant be obligated for rent on both Anchor Mill Road under the Anchor Road Lease and on Ships Landing Way under the Lease, provided that Tenant has not breached its obligations to vacate Anchor Mill Road under the preceding sentence.

2. Renewal Options. There will be [                ] renewal options, at Tenant’s election. Tenant may elect to renew by giving one hundred eighty (180) days’ advance written notice to Landlord prior to expiration of the initial Lease Term or renewal period, as the case may be.

3. Rent. The initial annual rent for Ships Landing Way shall be [        ] per square foot, payable monthly, or [                ] per month, and shall commence effective as of the Commencement Date. The rent shall escalate [                ] annually effective as of the first day of the calendar month following each anniversary of the Commencement Date. For avoidance of doubt, no rent shall be due under the various Addendums to the Original Lease.

4. Property Operating Costs. Property Operating Costs shall be on the basis of [                ] Property Operating Costs for Year I shall not [        ] per square foot annually, or [                ] per month, and shall not increase by more than [                ] annually.

5. Renovations. Landlord shall have full responsibility for the payment of all costs and expenses associated with renovations and fit-outs, and all reasonable costs of Tenant’s

2

relocation to the new location. Such costs shall not be limited to the estimated costs recited above. Landlord’s renovations and fit-outs to Ships Landing Way shall provide Tenant with the practical equivalent of all fit-outs, improvements, and specialties available to Tenant at Anchor Mill Road and shall include, but not be limited to, a minimum ceiling height equal to or greater than the Anchor Mill Road building; same or better office space and loading doors; ESFR sprinkler system; T-5 type fluorescent lighting; security and fire protection systems; whole building capable exhaust fans; power dock levelers; electric powered bay doors; trailer locks; and dock seals or enclosures.

Additional specific renovations shall include but are not limited to the following:

A.

B.

C.

D.

E.

F.

G.

H.

I.

J.

3

K.

L.

M.

N.

O.

P.

Q.

R.

S.

T.

U.

V.

W.

X.

Y.

Z.

AA.

BB.

CC.

4

DD.

EE.

FF.

6. Permitted Parking Area. Per attached plan.

7. Outside Storage. Per attached plan.

8. Option for Available Space. Section 31.09 of the Addendum attached to the Original Lease is deleted in its entirety.

9. Contingency. This Agreement in contingent upon Landlord entering into a Lease Modification Agreement with Five Below, Inc. to lease additional space in the Anchor Mill Road building. In the event such agreement is not reached the terms of this Agreement shall be null and void and the terms and conditions of the Original Lease, as amended, shall remain in full force and effect.

10. Miscellaneous. Except as amended hereby, all terms and conditions of the Original Lease and amendments thereto are hereby ratified and confirmed and shall remain in full force and effect. Tenant shall have all rights and benefits with respect to its lease and occupation of Ships Landing Way that Tenant had under the Original Lease notwithstanding that certain of those rights and benefits may already have been delivered by Landlord under the Original Lease with respect to the Anchor Mill Road premises, including for illustration purposes only and not by way of limitation, Tenant’s right to plans and specifications for Ships Landing Way pursuant to Section 1.01 of the Original Lease; and Tenant’s right to use roof area at Ships Landing Way to install and maintain a roof satellite or antenna pursuant to Section 4.01 of the Original Lease. This Agreement shall be binding upon and inure to the benefit of the successors and assigned of the parties hereto. This Agreement may not be amended or modified orally nor may any obligation hereunder be waived orally, and no such amendment, modification or waiver shall be effective for any purpose unless it is in writing and signed by the parties against whom enforcement thereof is sought The captions and paragraph headings are provided for the purpose of convenience and reference only and are not intended to limit, define the scope of, or aid in the interpretation of any provisions hereof. If there is any inconsistency between the provisions of this Agreement and the provisions of the Original Lease or amendments thereto, the provisions of this Agreement shall govern. This Agreement may be executed and delivered in several counterparts, each of which when so executed and delivered shall constitute an originally, fully enforceable counterpart for all purposes.

[ Signatures On Next Page ]

5

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

Witness:	LANDLORD:
By:	Twin Spans Business Park LLC By: Thomas J. Hanna
	TENANT
By:	Zenith Products Corporation
	By:

6

EX-10.28

Exhibit 10.28

Published Deal

CUSIP No. 33828EAA8

Published Facility

CUSIP No. 33828EAB6

CREDIT AGREEMENT

dated as of May 16, 2012

among

FIVE BELOW, INC.

and

THE LENDERS PARTY HERETO,

and

GOLDMAN SACHS BANK USA, BARCLAYS BANK PLC AND JEFFERIES FINANCE LLC,

as Lead Arrangers and Lead Bookrunners,

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, DEUTSCHE BANK TRUST

COMPANY AMERICAS, UBS SECURITIES LLC AND WELLS FARGO BANK,

NATIONAL ASSOCIATION,

as Arrangers and Bookrunners

GOLDMAN SACHS BANK USA,

as Administrative Agent and Collateral Agent,

BARCLAYS BANK PLC,

as Syndication Agent,

and

JEFFERIES FINANCE LLC,

as Documentation Agent

$100,000,000 Term Loan

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS		1
Section 1.01. Defined Terms		1
Section 1.02. Classification of Loans		45
Section 1.03. Terms Generally		45
Section 1.04. Accounting Terms; GAAP		46
Section 1.05. Pro Forma Calculations		46
Section 1.06. Borrower Authorized		47
ARTICLE II THE CREDITS		47
Section 2.01. Commitments		47
Section 2.02. Evidence of Debt; Repayment of Loans		48
Section 2.03. Fees		49
Section 2.04. Interest on Loans		49
Section 2.05. Termination and Reduction of Commitments		50
Section 2.06. Interest Elections		50
Section 2.07. Amortization of Loans		51
Section 2.08. Optional and Mandatory Prepayments of Loans		51
Section 2.09. Making or Maintaining LIBOR Rate Loans		55
Section 2.10. Breakage Payments		56
Section 2.11. Payments Generally; Pro Rata Treatment; Sharing of Setoffs		57
Section 2.12. Taxes		58
Section 2.13. Mitigation Obligations; Replacement of Lenders		61
Section 2.14. Defaulting Lenders		62
Section 2.15. Refinancing Amendments		63
Section 2.16. Increased Costs; Capital Adequacy		64
ARTICLE III REPRESENTATIONS AND WARRANTIES		66
Section 3.01. Organization; Powers		66
Section 3.02. Authorization; Enforceability		66
Section 3.03. No Conflicts; No Default		66
Section 3.04. Financial Statements; Projections		67
Section 3.05. Properties		67
Section 3.06. Intellectual Property		69
Section 3.07. Equity Interests and Subsidiaries		70
Section 3.08. Litigation		70
Section 3.09. Federal Reserve Regulations		71
Section 3.10. Investment Company Act, etc		71
Section 3.11. Taxes		71
Section 3.12. No Material Misstatements		71
Section 3.13. Labor Matters		72
Section 3.14. Solvency		72
Section 3.15. Employee Benefit Plans		72
Section 3.16. Environmental Matters		72

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	Page
Section 3.17. Anti-Terrorism Law; Foreign Corrupt Practices Act		73
Section 3.18. Mortgages		74
Section 3.19. Security Interests		74
ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS		74
Section 4.01. Conditions to Initial Credit Extension		74
Section 4.02. Conditions to All Credit Extensions		77
ARTICLE V AFFIRMATIVE COVENANTS		78
Section 5.01. Financial Statements, Reports, etc		78
Section 5.02. Litigation and Other Notices		81
Section 5.03. Existence; Businesses and Properties		81
Section 5.04. Compliance with Laws		81
Section 5.05. Insurance		81
Section 5.06. Obligations; Taxes		82
Section 5.07. Maintaining Records; Access to Properties and Inspections; Annual Meetings		83
Section 5.08. Use of Proceeds		84
Section 5.09. Compliance with Environmental Laws		84
Section 5.10. Interest Rate Protection		84
Section 5.11. Additional Collateral; Additional Guarantors		84
Section 5.12. Security Interests; Further Assurances		86
Section 5.13. Maintenance of Ratings		87
Section 5.14. Post-Closing Collateral Matters		87
ARTICLE VI NEGATIVE COVENANTS		87
Section 6.01. Indebtedness		87
Section 6.02. Liens		90
Section 6.03. Sale and Leaseback Transactions		93
Section 6.04. Investments, Loans and Advances		94
Section 6.05. Mergers and Consolidations		96
Section 6.06. Asset Sales		97
Section 6.07. Acquisitions		98
Section 6.08. Dividends		99
Section 6.09. Transactions with Affiliates		100
Section 6.10. Financial Covenant		101
Section 6.11. Prepayments of Other Indebtedness; Modifications of Organizational Documents,
Acquisition and Certain Other Documents, etc		101
Section 6.12. Limitation on Certain Restrictions on Subsidiaries		103
Section 6.13. No Further Negative Pledge		104
Section 6.14. Business		104
Section 6.15. Amendments to Organizational Documents		104
Section 6.16. Limitation on Accounting Changes		104
Section 6.17. Fiscal Periods		104

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	Page
ARTICLE VII GUARANTEE		105
Section 7.01. The Guarantee		105
Section 7.02. Obligations Unconditional		105
Section 7.03. Reinstatement		106
Section 7.04. Subrogation; Subordination		106
Section 7.05. Remedies		107
Section 7.06. Instrument for the Payment of Money		107
Section 7.07. Continuing Guarantee		107
Section 7.08. General Limitation on Guarantee Obligations		107
Section 7.09. Release of Guarantors		107
Section 7.10. Right of Contribution		108
ARTICLE VIII EVENTS OF DEFAULT		108
Section 8.01. Events of Default		108
Section 8.02. [RESERVED]		111
Section 8.03. Borrower’s Right to Cure		111
ARTICLE IX THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT		112
Section 9.01. Appointment		112
Section 9.02. Agent in Its Individual Capacity		113
Section 9.03. Exculpatory Provisions		113
Section 9.04. Reliance by Agent		114
Section 9.05. Delegation of Duties		114
Section 9.06. Successor Agent		115
Section 9.07. Indemnification		116
Section 9.08. Withholding Taxes		117
Section 9.09. [RESERVED]		117
Section 9.10. Lenders’ Representations, Warranties and Acknowledgment		117
Section 9.11. Collateral Documents and Guaranty.		118
Section 9.12. Administrative Agent May File Bankruptcy Disclosure and Proofs of Claim		120
Section 9.13. No Other Duties Etc		120
ARTICLE X MISCELLANEOUS		121
Section 10.01. Notices.		121
Section 10.02. Waivers; Amendment		122
Section 10.03. Expenses; Indemnity; Damage Waiver		126
Section 10.04. Successors and Assigns		128
Section 10.05. Survival of Agreement		137
Section 10.06. Counterparts; Integration; Effectiveness		137
Section 10.07. Severability		137
Section 10.08. Right of Setoff		137
Section 10.09. Governing Law; Jurisdiction; Consent to Service of Process		138
Section 10.10. Waiver of Jury Trial		139
Section 10.11. Headings		139
Section 10.12. Confidentiality		139
Section 10.13. Interest Rate Limitation		140
Section 10.14. Assignment Agreement		140

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	Page
Section 10.15. Obligations Absolute		141
Section 10.16. Waiver of Defenses; Absence of Fiduciary Duties		141
Section 10.17. USA Patriot Act		142
Section 10.18. [RESERVED]		142
Section 10.19. Concerning the ABL Facility		142

ANNEXES
Annex I	Initial Lenders and Commitments
Annex II	Initial Lender Addresses
SCHEDULES
Schedule 1.01(a)	Material Indebtedness
Schedule 3.05(b)	Owned and Leased Property
Schedule 3.06	Intellectual Property Matters
Schedule 3.07(a)	Subsidiaries
Schedule 3.16	Environmental Matters
Schedule 5.11(d)	Real Property Collateral Matters
Schedule 5.14	Post-Closing Items
Schedule 6.01(b)	Existing Indebtedness
Schedule 6.02(c)	Existing Liens
Schedule 6.04(b)	Existing Investments
EXHIBITS
Exhibit A	Form of Assignment Agreement
Exhibit B	Form of Funding Notice
Exhibit C	Form of Compliance Certificate
Exhibit D	Form of Intercompany Note
Exhibit E	Form of Conversion/Continuation Notice
Exhibit F	United States Tax Compliance Certificate
Exhibit G	Form of Note
Exhibit H	Form of Security Agreement
Exhibit J	Form of Solvency Certificate
Exhibit K	Form of Guarantee Joinder Agreement
Exhibit L	Form of ABL Intercreditor Agreement
[Exhibits H and L have been omitted as these have been separately filed as exhibits to the Form S-1].

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CREDIT AGREEMENT

This CREDIT AGREEMENT (this “Agreement”), dated as of May 16, 2012 by and among Five Below, Inc., a Pennsylvania corporation (the “Borrower”), the Guarantors party hereto from time to time, the Lenders, and Goldman Sachs Bank USA (“Goldman Sachs”), Barclays Bank PLC and Jefferies Finance LLC, as Lead Arrangers and as Lead Bookrunners, Goldman Sachs as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) and as Collateral Agent for the Secured Parties (in such capacity, the “Collateral Agent”), Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Trust Company Americas, UBS Securities LLC and Wells Fargo Bank, National Association, as Arrangers (in such capacity and together with the Lead Arrangers, the “Arrangers”) and Bookrunners (in such capacity and together with the Lead Bookrunners, the “Bookrunners”), Barclays Bank PLC, as Syndication Agent (in such capacity, the “Syndication Agent”), and Jefferies Finance LLC, as Documentation Agent (in such capacity, the “Documentation Agent”).

WITNESSETH:

WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.01 hereof;

WHEREAS, the Borrower has requested that the Lenders enter into this Agreement to make a loan in a principal amount of up to $100,000,000, the proceeds of which will be used to pay dividends and to make distributions to holders of stock and stock equivalents in the Borrower and to pay costs and expenses related to the Transactions, with the excess, if any, to be used for working capital and general corporate purposes of the Borrower and its Subsidiaries; and

WHEREAS, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

“ABL Collateral Agent” shall mean Wells Fargo Bank, National Association, in its capacity as lender or as ABL Representative under the ABL Loan Documents, or any successor ABL Representative under the ABL Loan Documents.

“ABL Credit Agreement” shall mean that certain Second Amended and Restated Loan and Security Agreement, dated as of the Closing Date, by and among the Borrower, as borrower and the ABL Senior Representative in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent, as the same may be amended, restated, modified, supplemented, extended, renewed, refunded, replaced or refinanced from time to time

in one or more agreements (in each case with the same or new lenders, institutional investors or agents), including any agreement extending the maturity thereof or otherwise restructuring all or any portion of the Indebtedness thereunder or increasing the amount loaned or issued thereunder or altering the maturity thereof, in each case as and to the extent permitted by this Agreement and the ABL Intercreditor Agreement.

“ABL Indebtedness” shall mean the Indebtedness of the Borrower and its Subsidiaries owing to the ABL Collateral Agent and the ABL Secured Parties under the ABL Loan Documents in a maximum principal amount not in excess of the amount permitted in Section 6.01(t).

“ABL Intercreditor Agreement” shall mean that certain Lien Subordination and Intercreditor Agreement dated as of the Closing Date, by and among the ABL Collateral Agent, the Collateral Agent, the Borrower and any Subsidiary of the Borrower party thereto from time to time, substantially in the form attached as Exhibit L hereto or any other intercreditor agreement among the ABL Collateral Agent, one or more Senior Representatives of Permitted First Priority Refinancing Debt or Permitted Second Priority Refinancing Debt, the Collateral Agent and the Loan Parties on terms that are no less favorable in any material respect to the Secured Parties as those contained in the form attached as Exhibit L hereto or otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent.

“ABL Lenders” shall mean the lenders from time to time party to the ABL Credit Agreement.

“ABL Loan Documents” shall mean the ABL Credit Agreement and all security agreements, guarantees, pledge agreements and other agreements or instruments executed in connection therewith as of the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent, as the same may be amended, restated, modified, supplemented, replaced or modified from time to time in one or more agreements (in each case with the same or new parties there to), in each case as and to the extent permitted by this Agreement and the ABL Intercreditor Agreement.

“ABL Loans” shall mean the revolving loans (excluding letters of credit) made pursuant to the ABL Credit Agreement.

“ABL Priority Collateral” shall mean the “Revolving Facility First Lien Collateral” as defined in the ABL Intercreditor Agreement.

“ABL Representative” shall mean, with respect to the ABL Indebtedness, the ABL Collateral Agent, or any administrative agent, collateral agent, security agent or similar agent under the agreements or documents pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.

“ABL Secured Parties” shall mean the “Revolving Facility Secured Parties” as defined in the ABL Intercreditor Agreement.

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

“Acquisition Consideration” shall mean the purchase consideration for a Permitted Acquisition or a Permitted Joint Venture and all other payments, directly or indirectly, by the Borrower or any of its Subsidiaries in exchange for, or as part of, or in connection with, a Permitted Acquisition or a Permitted Joint Venture, whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of a Permitted Acquisition or a Permitted Joint Venture or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness and/or Contingent Obligations, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP (as determined at the time of the consummation of such Permitted Acquisition or such Permitted Joint Venture) to be established in respect thereof by the Borrower or any of its Subsidiaries; provided, further, that the assumption of bona fide lease obligations of any acquired company or business as part of a Permitted Acquisition or Permitted Joint Venture shall not be considered Acquisition Consideration.

“Adjusted LIBOR Rate” shall mean, with respect to any Eurodollar Loan for any Interest Period therefor, the rate per annum obtained by dividing (i) (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum equal to the offered quotation rate to first class banks in the London interbank market by Goldman Sachs Bank USA for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of the Administrative Agent, in its capacity as a Lender, for which the Adjusted LIBOR Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement; provided, however, that notwithstanding the foregoing, the Adjusted LIBOR Rate shall at no time be less than 1.00% per annum.

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“Administrative Agent” shall have the meaning assigned to such term in the preamble hereto and includes each other person appointed as the successor administrative agent pursuant to Article IX.

“Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.03(a).

“Advisors” shall mean legal counsel (including local and foreign counsel), auditors, accountants, consultants, appraisers, engineers or other advisors.

“Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided, however, that, for purposes of Section 6.09, the term “Affiliate” shall also include (i) any person that directly or indirectly owns more than 10% of any class of Equity Interests of the person specified or (ii) any person that is an officer or director of the person specified.

“Affiliated Lender” shall mean (a) the Sponsor and its Affiliates (excluding any Debt Fund Affiliate), (b) any Non-Debt Fund Affiliate and/or (c) the Borrower and/or any Subsidiary of the Borrower and their respective Affiliates (excluding any Debt Fund Affiliate).

“Agents” shall mean the Arrangers, the Administrative Agent, the Collateral Agent, the Bookrunners, the Documentation Agent, the Syndication Agent and any auction manager; and “Agent” shall mean any of them.

“Agreement” shall have the meaning assigned to such term in the preamble hereto.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day; (b) the Federal Funds Effective Rate in effect on such day plus 0.50%; and (c) 2.00%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“Anti-Terrorism Laws” shall have the meaning assigned to such term in Section 3.17(a).

“Applicable Margin” shall mean, for any day, with respect to any Loan that is an ABR Loan, 3.25% per annum and any Loan that is a Eurodollar Loan, 4.25% per annum; provided, that if a Qualifying IPO shall not have occurred within twelve (12) months of the Closing Date and, for so long as the Consolidated Net Leverage Ratio shall be greater than 2.00 to 1.00, the Applicable Margin shall mean, for any day with respect to any Loan that is an ABR Loan, 4.75% and any Loan that is a Eurodollar Loan, 5.75%.

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Loan, the maximum rate expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under

-4-

regulations issued from time to time by the Board or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted LIBOR Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Loans. A Eurodollar Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“Approved Electronic Communications” shall mean any notice, demand, communication, information, document or other material that any Loan Party provides to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Agents or the Lenders by means of electronic communications pursuant to Section 10.01(b).

“Approved Fund” shall mean, with respect to any Lender, any person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in bank and other commercial loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity or an Affiliate of an entity that administers or manages such Lender.

“Arrangers” shall have the meaning assigned to such term in the preamble hereto.

“Asset Sale” shall mean (a) any Disposition of any property by any Loan Party and (b) any issuance or sale of any Equity Interests of any Subsidiary of the Borrower, in each case, to any person other than a Loan Party (except in the case of a Permitted Acquisition or Permitted Joint Venture). Notwithstanding the foregoing, none of the following shall constitute “Asset Sales”: (i) any Disposition of assets permitted by, or expressly referred to in, Section 6.04(c), 6.06(a), 6.06(c), 6.06(e), 6.06(f), 6.06(g), 6.06(h), 6.06(i), 6.06(j), 6.06(k), 6.06(n) or 6.06(o); (ii) so long as the ABL Credit Agreement is in effect, the ABL Priority Collateral; and (iii) solely for the purposes of clause (a) above, any Disposition of any property by any Loan Party for Fair Market Value resulting in less than $250,000 in Net Cash Proceeds per Disposition (or series of related Dispositions) and less than $750,000 in Net Cash Proceeds in any Fiscal Year.

“Assignment Agreement” shall mean an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required pursuant to Section 10.04(b)), and accepted by the Administrative Agent, substantially in the form of Exhibit A, or such other form as shall be approved by the Administrative Agent.

“Attributable Indebtedness” shall mean, when used with respect to any Sale and Leaseback Transaction, as at the time of determination, the present value (discounted at a rate equivalent to the Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments (and substantially similar payments) during the remaining term of the lease included in any such Sale and Leaseback Transaction.

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“Authorized Officer” shall mean, as applied to any person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, vice president (or the equivalent thereof), chief financial officer, treasurer or controller of such person; provided that the secretary or assistant secretary of such person shall have delivered an incumbency certificate to the Administrative Agent as to the authority of such Authorized Officer.

“Auction” shall have the meaning assigned to such term in Section 10.04(j)(ii).

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

“Board of Directors” shall mean, with respect to any person, (i) in the case of any corporation, the board of directors of such person, (ii) in the case of any limited liability company, the board of managers or board of directors, as applicable, of such person, or if such limited liability company does not have a board of managers or board of directors, the functional equivalent of the foregoing, (iii) in the case of any partnership, the board of directors or board of managers, as applicable, of the general partner of such person and (iv) in any other case, the functional equivalent of the foregoing.

“Bookrunners” shall have the meaning assigned to such term in the preamble hereto.

“Borrower” shall have the meaning assigned to such term in the preamble hereto.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law or other governmental action to close; provided, however, that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” shall mean, without duplication any expenditure for assets which would be reflected as additions to property, plant or equipment on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP but excluding (a) expenditures made in connection with the replacement, substitution or restoration of property pursuant to Section 2.08(e), (b) the purchase price of equipment that is purchased substantially contemporaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (c) Permitted Acquisitions and (d) Permitted Joint Ventures.

“Capital Lease” shall mean, with respect to any person, any lease of, or other arrangement conveying the right to use, any property by such person as lessee that has been or should be accounted for as a capital lease on a balance sheet of such person prepared in accordance with GAAP.

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“Capital Lease Obligations” of any person shall mean the obligations of such person to pay rent or other amounts under any Capital Lease, any lease entered into as part of any Sale and Leaseback Transaction or any Synthetic Lease, or a combination thereof, which obligations are (or would be, if such Synthetic Lease or other lease were accounted for as a Capital Lease) required to be classified and accounted for as Capital Leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof (or the amount that would be capitalized, if such Synthetic Lease or other lease were accounted for as a Capital Lease) determined in accordance with GAAP.

“Cash Equivalents” shall mean, as of any date of determination, as to any person, any of the following: (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person, (b) time deposits and certificates of deposit or bankers’ acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state or commonwealth thereof or the District of Columbia having, capital and surplus aggregating in excess of $250,000,000 and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such person, (c) commercial paper issued by any person meeting the qualifications specified in clause (b) above, or incorporated in the United States rated at least A-1 or the equivalent thereof by Standard & Poor’s Rating Service or Fitch Rating Limited or at least P-1 or the equivalent thereof by Moody’s Investors Service Inc., and in each case maturing not more than one year after the date of acquisition by such person, (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000, (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985, (f) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) through (e) above, and (ii) has the highest rating obtainable from either S&P or Moody’s, and (e) demand deposit accounts maintained in the ordinary course of business.

“Cash Interest Expense” shall mean, for any period, Consolidated Interest Expense for such period, less interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind or the accretion or capitalization of interest as principal.

“Casualty Event” shall mean any loss of title (other than through a consensual Disposition of such property in accordance with this Agreement) or any loss of or damage to or any destruction of, or any condemnation or other taking (including by any Governmental

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Authority) of, any property of any Loan Party. “Casualty Event” shall include any taking of all or any part of any real property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Legal Requirement, or by reason of the temporary requisition of the use or occupancy of all or any part of any real property of any person or any part thereof by any Governmental Authority, or any settlement in lieu thereof. Notwithstanding the foregoing, “Casualty Event” shall not include (i) the loss of title or loss of or damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of any Loan Party with a Fair Market Value of less than $700,000 in Net Cash Proceeds per such event and less than $1,500,000 in Net Cash Proceeds in any Fiscal Year; and (ii) so long as the ABL Credit Agreement is in effect, the ABL Priority Collateral.

“Casualty Proceeds Receipt Date” shall have the meaning assigned to such term in Section 2.08(e)(i).

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.

A “Change in Control” shall mean the occurrence of any of the following:

(a) prior to an initial public offering of the Borrower (or any holding company of the Borrower), (i) the Permitted Holders (taken collectively) cease to own, or to have the power to vote or direct the voting of, Voting Stock of the Borrower representing a majority of the voting power of the total outstanding Voting Stock of the Borrower or (ii) the Permitted Holders (taken collectively) cease to own Equity Interests representing a majority of the total economic interests of the Equity Interests of the Borrower;

(b) upon and following an initial public offering of the Borrower (or any holding company of the Borrower), any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or group or its respective subsidiaries, and any person acting in its capacity as trustee, agent or fiduciary or administrator of any such plan), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of Voting Stock of Borrower representing more than the greater of (i) 35% of the voting power of the total outstanding Voting Stock of Borrower or (ii) the percentage of the then outstanding Voting Stock of Borrower owned directly or indirectly, by the Permitted Holders collectively; or

(c) upon and following an initial public offering of the Borrower (or any holding company of the Borrower), during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of a majority of the members of the Board of Directors of the Borrower, which members comprising such majority are then still in office and were either directors at the beginning of such period or whose election or nomination for election was previously so approved, or such director received the vote of a Permitted Holder) cease for any reason to constitute a majority of the Board of Directors of the Borrower.

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“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation, policy, or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Charges” shall have the meaning assigned to such term in Section 10.13.

“Class” shall refer, when used in connection with (a) any Loans, to whether such Loans are Initial Loans or Other Loans, (b) any Commitment, to whether such Commitment is an Initial Loan Commitment or an Other Commitment and (c) any Lender, to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Initial Loans, Other Loans, Initial Loan Commitments and Other Commitments that have different terms and conditions, shall be construed to be in different Classes.

“Closing Date” shall mean the date of the initial Credit Extension hereunder.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Collateral” shall mean, collectively, all of the Security Agreement Collateral, the Mortgaged Property and all other property of whatever kind and nature, whether now existing or hereafter acquired, pledged or purported to be pledged as collateral or otherwise subject to a security interest or purported to be subject to a security interest under any Security Document.

“Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Collateral Agent executed by any landlord of Leased Real Property where such landlord (i) acknowledges the Collateral Agent’s Lien on the Collateral, (ii) unless otherwise agreed by the Collateral Agent in writing, releases or subordinates such Person’s Liens in the Collateral held by such landlord or located on such Leased Real Property, (iii) provides the Collateral Agent with access to the Collateral located in or on such Leased Real Property, (iv) as to any landlord, provides the Collateral Agent with a reasonable time to sell or otherwise dispose of the Collateral located on or in such Leased Real Property, and (v) makes such other agreements with the Collateral Agent as the Collateral Agent may reasonably require.

“Collateral Agent” shall have the meaning assigned to such term in the preamble hereto.

“Commitment” shall mean the commitment of a Lender to make Loans to the Borrower and shall include Initial Loan Commitments and Other Commitments, if any, of such Lender, as the context may require, and “Commitments” shall mean such commitments of all Lenders in the aggregate.

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“Compliance Certificate” shall mean a certificate of a Financial Officer of the Borrower substantially in the form of Exhibit C or such other form as may be approved by the Administrative Agent and the Borrower.

“Consolidated Amortization Expense” shall mean, for any period, the amortization expense of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated Current Assets” shall mean, as at any date of determination, the total assets of the Borrower and its Subsidiaries (other than cash, Cash Equivalents and marketable securities) which may properly be classified as current assets on a consolidated balance sheet of the Borrower and its Subsidiaries in accordance with GAAP.

“Consolidated Current Liabilities” shall mean, as at any date of determination, the total liabilities of the Borrower and its Subsidiaries which may properly be classified as current liabilities (other than the current portion of (a) any Loans, (b) any long term Synthetic Lease Obligations, Purchase Money Obligations or Capital Lease Obligations or (c) any other long term Indebtedness) on a consolidated balance sheet of the Borrower and its Subsidiaries in accordance with GAAP.

“Consolidated Depreciation Expense” shall mean, for any period, the depreciation expense of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period, adjusted by (x) adding thereto, without duplication, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income for such period:

(a) Consolidated Interest Expense for such period;

(b) Consolidated Amortization Expense for such period;

(c) Consolidated Depreciation Expense for such period;

(d) Consolidated Tax Expense for such period;

(e) [Reserved];

(f) non-recurring cash costs, fees and expenses directly incurred in connection with the Transactions during such period; provided that no more than $1,500,000 in the aggregate of such costs, fees and expenses which are paid after the Closing Date may be added to Consolidated Net Income pursuant to this clause (f);

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(g) expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to acquisitions, divestitures, restructuring, cost savings initiatives and other similar initiatives after the Closing Date and reasonably projected by the Borrower in good faith to result from actions with respect to which substantial steps have been taken (in the good faith determination of the Borrower) within twelve (12) months after such transaction or initiative is consummated; provided that the aggregate amount of add-backs made pursuant to this clause (g) for any four (4) consecutive quarter period shall not exceed 2.5% of Consolidated EBITDA for such period (without giving effect to any adjustments pursuant to this clause (g));

(h) extraordinary charges and non-recurring charges, which non-recurring charges may include severance costs, relocation costs, signing costs, retention or completion bonuses, and costs and expenses payable to third party consultants;

(i) the aggregate amount of all non-cash charges, including (i) non-cash losses on Dispositions of fixed assets and intangibles, (ii) impairment charges on fixed assets and intangibles, (iii) the amount of reserves provided for in respect of rental payments related to closed stores, (iv) the aggregate amount of all non-cash restricted stock expense, (v) changes in the mark-to-market valuation of any Hedging Obligations, (vi) any non-cash compensation expenses arising from the issuance of Equity Interests, options to purchase Equity Interests and stock appreciation rights for any employees or members of management of the Loan Parties, (vii) non-contractual executive bonus expenses, (viii) deferred rents, (ix) any loss on the Disposition of assets, and (x) any non-cash loss from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments (excluding, in the case of each of the preceding sub-clauses (i) through and including (x), any non-cash charge that results in an accrual of a reserve for cash charges (excluding reserves in respect of rental payments related to closed stores) in any future period or the amortization of a prepaid cash item that was paid in a prior period);

(j) agency fees paid to the Administrative Agent or the Collateral Agent and similar fees paid in respect of the ABL Indebtedness and fees and expenses paid in connection with obtaining or maintaining credit ratings from any ratings agency for the Loans;

(k) to the extent covered by insurance and actually reimbursed or otherwise paid, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed or otherwise paid by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed or otherwise paid within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not denied within such 180 days or so reimbursed or otherwise paid within such 365 days), expenses with respect to liability or casualty events and expenses or losses relating to business interruption; and

(l) fees, allowances or other similar arrangements directly or indirectly paid to members of the Board of Directors of any of the Loan Parties or any of their Subsidiaries in such person’s capacity as a member of such Board of Directors in an aggregate amount not to exceed $250,000 in any period of twelve (12) consecutive months; and

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(y) subtracting therefrom the sum of the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the recognition of any deferred revenue and the accrual of revenue or recording of receivables in the ordinary course of business) for such period.

For purposes of this definition of “Consolidated EBITDA,” the amount of add-backs pursuant to the preceding clauses (x)(g) through (x)(h), inclusive, in any four (4) consecutive quarter period shall not, in the aggregate for all such clauses, exceed 5% of Consolidated EBITDA for such period (without giving effect to any adjustments pursuant to such clauses). For the avoidance of doubt, it is understood and agreed that, (i) to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein and (ii) any amount that may be added back as an adjustment pursuant to clause (x)(i) need not be limited pursuant to the restrictions set forth in the immediately preceding sentence.

Notwithstanding the foregoing, for each Fiscal Quarter ending on a date identified in the table below, Consolidated EBITDA for such Fiscal Quarter shall be deemed to have been the amount set forth opposite such date:

Fiscal Quarter ending:	Consolidated EBITDA
January 28, 2012	$	27,967,040
October 29, 2011	$	4,508,164
July 30, 2011	$	6,587,357
April 30, 2011	$	3,314,341

“Consolidated Indebtedness” shall mean, as at any date of determination, without duplication, the aggregate amount of all Indebtedness described in clauses (a), (b), (c), (d), (f), (g), (h) and (i) of such definition (but, in the case of such clause (i), only in respect of drawn or funded letters of credit, letters of guaranty, bankers’ acceptances or similar credit transactions) and (j) (but, in the case of such clause (j), only in respect of Indebtedness otherwise constituting Consolidated Indebtedness under this definition) thereof of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” shall mean, for any period, the total consolidated interest expense of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP plus, without duplication:

(a) imputed interest on Capital Lease Obligations and Attributable Indebtedness of the Borrower and its Subsidiaries for such period;

(b) commissions, discounts and other fees and charges owed by the Borrower or any of its Subsidiaries with respect to letters of credit securing financial obligations, bankers’ acceptance financing, receivables financings and similar credit transactions for such period; and

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(c) all interest paid or payable with respect to discontinued operations of the Borrower or any of its Subsidiaries for such period;

less, to the extent paid in cash, any interest income for such period,

provided that (a) to the extent directly related to the Transactions, issuance costs, discount or premium and other financing fees and expenses payable by the Borrower or any of its Subsidiaries shall be excluded from the calculation of Consolidated Interest Expense and (b) Consolidated Interest Expense shall be calculated after giving effect to cash costs associated with obtaining Hedging Agreements intended to protect against fluctuations in interest rates.

“Consolidated Net Income” shall mean, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

(a) the net income (or loss) of any person (other than a direct or indirect Subsidiary of the Borrower) in which any person other than any Loan Party has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by the Borrower or (subject to clause (b) below) any of its Wholly Owned Subsidiaries from such person during such period;

(b) the net income of any Subsidiary of the Borrower during such period to the extent that the declaration and/or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement, instrument, Order or other Legal Requirement applicable to that Subsidiary during such period;

(c) earnings (or losses) resulting from any reappraisal, revaluation or write-up (or write-down) of assets; and

(d) any extraordinary or non-recurring non-cash gain or income (or extraordinary or non-recurring non-cash loss or expenses (it being understood that cash write-off or write-down of receivables shall not be deemed to be an extraordinary or non-recurring loss or expense)), together with any related provision for taxes on any such non-cash gain (or the tax effect of any such non-cash loss), recorded or recognized by any Loan Party during such period.

“Consolidated Net Leverage Ratio” shall mean at any date of determination, the ratio of (i) Consolidated Indebtedness on such date net of up to $10,000,000 of unrestricted cash and Cash Equivalents of the Loan Parties at such time to (ii) Consolidated EBITDA for the Test Period then most recently ended.

“Consolidated Tax Expense” shall mean, for any period, the tax expense (including federal, state, local and foreign income taxes) of the Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP.

“Contingent Obligation” shall mean, as to any person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee

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any Indebtedness, Leases, dividends or other obligations (“primary obligations”) of any other person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation, agreement, understanding or arrangement of such person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth, net equity, liquidity, level of income, cash flow or solvency of the primary obligor, (c) to purchase or lease property, securities or services primarily for the purpose of assuring the primary obligor of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) with respect to bankers’ acceptances, letters of credit and similar credit arrangements, until a reimbursement or equivalent obligation arises (which reimbursement obligation shall constitute a primary obligation), or (e) otherwise to assure or hold harmless the primary obligor of any such primary obligation against loss (in whole or in part) in respect thereof; provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties given in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation, or portion thereof, in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument, agreements or other documents or, if applicable, unwritten agreement, evidencing such Contingent Obligation) or, if not stated or determinable, the amount that can reasonably be expected to become an actual or matured liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

“Controlled Investment Affiliate” shall mean, as to any person, any other person which directly or indirectly is in Control of, is Controlled by, or is under common Control with, such person and is organized by such person (or any person Controlling such person) primarily for making equity or debt investments in the Borrower or other portfolio companies of such person, but excluding all such portfolio companies.

“Conversion/Continuation Notice” shall mean a request by the Borrower in accordance with Section 2.06(b), substantially in the form of Exhibit E.

“Credit Agreement Refinancing Indebtedness” shall mean (a) Permitted First Priority Refinancing Debt, (b) Permitted Second Priority Refinancing Debt, (c) Permitted Unsecured Refinancing Debt or (d) Indebtedness incurred or obtained pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in conversion of or exchange for, or to extend, renew, replace or refinance, in whole or in part, existing Loans hereunder (including any successive Credit Agreement Refinancing Indebtedness) (“Refinanced Debt”); provided that (i) such extending, renewing or refinancing Indebtedness is in an original aggregate principal

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amount not greater than the aggregate principal amount of the Refinanced Debt except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such extending, renewing or refinancing Indebtedness, (ii) such Indebtedness has a later maturity and a Weighted Average Life to Maturity equal to or greater than the Refinanced Debt (but in any event on or later than the Maturity Date for the Initial Loans), (iii) unless such Credit Agreement Refinancing Indebtedness is incurred by means of extension, renewal, conversion or exchange without resulting in Net Cash Proceeds, such Refinanced Debt shall be repaid, defeased or satisfied and discharged, and all accrued interest, fees and premiums (if any) in connection therewith shall be paid as set forth in Section 2.08(d)(ii), the definition of “change of control” (or applicable similar definition or provision) thereunder shall be no more favorable to the providers of such Credit Agreement Refinancing Indebtedness than the “Change in Control” definition contained in this Agreement, and (iv) if such Credit Agreement Refinancing Indebtedness results in the extension, renewal, conversion or exchange (as opposed to repayment in cash) of any Class of Loans and/or Commitments, the opportunity to participate in such Credit Agreement Refinancing Indebtedness shall be offered to all Lenders of the affected Class on a ratable basis and allocated among all accepting Lenders of the affected Class first, on a ratable basis equal to an amount obtained by dividing the aggregate principal amount of the Refinanced Debt held by such accepting Lender by the aggregate principal amount of Refinanced Debt held by all Lenders and next, to the extent of any excess to the Refinanced Debt of all accepting Lenders as agreed by the Administrative Agent and the Borrower, pursuant to notice and acceptance procedures to be agreed between the Borrower and the Administrative Agent, each acting reasonably.

“Credit Extension” shall mean the making of a Loan by a Lender.

“Credit Facilities” shall mean the loan facility under this Agreement, including any facility contemplated by Section 2.15.

“Cumulative Credit Availability” shall mean, as of any date, an amount (which shall not be less than zero), determined on a cumulative basis, equal to, without duplication:

(a) the Retained Excess Cash Flow Amount; plus

(b) the cumulative amount of Net Cash Proceeds received after the Closing Date that have been contributed as capital to the Borrower or otherwise received by the Borrower in respect of the issuance of Qualified Capital Stock by the Borrower, but excluding any such sale or issuance by the Borrower of its Equity Interests upon exercise of any warrant or option to directors, officers or employees of the Borrower, plus

(c) the cumulative amount of Net Cash Proceeds that have been contributed as capital to the Borrower or otherwise received by the Borrower in connection with a Qualifying IPO less the amount of such Net Cash Proceeds used to prepay the Loans in accordance with Section 2.08(b), minus

(d) the cumulative amount of Investments made in reliance on Section 6.04(o), minus

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(e) the cumulative amount of Dividends made in reliance on Section 6.08(b), minus

(f) the cumulative amount of Acquisition Consideration paid in respect of Permitted Acquisitions in reliance on Cumulative Credit Availability pursuant to paragraph (viii) of the definition of “Permitted Acquisitions”, minus

(g) the cumulative amount of (i) voluntary or optional payments or prepayments on or (ii) redemptions, retirements, defeasances, or acquisitions for value of or (iii) any prepayments or redemptions as a result of any Disposition, change of control or similar event of, Junior Financing made in reliance on clause (II) of the proviso in Section 6.11(a).

“Debt Fund Affiliate” shall mean any Affiliate of the Borrower that is a bona fide debt fund or an investment vehicle that is engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course and for which any equity fund which has a direct or indirect equity investment in the Borrower or any Subsidiary of the Borrower does not make any investment decisions.

“Debt Issuance” shall mean the incurrence by any Loan Party of any Indebtedness after the Closing Date (other than as permitted by Section 6.01).

“Debt Service” shall mean, for any period, Cash Interest Expense for such period plus scheduled principal amortization and mandatory principal repayments (whether pursuant to this Agreement or otherwise) of all Indebtedness for such period.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

“Default” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

“Default Excess” shall mean, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender.

“Default Period” shall mean, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (a) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (b) the date on which (i) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.13 or Section 2.14 or by a combination thereof) and (ii) such Defaulting Lender shall have delivered to the Borrower and the Administrative Agent a

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written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (c) the date on which the Borrower, the Administrative Agent and the Required Lenders waive all Funding Defaults of such Defaulting Lender in writing.

“Default Rate” shall have the meaning assigned to such term in Section 2.04(c).

“Defaulted Loan” shall have the meaning assigned to such term in Section 2.14.

“Defaulting Lender” shall have the meaning assigned to such term in Section 2.14.

“Disposition” shall mean, with respect to any property, any conveyance, sale, lease, sublease, assignment, transfer or other disposition of such property (including (i) by way of merger or consolidation, (ii) any Sale and Leaseback Transaction and (iii) any Synthetic Lease).

“Disqualified Capital Stock” shall mean any Equity Interest which, by its terms (or by the terms of any security or instrument into which it is convertible or for which it is exchangeable or exercisable), or upon the happening of any event (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments) or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date, (b) is convertible into or exchangeable or exercisable (unless at the sole option of the issuer thereof) for (i) debt securities or other indebtedness or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase or payment obligation which may come into effect prior to the first anniversary of the Final Maturity Date (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments).

“Disqualified Institution” shall mean (a) any person identified by the Borrower to the Administrative Agent in writing and approved by the Administrative Agent prior to the Closing Date and (b) any other person deemed by the Borrower, in good faith, to be a direct or indirect competitor of the Borrower or any of its Subsidiaries and designated by the Borrower as such from time to time after the Closing Date in a certificate (which shall set forth in reasonable detail the basis for each applicable designation) duly executed by a Responsible Officer of the Borrower.

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“Disregarded Domestic Person” shall mean any direct or indirect Domestic Subsidiary that is treated as a disregarded entity for United States federal income tax purposes if substantially all of its assets consist of the equity of one or more direct or indirect Foreign Subsidiaries.

“Distribution Center” shall mean the proposed second distribution center of the Borrower which is anticipated to be located in the southern United States or in the mid-western region of the United States and purchased or developed by a Loan Party at a cost of approximately $28,000,000.

“Dividend” shall mean, with respect to any person, that such person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or authorized or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants issued by such person with respect to its Equity Interests), or set aside or otherwise reserved, directly or indirectly, any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for consideration any of the outstanding Equity Interests of such person (or any options or warrants issued by such person with respect to its Equity Interests). Without limiting the foregoing, “Dividends” with respect to any person shall also include all payments made or required to be made by such person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of or otherwise reserving any funds for the foregoing purposes.

“Documentation Agent” shall have the meaning assigned to such term in the preamble hereto.

“Dollars” or “$” shall mean lawful money of the United States.

“Domestic Subsidiary” shall mean any Subsidiary other than a Foreign Subsidiary.

“Effective Yield” shall mean, as to any Loans of any Class, the effective yield on such Loans as determined in good faith by the Administrative Agent, taking into account the applicable interest rate margins, any interest rate floors or similar devices and all fees, including upfront or similar fees or original issue discount (amortized over the shorter of (x) the life of such Loans and (y) four years following the date of incurrence thereof) payable generally to the Lenders making such Loans, but excluding any arrangement, structuring or other fees payable in connection therewith that are not generally shared with the relevant Lenders and customary consent fees paid generally to consenting Lenders. All such determinations made by the Administrative Agent shall, absent manifest error, be final, conclusive and binding on the Borrower and the Lenders, and the Administrative Agent shall have no liability to any person with respect to such determination absent gross negligence or willful misconduct.

“Employee Benefit Plan” shall mean any “employee benefit plan” as defined in Section 3(3) of ERISA which is maintained by any Loan Party or any ERISA Affiliate.

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“Environment” shall mean air, land, soil, surface waters, ground waters, wetlands, stream and river sediments, biota and any indoor area.

“Environmental Claim” shall mean any claim, notice, demand, Order, action, suit, proceeding, or other communication alleging or asserting liability or obligations under Environmental Law, including liability or obligation for investigation, assessment, remediation, removal, cleanup, Response, corrective action, restoration, monitoring, post-remedial or post-closure studies, investigations, operations and maintenance, injury, damage, destruction or loss to natural resources, personal injury, wrongful death, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release of Hazardous Material in, on, into, under or from the Environment at any location or (ii) any violation of or non-compliance with Environmental Law.

“Environmental Law” shall mean any and all applicable current and future Legal Requirements relating to the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or occupational safety or health.

“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental Response, fines, penalties or indemnities), of the Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the Environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interest” shall mean, with respect to any person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited), or if such person is a limited liability company, membership interests and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued on or after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.

“Equity Issuance” shall mean, without duplication, (i) any issuance or sale by the Borrower after the Closing Date of any Equity Interests in the Borrower (including any Equity Interests issued upon exercise of any warrant or option or equity-based derivative) or any warrants or options or equity-based derivatives to purchase Equity Interests in the Borrower or (ii) any contribution to the capital of the Borrower; provided, however, that an Equity Issuance shall not include any Preferred Stock Issuance or Debt Issuance.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

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“ERISA Affiliate” shall mean, with respect to any person, any trade or business (whether or not incorporated) that is, along with any Loan Party, treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code; provided, however, that any former ERISA Affiliate of such person or any of its Subsidiaries shall continue to be considered an ERISA Affiliate with respect to liabilities arising after such period for which such person or such Subsidiary could reasonably be expected to be liable under Title IV of ERISA.

“ERISA Event” shall mean (a) a “reportable event” within the meaning of Section 4043(c) of ERISA and the regulations issued thereunder with respect to any Pension Plan other than such events for which the provision of 30-day notice is waived under such regulations; (b) the failure to meet the minimum funding standard of Section 412 or 430 of the Code with respect to any Pension Plan (whether or not waived), or a determination that any Pension Plan is, or is expected to be, considered an at-risk Plan within the meaning of Section 430 of the Code or Section 303 of ERISA, or the failure to make any required contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by any Loan Party or any ERISA Affiliate from any Pension Plan with two (2) or more contributing sponsors resulting in liability pursuant to Section 4063 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on any Loan Party or any ERISA Affiliate pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of any Loan Party or any ERISA Affiliate in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by any Loan Party or any ERISA Affiliate of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or it intends to terminate or has terminated under Section 4041A or 4042 of ERISA, or a Multiemployer Plan is in endangered or critical status under Section 432 of the Code or Section 305 of ERISA; or (h) the imposition of a Lien pursuant to Section 430 of the Code or pursuant to Section 303 or Title IV of ERISA with respect to any Pension Plan.

“Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.

“Event of Default” shall have the meaning assigned to such term in Article VIII.

“Excess Cash Flow” shall mean, for any Excess Cash Flow Period, the sum, without duplication, of:

(a) the sum, without duplication, of:

(i) Consolidated EBITDA for such Excess Cash Flow Period; and

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(ii) the decrease, if any, in the Net Working Capital from the beginning to the end of such Excess Cash Flow Period; minus

(b) the sum, without duplication, of:

(i) the amount of any cash Consolidated Tax Expense paid by the Borrower and its Subsidiaries with respect to such Excess Cash Flow Period;

(ii) the amount of Debt Service for such Excess Cash Flow Period;

(iii) permanent repayments and prepayments of Indebtedness made by the Borrower and its Subsidiaries during such Excess Cash Flow Period (other than repayments and prepayments of Loans) but only to the extent that (A) (i) such repayments and prepayments by their terms cannot be reborrowed or redrawn, and (ii) such repayments and prepayments do not occur in connection with a refinancing of all or a portion of such Indebtedness, and (B) the amounts used to make such payments are not funded from Externally Generated Funds;

(iv) the increase, if any, in the Net Working Capital from the beginning to the end of such Excess Cash Flow Period;

(v) [Reserved];

(vi) cash items of expense (including losses) during such Excess Cash Flow Period not deducted in calculating Consolidated EBITDA (including, without limitation, the cash items in paragraphs (j) and (k) in the definition of Consolidated EBITDA);

(vii) the amount of any non-cash gain included in Consolidated EBITDA for such Excess Cash Flow Period recognized as a result of any Asset Sale; and

(viii) Capital Expenditures made in cash during such Excess Cash Flow Period to the extent not funded from Externally Generated Funds.

“Excess Cash Flow Period” shall mean each Fiscal Year of the Borrower beginning with the fiscal year ended January 30, 2013.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Excluded Subsidiary” shall mean (a) any Subsidiary that is not a Wholly Owned Subsidiary, (b) any Immaterial Subsidiary, (c) any Subsidiary that is prohibited by applicable law, regulation or contractual obligation from guaranteeing the Obligations or that would require governmental (including regulatory) consent, approval, license or authorization in order to provide such guarantee or where the making of such guarantee would result in material adverse tax consequences (as reasonably determined by the Borrower), (d) any Domestic Subsidiary of the Borrower that is a Disregarded Domestic Person, (e) any direct or indirect Domestic Subsidiary of a direct or indirect Foreign Subsidiary of the Borrower, (f) any Foreign Subsidiary and (g) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower, the burden or cost of providing a guarantee of the Obligations shall outweigh the benefits to be afforded thereby.

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“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income taxes, branch profits taxes (including those imposed in a jurisdiction in which the Borrower is located), franchise taxes (imposed in lieu of income taxes) or other Taxes imposed on (or measured by) its net income by the United States, or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located, or in which it is doing business, or in which it has a present or former connection (other than such a connection resulting from a Secured Party having executed or delivered, or performed its obligations, or received a payment under, or enforced any Loan Document) or, in the case of any Lender, in which its applicable lending office is located, and (b) in the case of a Foreign Lender, (i) any withholding Taxes imposed under FATCA and (ii) other than an assignee pursuant to a request by the Borrower under Section 2.13, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.12(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.12 (it being understood and agreed, for the avoidance of doubt, that any withholding tax imposed on a Foreign Lender as a result of a change in law occurring after the time such Foreign Lender becomes a party to this Agreement shall not be an Excluded Tax).

“Executive Order” shall have the meaning assigned to such term in Section 3.17(a).

“Existing Lien” shall have the meaning assigned to such term in Section 6.02(c).

“Externally Generated Funds” shall mean funds generated from the proceeds of any Indebtedness, Equity Issuance, Asset Sale or Casualty Event (in each case, without regard to the exclusions from the definitions of Debt Issuance, Equity Issuance, Asset Sale or Casualty Event).

“Fair Market Value” shall mean, with respect to any asset (including any Equity Interests of any person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the Board of Directors or, pursuant to a specific delegation of authority by such Board of Directors or a designated senior executive officer, of the Borrower or the Subsidiary of the Borrower selling such asset.

“FATCA” shall mean, Section 1471 through 1474 of the Code as in existence on the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations thereunder or published administrative guidance implementing such Sections.

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“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary to the next 1/100th of 1%) of the quotations for the day for such transactions received by the Administrative Agent from three (3) federal funds brokers of recognized standing selected by it.

“Fee Letter” shall mean the confidential Fee Letter, dated May 16, 2012 among the Borrower and Goldman Sachs.

“Fees” shall mean the Administrative Agent Fees and the other fees referred to in Section 2.03(b).

“Final Maturity Date” shall mean, at any date of determination, the latest Maturity Date applicable to any Loan or Commitment hereunder at such time, including the latest Maturity Date of any Class of Initial Loans or Other Loans.

“Financial Officer” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person or such other financial officer with reasonably equivalent responsibilities as the foregoing persons.

“Fiscal Quarter” shall mean each period of thirteen or fourteen weeks ending on or about April 30, July 31, October 31 and January 31.

“Fiscal Year” shall mean the twelve (12) month period ending on the Saturday closest to January 31 of the following year.

“Flood Zone” shall mean areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

“Foreign Lender” shall mean any Lender that is not, for United States federal income tax purposes, (a) a citizen or resident of the United States, (b) a corporation or entity treated as a corporation created or organized in or under the laws of the United States, or any political subdivision thereof, (c) an estate whose income is subject to U.S. federal income taxation regardless of its source or (d) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust.

“Foreign Subsidiary” shall mean (a) a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia (and including a Subsidiary of such a Subsidiary) and (b) any direct or indirect Subsidiary that is (i) a “controlled foreign corporation” within the meaning of Section 957(a) of the Code and any Subsidiary of such controlled foreign corporation or (ii) a domestic corporation or domestic partnership for U.S. federal income tax purposes, all or substantially all of whose assets consist of Equity Interests in one or more entities described in clause (i) above.

“Funding Default” as defined in Section 2.14.

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“Funding Notice” shall mean a notice substantially in the form of Exhibit B.

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis.

“Governmental Authority” shall mean any federal, state, local or foreign (whether civil, criminal, military or otherwise) court, central bank or governmental agency, tribunal, authority, instrumentality or regulatory body or any subdivision thereof or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Granting Lender” shall have the meaning assigned to such term in Section 10.04(h).

“Guarantee Joinder Agreement” shall mean a joinder agreement substantially in the form of Exhibit K or such other form as shall be approved by the Collateral Agent and the Borrower.

“Guaranteed Obligations” shall have the meaning assigned to such term in Section 7.01.

“Guarantees” shall mean the guarantees issued pursuant to Article VII by the Guarantors.

“Guarantor” shall mean each Domestic Subsidiary of any Loan Party that is or becomes a party to this Agreement and the Security Documents pursuant to Section 5.11; provided, however, that the Guarantors shall not include any Excluded Subsidiary.

“Hazardous Materials” shall mean any substance, material or waste defined or regulated under any Environmental Law as “hazardous,” “toxic,” a “pollutant,” a “contaminant,” or words of similar meaning and effect, including mold, asbestos or any asbestos-containing materials in any form or condition, lead-based paint, urea formaldehyde, pesticides, radon or any other radioactive materials including any source, special nuclear or by-product material, petroleum, petroleum products, petroleum-derived substances, and crude oil or any fraction thereof.

“Hedging Agreement” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, currency swap transactions, cross-currency rate swap transactions, currency options, cap transactions, floor transactions, collar transactions, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options or warrants to enter into any of the foregoing), whether or not any such transaction is governed by, or otherwise subject to, any master agreement or any netting agreement, and (b) any and all transactions or arrangements of any kind, and the related confirmations, which are subject to the terms and conditions of, or

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governed by, any form of master agreement (or similar documentation) published from time to time by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such agreement or documentation, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Hedging Obligations” shall mean obligations under or with respect to Hedging Agreements.

“Hedging Termination Value” shall mean, in respect of any one or more Hedging Agreements, after taking into account the effect of any netting agreements relating to such Hedging Agreements (to the extent, and only to the extent, such netting agreements are legally enforceable in Insolvency Proceedings against the applicable counterparty obligor thereunder), (a) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in preceding clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include an Agent, a Lender or any Affiliate of an Agent or a Lender).

“Historical Financial Statements” shall mean as of the Closing Date, (a) the audited financial statements of the Borrower and its Subsidiaries, for the immediately preceding three (3) Fiscal Years, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (b) the unaudited financial statements of the Borrower and its Subsidiaries as of the most recent Fiscal Quarter ended after the date of the most recent audited financial statements, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the three (3) month period ending on such date, and, in the case of clauses (a) and (b), certified by the chief financial officer of the Borrower that they fairly present, in all material respects, the financial condition of the Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

“Immaterial Subsidiaries” shall mean all Subsidiaries of the Borrower designated as such in writing by the Borrower to the Administrative Agent from time to time for which (a) the aggregate value of assets of any such Subsidiary does not exceed 2% of the consolidated total assets of the Borrower and its Subsidiaries, (b) the aggregate value of assets of all such Subsidiaries does not exceed 5% of the consolidated total assets of the Borrower and its Subsidiaries, (c) the gross revenue of such Subsidiary does not exceed 2% of the consolidated gross revenues of the Borrower and its Subsidiaries and (d) the aggregate gross revenues of all such Subsidiaries does not exceed 5% of the consolidated gross revenues of the Borrower and its Subsidiaries, in each case determined as of the last day of the most recent Fiscal Quarter or Fiscal Year for which financial statements have been delivered in accordance with Section 5.01. If, at any time and from time to time after the Closing Date, one or more Subsidiaries shall cease to qualify as “Immaterial Subsidiaries”, then the Borrower shall, on the date on which financial statements are in accordance with Section 5.01 for such Fiscal Quarter or Fiscal Year, as the case

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may be, delivered pursuant to this Agreement, designate in writing to the Administrative Agent one or more of such Subsidiaries (which shall cease to constitute “Immaterial Subsidiaries”) as may be necessary to ensure compliance with this definition.

“Indebtedness” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes, loan agreements or similar instruments; (c) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all obligations of such person issued or assumed as part of the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than ninety (90) days); (e) all Indebtedness secured by any Lien on property owned or acquired by such person (including indebtedness arising under conditional sales or other title retention agreements), whether or not the obligations secured thereby have been assumed, but limited to the lower of (i) the Fair Market Value of such property and (ii) the amount of the Indebtedness secured; (f) all Capital Lease Obligations, Purchase Money Obligations and Synthetic Lease Obligations of such person; (g) all obligations of such person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Equity Interests of such person, valued, in the case of a redeemable preferred Equity Interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (h) all Hedging Obligations, valued at the Hedging Termination Value thereof; (i) all obligations of such person for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; and (j) all Contingent Obligations of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person’s ownership interest in or other relationship with such entity, except (other than in the case of general partner liability) to the extent that terms of such Indebtedness expressly provide that such person is not liable therefor.

“Indemnified Liabilities” shall mean, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect, special or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Loan Documents or the transactions contemplated

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hereby or thereby (including the Lenders’ agreement to make Credit Extensions, the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, any amendments, waivers or consents with respect to any provision of this Agreement or any of the other Loan Documents, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guarantees)); (ii) the fee and engagement letters delivered by any Agent or any Lender to the Borrower with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of the Borrower or any of its Subsidiaries.

“Indemnified Taxes” shall mean (a) Taxes other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Indemnitee” shall have the meaning assigned to such term in Section 10.03(b).

“Information” shall have the meaning assigned to such term in Section 10.12.

“Initial Loan” shall mean a term loan made by the Lenders to the Borrower on the Closing Date pursuant to Section 2.01(a).

“Initial Loan Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender as in effect on the Closing Date to make an Initial Loan hereunder in the amount set forth on Annex I to this Agreement or on Schedule 1 to the Assignment Agreement pursuant to which such Lender assumed its Initial Loan Commitment, as applicable, as the same may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The aggregate principal amount of the Lenders’ “Initial Loan Commitments” on the Closing Date is $100,000,000.

“Insolvency Laws” shall mean the Bankruptcy Code of the United States, and all other insolvency, bankruptcy, receivership, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, rearrangement, reorganization, or similar applicable Legal Requirements of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Insolvency Proceeding” shall mean (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, formal or informal moratorium, composition, marshaling of assets for creditors or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case, undertaken under United States federal or state or non-United States Legal Requirements, including the Bankruptcy Code of the United States.

“Insurance Policies” shall mean the insurance policies and coverages required to be maintained by each Loan Party that is an owner or lessee of Mortgaged Property with respect to the applicable Mortgaged Property pursuant to Section 5.05 and all renewals and extensions thereof.

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“Intellectual Property” shall have the meaning assigned to such term in Section 3.06(a).

“Intercompany Note” shall mean an intercompany demand promissory note substantially in the form of Exhibit D.

“Intercreditor Agreement” shall mean an intercreditor agreement among, inter alias, the Administrative Agent, the Collateral Agent and one or more Senior Representatives for holders of Permitted First Priority Refinancing Debt or Permitted Second Priority Refinancing Debt, as the case may be, providing that, inter alia, the Liens on the Collateral as between the Collateral Agent (for the benefit of the Secured Parties) and one or more Senior Representatives (for the benefit of the holders of Permitted First Priority Refinancing Debt or Permitted Second Priority Refinancing Debt, as the case may be) shall be pari passu or subordinate in right of payment and pari passu or subordinate with respect to security, in each case as the context may require, with any remaining Credit Facilities, as such intercreditor agreement may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. The Intercreditor Agreement shall be in a form customary for transactions of the type contemplated thereby and otherwise reasonably satisfactory to the Administrative Agent, the Collateral Agent, the Required Lenders and the Borrower.

“Interest Payment Date” shall mean (a) with respect to any ABR Loan of any Class, the last Business Day of each Fiscal Quarter to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan of any Class, the last day of the Interest Period applicable to the Loan of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three (3) months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three (3) months’ duration after the first day of such Interest Period, (c) with respect to any Loan of any Class, the Maturity Date and, after such maturity, on each date on which demand for payment is made.

“Interest Rate Determination Date” shall mean, with respect to any Interest Period, the date that is two (2) Business Days prior to the first day of such Interest Period.

“Interest Period” shall mean, with respect to any Eurodollar Loan, the period commencing on the date of such Loan and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter (or, in each case if available to all relevant affected Lenders, nine (9) or twelve (12) months thereafter or, with the consent of the Lenders, such shorter period as may be selected by the Borrower); provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Loan initially shall be the date on which such Loan is made and thereafter shall be the effective date of the most recent conversion or continuation of such Loan.

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“Investments” shall have the meaning assigned to such term in Section 6.04.

“Joinder Agreement” shall mean (a) a Security Joinder Agreement and/or (b) a Guarantee Joinder Agreement, as the case may be.

“Junior Financing” has the meaning set forth in Section 6.11(a).

“Junior Financing Documentation” shall mean any documentation governing any Junior Financing.

“Leased Real Property” shall have the meaning assigned to such term in Section 3.05(b).

“Leases” shall mean any and all leases, licenses, subleases, sublicenses, tenancies, options, concession agreements, rental agreements, occupancy agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, relating to tenancy of real property or rights of use or occupancy of all or any portion of any real property.

“Legal Requirements” shall mean, as to any person, the Organizational Documents of such person, and any treaty, law (including the common law), statute, ordinance, code, rule, regulation, guidelines, license, permit requirement, Order or determination of an arbitrator or a court or other Governmental Authority, and the interpretation or administration thereof, in each case applicable to or binding upon such person or any of its property or to which such person or any of its property is subject.

“Lender Counterparty” shall mean each Lender, each Agent and each of their respective Affiliates counterparty to a Hedging Agreement (including any person who is an Agent or a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after entering into a Hedging Agreement, ceases to be an Agent or a Lender, as the case may be); provided, at the time of entering into a Hedging Agreement, no Lender Counterparty shall be a Defaulting Lender.

“Lenders” shall mean (a) the financial institutions and other persons party hereto as “Lenders” on the date hereof, and (b) each financial institutions or other person that becomes a party hereto pursuant to an Assignment Agreement or a Refinancing Amendment, other than, in each case, any such financial institution or person that has ceased to be a party hereto pursuant to (i) an Assignment Agreement or (ii) the operation of Section 2.13.

“Lien” shall mean, (a) with respect to any property, (i) any mortgage, deed of trust, lien (statutory or other), pledge, encumbrance, claim, charge, assignment, hypothecation, deposit arrangement, security interest or encumbrance of any kind or any arrangement to provide priority or preference or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, servitude, right-of-way or other encumbrance on title to real property, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing, and (ii) the interest of a vendor or a lessor under any

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conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property, and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Loan Documents” shall mean this Agreement, the Notes (if any), the Security Documents, any Hedging Agreement entered into pursuant to Section 5.10, each Joinder Agreement, the ABL Intercreditor Agreement, any Intercreditor Agreement (if any) and, except for purposes of Section 10.02(a), the Fee Letter.

“Loan Parties” shall mean the Borrower and the Guarantors.

“Loans” shall mean the Initial Loans and/or any Other Loans, as the context may require. Each Loan shall either be an ABR Loan or a Eurodollar Loan.

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

“Material Adverse Effect” shall mean (a) a material adverse effect on the business, assets, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole, (b) a material and adverse effect on the rights and remedies of the Administrative Agent (taken as a whole) under the Loan Documents or (c) a material and adverse effect on the ability of the Borrower and the Guarantors (taken as a whole) to perform their payment Obligations under the Loan Documents.

“Material Indebtedness” shall mean (a) the Indebtedness listed on Schedule 1.01(a) and (b) any other Indebtedness (other than the Loans) or Hedging Obligations of any Loan Party in an aggregate outstanding principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the “principal amount” in respect of any Hedging Obligations of any Loan Party at any time shall be the Hedging Termination Value thereof at such time.

“Material Real Property” shall mean Owned Real Property with a Fair Market Value in excess of $2,000,000.

“Maturity Date” shall mean (a) with respect to the Initial Loans, the date that is three (3) years after the Closing Date; provided that if a Qualifying IPO of the Borrower shall not have been consummated within twelve (12) months of the Closing Date, then “Maturity Date” shall mean the date that is two (2) years after the Closing Date and (b) with respect to the Other Loans, as set forth in the applicable Refinancing Amendment.

“Maximum Rate” shall have the meaning assigned to such term in Section 10.13.

“Mortgage” shall mean an agreement, including a mortgage, deed of trust or any other document, creating and evidencing a Lien (subject only to Permitted Collateral Liens) on a Mortgaged Property as security for the Secured Obligations, which shall be in a form reasonably satisfactory to the Collateral Agent and the Borrower, with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign Legal Requirements.

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“Mortgaged Property” shall mean each parcel of fee-owned Material Real Property, if any, and improvements thereto which shall be subject to a Mortgage delivered after the Closing Date pursuant to Section 5.11(d).

“Multiemployer Plan” shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA, (a) to which any Loan Party or any ERISA Affiliate is then making or accruing an obligation to make contributions, or (b) to which any Loan Party or any ERISA Affiliate has within the preceding six plan years made or been obligated to make contributions.

“Net Cash Proceeds” shall mean:

(a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the proceeds thereof in the form of cash, Cash Equivalents and marketable securities (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable, or by the sale, transfer or other Disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) received by the Borrower or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by the Borrower or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) reasonable and customary selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and the Borrower’s good faith estimate of income taxes paid or payable in connection with such sale), (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by the Borrower or any of its Subsidiaries associated with the properties sold in such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money that is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than the Obligations and any such other Indebtedness assumed by the purchaser of such properties);

(b) with respect to any (i) Debt Issuance, (ii) Equity Issuance or (iii) other issuance or sale of Equity Interests by the Borrower or any of its Subsidiaries, the cash proceeds thereof received by the Borrower or any of its Subsidiaries, net of reasonable and customary fees, commissions, costs and other expenses incurred in connection therewith; and

(c) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received by the Borrower or any of its Subsidiaries in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event.

“Net Working Capital” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time.

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“Non-Debt Fund Affiliate” shall mean any Affiliate of the Borrower other than (a) any Subsidiary of the Borrower, (b) any Debt Fund Affiliate and (c) any natural person.

“Non-Public Information” shall mean material non-public information (within the meaning of United States federal, state or other applicable securities laws) with respect to the Borrower or its Subsidiaries or their Securities.

“Notes” shall mean any notes evidencing the Loans, in each case issued pursuant to Section 2.02(e), if any, substantially in the form of Exhibit G.

“Notice of Intent to Cure” shall have the meaning assigned to such term in Section 8.02.

“Obligations” shall mean (a) all obligations of the Borrower and the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing at the applicable contract rate during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations at the applicable contract rate incurred during the pendency of any Insolvency Proceeding, regardless of whether allowed or allowable in such Insolvency Proceeding), of the Borrower and the other Loan Parties under this Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower and the other Loan Parties under or pursuant to this Agreement and the other Loan Documents, in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising.

“OFAC” shall have the meaning assigned to such term in Section 3.17(b).

“Offer Loans” shall have the meaning assigned to such term in Section 10.04(j)(ii).

“Officers’ Certificate” shall mean a certificate executed by (a) a Responsible Officer of the relevant Loan Party and (b) if such certificate relates to financial matters, one of the Financial Officers of the relevant Loan Party, in each case in his or her official (and not individual) capacity.

“Order” shall mean any judgment, decree, verdict, order, consent order, consent decree, writ, declaration or injunction.

“Organizational Documents” shall mean, with respect to any person, (a) in the case of any corporation, the certificate of incorporation or deed of incorporation and by-laws (or similar documents) of such person, (b) in the case of any limited liability company, the certificate or articles of formation or organization and operating agreement or memorandum and articles of association (or similar constitutive documents) of such person, (c) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar

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constitutive documents) of such person (and, where applicable, the equityholders or shareholders registry of such person), (d) in the case of any general partnership, the partnership agreement (or similar constitutive document) of such person, (e) in any other case, the functional equivalent of the foregoing, and (f) any shareholder, voting trust or similar agreement between or among any holders of Equity Interests of such person.

“Other Commitments” shall mean one or more Series of term loan commitments to make Other Loans hereunder that result from a Refinancing Amendment.

“Other Lender” shall mean a Lender with an outstanding Other Loan of a given Series or with an Other Commitment of a given Series.

“Other Loans” shall mean one or more Series of Loans (other than Initial Loans) that result from a Refinancing Amendment.

“Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges (including fees and expenses to the extent incurred as a result of any such taxes or charges) or similar levies (including interest, fines, penalties and additions resulting from any of the foregoing) arising from any payment made or required to be made under, or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Loan Document or any transaction contemplated therein.

“Owned Real Property” shall have the meaning assigned to such term in Section 3.05(b).

“Participant” shall have the meaning assigned to such term in Section 10.04(e).

“Participant Register” shall have the meaning assigned to such term in Section 10.04(e).

“Patriot Act” shall have the meaning assigned to such term in Section 3.17(a).

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“Pension Plan” shall mean any employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Loan Party or any ERISA Affiliate or with respect to which any Loan Party could reasonably be expected to incur liability (including under Section 4069 of ERISA).

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“Permitted Acquisition” shall mean any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any person, or of any business or division of any person, (b) acquisition of all or substantially all the Equity Interests of any person, and otherwise causing such person to become a Subsidiary of such person, or (c) merger or consolidation or any other combination with any person, subject to satisfaction of each of the following conditions:

(i) no Default or Event of Default then exists or would result therefrom;

(ii) after giving effect to such transaction on a Pro Forma Basis, the Borrower shall be in compliance with the financial covenant set forth in Section 6.10 as of the most recent Test Period (assuming, for purposes of Section 6.10, that such transaction had occurred on the first day of such relevant Test Period);

(iii) no Loan Party shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or Contingent Obligation (including any material tax or ERISA liability) of the related seller or the business, person or properties acquired, except (A) to the extent permitted under Section 6.01 and (B) obligations incurred in the ordinary course of business that do not constitute Indebtedness (and not in anticipation of such acquisition) and necessary or desirable to the continued operation of the underlying business, persons or properties being so acquired, and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Loan Party hereunder shall be paid in full or released as to the business, persons or properties being so acquired on or before the consummation of such acquisition;

(iv) the person or business to be acquired shall be, or shall be engaged in, a business of the type that the Borrower and its Subsidiaries are permitted to be engaged in under Section 6.14 and the property acquired in connection with any such transaction shall be made subject to the Lien of the Security Documents in accordance with Section 5.12 and shall be free and clear of any Liens, other than Permitted Liens;

(v) the Board of Directors of the person to be acquired shall not have indicated its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn);

(vi) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Legal Requirements;

(vii) at least ten (10) Business Days prior to the proposed date of consummation of the transaction, the Borrower shall have delivered to the Administrative Agent an Officers’ Certificate certifying that such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance);

(viii) the Acquisition Consideration for any acquisition of the Equity Interests of any person that does not become a Guarantor shall not exceed $1,000,000, and the aggregate amount of the Acquisition Consideration for all such acquisitions and Permitted Joint Ventures since the Closing Date shall not exceed $2,500,000 plus the Cumulative Credit Availability at such time; provided that no Cumulative Credit Availability will be permitted to be used as Acquisition Consideration for any Permitted Acquisition unless prior to the making of such Permitted Acquisition, the Borrower shall have delivered to the Administrative Agent a certificate executed by a Financial Officer, calculating in reasonable detail the amount of Cumulative Credit Availability immediately prior to such Permitted

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Acquisition and the amount thereof to be so applied and certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clause (i), and containing the calculations (in reasonable detail) required by preceding clause (i); provided, further, that no Equity Interests constituting all or a portion of such Acquisition Consideration shall require any payments or other distributions of cash or property in respect thereof, or any purchases, redemptions or other acquisitions thereof for cash or property, in each case prior to the date which is 91 days following payment in full and performance of the Obligations; and

(ix)(a) in the case of an acquisition of all or substantially all of the property of any person, (A) the person making such acquisition is the Borrower or a Guarantor and (B) to the extent required under the Loan Documents, including Section 5.12, upon consummation of the Permitted Acquisition, the person being so acquired becomes a Guarantor, (b) in the case of an acquisition of all or substantially all of the Equity Interests of any person, (A) the person making such acquisition is the Borrower or a Guarantor and (B) to the extent required under the Loan Documents, including Section 5.12, upon consummation of the Permitted Acquisition, the person the Equity Interests of which are being so acquired becomes a Guarantor, and (c) in the case of a merger or consolidation or any other combination with any person, the person surviving such merger, consolidation or other combination (x) is the Borrower or a Guarantor or (y) to the extent required under the Loan Documents, including Section 5.12, upon consummation of the Permitted Acquisition becomes a Guarantor.

“Permitted Collateral Liens” shall mean (a) in the case of Collateral other than Mortgaged Property, Permitted Liens and (b) in the case of Mortgaged Property, “Permitted Collateral Liens” shall mean the Liens described in clauses (a), (b), (c), (d), (e), (g), (n), (u), (v), (w) and (x) of Section 6.02; provided, however, on the Closing Date or upon the date of delivery of each additional Mortgage under Section 5.11 or Section 5.12, Permitted Collateral Liens shall mean only those Liens that are (i) identified on a schedule to the applicable Mortgage, (ii) excepted as being prior to the Lien of such Mortgage as set forth in the Title Policy (or commitment therefor) relating to such Mortgaged Property issued by the applicable Title Company and (iii) other Permitted Liens.

“Permitted First Priority Refinancing Debt” shall mean any secured Indebtedness incurred by the Borrower in the form of one or more series of senior secured notes or senior secured loans; provided that (a) such Indebtedness is secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Secured Obligations and is not secured by any property or assets of the Borrower or any Subsidiary other than the Collateral, (b) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of any Class of Loans and/or Commitments (including portions of Classes of Loans and/or Commitments), (c) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is 181 days after the Final Maturity Date (determined immediately prior to the time such Indebtedness is incurred), (d) the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (e) such Indebtedness is not guaranteed by any Subsidiaries other than the Guarantors, (f) the terms and conditions of such Indebtedness (including with respect to amortization, covenants, defaults, remedies and guaranty provisions, if any, but excluding interest rates, fees, optional prepayment and redemption provisions) shall reflect market terms and conditions precedent at the time of incurrence but shall

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be substantially the same as to, or otherwise less favorable to, the Lenders providing such Indebtedness than those applicable to the then outstanding Class of Loans and/or Commitments being so refinanced, except to the extent such covenants and other terms apply solely to any period after the date that is 181 days after the Final Maturity Date at the time such Indebtedness is incurred and (g) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the ABL Intercreditor Agreement and/or an Intercreditor Agreement with respect thereto.

“Permitted Hedging Agreement” shall mean any Hedging Agreement to the extent constituting a swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies, in each case entered into in the ordinary course of business and not for speculative purposes or taking a “market view.”

“Permitted Holders” shall mean (a) the Sponsor and (b) any Controlled Investment Affiliates thereof.

“Permitted Joint Venture” shall mean any person that is organized under the laws of the United States or the District of Columbia and a portion of the Equity Interests of which are acquired by a Loan Party after the Closing Date and is owned by a Loan Party and one or more persons other than a Loan Party after such acquisition; provided that all of the following conditions shall have been satisfied at the time of such acquisition: (a) such person shall be engaged in a business of the type that the Borrower and its Subsidiaries are permitted to be engaged in under Section 6.14, (b) no Default or Event of Default then exists or would result therefrom, (c) the Loan Parties are not prohibited from, either directly or indirectly, receiving its proportionate amount of the total dividends, distributions and payments from, and other economic interests in, the joint venture, (d) a Loan Party has the right to participate, or elect representatives who participate, in the direction of the business and affairs of the joint venture, (e) no Loan Party shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or Contingent Obligation (including any material tax or ERISA liability) of the related seller or the business, person or properties acquired, except (A) to the extent permitted under Section 6.01 and (B) obligations not constituting Indebtedness incurred in the ordinary course of business (and not in anticipation of such acquisition) and necessary or desirable to the continued operation of the underlying business, persons or properties being so acquired, and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Loan Party hereunder shall be paid in full or released as to the business, persons or properties being so acquired on or before the consummation of such acquisition, (f) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Legal Requirements, (g) at least five (5) Business Days prior to the proposed date of consummation of the transaction, the Borrower shall have delivered to the Administrative Agent an Officer’s Certificate certifying that such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance) and (h) the Acquisition Consideration for any Permitted Joint Ventures shall not exceed $1,000,000 since the Closing Date and the Acquisition Consideration for all Permitted Joint Ventures and Permitted Acquisitions subject to clause (viii) of the definition thereof after the Closing Date shall not exceed $2,500,000; provided that no Equity Interests constituting all or a portion of such Acquisition Consideration shall require any

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payments or other distributions of cash or property in respect thereof, or any purchases, redemptions or other acquisitions thereof for cash or property, in each case prior to the date which is 91 days following payment in full and performance of the Obligations.

“Permitted Liens” shall have the meaning assigned to such term in Section 6.02.

“Permitted Second Priority Refinancing Debt” shall mean secured Indebtedness incurred by the Borrower in the form of one or more series of second lien secured notes or second lien secured loans; provided that (a) such Indebtedness is secured by the Collateral on a second lien, subordinated basis to the Secured Obligations, the obligations in respect of any Permitted First Priority Refinancing Debt and the obligations in respect of the ABL Indebtedness and is not secured by any property or assets of the Borrower or any Subsidiary other than the Collateral, (b) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of any Class of Loans (including portions of Classes of Loans), (c) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is 181 days after the Final Maturity Date (determined immediately prior to the time such Indebtedness is incurred), (d) the security agreements relating to such Indebtedness are substantially the same as the Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (e) such Indebtedness is not guaranteed by any Subsidiaries other than the Guarantors, (f) the terms and conditions of such Indebtedness (including with respect to amortization, covenants, defaults, remedies and guaranty provisions, if any, but excluding interest rates, fees, optional prepayment and redemption provisions) shall reflect market terms and conditions precedent at the time of incurrence but shall be substantially the same as to, or otherwise less favorable to, the Lenders providing such Indebtedness than those applicable to the then outstanding Class of Loans and/or Commitments being so refinanced, except to the extent such covenants and other terms apply solely to any period after the date that is 181 days after the Final Maturity Date at the time such Indebtedness is incurred and (g) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the ABL Intercreditor Agreement and/or an Intercreditor Agreement with respect thereto.

“Permitted Unsecured Refinancing Debt” shall mean unsecured Indebtedness incurred by the Borrower in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that (a) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of any Class of Loans (including portions of Classes of Loans), (b) such Indebtedness does not mature or have scheduled amortization or payments of principal prior to the date that is 181 days after the Final Maturity Date (determined immediately prior to the time such Indebtedness is incurred), (c) such Indebtedness is not guaranteed by any Subsidiaries other than the Guarantors, (d) the terms and conditions of such Indebtedness (including with respect to amortization, covenants, defaults, remedies and guaranty provisions, if any, but excluding interest rates, fees, optional prepayment and redemption provisions) shall reflect market terms and conditions precedent at the time of incurrence but shall be substantially the same as to, or otherwise less favorable to, the Lenders providing such Indebtedness than those applicable to the then outstanding Class of Loans and/or Commitments being so refinanced, except to the extent such covenants and other terms apply solely to any period after the date that is 181 days after the Final Maturity Date at the time such Indebtedness is incurred and (e) such Indebtedness is not secured by any Lien or any property or assets of the Borrower or any Subsidiary.

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“person” shall mean any natural person, corporation, business trust, joint venture, trust, association, company (whether limited in liability or otherwise), partnership (whether limited in liability or otherwise) or Governmental Authority, or any other entity, in any case, whether acting in a personal, fiduciary or other capacity.

“Platform” shall mean IntraLinks, SyndTrak or a substantially similar electronic transmission system.

“Pledgor” shall mean the Borrower and each Subsidiary of any Loan Party that is or becomes a party to this Agreement (in its capacity as a Guarantor) and the Security Documents pursuant to Section 5.12.

“Preferred Stock” shall mean, with respect to any person, any and all preferred or preference Equity Interests (however designated) of such person whether now outstanding or issued after the Closing Date.

“Preferred Stock Issuance” shall mean the issuance or sale by any Loan Party of any Preferred Stock after the Closing Date.

“Prime Rate” shall mean, for any day, the rate of interest per annum announced by the Administrative Agent from time to time as its prime commercial lending rate for Dollar loans in the United States for such day. The Prime Rate is not necessarily the lowest rate that the Administrative Agent is charging any corporate customer.

“Principal Office” shall mean, for each of the Administrative Agent and the Collateral Agent, such person’s “Principal Office” as set forth on Annex II, or such other office or office of a third party or sub-agent, as appropriate, as such person may from time to time designate in writing to the Borrower, the Administrative Agent and each Lender.

“Pro Forma Basis” shall mean, with respect to compliance with any test or covenant hereunder, compliance with such covenant or test after giving effect to (a) any Permitted Acquisition (to the extent not subsequently disposed of during such period), (b) any Permitted Joint Venture, or (c) any Asset Sale, as if such Permitted Acquisition, Permitted Joint Venture or Asset Sale, and all other Permitted Acquisitions, Permitted Joint Ventures or Asset Sales consummated during the applicable period, and any Indebtedness or other liabilities incurred in connection with such Permitted Acquisitions, Permitted Joint Ventures or Asset Sales had been consummated and incurred at the beginning of such period. For purposes of this definition, if any Indebtedness to be so incurred bears interest at a floating rate and is being given pro forma effect, the interest on such Indebtedness will be calculated as if the rate in effect on the date of incurrence had been the applicable rate for the entire period (taking into account any applicable interest rate Hedging Agreements).

“Pro Rata Share” shall mean with respect to all payments, computations and other matters relating to the Loan of any Lender, the percentage obtained by dividing (a) the Loans and Commitments of that Lender by (b) the aggregate Loans and Commitments of all Lenders.

“Projections” shall have the meaning assigned to such term in Section 3.04(b).

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“property” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests of any person and whether now in existence or owned or hereafter entered into or acquired, including all real property, cash, securities, accounts, revenues and contract rights.

“Public Lenders” shall mean Lenders that do not wish to receive Non-Public Information with respect to the Borrower or its Subsidiaries.

“Purchase Money Obligation” shall mean, for any person, the obligations of such person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any fixed or capital assets (including Equity Interests of any person owning fixed or capital assets) or the cost of installation, construction or improvement of any fixed or capital assets.

“Qualified Capital Stock” of any person shall mean any Equity Interests of such person that are not Disqualified Capital Stock.

“Qualifying IPO” shall mean the first bona fide underwritten primary or secondary (or combination of primary and secondary) public offering (other than a public offering pursuant to a registration statement on Form S-8) by the Borrower of its common Equity Interests after the Closing Date pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act.

“Quarterly Payment Date” shall mean the last Business Day of each Fiscal Quarter occurring after the Closing Date, commencing on July 27, 2012.

“Refinanced Debt” shall have the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness”.

“Refinancing Amendment” shall mean an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower, (b) the Administrative Agent and (c) each Lender and/or Other Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.15.

“Refinancing Effective Date” shall have the meaning set forth in Section 2.15(c).

“Refinancing Indebtedness” shall mean, with respect to any person, any replacement, refinancing, refunding, renewal or extension of any Indebtedness of such person, provided that:

(a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so replaced, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest, discounts, premiums thereon, costs and fees and expenses incurred, in connection with such replacement, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder;

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(b) such replacement, refinancing, refunding, renewal or extension has at the time incurred a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, replaced, refinanced, refunded, renewed or extended; and

(c) if such Indebtedness being replaced, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, such replacement, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being replaced, refinanced, refunded, renewed or extended;

provided that when such term is used in respect of (i) Permitted First Priority Refinancing Debt, such Refinancing Indebtedness must also satisfy clauses (a), (c), (d), (e), (f) and (g) of the definition of Permitted First Priority Refinancing Debt; (ii) Permitted Second Priority Refinancing Debt, such Refinancing Indebtedness must also satisfy clauses (a), (c), (d), (e), (f) and (g) of the definition of Permitted Second Priority Refinancing Debt; and (iii) Permitted Unsecured Refinancing Debt, such Refinancing Indebtedness must also satisfy clauses (b), (c), (d) and (e) of the definition of Permitted Unsecured Refinancing Debt.

“Register” shall have the meaning assigned to such term in Section 10.04(c).

“Regulation D” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Materials in, into, onto, from, under or through the Environment or any real property.

“Repayment Date” shall have the meaning assigned to such term in Section 2.07(a).

“Required Lenders” shall mean, at any date of determination, Lenders having Loans and Commitments representing more than 50% of the sum of all Loans outstanding and Commitments at such time.

“Response” shall mean (a) “response” as such term is defined in CERCLA, 42 U.S.C. § 9601(25) or any words of similar import defined under other applicable Environmental

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Law, or (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, remediate, contain, assess, abate, monitor or in any other way address any Hazardous Materials at, in, on, under or from any real property, or otherwise in the Environment, (ii) prevent, stop, control or minimize the Release or threat of Release, or minimize the further Release, of any Hazardous Material, or (iii) perform studies, investigations, maintenance or monitoring in connection with, following, or as a precondition to or to determine the necessity of, the actions set forth in clause (i) or (ii) above.

“Responsible Officer” of any person shall mean any executive officer or Financial Officer of such person and any other officer thereof with significant responsibility for the administration of the obligations of such person in respect of this Agreement.

“Restricted Indebtedness” shall mean Indebtedness of any Loan Party, the payment, prepayment, repurchase, defeasance or acquisition for value of which is restricted under Section 6.11.

“Retained Excess Cash Flow Amount” shall mean, at any date of determination, an amount equal to 50% of the sum of the amounts of Excess Cash Flow for all Excess Cash Flow Periods ending on or prior to the date of determination for which the amount of Excess Cash Flow shall have been calculated as provided in Section 5.01(c).

“Sale and Leaseback Transaction” shall have the meaning assigned to such term in Section 6.03.

“Sarbanes-Oxley Act” shall mean the United States Sarbanes-Oxley Act of 2002, as amended from time to time and, and any successor statute.

“Secured Obligations” shall mean (a) the Obligations and (b) the due and punctual payment and performance of all obligations of the Borrower and the other Loan Parties under each Permitted Hedging Agreement intended to protect against fluctuations in interest rates entered into with any counterparty that is a Secured Party.

“Secured Parties” shall mean, collectively:

(a) with respect to the Obligations, the Administrative Agent, the Collateral Agent, each other Agent and the Lenders; and

(b) with respect to obligations under Permitted Hedging Agreements, each counterparty to such Permitted Hedging Agreement if (i) at the date of entering into such Hedging Agreement such counterparty was an Agent, a Lender or an Affiliate of an Agent or Lender, and (ii) such counterparty executes and delivers to the Administrative Agent a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which such counterparty (x) appoints the Administrative Agent and the Collateral Agent as its agents under the applicable Loan Documents and (y) agrees to be bound by the provisions of Sections 9.03, 10.03 and 10.09 as if it were a Lender.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and any successor statute.

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“Security Agreement” shall mean a Security Agreement substantially in the form of Exhibit H among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties, as the same may be supplemented from time to time by one or more Joinder Agreements.

“Security Agreement Collateral” shall mean all property pledged or granted as collateral pursuant to the Security Agreement delivered on the Closing Date or thereafter pursuant to Section 5.12, but shall not include Equity Interests representing more than 65% of the total combined voting power of any Foreign Subsidiary or Disregarded Domestic Person to secure the Obligations of any Loan Party.

“Security Documents” shall mean the Security Agreement, the Mortgages and each other security document or pledge agreement delivered in accordance with applicable local or foreign Legal Requirements to grant a valid, enforceable, perfected security interest (with the priority required under the Loan Documents) in any property as collateral for the Secured Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement, the Security Agreement, any Mortgage or any other such security document or pledge agreement to be filed or registered with respect to the security interests in property created pursuant to the Security Agreement, any Mortgage and any other document or instrument utilized to pledge any property as collateral for the Secured Obligations.

“Security Joinder Agreement” shall mean a joinder agreement substantially in the form of Exhibit A to the Security Agreement or such other form as shall be approved by the Collateral Agent and the Borrower.

“Senior Representative” shall mean, with respect to any series of Permitted First Priority Refinancing Debt or Permitted Second Priority Refinancing Debt, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.

“Series” shall mean all Loans or Commitments that are established pursuant to the same Refinancing Amendment (or any subsequent Refinancing Amendment to the extent such Refinancing Amendment expressly provides that the Loans or Commitments provided for therein are intended to be a part of any previously established Series) and that provide for the same interest margins and amortization schedule.

“Solvency Certificate” shall have the meaning assigned to such term in Section 4.01(f).

“SPC” shall have the meaning assigned to such terms in Section 10.04(h).

“Specified Equity Contribution” shall have the meaning assigned to such term in Section 8.02.

“Sponsor” shall mean Advent International Corporation, a Delaware corporation.

“Statutory Reserves” shall mean, for any day during any Interest Period for any Eurodollar Loan, the average maximum rate at which reserves (including any marginal,

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supplemental or emergency reserves) are required to be maintained, during such Interest Period under regulations issued from time to time (including Regulation D) (the “Reserve Regulations”) by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion Dollars against Eurocurrency funding liabilities (currently referred to as “Eurocurrency liabilities” (as such term is used in Regulation D)). Eurodollar Loans shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under the Reserve Regulations.

“Subordinated Indebtedness” shall mean Indebtedness of any Loan Party that is by its terms subordinated in right of payment to all or any portion of the Secured Obligations.

“Subsidiary” shall mean, with respect to any person (the “parent”) at any date, (a) any person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (b) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (c) any partnership (i) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of the parent or (ii) the only general partners of which are the parent and/or one or more subsidiaries of the parent and (d) any other person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent. Unless the context requires otherwise, “Subsidiary” refers to a Subsidiary of the Borrower.

“Survey” shall mean a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Property is located, (ii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iii) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (iv) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property and issue the endorsements of the type required by Section 5.11(d), or (b) otherwise reasonably acceptable to the Collateral Agent.

“Syndication Agent” shall have the meaning assigned to such term in the preamble hereto.

“Synthetic Lease” shall mean, as to any person, (a) any lease (including leases that may be terminated by the lessee at any time) of any property (i) that is accounted for as an operating lease under GAAP and (ii) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such person is the lessor or (b) (i) a synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property (including a Sale and Leaseback Transaction), in each case under this clause (b), creating obligations that do not appear on the

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balance sheet of such person but which, upon the application of any Insolvency Laws to such person, would be characterized as the indebtedness of such person (without regard to accounting treatment).

“Synthetic Lease Obligations” shall mean, as to any person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which any Loan Party is or may become obligated to make (a) any payment in connection with a purchase by any third party from a person other than a Loan Party of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness.

“Tax Returns” shall mean all returns, statements, filings, attachments and other documents or certifications filed or required to be filed in respect of Taxes.

“Taxes” shall mean (a) any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges, whether computed on a separate, consolidated, unitary, combined or other basis (including interest, fines, penalties or additions with respect to any of the foregoing), and (b) any transferee, successor, joint and several, contractual or other liability (including liability pursuant to Treasury Regulation § 1.1502-6 (or any similar provision of state, local or non-U.S. law)) in respect of any item described in clause (a).

“Test Period” shall mean, at any time, the four consecutive Fiscal Quarters of the Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.01(a) or (b).

“Title Company” shall mean any title insurance company as shall be retained by the Borrower and reasonably acceptable to the Administrative Agent.

“Title Policy” shall have the meaning assigned to such term in Schedule 5.11(d).

“Transactions” shall mean, collectively, the transactions to occur pursuant to, or contemplated by, the Loan Documents, including (a) the execution, delivery and performance of the Loan Documents and the Initial Loans hereunder, (b) the payment of all fees, premiums, costs and expenses to be paid on or prior to the Closing Date owing in connection with the foregoing (including to fund any upfront fees) and (c) the entry into the ABL Loan Documents.

“Transferred Guarantor” shall have the meaning assigned to such term in Section 7.09.

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“Type” shall mean, when used in reference to any Loan, a reference to whether the rate of interest on such Loan, or on the Loans comprising such Loan, is determined on the basis of Adjusted LIBOR Rate or the Alternate Base Rate.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

“United States” and “U.S.” shall mean the United States of America.

“Voting Stock” shall mean, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person.

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness, Disqualified Capital Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

(a) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Capital Stock or Preferred Stock multiplied by the amount of such payment; by

(b) the sum of all such payments.

“Wholly Owned Subsidiary” shall mean, with respect to any person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares to the extent required under applicable Legal Requirements) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% Equity Interest (other than directors’ qualifying shares to the extent required under applicable Legal Requirements) at such time.

Section 1.02. Classification of Loans. For purposes of this Agreement, Loans may be classified and referred to by Class or by Type (e.g., a “Eurodollar Loan”).

Section 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The phrase “Material Adverse Effect” shall be deemed to be followed by the phrase “, individually or in the aggregate”. The words “asset” and “property” shall be construed to have the same meaning and effect. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in any Loan Document), (b) any reference herein to any person shall be construed to include such person’s successors and assigns, (c) the words

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“herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, unless otherwise indicated and (e) any reference to any law or regulation shall (i) include all statutory and regulatory provisions consolidating, amending, replacing or interpreting or supplementing such law or regulation, and (ii) unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time. This Section 1.03 shall apply, mutatis mutandis, to all Loan Documents.

Section 1.04. Accounting Terms; GAAP.

(a) Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP as in effect from time to time. If at any time any change in GAAP would affect the computation of any financial ratio set forth in any Loan Document, and the Borrower or the Required Lenders shall so request, the Administrative 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 (subject to approval by the Required Lenders and the Borrower); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein, and the Borrower shall provide to the Administrative Agent within five (5) Business Days after delivery of each certificate or financial report required hereunder that is affected thereby a written statement of a Financial Officer of the Borrower setting forth in reasonable detail the differences (including any differences that would affect any calculations relating to the financial covenants as set forth in Section 6.10) that would have resulted if such financial statements had been prepared giving effect to such change.

(b) Notwithstanding the foregoing, when determining the amounts of Capital Lease Obligations, such determination shall be made in accordance with GAAP, provided that, subject to amendments to this Agreement as contemplated in preceding clause (a) addressing the impact of any such change, for purposes of defining Capital Lease Obligations, operating leases that are required to be reclassified as Capital Leases as a result of a change in GAAP shall remain classified as operating leases and shall not be included within the definition of Capital Lease Obligations.

Section 1.05. Pro Forma Calculations. With respect to any applicable period during which any Permitted Acquisition, Permitted Joint Venture or Asset Sale occurs as permitted pursuant to the terms hereof, the financial covenant set forth in Section 6.10 shall be calculated with respect to such period and such Permitted Acquisition, Permitted Joint Venture or Asset Sale on a Pro Forma Basis. Any financial ratios required to be satisfied in order for a specific action to be permitted under this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

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Section 1.06. Borrower Authorized.

(a) Each Loan Party (other than the Borrower) by its execution of this Agreement or a Joinder Agreement irrevocably appoints Borrower to act on its behalf as its agent and representative in relation to the Loan Documents and irrevocably authorizes:

(i) the Borrower on its behalf to supply all information concerning itself contemplated by this Agreement to the Agents and the Lenders and to give all notices and instructions; and

(ii) each Agent and Lender to give any notice, demand or other communication to that Loan Party pursuant to the Loan Documents to the Borrower,

and in each case the Loan Party shall be bound as though the Loan Party itself, had given the notices and instructions (including, without limitation, any Funding Notices).

(b) Every act, omission, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Borrower or given to the Borrower under any Loan Document on behalf of another Loan Party or in connection with any Loan Document (whether or not known to any other Loan Party and whether occurring before or after such other Loan Party became a Loan Party under any Loan Document or the Borrower executed this Agreement) shall be binding for all purposes on that Loan Party as if that Loan Party had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Borrower and any other Loan Party, those of the Borrower shall prevail.

ARTICLE II

THE CREDITS

Section 2.01. Commitments.

(a) Loan Commitments. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make an Initial Loan to the Borrower on the Closing Date in the principal amount equal to such Lender’s Initial Loan Commitment.

(b) Borrowing Mechanics for Loans.

(i) the Borrower shall deliver to the Administrative Agent a fully executed Funding Notice no later than (x) one (1) Business Day prior to the Closing Date with respect to ABR Loans and (y) three (3) days prior to the Closing Date with respect to Eurodollar Loans (or such shorter period as may be acceptable to the Administrative Agent). Promptly upon receipt by the Administrative Agent of such Funding Notice, the Administrative Agent shall notify each Lender of the proposed borrowing.

(ii) Each Lender shall make its Initial Loans, as the case may be, available to the Administrative Agent not later than 12:00 p.m. (New York City time) on the Closing Date, by wire transfer of same day funds in Dollars, at the principal office designated by

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the Administrative Agent. Upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of the Initial Loans available to the Borrower on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by the Administrative Agent from Lenders to be credited to the account of the Borrower at the Principal Office designated by the Administrative Agent or to such other account as may be designated in writing to the Administrative Agent by the Borrower.

The Borrower may make only one borrowing under the Initial Loans, which shall be on the Closing Date. Amounts paid or prepaid in respect of Loans may not be reborrowed.

Section 2.02. Evidence of Debt; Repayment of Loans.

(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender, the principal amount of each Loan of such Lender as provided in Section 2.07.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to Sections 2.02(b) and (c) shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower and the other Loan Parties to pay, and perform, the Obligations in accordance with the Loan Documents. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such entries, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

(e) Any Lender by written notice to the Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall promptly (and, in all events, within five (5) Business Days of receipt of such request) prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibit G. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

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Section 2.03. Fees.

(a) Administrative Agent Fees. The Borrower agree to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter and such other fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent (the “Administrative Agent Fees”).

(b) Other Fees. The Borrower agrees to pay the Agents, for their own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the applicable Agents.

(c) Payment of Fees. All Fees shall be paid on the dates due, in immediately available funds in Dollars, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Borrower shall pay (i) Administrative Agent Fees directly to the Administrative Agent and (ii) the Fees provided under Section 2.03(b) directly to the Agents. Once paid, none of the Fees shall be refundable under any circumstances.

Section 2.04. Interest on Loans.

(a) Subject to the provisions of Section 2.04(c), the Loans comprising each ABR Loan for a given Class shall bear interest at a rate per annum equal to the Alternate Base Rate applicable to such Class plus the Applicable Margin in effect from time to time with respect to such Loan.

(b) Subject to the provisions of Section 2.04(c), the Loans comprising each Eurodollar Loan of a given Class shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for such Class for the Interest Period in effect for such Loan plus the Applicable Margin in effect from time to time with respect to such Loan.

(c) Notwithstanding the foregoing, during an Event of Default under Section 8.01(a) or (b), all overdue Obligations shall bear interest, after as well as before judgment, at a per annum rate equal to (i) in the case of principal of or interest on any Loan, 2.0% plus the rate otherwise applicable to such Loan as provided in Sections 2.04(a) and (b) or (ii) in the case of any other Obligation, 2.0% plus the rate otherwise applicable to such Obligation (in either case, the “Default Rate”).

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 2.04(c) (including interest on past due interest) and all interest accrued but unpaid on or after the Maturity Date of any Class, as applicable, shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan of such Class (other than a prepayment of an ABR Loan or any repayment pursuant to Section 2.07(a)), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan of such Class prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

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(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any Insolvency Proceeding.

Section 2.05. Termination and Reduction of Commitments. The Initial Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date. The Other Commitments of any Class or Series shall automatically terminate upon the conversion or refinancing, as the case may be, of all or a portion of the relevant Loans as provided in the relevant Refinancing Amendment.

Section 2.06. Interest Elections.

(a) Each Loan initially shall be of the Type specified in the applicable Funding Notice and, in the case of a Eurodollar Loan, shall have an initial Interest Period as specified in such Funding Notice. Thereafter, the Borrower may elect to convert such Loan to a different Type or to continue such Loan and, in the case of a Eurodollar Loan, may elect Interest Periods therefor, all as provided in this Section 2.06. The Borrower on their behalf may elect different options with respect to different portions of the affected Loan, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Loan, and the Loans comprising each such portion shall be considered a separate Loan. Notwithstanding anything to the contrary, the Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than five (5) Eurodollar Loans outstanding hereunder at any one time.

(b) To make an election pursuant to this Section 2.06, the Borrower shall deliver a Conversion/Continuation Notice to the Administrative Agent no later than 11:00 a.m. (New York City time) at least one (1) Business Day in advance of the proposed conversion date (in the case of a conversion to an ABR Loan) and at least three (3) Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Loan) (the “Conversion/Continuation Notice”). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Loans shall be irrevocable on and after the related Interest Rate Determination Date, and the Borrower shall be bound to effect a conversion or continuation in accordance therewith. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to the Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be an ABR Loan.

If any such Conversion/Continuation Notice requests a Eurodollar Loan but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

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(c) Promptly following receipt of a Conversion/Continuation Notice, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Loan.

(d) If a Conversion/Continuation Notice with respect to a Eurodollar Loan is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Loan is repaid as provided herein, at the end of such Interest Period such Loan shall be converted to an ABR Loan. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to the Borrower, that (i) no outstanding Loan may be converted to or continued as a Eurodollar Loan and (ii) unless repaid, each Eurodollar Loan shall be converted to an ABR Loan at the end of the Interest Period applicable thereto.

Section 2.07. Amortization of Loans.

(a) The Borrower shall pay to the Administrative Agent, for the account of the Lenders with Initial Loans, on each Quarterly Payment Date following the Closing Date, or if any such date is not a Business Day, on the immediately following Business Day, a principal amount of the Initial Loans equal to 0.25% of the initial aggregate principal amount of such Initial Loans (as adjusted from time to time pursuant to Section 2.08). The Borrower shall pay to the Administrative Agent, for the account of the Lenders with outstanding Other Loans, the amortization amounts and on the dates set forth in the relevant Refinancing Amendment (each such date, together with each such date on which principal of Initial Loans is required to be repaid as provided above in this clause (a), a “Repayment Date”); provided that any payment under this Section 2.07(a) shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Sections 2.07(b) and 2.08(f) and by the amount of Loans purchased by any Loan Party or any of its Subsidiaries and cancelled in accordance with Section 10.04(j)(v).

(b) To the extent not previously irrevocably paid in full in cash, each Class of Loans shall be due and payable on the Maturity Date for such Class of Loans, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.

Section 2.08. Optional and Mandatory Prepayments of Loans.

(a) Optional Prepayments. The Borrower shall have the right at any time and from time to time to prepay any Loan, in whole or in part without premium or penalty, subject to the requirements of this Section 2.08; provided that each partial prepayment shall be in an amount that is an integral multiple of $250,000 and not less than $250,000.

(b) IPO. Within ten (10) Business Days after the consummation of a Qualifying IPO, the Borrower shall prepay the Loans in an aggregate amount equal to $50,000,000.

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(c) Asset Sales. Not later than five (5) Business Days following the receipt of Net Cash Proceeds of any Asset Sale by the Borrower or any of its Subsidiaries, the Borrower shall apply 100% of such Net Cash Proceeds to make prepayments in accordance with Section 2.08(f); provided that:

(i) so long as no Default shall then exist or would arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that the Borrower shall have delivered an Officer’s Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are reasonably expected to be reinvested in assets of any Loan Party used or useful in the operations of the Borrower or any of its Subsidiaries within 365 days following the receipt of such proceeds (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended), which time frame may be extended to 545 days following the date of receipt of such proceeds if the Borrower or the applicable Subsidiary or Subsidiaries of the Borrower shall have entered into a binding agreement within such original 365-day time frame to make such reinvestment and such reinvestment shall not be complete within the original 365-day time frame; provided that, if the property subject to such Asset Sale constituted Collateral, then all property purchased or otherwise acquired with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the perfected Lien (subject only to Permitted Liens) of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12;

(ii) if all or any portion of such Net Cash Proceeds is not so reinvested within such 365-day period (or, if applicable, 545-day period), such unused portion shall be applied on the last day of such period as a mandatory prepayment as otherwise provided in this Section 2.08(c); and

(iii) if at any time that any prepayment pursuant to this Section 2.08(c) would be required, the Borrower is required to offer to repurchase or prepay Permitted First Priority Refinancing Debt (or any Refinancing Indebtedness that is secured on a pro rata basis with the Obligations) pursuant to the terms of the documentation governing such Indebtedness with the net proceeds of such Disposition (such Permitted First Priority Refinancing Debt or such Refinancing Indebtedness required to be offered to be so repurchased or prepaid, “Other Applicable Indebtedness”), then the Borrower may apply such Net Cash Proceeds on a pro rata basis (determined on the basis of the aggregate outstanding principal amount of the Loans and Other Applicable Indebtedness at such time) to the prepayment of the Loans and to the repurchase or prepayment of Other Applicable Indebtedness, and the amount of prepayment of the Loans that would have otherwise been required pursuant to this Section 2.08(c) shall be reduced accordingly.

(d) Debt Issuance. (i) Not later than five (5) Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance (other than Indebtedness permitted to be incurred pursuant to Section 6.01 hereof) by the Borrower or any of its Subsidiaries, the Borrower shall make prepayments in accordance with Section 2.08(f) in an aggregate principal amount equal to 100% of such Net Cash Proceeds.

(i) Not later than one (1) Business Day following the issuance or incurrence of any Credit Agreement Refinancing Indebtedness (other than solely by means of extending or renewing then existing Credit Agreement Refinancing Indebtedness without

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resulting in any Net Cash Proceeds), the Borrower shall prepay an aggregate principal amount of Loans in an amount equal to 100% of the Net Cash Proceeds of such Credit Agreement Refinancing Indebtedness; provided that each prepayment of Loans required by this clause (ii) shall be applied (A) first, to the Initial Loans, (B) next, to the Class or Classes of Loans with the earliest Maturity Date (ratably among such Classes, if multiple Classes exist with the same Maturity Date), until all such Loans, as applicable, of such Class or Classes have been repaid or terminated in full and (C) thereafter, to the successive Class or Classes of Loans with the then next earliest Maturity Date (ratably among such Classes, if multiple Classes exist with the same Maturity Date), and so on, until 100% of the Net Cash Proceeds from such Credit Agreement Refinancing Indebtedness has been applied to the Loans as required by this clause (ii).

(e) Casualty Events. Not later than five (5) Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by the Borrower, the Borrower shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with Section 2.08(f); provided that:

(i) so long as no Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that the Borrower shall have delivered an Officer’s Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are reasonably expected to be used to repair, replace or restore the property that was the subject of such Casualty Event or otherwise reinvested in assets of any Loan Party used or useful in the operations of the Borrower or any of its Subsidiaries, in either case within 365 days following the date of receipt of such proceeds (the “Casualty Proceeds Receipt Date”) (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended), which time frame may be extended to 545 days following the Casualty Proceeds Receipt Date if the Borrower or the applicable Subsidiary or Subsidiaries of the Borrower shall have entered into a binding agreement within such original 365-day time frame to repair, replace or restore such property or make such reinvestment and such contracted work or reinvestment shall not be complete within the original 365-day time frame; provided that if the property subject to such Casualty Event constituted Collateral, then all property repaired, replaced or restored or purchased or otherwise acquired with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the perfected Lien (subject only to Permitted Liens) of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12;

(ii) if all or any portion of such Net Cash Proceeds shall not be so applied within such 365-day period (or, if applicable, 545-day period), such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.08(f); and

(iii) if at any time that any prepayment pursuant to this Section 2.08(e) would be required, the Borrower is required to offer to repurchase or prepay Permitted First Priority Refinancing Debt (or any Refinancing Indebtedness that is secured on a pro rata basis with the Obligations) pursuant to the terms of the documentation governing such Indebtedness with the net proceeds of such Casualty Event (such Permitted First Priority Refinancing Debt or such Refinancing Indebtedness required to be offered to be so repurchased or prepaid, “Other Applicable Indebtedness”), then the Borrower may apply such Net Cash

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Proceeds on a pro rata basis (determined on the basis of the aggregate outstanding principal amount of the Loans and Other Applicable Indebtedness at such time) to the prepayment of the Loans and to the repurchase or prepayment of Other Applicable Indebtedness, and the amount of prepayment of the Loans that would have otherwise been required pursuant to this Section 2.08(f) shall be reduced accordingly.

(f) Application of Prepayments.

(i) Prior to any optional prepayment hereunder, the Borrower shall select the Loan to be prepaid and shall specify such selection in the notice of such prepayment pursuant to Section 2.08(f)(iii), subject to the provisions of this Section 2.08(f)(i). Any prepayments of Loans pursuant to Sections 2.08(b) through and including (e) shall be applied ratably among each Class of Loans then outstanding (other than as required or permitted pursuant to Section 2.08(d)(ii) and, subject to Section 2.14, to the Lenders based on their Pro Rata Share) to reduce scheduled payments required under Section 2.07(a) in respect of each Class or Series of Loans in direct order of maturity among the next eight (8) scheduled payments to be made on each Repayment Date and, thereafter, on a pro rata basis among the payments remaining to be made on each remaining Repayment Date. Optional prepayments of Loans pursuant to Section 2.08(a) shall be applied to each Class of Loans in the manner directed by the Borrower (or, in the absence of direction from the Borrower, in direct order of maturity among the payments remaining to be made on each Repayment Date of the Class of Loans subject to such prepayment). Each of the foregoing application provisions (including Section 2.08(d)(ii)) may be modified as expressly provided in Section 2.15 in connection with a Refinancing Amendment.

(ii) Amounts to be applied pursuant to this Section 2.08 to the prepayment of Loans shall be applied, as applicable, first to reduce outstanding ABR Loans. Any amounts remaining after each such application shall be applied to prepay Eurodollar Loans.

(iii) Notice of Prepayment. The Borrower shall notify the Administrative Agent by written notice of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment and (ii) in the case of prepayment of an ABR Loan, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment. Each such notice shall specify the prepayment date, the principal amount of each Loan or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Such notice to the Lenders may be by electronic communication. Each partial prepayment of any Loan shall be in an amount that would be permitted in the case of a Loan of the same Type, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Loan shall be applied ratably to the Loans included in the prepaid Loan and otherwise in accordance with this Section 2.08. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.04.

(g) Waiver of Mandatory Prepayments. Notwithstanding the foregoing provisions of this Section 2.08, (i) the Lenders may waive, by written notice to the

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Borrower and the Administrative Agent on or before the date on which such mandatory prepayment would otherwise be required to be made hereunder, the right to receive the amount of such mandatory prepayment of the Loans (other than in connection with a mandatory prepayment required pursuant to Section 2.08(d) as a result of any refinancing of such Loans) and (ii) any amounts not applied to the prepayment of Loans pursuant to this clause (g) may be retained instead by the Borrower (provided that no such retained amounts may be used by the Borrower to make Dividends).

(h) Notices of Cancellation or Prepayment. A notice of prepayment in full of the Credit Facilities (together with a notice to terminate in full all remaining Commitments) in connection with a full refinancing of the Credit Facilities (including in connection with a Change of Control) (an “Original Prepayment Notice”) may be revoked by written counter-notice no later than one (1) Business Day prior to the date of prepayment as specified in such Original Prepayment Notice; provided that the Borrower shall pay any breakage costs and other amounts due in respect of any such revocation as set forth in Section 2.10. The failure to make a prepayment of outstanding Obligations hereunder pursuant to an Original Prepayment Notice that is revoked in accordance with this clause (h) shall not constitute an Event of Default under Section 8.01(a).

Section 2.09. Making or Maintaining LIBOR Rate Loans

(a) Inability to determine Applicable Interest Rate. If prior to the commencement of any Interest Period for a Eurodollar Loan:

(i) the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) that adequate means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

(ii) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Loan for such Interest Period;

then the Administrative Agent shall give written notice thereof to the Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Conversion/Continuation Notice that requests the conversion of any Loan to, or continuation of any Loan as, a Eurodollar Loan shall be ineffective and (ii) if any Funding Notice requests a Eurodollar Loan, such Loan shall be made as an ABR Loan.

(b) Illegality or Impracticability of Eurodollar Loans. In the event that on any date (i) any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto) that the making, maintaining, converting to or continuation of its Eurodollar Loans has become unlawful as a result of a Change in Law, or (ii) the Administrative Agent is advised by the Required Lenders (which determination shall be final and conclusive and binding upon all parties hereto) that the making, maintaining, converting to or continuation of its Eurodollar Loans has become impracticable, as a result of contingencies

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occurring after the date hereof which materially and adversely affect the London interbank market or the position of the Lenders in that market, then, and in any such event, such Lenders (or in the case of the preceding clause (i), such Lender) shall be an “Affected Lender” and such Affected Lender shall on that day give notice (by e-mail or by telephone confirmed in writing) to the Borrower and the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each other Lender). If the Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting the Required Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to make Loans as, or to convert Loans to, Eurodollar Loans shall be suspended until such notice shall be withdrawn by each Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Loan then being requested by the Borrower pursuant to a Conversion/Continuation Notice, the Lenders (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) an ABR Loan, (3) the Lenders’ (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender’s) obligations to maintain their respective outstanding Eurodollar Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into ABR Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Loan then being requested by the Borrower pursuant to a Conversion/Continuation Notice, the Borrower shall have the option to rescind such Conversion/Continuation Notice as to all Lenders by giving written or telephonic notice (promptly confirmed by delivery of written notice thereof) to the Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission the Administrative Agent shall promptly transmit to each other Lender).

Section 2.10. Breakage Payments. In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.13, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would accrue on the principal amount of such Loan for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan) at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the Eurodollar market over (ii) the amount of interest that would have accrued on such principal amount had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for such

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period. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.10 shall be delivered to the Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within five (5) Business Days after receipt thereof.

Section 2.11. Payments Generally; Pro Rata Treatment; Sharing of Setoffs.

(a) The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest or fees, of amounts payable under Section 2.10 or 2.12, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 3:00 p.m., New York City time), on the date when due, in Dollars in immediately available funds, without setoff, deduction or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Principal Office of the Administrative Agent and except that payments pursuant to Sections 2.10, 2.12 and 10.03 shall be made directly to the persons entitled thereto and payments pursuant to other Loan Documents shall be made to the persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in Dollars.

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c) If any Lender shall, by exercising any right of setoff or counterclaim (including pursuant to Section 10.08) or otherwise (including by exercise of its rights under the Security Documents), obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this Section 2.11(c) shall not be

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construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or Participant, other than to the Borrower or any Affiliates thereof (as to which the provisions of this Section 2.11(c) shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Legal Requirements, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation. If under applicable Insolvency Law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.11(c) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.11(c) to share in the benefits of the recovery of such secured claim.

(d) Unless the Administrative Agent shall have received written notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower have not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Sections 2.11(d) or 9.07, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

Section 2.12. Taxes.

(a) Payments Free and Clear of Taxes. Each payment to any Secured Party by or on account of any obligation of any Loan Party hereunder or under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.

(b) Gross-Up. If any Indemnified Taxes shall be required by law to be deducted by any Loan Party or other applicable withholding agent from or in respect of any amount payable under any Loan Document to any Secured Party (i) such amount shall be increased by the applicable Loan Party as necessary to ensure that, after all required deductions for Indemnified Taxes are made (including deductions applicable to any increases to any amount under this Section 2.12), such Secured Party receives the amount it would have received had no such deductions been made, (ii) the applicable withholding agent shall make such deductions, (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant

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taxing authority or other authority in accordance with applicable Legal Requirements and (iv) if a Loan Party is the applicable withholding agent, as soon as practicable after such payment is made, such Loan Party shall deliver to the Administrative Agent an original or certified copy of a receipt evidencing such payment.

(c) Other Taxes. In addition, the Borrower agrees to pay, and authorizes the Administrative Agent to pay on behalf of the Borrower, any Other Taxes. As soon as practicable after the date of any payment of Other Taxes by any Loan Party, the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof.

(d) Indemnification. The Borrower shall indemnify and hold harmless, within thirty (30) days after receipt of demand therefor (with a copy to the Administrative Agent), each Secured Party for all Indemnified Taxes (including any Indemnified Taxes imposed by any jurisdiction on amounts payable under this Section 2.12) paid by such Secured Party and any liabilities arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate of the Secured Party (or of the Administrative Agent on behalf of such Secured Party) claiming any compensation under this Section 2.12(d), setting forth the amounts to be paid thereunder, together with reasonable supporting documentation of the imposition of such Indemnified Tax, shall be delivered to the Borrower with copy to the Administrative Agent, and shall be conclusive absent manifest error. Any amounts payable under this Section 2.12(d) shall be paid within ten (10) Business Days after written demand is made by a Secured Party.

(e) Tax Forms. Each Secured Party shall, at such times as are reasonably requested by the Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any documentation prescribed by law, or reasonably requested by the Borrower or the Administrative Agent, certifying as to any entitlement of such Secured Party to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Secured Party under the Loan Documents. Unless the Borrower and the Administrative Agent have received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Secured Party are not subject to withholding tax or are subject to such Tax at a rate reduced by an applicable tax treaty, the Borrower, the Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate. Without limiting the generality of the foregoing: (i) each Secured Party that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two (2) properly completed and duly signed original copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Secured Party is exempt from U.S. federal backup withholding; and (ii) each Foreign Lender shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter when required by law or upon the reasonable request of the Borrower or the Administrative Agent) whichever of the following is applicable: (I) two (2) duly completed copies of Internal Revenue Service Form W-8BEN (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party, (II) two (2) duly completed copies of Internal Revenue Service Form W-8ECI (or any successor forms), (III)

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in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate, in substantially the form of Exhibit F (any such certificate a “United States Tax Compliance Certificate”), or any other form approved by the Administrative Agent and the Borrower, to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, and that no payments in connection with the Loan Documents are effectively connected with such Foreign Lender’s conduct of a U.S. trade or business and (y) two (2) duly completed copies of Internal Revenue Service Form W-8BEN (or any successor forms) and a Certificate re Non-Bank Status, substantially in the form of Exhibit I, (IV) to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership), Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable, or (V) any other form prescribed by applicable requirements of U.S. federal income tax law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Legal Requirements to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made. Each Foreign Lender shall, from time to time after the initial delivery by such Foreign Lender of the forms described above, whenever a lapse in time, change in such Foreign Lender’s circumstances or change in applicable law renders such forms, certificates or other evidence so delivered expired, invalid, obsolete or inaccurate, promptly (1) deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) renewals, amendments or additional or successor forms, properly completed and duly executed by such Foreign Lender, together with any other certificate or statement of exemption required in order to confirm or establish such Foreign Lender’s status or that such Foreign Lender is entitled to an exemption from or reduction in U.S. federal withholding tax or (2) notify the Administrative Agent and the Borrower of its inability to deliver any such forms, certificates or other evidence. Notwithstanding any other provision of this clause (f), a Secured Party shall not be required to deliver any form that such Secured Party is not legally eligible to deliver or the completion, execution, and delivery or submission of which would subject such Secured Party to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by laws and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (included as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA or to determine the amount to deduct and withhold from such payment.

(f) For the avoidance of doubt, any payments made by the Administrative Agent to any Lender shall be treated as payments made by the applicable Loan

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Party. Solely for purposes of this Section 2.12, the term “Loan Documents” shall not include the Permitted Hedging Agreements, the tax gross-up and tax indemnity obligations for which (if any) shall be addressed in such documents.

(g) If any party determines, in its sole discretion, exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.12 (including by payment of additional amounts pursuant to this Section 2.12), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary to this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other person.

Section 2.13. Mitigation Obligations; Replacement of Lenders.

(a) Mitigation of Obligations. If the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.12(b), then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce materially amounts payable pursuant to Section 2.12 in the future, (ii) would not subject such Lender to any unreimbursed cost or expense, (iii) would not require such Lender to take any action inconsistent with its internal policies or legal or regulatory restrictions, and (iv) would not otherwise be disadvantageous to such Lender in any material respect. The Borrower shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. A certificate setting forth such costs and expenses submitted by such Lender to the Administrative Agent shall be conclusive absent manifest error.

(b) Replacement of Lenders. In the event (i) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Sections 2.09, 2.12 or 2.16, (ii) any Lender (a “Non-Consenting Lender”) fails to consent to any amendment, waiver or other modification of any Loan Document requested by the Borrower that requires the consent of 100% of the Lenders or 100% of all affected Lenders and, which, in each case, has been consented to by the Required Lenders or (iii) any Lender defaults in its obligations to make Loans, as the case may be, or other extensions of credit hereunder or becomes subject to an insolvency or bankruptcy proceeding, the Borrower

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may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 10.04(b)), upon notice to such Lender and the Administrative Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all of its interests, rights and obligations under this Agreement to an assignee which shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (v) in the event such assignor is a Non-Consenting Lender, each assignee shall consent, at the time of such assignment, to each matter in respect of which such Non-Consenting Lender failed to provide its consent on any matter where the Required Lenders have given their consent, (w) no Default shall have occurred and be continuing, (x) such assignment shall not conflict with any applicable Legal Requirement, (y) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Borrower or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender affected by such assignment plus all Fees and other amounts owing to or accrued for the account of such Lender hereunder (including any amounts under Section 2.12); provided, further, that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s claim for compensation under the amounts paid pursuant to Section 2.12 or 2.16 cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital or cease to result in amounts being payable under Section 2.12 or 2.16, as the case may be (including as a result of any action taken by such Lender pursuant to Section 2.13(a)), or if such Lender shall waive its right to further payments under Section 2.12 or 2.16 in respect of such circumstances or event, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder. Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment Agreement necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.13(b).

Section 2.14. Defaulting Lenders.

(a) Anything contained herein to the contrary notwithstanding, in the event that any Lender, other than at the direction or request of any regulatory agency or authority, defaults (a “Defaulting Lender”) in its obligation to fund (a “Funding Default”) any Loan (in each case, a “Defaulted Loan”), then (a) during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Loan Documents; (b) to the extent permitted by applicable law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary prepayment of the Loans shall, if the Borrower so directs at the time of making such voluntary prepayment, be applied to the Loans of other Lenders as if such Defaulting Lender had no Loans outstanding, and (ii) any mandatory prepayment of the Loans shall, if the Borrower so directs at the time of making such mandatory prepayment, be applied to the Loans of other Lenders (but not to the Loans of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that the Borrower shall be entitled to retain any portion of any mandatory prepayment of the Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b);

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and (c) such Defaulting Lender’s Commitment shall be excluded for purposes of calculating any commitment or arranger fee payable to the Lenders in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any fee pursuant to Section 2.03 with respect to such Defaulting Lender’s Commitment in respect of any Default Period with respect to such Defaulting Lender.

(b) No Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.14, performance by the Borrower of its obligations hereunder and the other Loan Documents shall not be excused or otherwise modified as a result of any Funding Default or the operation of this Section 2.14. The rights and remedies against a Defaulting Lender under this Section 2.14 are in addition to other rights and remedies which the Borrower may have against such Defaulting Lender with respect to any Funding Default and which the Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default.

Section 2.15. Refinancing Amendments.

(a) At any time after the Closing Date, the Borrower may obtain, from any Lender or any Other Lender, Credit Agreement Refinancing Indebtedness in respect of (I) all or any portion of the Loans then outstanding under this Agreement (which for purposes of this clause (I) will be deemed to include any then outstanding Other Loans) under this Agreement, in the form of Other Loans or Other Commitments, as applicable, in each case pursuant to a Refinancing Amendment; provided that such Credit Agreement Refinancing Indebtedness (i) will rank pari passu in right of payment and of security with, or at the option of the Borrower, may be subordinated in right of payment and/or security (or be unsecured) to the other Loans and Commitments hereunder, (ii) will have such pricing and call protection terms as may be agreed by the Borrower and the Lenders thereof, (iii) the Effective Yield with respect to each Class of Other Loans (whether in the form of interest rate margin, upfront fees, original issue discount or otherwise) thereunder may be different than the Effective Yield for the Loans of other Class or Classes of Loans and Commitments, in each case, to the extent provided in the applicable Refinancing Amendment, (iv) except as provided in Section 2.08(f)(i) or as may be agreed to by the Lenders and Other Lenders providing such Credit Agreement Refinancing Indebtedness in the respective Refinancing Amendment (but solely as it relates to such person’s providing such Credit Agreement Refinancing Indebtedness waiving their pro rata share of any applicable prepayment or repayment), each Class of Other Loans shall be prepaid and repaid on a pro rata basis with all voluntary prepayments and mandatory prepayments (but not amortization payments) of the other Classes of Loans (and the proceeds of any Credit Agreement Refinancing Indebtedness shall be applied substantially concurrently with the incurrence thereof), and (v) otherwise be treated hereunder no more favorably with respect to covenants and events of default than the Refinanced Debt, except that the terms and conditions applicable to such Credit Agreement Refinancing Indebtedness may provide for any additional or different financial or other covenants or other provisions that are agreed between the Borrower and the Lenders thereof and applicable only during periods after the Final Maturity Date that is in effect on the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.

(b) The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.02 and such

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other conditions as may be agreed by the Borrower and the Lenders providing such Credit Agreement Refinancing Indebtedness and set forth in a Refinancing Amendment and, to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of (i) legal opinions, board resolutions and officers’ certificates consistent with those delivered on the Closing Date other than changes to such legal opinion resulting from a change in law, change in fact or change to counsel’s form of opinions reasonably satisfactory to the Administrative Agent and (ii) reaffirmation agreements and/or such amendments to the Security Documents as may be reasonably requested by the Collateral Agent (including mortgage amendments) in order to ensure that the Credit Agreement Refinancing Indebtedness is provided with the benefit of the applicable Loan Documents. Any Other Loans converted from or exchanged for any then-existing Loans may, to the extent provided in the applicable Refinancing Amendment, be designated as an increase in any previously established Other Loan, as applicable. Each Class or Series of Credit Agreement Refinancing Indebtedness incurred under this Section 2.15 shall be in an aggregate principal amount that is not less than $10,000,000.

(c) The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment (each, a “Refinancing Effective Date”). Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended (without any consent from any Lender) to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Loans) and (ii) make such other changes to this Agreement and the other Loan Documents consistent with the provisions and intent of Section 10.02(d). Additionally, each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment in connection with any Permitted Second Priority Refinancing Debt, the Loan Parties and the Collateral Agent will enter into junior lien collateral documents without the consent of the Lenders so long as the Administrative Agent has been provided reasonably requested assurances that such documentation is not more restrictive than the Collateral Documents in any material respect. Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.15 and the Required Lenders hereby expressly authorize the Administrative Agent to enter into any such Refinancing Amendment, and this Section 2.15 shall supersede any provisions in Section 2.11 or Section 10.02 to the contrary.

Section 2.16. Increased Costs; Capital Adequacy.

(a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section 2.12 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that (A) any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (regardless of whether the underlying law, treaty or governmental rule, regulation or order was issued or enacted prior to the date hereof), including the introduction of any new law, treaty or governmental rule, regulation or order but excluding solely proposals thereof, or any determination of a court or Governmental Authority, in each case

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that becomes effective after the date hereof, or (B) any guideline, request or directive by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law) or any implementation of rules or interpretations of previously issued guidelines, requests or directives, in each case that is issued or made after the date hereof: (i) subjects such Lender (or its applicable lending office) or any company controlling such Lender to any additional Tax (other than any Indemnified Taxes or Excluded Taxes) with respect to this Agreement or any of the other Loan Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, liquidity, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Loans that are reflected in the definition of “Adjusted LIBOR Rate”) or any company controlling such Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or any company controlling such Lender or such Lender’s obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, the Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or in a lump sum or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to the Borrower (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.16(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment. In the event that any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that (A) the adoption, effectiveness, phase-in or applicability of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or (B) compliance by any Lender (or its applicable lending office) or any company controlling such Lender with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, in each case after the date hereof, has or would have the effect of reducing the rate of return on the capital of such Lender or any company controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or participations therein or other obligations hereunder with respect to the Loans to a level below that which such Lender or such controlling company could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling company with regard to capital adequacy), then from time to time, within five (5) Business Days after receipt by the Borrower from such Lender of the statement referred to in the next sentence,

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the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling company on an after-tax basis for such reduction. Such Lender shall deliver to the Borrower (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to the Lender under this Section 2.16(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error. For the avoidance of doubt, subsections (a) and (b) of this Section 2.16 shall apply to all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued by any United States regulatory authority (i) under or in connection with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), regardless of the date adopted, issued, promulgated or implemented.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent and each of the Lenders that:

Section 3.01. Organization; Powers. Each Loan Party (a) is duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to carry on its business as now conducted and (c) is qualified, licensed and in good standing to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify, be licensed or be in good standing could not reasonably be expected to result in a Material Adverse Effect.

Section 3.02. Authorization; Enforceability. The Transactions to be entered into by each Loan Party are within such Loan Party’s powers and have been duly authorized by all necessary corporate or other organizational action on the part of each such Loan Party. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, regardless of whether considered in a proceeding in equity or at law.

Section 3.03. No Conflicts; No Default. The Transactions (a) do not require any consent, exemption, authorization or approval of, registration or filing with, or any other action by, any Governmental Authority or third party, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect or maintain the perfection or priority of the Liens created by the Security Documents and (iii) consents, approvals, exemptions, authorizations, registrations, filings, permits or actions the failure of which to obtain or perform could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of any Loan Party, (c) will not violate or result in a default or require any consent or approval under (x) any indenture, instrument, agreement, or other document binding upon any Loan Party or its property or to which any Loan Party or its property

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is subject, or give rise to a right thereunder to require any payment to be made by any Loan Party, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect or (y) any Organizational Document, (d) will not violate any Legal Requirement in any material respect, and (e) will not result in the creation or imposition of any Lien on any property of any Loan Party, except Liens created by the Security Documents and Liens created by the ABL Loan Documents. No Default or Event of Default has occurred and is continuing.

Section 3.04. Financial Statements; Projections.

(a) The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments and the absence of footnotes. Such financial statements and all financial statements delivered pursuant to Sections 5.01(a) and (b) have been prepared in conformity with GAAP and fairly present in all material respects financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of the dates and for the periods to which they relate (subject to normal year-end audit adjustments and the absence of footnotes). Except as set forth in such financial statements, there are no contingent liabilities or liabilities for Taxes, long term leases or unusual forward or long term commitments that are not reflected in the Historical Financial Statements or the notes thereto and which in any such case are material in relation to the business, operations, properties, assets or condition (financial or otherwise) of the Borrower and any of its Subsidiaries taken as a whole.

(b) On and as of the Closing Date, the projections of the Borrower and its Subsidiaries for the period of Fiscal Year 2012 through and including Fiscal Year 2015 (the “Projections”) are based on good faith estimates and assumptions made by management of the Borrower; provided, that such Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that such differences may be material; provided that as of the Closing Date and the time made, management of the Borrower believed such Projections were reasonable.

(c) Since January 28, 2012, there has been no event, change, circumstance or occurrence that has had, or could reasonably be expected to result in, a Material Adverse Effect.

Section 3.05. Properties.

(a) Each Loan Party has good title to, or valid leasehold interests in, all property that is material to its business, free and clear of all Liens and irregularities, deficiencies and defects in title except for Permitted Liens (or, in the case of Collateral, Permitted Collateral Liens) and minor irregularities, deficiencies and defects in title that, individually or in the aggregate, do not, and could not reasonably be expected to, materially impair the use thereof in the operation of the business of the Loan Parties, taken as a whole. The property of the Loan Parties, taken as a whole, is in satisfactory condition and repair for use in the ordinary course of business (ordinary wear and tear and casualty excepted).

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(b) Schedule 3.05(b) contains a true and complete list of each ownership and leasehold interest in real property (i) owned by any Loan Party (“Owned Real Property”) as of the Closing Date and (ii) leased, subleased or otherwise occupied or utilized by any Loan Party, as lessee, sublessee, franchisee or licensee (“Leased Real Property”), as of the Closing Date and describes the type of interest therein held by such Loan Party and whether such lease, sublease or other instrument requires the consent of the landlord thereunder or other parties thereto to the Transactions except to the extent the failure to obtain such consent would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(c) No Mortgage encumbers Mortgaged Property that is located in a Flood Zone unless flood insurance available under the National Flood Insurance Act of 1968, as amended, has been obtained in accordance with Section 5.05.

(d) The use by each Loan Party of its property and all such rights with respect to the foregoing does not infringe on the rights or other interests of any person, other than any infringement that could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. No claim has been made and remains outstanding that any Loan Party’s use of any of its property does or may violate the rights of any third party that, individually or in the aggregate, has had, or could reasonably be expected to result in, a Material Adverse Effect. The Owned Real Property and the Leased Real Property is zoned in all material respects to permit the uses for which such real property is currently being used except to the extent such violation, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The present uses of the Owned Real Property and the Leased Real Property and the current operations of each Loan Party’s business do not violate in any material respect any provision of any applicable building codes, subdivision regulations, fire regulations, health regulations or building and zoning by-laws, except to the extent such violation, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(e) Except for exceptions to the following that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, there is no pending or, to the knowledge of the Loan Parties, threatened condemnation or eminent domain proceeding with respect to, or that could affect any of the Owned Real Property and the Leased Real Property of the Loan Parties.

(f) To the knowledge of the Loan Parties, each parcel of Owned Real Property is taxed as a separate tax lot and is currently being used in a manner that is consistent with and in compliance in all material respects with the property classification assigned to it for real estate tax assessment purposes.

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Section 3.06. Intellectual Property

(a) Each Loan Party owns or is licensed to use, free and clear of all Liens (other than Permitted Liens), all patents and patent applications, trademarks, trade names, service marks, copyrights, domain names and applications for registration thereof, and technology, trade secrets, proprietary information, inventions, know-how and processes, in each case necessary for the conduct of its business as currently conducted (the “Intellectual Property”), except for those for which the failure to own or be licensed, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 3.06, no claim has been asserted or is pending by any person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Loan Party know of any valid basis for any such claim. The use of such Intellectual Property by each Loan Party does not infringe, misappropriate, dilute or otherwise violate the rights of any person, except for such claims and infringements which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Except pursuant to licenses and other user agreements entered into by each Loan Party in the ordinary course of business, no Loan Party has done anything to authorize or enable any other person to use such Intellectual Property. Each Loan Party has taken commercially reasonable actions to protect the secrecy, confidentiality and value of all trade secrets which are material in such Loan Party’s business.

(b) No Violations or Proceedings. Except as set forth on Schedule 3.06, (i) to the knowledge of each Loan Party, there is no infringement, misappropriation, dilution or other violation by others of any right of any Loan Party with respect to any Intellectual Property, other than in any case where such infringement, misappropriation, dilution or violation, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (ii) no Loan Party is infringing upon, misappropriating, diluting or otherwise violating any Intellectual Property right of any other person other than in any case where such infringement, misappropriation, dilution or violation, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (iii) no Loan Party is in breach of, or in default under, any license of Intellectual Property by any other person, to such Loan Party, except in any case where such breach or default, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and (iv) no proceedings have been instituted or are pending against any Loan Party or threatened, and no claim against any Loan Party has been received by any Loan Party, alleging any such infringement, misappropriation, dilution or other violation, except to the extent that such proceedings or claims, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(c) No Impairment. Neither the execution, delivery or performance of this Agreement and the other Loan Documents, nor the consummation of the Transactions and the other transactions contemplated hereby and thereby, will alter, impair or otherwise affect or require the consent, approval or other authorization of any other person in respect of any right of any Loan Party in any Intellectual Property, except to the extent that such alteration, impairment, effect, consent, approval or other authorization, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

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(d) No Agreement or Order Materially Affecting Intellectual Property. Except as set forth on Schedule 3.06, no Loan Party is subject to any settlement, covenant not to sue or other instrument, agreement or other document, or any outstanding Order, which may materially affect the validity or enforceability or restrict in any manner such Loan Party’s use, licensing or transfer of any of the Intellectual Property or may require such Loan Party to pay amounts after Closing, in each case which may reasonably be expected to result in a Material Adverse Effect.

Section 3.07. Equity Interests and Subsidiaries

(a) Schedule 3.07(a) sets forth a list of (i) the Borrower and each Subsidiary of the Borrower and its jurisdiction of incorporation or organization as of the Closing Date and (ii) the number of each class of its Equity Interests authorized, and the number outstanding, on the Closing Date and the number of Equity Interests covered by all outstanding options, warrants, rights of conversion or purchase and similar rights on the Closing Date. All Equity Interests of each Loan Party are duly and validly issued and are fully paid and non-assessable, and, other than the Borrower, are, as of the Closing Date, owned by the Borrower, directly or indirectly, through Wholly Owned Subsidiaries. Each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Equity Interests pledged by (or purporting to be pledged by) it under the Security Documents, free of any and all Liens, rights or claims of other persons, except the security interest created by the Security Documents or the ABL Loan Documents or imposed pursuant to the ABL Intercreditor Agreement or any other Intercreditor Agreement and any Permitted Liens that arise by operation of applicable Legal Requirements and are not voluntarily granted, and, as of the Closing Date, there are no outstanding warrants, options or other rights (including derivatives) to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Equity Interests (or any economic or voting interests therein).

(b) No consent of any person, including any general or limited partner, any other member or manager of a limited liability company, any shareholder, any other trust beneficiary or derivative counterparty, is necessary or reasonably desirable (from the perspective of a secured party) in connection with the creation, perfection or priority status with the ranking provided for in the ABL Intercreditor Agreement (or the maintenance thereof) of the security interest of the Collateral Agent in any Equity Interests pledged to the Collateral Agent under the Security Documents or the exercise by the Collateral Agent or any Lender of the voting or other rights provided for in the Security Documents or the exercise of remedies in respect of such Equity Interests.

Section 3.08. Litigation. There are no actions, suits, claims, disputes or proceedings at law or in equity by or before any Governmental Authority now pending or, to the best of the knowledge of any Loan Party, threatened against or affecting any Loan Party or any business, property or rights of any Loan Party (a) that purport to affect or involve any Loan Document or any of the Transactions or (b) that have resulted, or as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could, individually or in the aggregate, reasonably be expected to result, in a Material Adverse Effect.

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Section 3.09. Federal Reserve Regulations

(a) No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing, buying or carrying Margin Stock.

(b) No part of the proceeds of any Credit Extension will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board, including Regulation T, U or X. The pledge of the Security Agreement Collateral does not violate such regulations.

Section 3.10. Investment Company Act, etc. No Loan Party is (a) an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in as defined in the Investment Company Act of 1940, as amended, or (b) subject to regulation under any Legal Requirement (other than Regulation X) that limits its ability to incur, create, assume or permit to exist Indebtedness or grant any Contingent Obligation in respect of Indebtedness.

Section 3.11. Taxes. Each Loan Party has (a) timely filed or caused to be timely filed all income Tax Returns and all other material Tax Returns required to have been filed by it and all such Tax Returns are true and correct in all material respects and (b) duly and timely paid or caused to be duly and timely paid all material Taxes (whether or not shown on any Tax Return) due and payable by it and all assessments received by it; except for Taxes and assessments that are being contested in good faith by appropriate proceedings and for which such Loan Party has set aside on its books adequate reserves in accordance with GAAP. Each Loan Party has made adequate provision in accordance with GAAP for all Taxes not yet due and payable. No Loan Party has knowledge of any proposed or pending tax assessments, deficiencies, audits or other proceedings and no proposed or pending tax assessments, deficiencies, audits or other proceedings have resulted, or could, individually or in the aggregate, reasonably be expected to result, in a Material Adverse Effect. No Loan Party has ever “participated” in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4. No Loan Party is party to any tax sharing or similar agreement.

Section 3.12. No Material Misstatements. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender, taken as a whole, in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect; provided that (a) with respect to financial estimates, projected financial information and other forward-looking information, the Borrower represents and warrants only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation; it being understood that such projections are

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not to be viewed as facts, that actual results during the period or periods covered by any such projections may differ significantly from the projected results and that such differences may be material and that such projections are not a guarantee of financial performance and (b) no representation is being made pursuant to this Section 3.12 with respect to information of a general economic or general industry nature.

Section 3.13. Labor Matters. There are no strikes, lockouts or slowdowns against any Loan Party pending or, to the best of the knowledge of the Loan Parties, threatened that have resulted in, or could reasonably be expected to result in, a Material Adverse Effect. The hours worked by and payments made to employees of any Loan Party have not been in violation of the Fair Labor Standards Act of 1938, as amended, or any other applicable Legal Requirement dealing with such matters in any manner that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

Section 3.14. Solvency. Both immediately before and immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Credit Extension and after giving effect to the application of the proceeds of each Credit Extension, (a) the sum of the debt (including contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, does not exceed the fair value of the present assets of the Borrower and its Subsidiaries, taken as a whole, (b) the present fair saleable value of the assets of the Borrower and its Subsidiaries, taken as a whole, is not less than the amount that will be required to pay the probable liabilities (including contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, on their debts as they become absolute and matured, (c) the capital of the Borrower and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of the Borrower and its Subsidiaries, taken as a whole, contemplated as of the date hereof and (d) the Borrower and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, debts (including current obligations and contingent liabilities) beyond their ability to pay such debts as they mature in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

Section 3.15. Employee Benefit Plans

(a) Each Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination from the Internal Revenue Service on which the sponsor of such plan is entitled to rely and nothing has occurred which would prevent, or cause the loss of, such qualification, in each case except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) No ERISA Event has occurred or is reasonably expected to occur except as could not reasonably be expected to result in a Material Adverse Effect.

Section 3.16. Environmental Matters.

(a) Except for the matters described on Schedule 3.16 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be

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expected to result in a Material Adverse Effect, no Loan Party or any of its predecessors (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any Environmental Claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

(b) Except for the matters described on Schedule 3.16 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, there are no and never have been any Hazardous Materials Released, treated, stored or disposed of on any property currently or formerly owned, operated or used by any Loan Party or (to the knowledge of the Borrower) by any of its predecessors.

(c) Except for the matters described on Schedule 3.16 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, no Loan Party is undertaking, or has completed, either individually or together with other potentially responsible parties, any investigation, assessment, remedial or Response action relating to any actual or threatened Release or disposal of Hazardous Materials at any site, location, or operation, either voluntarily or pursuant to the Order of any Governmental Authority or the requirements of any Environmental Law.

Section 3.17. Anti-Terrorism Law; Foreign Corrupt Practices Act.

(a) No Loan Party and, to the knowledge of the Loan Parties, none of its Affiliates is in violation of any Legal Requirements relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (the “Patriot Act”).

(b) No Loan Party and to the knowledge of the Loan Parties, no Affiliate or broker or other agent of any Loan Party acting or benefiting in any capacity in connection with the Credit Extensions currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Borrower will not directly or indirectly use the proceeds of the Loans or otherwise make available such proceeds to any person, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(c) No Loan Party and, to the knowledge of the Loan Parties, no broker or other agent of any Loan Party acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in Section 3.17(b), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

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(d) No Loan Party nor any director or officer, nor to the knowledge of the Loan Parties, any agent, employee or other person acting, directly or indirectly, on behalf of any Loan Party, has, in the course of its actions for, or on behalf of, any Loan Party, directly or indirectly (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

Section 3.18. Mortgages. To the extent provided therein, each Mortgage to be executed and delivered after the Closing Date will, when delivered, be effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Loan Parties’ right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens, and when the Mortgages are filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 5.11 and 5.12, the Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Permitted Collateral Liens.

Section 3.19. Security Interests. Subject to the terms of the Security Documents, on and after the Closing Date, each of the Security Documents creates (or after the execution and delivery thereof will create), as security for the Obligations, a valid and enforceable perfected security interest in and Lien on all of the Collateral subject thereto, superior to and prior to the rights of all third persons and subject to no other Liens (except such Permitted Liens as described herein), in favor of the Collateral Agent, for its benefit and for the benefit of the Secured Parties; provided, however, that notwithstanding anything to the contrary herein or in any other Loan Document to the contrary, no Loan Party makes any representation or warranty as to the effects of perfection or non-perfection of any pledge of or security interest in any Equity Interests of any Foreign Subsidiary, or as to the rights and remedies of the Administrative Agent, the Collateral Agent or any Lender or other Secured Party with respect thereto, in each case, under foreign law.

ARTICLE IV

CONDITIONS TO CREDIT EXTENSIONS

Section 4.01. Conditions to Initial Credit Extension. The obligation of each Lender to fund the initial Credit Extension requested to be made by it shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.01.

(a) Loan Documents. There shall have been delivered to the Administrative Agent a properly executed counterpart of each of the Loan Documents.

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(b) Corporate Documents. The Administrative Agent shall have received:

(i) a certificate of the secretary or assistant secretary of each Loan Party dated the Closing Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the Credit Extensions hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate required by this clause (i)); and

(ii) a certificate as to the good standing of each Loan Party (in so-called “long-form” if available) as of a recent date, from such Secretary of State (except with respect to the State of Illinois for the initial Credit Extension, which certificate shall be delivered promptly upon receipt).

(c) Officers’ Certificate. The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, confirming compliance with the conditions precedent set forth in this Section 4.01.

(d) Financings. Each of the Loan Documents shall be in form and substance reasonably satisfactory to the Administrative Agent and the Arrangers and shall be in full force and effect on the Closing Date.

(e) Opinions of Counsel. The Administrative Agent shall have received, on behalf of itself, the Collateral Agent and the Lenders, a customary legal opinion of Pepper Hamilton LLP, special counsel for the Loan Parties, (A) dated the Closing Date and (B) addressed to the Administrative Agent, the Collateral Agent and the Lenders.

(f) Solvency Certificate. The Administrative Agent shall have received a solvency certificate in the form of Exhibit J (a “Solvency Certificate”), dated the Closing Date and signed by the chief financial officer (or other officer with reasonably equivalent responsibilities) of the Borrower certifying that the Borrower and its Subsidiaries, taken as a whole, after giving effect to the Transactions, are solvent.

(g) Fees. The Arrangers and the Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including reimbursement or payment of all out-of-pocket expenses (including the premiums, survey charges and recording taxes and fees and the legal fees and expenses of Sullivan & Cromwell LLP, special counsel to the Administrative Agent and Arrangers, and the fees and expenses of any local counsel, foreign counsel, appraisers, consultants and other Advisors) required to be reimbursed or paid by the Loan Parties hereunder or under any other Loan Document, in each case to the extent such Fees and expenses are invoiced at least three (3) Business Days prior to the Closing Date (which Fees and expenses, for the avoidance of doubt, may be offset against the proceeds of Loans).

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(h) Personal Property Requirements. The Collateral Agent shall have received:

(i) UCC financing statements in appropriate form for filing under the UCC, filings with the United States Patent and Trademark Office and United States Copyright Office and such other documents under applicable Legal Requirements in each jurisdiction as may be necessary or appropriate to perfect the Liens created, or purported to be created, by the Security Documents in the Collateral;

(ii) certified copies, each as of a recent date, of (w) UCC searches with respect to the Borrower in form and substance satisfactory to the Collateral Agent, (x) United States Patent and Trademark Office and United States Copyright Office searches with respect to each Loan Party and (y) tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches listing all effective lien notices or comparable documents that name any Loan Party as debtor and that are filed in the state and county jurisdictions in which any Loan Party is organized or maintains its principal place of business; provided that to the extent that the searches described in preceding clauses (x) or (y) have not been or cannot be conducted on or prior the Closing Date after using commercially reasonable efforts without undue burden or expense, such lien searches shall not be a condition precedent to the Closing Date, but shall instead be required to be conducted and delivered within sixty (60) days (or such longer period as may be reasonably acceptable to the Collateral Agent in its sole discretion) after the Closing Date pursuant to arrangements to be mutually agreed between the Collateral Agent and the Borrower; and

(iii) evidence reasonably acceptable to the Collateral Agent of payment or arrangements for payment by the Loan Parties of all applicable filing or recording taxes, fees, charges, costs and expenses required for the filing or recording of the Security Documents;

provided that (i) where the Borrower has used commercially reasonable efforts without undue burden or expense, to the extent any security interest under a Security Document (other than any Collateral the security interest in which may be perfected by the filing of a UCC financing statement, or the filing of the intellectual property security agreements with the United States Patent and Trademark Office or United States Copyright Office, or the delivery or possession of stock certificates and other instruments) is not perfected on the Closing Date, such perfection shall not be a condition to the initial Credit Extension on the Closing Date and (ii) any such unperfected security shall be perfected promptly after the Closing Date, and in no event later than ninety (90) days after the Closing Date or such later date as the Administrative Agent may agree pursuant to arrangements to be mutually agreed between the Administrative Agent and the Borrower.

(i) Insurance. The Administrative Agent shall have received a certificate as to coverage under the Insurance Policies, together with the related endorsements, required by Section 5.05 and the applicable provisions of the Security Documents, each of which Insurance Policies shall be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable) and shall name the Collateral Agent, on behalf of the Secured Parties, as additional insured, in form and substance satisfactory to the Administrative Agent and the Collateral Agent.

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(j) Bank Regulatory Documentation. The Administrative Agent and the Lenders shall have received, in form and substance satisfactory to them, all documentation and other information required by bank regulatory authorities or by the Administrative Agent or any Lender under or in respect of applicable Anti-Terrorism Laws or “know-your-customer” Legal Requirements, including the Executive Order and the Patriot Act, in each case to the extent such information has been reasonably requested at least three (3) Business Days or such lesser time period as may be agreed between the Administrative Agent and the Borrower prior to the Closing Date.

(k) Closing Date Material Adverse Effect. Since January 28, 2012, with respect to the Borrower and its Subsidiaries, taken as a whole, there has been no Material Adverse Effect.

(l) Financial Statements; Projections. The Administrative Agent shall have received from the Borrower (i) the Historical Financial Statements, (ii) the Projections, and (iii) a pro forma consolidated balance sheet of the Borrower and its Subsidiaries for the twelve (12) month period ended March 31, 2012 and reflecting the consummation of the transactions contemplated by the Loan Documents to occur on or prior to the Closing Date, which pro forma financial statements shall be in form and substance satisfactory to the Administrative Agent.

(m) ABL Documents. The ABL Credit Agreement and the documents related thereto shall be in a form and substance reasonably satisfactory to the Administrative Agent.

Section 4.02. Conditions to All Credit Extensions. The obligation of each Lender to make any Credit Extension (including the initial Credit Extension) shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below.

(a) Letter of Direction. The Administrative Agent and the Arrangers shall have received (but solely as to the initial Credit Extension) a duly executed letter of direction from the Borrower addressed to the Administrative Agent and the Arrangers, on behalf of itself and the Lenders, directing the disbursement on the Closing Date of the proceeds of the Loans made on such date.

(b) Notice. The Administrative Agent shall have received a Funding Notice as required by Section 2.01 (or such notice shall have been deemed given in accordance with Section 2.01) if Loans are being requested.

(c) No Default. The Borrower and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after giving effect to such Credit Extension and the application of the proceeds thereof, no Default shall have occurred and be continuing on such date.

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(d) Representations and Warranties. Each of the representations and warranties made by any Loan Party set forth in Article III or in any other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date); provided that any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.

(e) No Legal Bar. No Order of any Governmental Authority shall purport to restrain any Lender from making any Loans to be made by it. No injunction or other restraining Order shall have been issued, shall be pending or notice with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder.

Each delivery of a Funding Notice and the acceptance by the Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by the Borrower and each other Loan Party that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the conditions contained in this Section 4.02 have been satisfied.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower and each of its Subsidiaries hereby warrants, covenants and agrees with the Administrative Agent, the Collateral Agent and each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest and premium (if any) on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full, the Borrower will, and will cause each of its Subsidiaries to:

Section 5.01. Financial Statements, Reports, etc. Furnish to the Administrative Agent for distribution to the Lenders:

(a) Annual Reports. As soon as available and in any event within 105 days after the end of each Fiscal Year, (i) the consolidated balance sheet of the Borrower as of the end of such Fiscal Year and related consolidated statements of income, cash flows and stockholders’ equity for such Fiscal Year, and in comparative form with such financial statements as of the end of, and for, the preceding Fiscal Year, and notes thereto, all prepared in accordance with GAAP and accompanied by an opinion of KPMG LLP or other independent public accountants of recognized national standing (which opinion shall not be qualified as to scope or contain any going concern or other qualification or exemption), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of the Borrower as of the dates and for the periods specified in accordance with GAAP, and (ii) a management’s discussion and analysis of the financial

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condition and results of operations for such Fiscal Year, as compared to the previous Fiscal Year and budgeted amounts; provided that if such information is filed with the SEC, the Borrower may comply by sending notice and copy of such information to the Administrative Agent promptly after such information becomes publicly available;

(b) Quarterly Reports. As soon as available and in any event within 45 days after the end of the first three (3) Fiscal Quarters of each Fiscal Year, (i) the consolidated balance sheet of the Borrower as of the end of such Fiscal Quarter and related consolidated statements of income and cash flows for such Fiscal Quarter and for the then elapsed portion of the Fiscal Year in comparative form with the consolidated statements of income and cash flows for the comparable periods in the previous Fiscal Year, and notes thereto, all prepared in accordance with GAAP and accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of the Borrower as of the date and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent with audited financial statements referred to in clause (a) of this Section 5.01, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) a management’s discussion and analysis of the financial condition and results of operations for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, as compared to the comparable periods in the previous Fiscal Year and budgeted amounts; provided that if such information is filed with the SEC, the Borrower may comply by sending notice and copy of such information to the Administrative Agent promptly after such information becomes publicly available;

(c) Financial Officer’s Certificate. (i) Concurrently with any delivery or notice in connection with an SEC filing of financial statements under Section 5.01(a) or (b) above, a Compliance Certificate from the Borrower certifying that no Default has occurred or, if such a Default has occurred, specifying in reasonable detail the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; and (ii) concurrently with any delivery of financial statements under Section 5.01(a) or (b) above, a Compliance Certificate setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the financial covenant contained in Section 6.10 and, in the case of Section 5.01(a) above, beginning with the Fiscal Year ending January 31, 2013, setting forth the calculation of Excess Cash Flow and Retained Excess Cash Flow Amount at the end of the period covered by such financial statements; and (iii) concurrently with any delivery of financial statements under Section 5.01(a) above, a certificate of the accounting firm opining on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default under Section 6.10 or, if any such Event of Default shall exist, stating the nature and status of such event, which certificate may be limited to accounting matters and disclaim any responsibility for legal interpretations; it being understood that the obligation under this Section 5.01(c)(iii) shall be satisfied regardless of whether such certificate is obtained from such accounting firm if Borrower shall have used commercially reasonable efforts to obtain such certificate;

(d) Management Letters. Promptly after the receipt thereof by any Loan Party, a copy of any “management letter” received by any such person from its certified public accountants and the management’s responses thereto;

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(e) Budgets. No later than 45 days after the first day of each Fiscal Year of the Borrower, a reasonably detailed budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income and projected Capital Expenditures) prepared by the Borrower for each fiscal month of such Fiscal Year, prepared in detail, of the Borrower and its Subsidiaries, with appropriate presentation and discussion in reasonable detail of the principal assumptions upon which such budget is based;

(f) Other Information. Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries, or compliance with the terms of any Loan Document, or the environmental condition of any real property, as any Agent or any Lender, through the Administrative Agent, may reasonably request;

(g) Securities Filings. Promptly after the same are publicly available, furnish to the Administrative Agent and the Lenders copies of all annual, regular, periodic and special reports and registration statements which any Loan Party files with the SEC or with any Governmental Authority that may be substituted therefor (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(h) Certification of Public Information. The Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed through a Platform, any document or notice that the Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such Public Lenders. The Borrower agrees to clearly designate all information provided to the Administrative Agent by or on behalf of the Borrower which is suitable to make available to Public Lenders. If the Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.01 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material Non-Public Information with respect to the Borrower, its Subsidiaries and their securities; and

(i) ABL. Promptly after delivery or receipt thereof: (i) copies of all material reports (including the borrowing base certificate, and all accounts receivable agings, accounts payable agings, all inventory reports and all monthly reports, it being understood that any such reports required to be delivered in accordance with the ABL Loan Documents more frequently than once a month shall only be required to be delivered pursuant to this Section 5.01(i) once in respect of any monthly period) delivered to or received from the ABL Collateral Agent or the ABL Lenders under the ABL Loan Documents, and (ii) final copies of any amendments, waivers, consents or other modifications to the ABL Loan Documents.

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Section 5.02. Litigation and Other Notices. Furnish to the Administrative Agent and each Lender written notice of the following promptly (and, in any event, within five (5) Business Days following knowledge of a Responsible Officer of the Borrower or any of its Subsidiaries thereof):

(a) any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation or proceeding, whether at law or in equity or otherwise by or before any Governmental Authority, (i) against any Loan Party that has had, or could reasonably be expected to result in, a Material Adverse Effect, (ii) with respect to any Loan Document or (iii) with respect to any of the other Transactions;

(c) any development that has resulted, or could reasonably be expected to result, in a Material Adverse Effect; and

(d)(i) the incurrence of any Lien (other than Permitted Collateral Liens) on, or claim asserted against, all or any material portion of the Collateral or (ii) the occurrence of any other event which could reasonably be expected to materially adversely affect the value of the Collateral.

Section 5.03. Existence; Businesses and Properties

(a) Do or cause to be done all things reasonably necessary to preserve, renew and maintain in full force and effect its legal existence and, except to the extent the failure to do so could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all rights and franchises, licenses and permits material to its business, except as otherwise expressly permitted under Section 6.05 or Section 6.06.

(b) Except to the extent the failure to do so could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, do or cause to be done all things necessary to maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear and casualty excepted, all properties necessary in the operation of the business of the Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof.

Section 5.04. Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), other than noncompliance which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 5.05. Insurance

(a) Keep its insurable property adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks as is customary with companies in the same or similar businesses operating in the same or similar locations, including insurance with respect to Mortgaged Properties and other properties material to the business of the Borrower and its Subsidiaries against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses operating in the same or similar locations.

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(b) Require, with respect to the Collateral (not including the ABL Priority Collateral), all policies and certificates (or certified copies thereof) with respect to any insurance to (i) be endorsed to the Collateral Agent’s reasonable satisfaction for the benefit of the Collateral Agent (including by naming the Collateral Agent as loss payee and/or additional insured other than with respect to automobile insurance and workers’ compensation) and (ii) state that such insurance policies shall not be canceled without at least thirty (30) days’ prior written notice thereof by the respective insurer to the Collateral Agent. All such certificates and endorsements (or certified copies thereof) shall be deposited with the Collateral Agent.

(c) With respect to each Mortgaged Property, obtain flood insurance in such total amount as is sufficient to comply with all applicable rules and regulations promulgated pursuant to (i) the National Flood Insurance Act of 1968, as amended from time to time, (ii) the Flood Disaster Protection Act of 1973, as amended from time to time, (iii) the National Flood Insurance Reform Act of 1994, as amended from time to time, and (iv) the Flood Insurance Reform Act of 2004, as amended from time to time, if at any time any improvements located on any such Mortgaged Property is located within an area designated a “special flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.

(d) Notify the Administrative Agent and the Collateral Agent promptly whenever any notice of cancellation of any insurance is received by any Loan Party; and promptly (and, in any event, within five (5) Business Days) deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such notice of cancellation.

Section 5.06. Obligations; Taxes

(a) Pay its Indebtedness and other obligations promptly and in accordance with the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Pay and discharge promptly when due all federal and all other material Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, services, materials and supplies or otherwise that, if unpaid, could reasonably be expected to give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; provided that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings timely instituted and diligently conducted and the Borrower or the applicable Subsidiary shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP.

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Section 5.07. Maintaining Records; Access to Properties and Inspections; Annual Meetings

(a) Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Legal Requirements are made of all dealings and transactions in relation to its business and activities. The Borrower and each Subsidiary will permit any representatives designated by the Administrative Agent to visit and inspect the financial records and the property of the Borrower or such Subsidiary at reasonable times during normal business hours and as often as reasonably requested upon reasonable advance notice and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent to discuss the affairs, finances, accounts and condition of the Borrower or any Subsidiary with the officers and employees thereof and Advisors therefor (including independent accountants); provided that, excluding any such visits and inspections during the continuation of an Event of Default, the Administrative Agent shall not exercise such rights more often than two (2) occasions during any calendar year and only one (1) such occasion shall be at the Borrower’s expense; provided, further, that when an Event of Default has occurred and is continuing the Administrative Agent (or any of its representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice. The Borrower or respective Subsidiary shall have the opportunity to have a representative accompany the Administrative Agent and its designated representatives on any such visits or inspections. The Administrative Agent shall give the Borrower prior notice of and the opportunity to participate in any discussions with the Borrower’s Advisors. Notwithstanding anything to the contrary in this Section 5.07, (A) none of the Borrower or any Subsidiary shall be required to disclose, permit the inspection, examination or making of copies or abstracts of, or any discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets unless an Event of Default has occurred and is continuing, (ii) in respect of which disclosure to the Administrative Agent (or its representatives or contractors) is prohibited by law or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work-product, and (B) the Administrative Agent’s inspection rights with respect to the Leased Real Property of the Borrower and its Subsidiaries shall be subject to the terms of the respective Lease governing such Leased Real Property.

(b) Prior to the occurrence of a Qualifying IPO, within (i) sixty (60) days after the close of the second Fiscal Quarter of each Fiscal Year of the Borrower and (ii) 150 days after the close of the fourth Fiscal Quarter of each Fiscal Year of the Borrower, hold a conference call with all Lenders who choose to attend any such conference call during which call the financial results of the previous Fiscal Quarter (or, in the case of clause (ii) above, Fiscal Year) and the financial condition of the Borrower and its Subsidiaries shall be reviewed and, in the case of clause (ii) above, the budgets for the current Fiscal Year of the Borrower and its Subsidiaries shall be presented.

(c) Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.01(c), Borrower shall deliver to Collateral Agent a certificate of its Authorized Officer (i) either confirming that there has been no change in such information since the date of the Security Agreement delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section 5.07 and/or

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identifying such changes, (ii) certifying that all UCC financing statements (including fixtures filings, as applicable, in respect of Owned Real Property) and all supplemental intellectual property security agreements or other appropriate filings, recordings or registrations, have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above (or in such Security Agreement) as required by the Loan Documents and (iii) certified copies, each as of a recent date, of (w) UCC searches with respect to the Loan Parties in scope similar to the UCC searches delivered pursuant to Section 4.01(h)(ii), (x) United States Patent and Trademark Office and United States Copyright Office searches with respect to each Loan Party and (y) tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches listing all effective lien notices or comparable documents that name any Loan Party as debtor and that are filed in the state and county jurisdictions in which any Loan Party is organized or maintains its principal place of business.

Section 5.08. Use of Proceeds. Use the proceeds of the Loans to pay dividends and to make distributions to holders of stock and stock equivalents in the Borrower and to pay costs and expenses related to the Transactions, with the excess, if any, to be used for working capital and general corporate purposes of the Borrower and its Subsidiaries. Use the proceeds of the Other Loans incurred pursuant to a Refinancing Amendment under Section 2.15 for the purposes described therein.

Section 5.09. Compliance with Environmental Laws. Except as could not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) comply, and take all steps within its control to cause all lessees and other persons occupying its properties to comply, with all Environmental Laws applicable to its operations and properties, (ii) obtain and renew all material environmental permits necessary for its operations and properties and (iii) conduct any Response in accordance with Environmental Laws; provided, however, that none of the Borrower any of its Subsidiaries shall be required to undertake any Response required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

Section 5.10. Interest Rate Protection. All Hedging Agreements must be entered into with a Lender, an ABL Lender or one or more counterparties reasonably acceptable to the Administrative Agent and with terms and conditions reasonably acceptable to the Administrative Agent.

Section 5.11. Additional Collateral; Additional Guarantors.

(a) Subject to this Section 5.11, with respect to any property acquired after the Closing Date by any Loan Party that is intended to be subject to the Lien created by any of the Security Documents but is not so subject (but, in any event, excluding any Equity Interest of a Foreign Subsidiary or a Disregarded Domestic Person not required to be pledged pursuant to the last sentence of Section 5.11(b)), promptly (and in any event within thirty (30) days after the acquisition thereof or such longer period as may be reasonably acceptable to the Administrative Agent in its sole discretion) (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such

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other documents as the Administrative Agent or the Collateral Agent shall deem reasonably necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien on such property subject to no Liens other than Permitted Liens, (ii) deliver opinions of counsel to the Loan Parties in form and substance reasonably acceptable to the Administrative Agent (but only if delivery thereof with respect to such property would have been required if the property had been owned on the Closing Date), and (iii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Documents in accordance with all applicable Legal Requirements (but subject, in any case, to any Permitted Collateral Liens), including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. The Borrower and the other Loan Parties shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of the Security Documents against such after-acquired properties.

(b) With respect to any person that is or becomes a Subsidiary of a Loan Party after the Closing Date, promptly (and in any event within thirty (30) days after such person becomes a Subsidiary or such longer period as may be reasonably acceptable to the Administrative Agent in its sole discretion), subject to the final sentence of this clause (b) (i) deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such Subsidiary, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new Subsidiary (A) to execute a Guarantee Joinder Agreement to become a Guarantor, (B) to execute a Security Joinder Agreement to become a Pledgor, (C) deliver customary opinions of counsel to the Loan Parties with respect to such Joinder Agreements and the Loan Documents to which such new Subsidiary becomes a party pursuant to such Joinder Agreements and (D) subject to the terms of the Security Documents, to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the applicable Loan Document to be duly perfected to the extent required by such Loan Document in accordance with all applicable Legal Requirements, including the filing of financing statements (or equivalent registrations) in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Collateral Agent pursuant to clause (i) of the preceding sentence shall not include any Equity Interests of a Foreign Subsidiary or a Disregarded Domestic Person and (2) no Excluded Subsidiary shall be required to take the actions specified in clause (ii) of the preceding sentence; provided that the exception contained in clause (1) shall not apply to (A) Voting Stock of any Subsidiary which is a first-tier Foreign Subsidiary or a Disregarded Domestic Person representing 65% of the total voting power of all outstanding Voting Stock of such Subsidiary and (B) 100% of the Equity Interests not constituting Voting Stock of any such Subsidiary, except that any such Equity Interests constituting “stock entitled to vote” within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this Section 5.11(b); provided, further, that, notwithstanding anything to the contrary, no Equity Interests of any partnership, joint venture or non-Wholly Owned Subsidiary which cannot be pledged without the consent of one or more third parties that are not Affiliates of the Borrower (after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law) shall be required to be pledged as Collateral under the Security Documents.

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(c) With respect to any person that is or becomes a Subsidiary of a Loan Party after the Closing Date, promptly (and in any event within thirty (30) days after such person becomes a Subsidiary or such longer period as may be reasonably acceptable to the Administrative Agent in its sole discretion) execute and deliver to the Collateral Agent, or its designee (i) a counterpart to the Intercompany Note and (ii) if such Subsidiary is a Loan Party, an endorsement to the Intercompany Note (undated and endorsed in blank) in the form attached thereto, endorsed by such Subsidiary.

(d) Cause the applicable Loan Party to grant within sixty (60) days of the acquisition thereof (or such longer period as may be reasonably acceptable to the Administrative Agent in its sole discretion) a security interest in and Mortgage on each Material Real Property owned in fee by such Loan Party, including any such Material Real Property acquired by such Loan Party after the Closing Date; provided, that if the Distribution Center is subject to a Lien securing Purchase Money Obligations, the Borrower shall be under no obligation to grant a security interest and Mortgage on such property unless and until requested by the Collateral Agent and the Administrative Agent and, if so requested, the Borrower shall use commercially reasonable efforts to obtain such security interest or Mortgage. Such Mortgages shall be reasonably satisfactory in form and substance to the Administrative Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Collateral Liens. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by applicable Legal Requirements to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages, and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall reasonably require to confirm the validity, enforceability, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Material Real Property owned in fee (including a Title Policy, a Survey and local counsel opinion (in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage) and shall satisfy all other requirements for Mortgaged Properties set forth on Schedule 5.11(d), in each case within the time limits specified therein.

Section 5.12. Security Interests; Further Assurances.

(a) Promptly, upon the reasonable request of the Administrative Agent or the Collateral Agent, at the Borrower’s expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, enforceability, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except Permitted Liens, or obtain any consents or waivers as may be necessary or appropriate in connection therewith.

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(b) Deliver or cause to be delivered to the Administrative Agent and the Collateral Agent from time to time such other documentation, instruments, consents, authorizations, approvals and Orders in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent as the Administrative Agent and the Collateral Agent shall reasonably deem necessary or advisable to perfect or maintain the validity, enforceability, perfection and priority of the Liens on the Collateral pursuant to the Security Documents.

(c) Upon the request of the Collateral Agent, use commercially reasonable efforts to cause any of its landlords (other than with respect to stores) with respect to Leased Real Property to deliver a Collateral Access Agreement to the Collateral Agent.

Section 5.13. Maintenance of Ratings. If a Qualifying IPO shall not have occurred within twelve (12) months of the Closing Date (the “IPO Period”), the Borrower shall use commercially reasonable efforts (including, payment of any fees to the rating agencies to receive a debt rating as contemplated pursuant to this Section 5.13, attendance by management of the Borrower (and using commercially reasonable efforts to cause the attendance of representatives of the Sponsor) at meetings with rating agencies if requested by the rating agencies and preparation of requested materials by the Rating Agency) to receive, by the end of the IPO Period, a debt rating of the Loans by Standard & Poor’s Ratings Group and Moody’s Investors Service, Inc., and thereafter use commercially reasonable efforts to maintain such ratings with both Standard & Poor’s Ratings Group and Moody’s Investors Service, Inc.

Section 5.14. Post-Closing Collateral Matters. Use commercially reasonable efforts to make such filings with the United States Patent and Trademark Office and each relevant state trademark authority as are reasonably necessary to correct the chain of title and/or Lien issues identified in Schedule 5.14 hereto within sixty (60) days after the Closing Date. To the extent the Loan Parties are unable to do so within such time, the Loan Parties shall continue to use such commercially reasonable efforts to correct the issues identified in Schedule 5.14 as soon as reasonably practicable thereafter unless it is not practicable or advisable to do so in the reasonable business judgment of the Borrower and the Administrative Agent.

ARTICLE VI

NEGATIVE COVENANTS

The Borrower and each of its Subsidiaries warrants, covenants and agrees with the Administrative Agent, the Collateral Agent and each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest and premium (if any) on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full, the Borrower will not, and will not cause or permit any of its Subsidiaries to:

Section 6.01. Indebtedness. Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except:

(a) Indebtedness incurred under this Agreement and the other Loan Documents;

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(b) Indebtedness outstanding on the Closing Date and listed on Schedule 6.01(b);

(c) Indebtedness under Hedging Obligations that are Permitted Hedging Agreements, in each case entered into in the ordinary course of business and not for speculative purposes; provided that if such Hedging Obligations relate to interest rates, (i) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents and (ii) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;

(d) Indebtedness arising from Investments permitted by Section 6.04;

(e) Indebtedness of the Borrower and its Subsidiaries in respect of Purchase Money Obligations and Capital Lease Obligations in an aggregate amount not to exceed (i) $10,500,000 at any time outstanding with respect to Purchase Money Obligations and Capital Lease Obligations related to assets other than the Distribution Center and (ii) $28,000,000 with respect to Purchase Money Obligations and Capital Lease Obligations related to the Distribution Center; provided, however, that, in the case of Purchase Money Obligations, (A) such Indebtedness is incurred within ninety (90) days after such acquisition, installation, construction or improvement of such fixed or capital assets (including Equity Interests of any person owning the applicable fixed or capital assets) by such person and (B) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be;

(f) Indebtedness assumed or incurred in connection with a Permitted Acquisition or a Permitted Joint Venture on or after the Closing Date in an aggregate principal amount not to exceed $2,500,000 at any time outstanding for all such Indebtedness; provided that such Indebtedness (i) exists at the time such person becomes a Subsidiary or the relevant assets are acquired, (ii) was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition or Permitted Joint Venture, and (iii) is not directly or indirectly recourse to the Borrower or any of its Subsidiaries or any of their respective assets, other than to the person that becomes a Subsidiary or the assets so acquired;

(g) Indebtedness in respect of workers’ compensation claims, self-insurance obligations or bid, performance or surety bonds or bankers’ acceptances issued for the account of the Borrower or any of its Subsidiaries, in each case in the ordinary course of business, including guarantees or obligations of the Borrower or any of its Subsidiaries with respect to letters of credit supporting such workers’ compensation claims, self-insurance obligations or bid, performance or surety obligations or bankers’ acceptances (in each case other than for an obligation for borrowed money);

(h) Subordinated Indebtedness and unsecured Indebtedness, in each case incurred after the Closing Date (including in connection with Permitted Acquisitions, Permitted Joint Ventures or Credit Agreement Refinancing Indebtedness), provided that (i) no Default or Event of Default exists or shall result from the incurrence thereof, (ii) such Indebtedness shall not mature or require any payment of principal, in each case, prior to the date

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which is 181 days after the Final Maturity Date then in effect, (iii) the holder of such debt executes an intercreditor agreement with terms acceptable, including subordination terms, to the Administrative Agent and the Collateral Agent and (iv) the Borrower shall be in compliance on a Pro Forma Basis after the incurrence of such Indebtedness (and, in the case of any such Indebtedness incurred in connection with a Permitted Acquisition or a Permitted Joint Venture, on a Pro Forma Basis after giving effect to such Permitted Acquisition or such Permitted Joint Venture) with the financial covenant set forth in Section 6.10;

(i) Contingent Obligations of the Borrower or any of its Subsidiaries (x) in respect of Indebtedness otherwise permitted under this Section 6.01 (other than this Section 6.01(i)) and (y) with respect to operating leases and other obligations (other than Indebtedness) of the Borrower or any of its Subsidiaries entered into in the ordinary course of business;

(j) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence;

(k) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

(l) Indebtedness of any Subsidiary that is a non-Loan Party in an aggregate outstanding principal amount not to exceed $5,000,000 at any time outstanding for all such non-Loan Parties; provided that such Indebtedness is not directly or indirectly recourse to the Borrower or any of its Subsidiaries or of their respective assets, other than to such non-Loan Party;

(m) Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount for the Borrower or any of its Subsidiaries not to exceed $5,000,000 at any time outstanding;

(n) Indebtedness which represents a refinancing or renewal of any of the Indebtedness described in clauses (b), (e), (f) and (t) of this Section 6.01; provided that (i) any such Refinancing Indebtedness is in an aggregate principal amount (or aggregate amount, as applicable) not greater than the aggregate principal amount (or aggregate amount, as applicable) of the Indebtedness being renewed or refinanced, plus the amount of any reasonable premiums required to be paid thereon and reasonable fees and expenses associated therewith, (ii) such Refinancing Indebtedness has a later or equal final maturity and longer or equal Weighted Average Life to Maturity than the Indebtedness being renewed or refinanced, (iii) the covenants, events of default, subordination (including lien subordination) and other terms, conditions and provisions thereof (including any guarantees thereof or security documents in respect thereof) shall be, in the aggregate, no less favorable to the Administrative Agent, the Collateral Agent and the Lenders than those contained in the Indebtedness being renewed or refinanced, and (iv) no Event of Default has occurred and is continuing or would result therefrom;

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(o) Permitted First Priority Refinancing Debt, Permitted Second Priority Refinancing Debt and/or Permitted Unsecured Refinancing Debt;

(p) Indebtedness representing deferred compensation to employees of the Borrower or any of its Subsidiaries incurred in the ordinary course of business;

(q) cash management obligations and other Indebtedness incurred in the ordinary course of business in respect of netting services and similar arrangements in each case in connection with cash management and deposit accounts;

(r) Indebtedness consisting of the financing of insurance premiums, in the ordinary course of business, not to exceed one year of such premiums;

(s) Indebtedness which may be deemed to exist in connection with customary agreements providing for indemnification, purchase price adjustments, earnouts and similar obligations in connection with Investments, Permitted Acquisitions, Permitted Joint Ventures or Asset Sales permitted hereunder;

(t) ABL Indebtedness in an aggregate principal amount at any time outstanding not to exceed (i) prior to a Qualifying IPO, $40,000,000 and (ii) following a Qualifying IPO, $50,000,000; and

(u) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest (other than pay-in-kind interest) on obligations described in clauses (a) through (t) of this Section 6.01.

Section 6.02. Liens. Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, the “Permitted Liens”):

(a) Liens for taxes, assessments or governmental charges or levies that are not overdue for a period of more than thirty (30) days or, if more than thirty (30) days overdue, which are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or Orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien;

(b) Liens in respect of property of the Borrower or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business, and (i) which do not in the aggregate materially detract from the value of the property of the Borrower and its Subsidiaries, taken as a whole, or the Loan Parties, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Borrower and its Subsidiaries, taken as a whole, or the Loan Parties, taken as a whole, and (ii) which, if they secure obligations that are then due and unpaid, are not more than thirty (30) days overdue unless they are being contested in good faith by appropriate proceedings

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for which adequate reserves have been established in accordance with GAAP, which proceedings (or Orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien;

(c) any Lien in existence on the Closing Date and set forth on Schedule 6.02(c) and any Lien granted as a replacement or substitute therefor; provided that any such replacement or substitute Lien (i) except as permitted by Section 6.01(n), does not secure an aggregate amount of Indebtedness or other obligations, if any, greater than that secured on the Closing Date and (ii) does not encumber any property other than the property subject thereto on the Closing Date (any such Lien, an “Existing Lien”);

(d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions, servitudes and other similar charges or encumbrances, and minor title deficiencies, in each case, on or with respect to any real property, in each case whether now or hereafter in existence, not (i) securing Indebtedness or (ii) individually or in the aggregate materially interfering with the ordinary conduct of the business of the Borrower or any of its Subsidiaries at or otherwise with respect to such real property;

(e) Liens arising out of judgments, attachments or awards not resulting in a Default or an Event of Default under Section 8.01(i) or securing appeal or other surety bonds relating to such judgments;

(f) Liens (other than any Lien imposed by ERISA) (i) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation, (ii) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (in each case, exclusive of obligations for the payment of Indebtedness for borrowed money) or (iii) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;

(g) Leases of the properties of the Borrower or any of its Subsidiaries, in each case entered into in the ordinary course of the Borrower or such Subsidiary’s business so long as such Leases do not (i) individually or in the aggregate, interfere in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries or (ii) secure any Indebtedness;

(h) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business in accordance with the past practices of the Borrower or such Subsidiary;

(i) Liens securing Indebtedness incurred pursuant to Section 6.01(e) provided that (i) any such Liens attach only to the property being financed pursuant to such Indebtedness and (ii) do not encumber any other property of any Loan Party;

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(j) Liens encumbering the underlying fee interest of the Leased Real Property related to the Leases;

(k) Liens on property rented to, or leased by, the Borrower or any of its Subsidiaries pursuant to a Sale and Leaseback Transaction; provided that (i) such Sale and Leaseback Transaction is permitted by Section 6.03, (ii) such Liens do not encumber any other property of the Borrower or any of its Subsidiaries, and (iii) such Liens secure only the Attributable Indebtedness incurred in connection with such Sale and Leaseback Transaction;

(l) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Borrower or any of its Subsidiaries, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and arise by operation of applicable Legal Requirements, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

(m) Liens on property of a person existing at the time such person is acquired or merged with or into or consolidated with the Borrower or any of its Subsidiaries to the extent permitted hereunder; provided that such Liens (i) do not extend to property not subject to such Liens at the time of such acquisition, merger or consolidation (other than improvements thereon), (ii) are no more favorable to the lienholders than such existing Liens and (iii) are not created in anticipation or contemplation of such acquisition, merger or consolidation;

(n) Liens granted pursuant to the Security Documents to secure the Secured Obligations;

(o) licenses of Intellectual Property granted by the Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Borrower or any of its Subsidiaries;

(p) the filing of UCC financing statements solely as a precautionary measure in connection with operating leases or consignment of goods;

(q) Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the UCC as in effect in the State of New York or any similar section under any applicable UCC, covering only the items being collected upon;

(r) Liens granted by the Borrower or any of its Subsidiaries in favor of a Loan Party in respect of Indebtedness owed by the Borrower or any such Subsidiary to such Loan Party; provided that such Indebtedness is (i) evidenced by the Intercompany Note and (ii) pledged by such Loan Party as Collateral pursuant to the Security Documents;

(s) Liens securing Indebtedness incurred by a non-Loan Party pursuant to Section 6.01(l);

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(t) Liens securing all obligations under the Permitted First Priority Refinancing Debt and Permitted Second Priority Refinancing Debt; provided that (i) any Liens securing such Refinancing Indebtedness shall also secure the Secured Obligations and (ii) any Liens securing any Permitted First Priority Refinancing Debt and any Permitted Second Priority Refinancing Debt and any refinancing thereof that constitutes Permitted First Priority Refinancing Debt or Permitted Second Priority Refinancing Debt shall be subject to an Intercreditor Agreement; and provided, further, that the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness otherwise permitted under this clause (t) at the time the original Lien became a Permitted Lien hereunder, and (B) an amount necessary to pay any accrued but unpaid interest and fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement (it being understood that one or more types or Classes of Indebtedness described in this clause (t) may be refinanced together into one or more types or Classes of Refinancing Indebtedness so long as the aggregate amount of such resulting Refinancing Indebtedness would not exceed the sum of the amounts otherwise permitted by this proviso for the refinanced Indebtedness individually), so long as the parameters for Refinancing Indebtedness for each such Class are otherwise satisfied;

(u) Liens (i) on advances of cash or Cash Equivalents in favor of the seller of any property acquired in any Permitted Acquisition or any other Investment permitted by this Agreement to be applied against the purchase price for such Permitted Acquisition or Investment, (ii) consisting of an agreement to dispose of any property pursuant to any Disposition permitted by this Agreement and (iii) earnest money deposits of cash or Cash Equivalents made by the Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted by this Agreement;

(v) Liens not otherwise permitted under this Section 6.02 securing obligations that do not in the aggregate exceed $1,500,000 at any time outstanding;

(w) all Liens and other matters disclosed in the Title Policies; and

(x) Liens granted to the ABL Collateral Agent, for the benefit of itself and the ABL Secured Parties, to secure Indebtedness evidenced by the ABL Loan Documents to the extent such Liens are subject to the terms and conditions of the ABL Intercreditor Agreement.

Section 6.03. Sale and Leaseback Transactions. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “Sale and Leaseback Transaction”) unless (a) the sale of such property is entered into in the ordinary course of business and is made for cash consideration in an amount not less than the Fair Market Value of such property, (b) the Sale and Leaseback Transaction is permitted by Section 6.06 and is consummated within sixty (60) days after the date on which such property is sold or transferred, (c) any Liens arising in connection with its use of the property are permitted by Section 6.02(k), (d) the Sale and Leaseback Transaction would be permitted under Section 6.01, assuming the Attributable Indebtedness with

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respect to the Sale and Leaseback Transaction constituted Indebtedness under Section 6.01 and (e) the Attributable Indebtedness incurred with respect to such Sale and Leaseback Transactions shall not exceed (i) for any property other than the Distribution Center, $1,250,000 with respect to any single Sale and Leaseback Transaction and $2,500,000 in the aggregate in any period of twelve (12) consecutive months and (ii) for the Distribution Center, $28,000,000.

Section 6.04. Investments, Loans and Advances. Directly or indirectly, lend money or credit (by way of guarantee, assumption of debt or otherwise) or make advances to any person, or purchase or acquire any stock, bonds, notes, debentures or other obligations or securities of, or any other interest in, or make any capital contribution to, any other person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract (all of the foregoing, collectively, “Investments”), except that the following shall be permitted:

(a) [Reserved];

(b) Investments outstanding on the Closing Date and, if individually in excess of $25,000, identified on Schedule 6.04(b);

(c) the Borrower or any of its Subsidiaries may (i) acquire and hold accounts receivables owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and Cash Equivalents, (iii) endorse negotiable instruments held for collection in the ordinary course of business, (iv) make lease, utility and other similar deposits in the ordinary course of business and (v) acquire and hold accounts receivable and notes receivable from financially troubled counterparts in the ordinary course of business in order to prevent or limit loss;

(d) Hedging Obligations permitted pursuant to Section 6.01(c);

(e) loans and advances to directors, employees and officers of the Borrower and its Subsidiaries for bona fide business purposes and to purchase Equity Interests of the Borrower, in aggregate amount not to exceed $500,000 at any time outstanding (calculated without regard to write-downs or write-offs thereof); provided that, following an initial public offering of the Borrower or any of its Subsidiaries, no loans in violation of Section 402 of the Sarbanes-Oxley Act shall be permitted hereunder;

(f) Investments by (i) the Borrower in any Guarantor, (ii) the Borrower or any of its Subsidiaries in the Borrower or any Guarantor, (iii) a Subsidiary of the Borrower that is not a Loan Party in any other Subsidiary of the Borrower that is not a Loan Party, and (iv) the Borrower or any Guarantor in any Subsidiary of the Borrower that is not a Guarantor in a maximum amount of $2,000,000 at any time outstanding; provided that any Investment in the form of a loan or advance shall be evidenced by an Intercompany Note (and shall be subject to the subordination provisions contained therein if made to a Subsidiary that is a Loan Party) and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents;

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(g) Investments in securities of trade creditors or customers in the ordinary course of business and consistent with the Borrower’s or such Subsidiary’s past practices that are received in settlement of bona fide disputes or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

(h) mergers and consolidations in compliance with Section 6.05;

(i) Investments made by the Borrower or any of its Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with Section 6.06;

(j) Investments (i) constituting acquisitions in compliance with Section 6.07 (other than Section 6.07(a)) and (ii) arising from non-cash consideration received in connection with Dispositions pursuant to Section 6.06(b);

(k) Dividends in compliance with Section 6.08;

(l) Investments of any person that becomes a Subsidiary on or after the Closing Date in an aggregate amount for all such Subsidiaries not to exceed $2,500,000 on the date such person becomes a Subsidiary; provided that (i) such Investments exist at the time such person is acquired, (ii) such Investments are not made in anticipation or contemplation of such person becoming a Subsidiary, and (iii) such Investments are not directly or indirectly recourse to the Borrower or any of its Subsidiaries or any of their respective assets, other than to the person that becomes a Subsidiary;

(m) other Investments in an aggregate amount not to exceed $3,500,000 on the date such Investments are made;

(n) unsecured intercompany loans by any of the Subsidiaries of the Borrower to the Borrower evidenced by an Intercompany Note (and subject to the subordination provisions contained therein) for purposes and in amounts that would otherwise be permitted to be made as Dividends to the Borrower pursuant to Sections 6.08(b) through and including (c); provided that the principal amount of any such loans shall reduce Dollar-for-Dollar the amounts that would otherwise be permitted to be paid for such purpose in the form of Dividends pursuant to such Sections;

(o) Investments in an aggregate amount outstanding not to exceed the Cumulative Credit Availability as of the time such Investments were made; provided that no such Investments will be permitted under this Section 6.04(o) unless (i) no Default or Event of Default exists or would result therefrom, (ii) at the time that any such Investment is made (and immediately after giving effect thereto and to any other related transaction), the Borrower shall be in compliance, on a Pro Forma Basis, with the financial covenant contained in Section 6.10, and (iii) prior to the making of such Investment, the Borrower shall have delivered to the Administrative Agent a certificate executed by a Financial Officer, calculating in reasonable detail the amount of Cumulative Credit Availability immediately prior to such Investment and the amount thereof to be so applied and certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) and (ii), and containing the calculations (in reasonable detail) required by preceding clause (ii);

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(p) so long as no Default or Event of Default then exists or would result therefrom, the Borrower and its Subsidiaries may make Investments that are made in exchange for the substantially concurrent sale of Equity Interests of the Borrower permitted to be issued by it hereunder (other than any such amounts that are received from a Subsidiary of the Borrower), to the extent that such amounts are not otherwise used to pay or make a Dividend under Section 6.08(b) or make a payment under Section 6.11(a)(IV) or be required to be used to make a mandatory prepayment pursuant to Section 2.08(b);

(q) promissory notes or other obligations of directors, officers or other employees of the Borrower or any of its Domestic Subsidiaries in connection with such directors’, officers’ or employees’ purchase of Equity Interests of the Borrower or any direct or indirect parent thereof, so long as no cash is advanced by the Borrower or any of its Subsidiaries in connection with such Investment; and

(r) Investments that may arise as a result of the consummation of Sale and Leaseback Transactions permitted under Section 6.03.

Section 6.05. Mergers and Consolidations. Wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation (or agree to do any of the foregoing at any time), except that the following shall be permitted:

(a) Dispositions of assets in compliance with Section 6.06 (other than Section 6.06(d) and Section 6.06(e));

(b) Permitted Acquisitions and Permitted Joint Ventures;

(c) any solvent Subsidiary of the Borrower may merge or consolidate with or into the Borrower or any Guarantor (as long as the Borrower or a Guarantor is the surviving person in such merger or consolidation and, in the case of any Guarantor, remains a Wholly Owned Subsidiary of the Borrower); provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.11 or Section 5.12, as applicable;

(d) any Subsidiary of the Borrower may dissolve, liquidate or wind up its affairs at any time; provided that (i) any and all assets or other distribution from such dissolution, liquidation or winding up shall be distributed to the Borrower or one or more Subsidiaries of the Borrower and (ii) if such Subsidiary is a Guarantor, then any and all assets or other distribution from such dissolution, liquidation or winding up shall be distributed to the Borrower or one or more Guarantors; and

(e) any Foreign Subsidiary may merge or consolidate with or into another Foreign Subsidiary.

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To the extent the Required Lenders under Section 10.02(b) waive the provisions of this Section 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.05, such Collateral (unless sold to a Loan Party or any Affiliate thereof), but not the proceeds thereof, shall be sold free and clear of the Liens created by the Security Documents, and, so long as the Borrower shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Collateral Agent and/or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 6.05, the Collateral Agent shall take all actions it deems appropriate in order to effect the foregoing.

Section 6.06. Asset Sales. Effect any Disposition, or agree to effect any Disposition, except that the following shall be permitted:

(a) Dispositions of used, worn out, surplus or obsolete property by the Borrower or any of its Subsidiaries or any property no longer useful in the conduct of the business of the Borrower or any of its Subsidiaries and the abandonment or other Disposition of Intellectual Property that is, in the reasonable good faith judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower and its Subsidiaries taken as a whole;

(b) other Dispositions; provided that (i) the aggregate consideration received in respect of all Dispositions pursuant to this clause (b) shall not exceed $1,000,000 in any period of twelve (12) consecutive months, (ii) such Dispositions are made for Fair Market Value and on an arm’s-length commercial basis, and (iii) at least 75% of the consideration payable in respect of such Disposition is in the form of cash or Cash Equivalents;

(c) Leases of real or personal property (other than Sale and Leaseback Transactions) in the ordinary course of business so long as no such Lease otherwise adversely affects the Collateral Agent’s security interest in the asset or property subject thereto in any material respect;

(d) Investments in compliance with Section 6.04;

(e) mergers and consolidations in compliance with Section 6.05;

(f) Dividends in compliance with Section 6.08;

(g) sales of inventory in the ordinary course of business and Dispositions of cash and Cash Equivalents in the ordinary course of business;

(h) any Disposition that constitutes a Casualty Event;

(i)(x) any Disposition by the Borrower or any Subsidiary of the Borrower to the Borrower or any of its Wholly Owned Subsidiaries; provided that if the transferor of such property is the Borrower or a Guarantor, the transferee thereof must be the Borrower or a Guarantor and (y) any Disposition by any Loan Party to a Subsidiary of the Borrower that is not a Loan Party to the extent constituting an Investment permitted by Section 6.04 hereof;

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(j) any Foreign Subsidiary may dispose of any or all of its assets to another Foreign Subsidiary;

(k) Dispositions of accounts receivable arising in the ordinary course of business in connection with the collection or compromise thereof and not as part of any financing transaction;

(l) Dispositions of common Equity Interests in the Borrower (in any case, not constituting Disqualified Stock) to any employee, officer, director or service provider of the Borrower or any ERISA Affiliate made pursuant to any equity or equity based plan approved by the Board of Directors of the Borrower in good faith;

(m) transactions permitted under Section 6.09(e);

(n) any Disposition of the Distribution Center or any constituent parts thereof in the context of a Sale and Leaseback Transaction permitted hereunder; and

(o) any Disposition by Borrower or any of its Subsidiaries of assets in connection with the closing or sale of a retail store location of the Borrower or any of its Subsidiaries in the ordinary course of business which consist of leasehold interests in the premises of such store, the equipment and fixtures located at such premises and the books and records relating exclusively and directly to the operations of such store; provided, that, as to each and all such sales and closings, (A) on the date of, and after giving effect to, any such closing or sale, the aggregate number of retail store locations closed or sold by Borrower or any of its Subsidiaries in any Fiscal Year minus the number of retail stores opened by Borrower and its Subsidiaries in such Fiscal Year, shall not exceed the amount equal to ten percent (10%) of the number of retail store locations of Borrower as of the end of the immediately preceding Fiscal Year, and (B) such sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction.

To the extent the Required Lenders under Section 10.02(b) waive the provisions of this Section 6.06, with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.06, such Collateral (unless sold to a Loan Party or any Affiliate thereof), but not the proceeds thereof, shall be sold free and clear of the Liens created by the Security Documents, and, so long as the Borrower shall have previously provided to the Collateral Agent and the Administrative Agent such certifications or documents as the Collateral Agent and/or the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 6.06, the Collateral Agent shall take all actions it deems appropriate in order to effect the foregoing.

Section 6.07. Acquisitions. Purchase or otherwise acquire (in one or a series of related transactions) any part of the property of any person (or agree to do any of the foregoing at any time), except that the following shall be permitted:

(a) Investments in compliance with Section 6.04;

(b) purchases and other acquisitions of inventory, materials, equipment and intangible property in the ordinary course of business;

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(c) leases or licenses of real or personal property in the ordinary course of business and in accordance with this Agreement and the applicable Security Documents;

(d) Permitted Acquisitions and Permitted Joint Ventures;

(e) mergers and consolidations in compliance with Section 6.05;

(f) Dividends in compliance with Section 6.08;

(g) Sale and Leaseback Transactions in compliance with Section 6.03; and

(h) purchases and other acquisitions of real property in the ordinary course of business that are used or useful in the conduct of the business in accordance with Section 6.14 hereof;

provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.11 or Section 5.12, as applicable.

Section 6.08. Dividends. Authorize, declare or pay, directly or indirectly, any Dividends with respect to the Borrower or any of its Subsidiaries (including pursuant to any Synthetic Purchase Agreement) or incur any obligation (contingent or otherwise) to do so, except that the following shall be permitted:

(a) Dividends by a Subsidiary of the Borrower to the Borrower or to another Subsidiary of the Borrower (provided that Dividends made by a Loan Party must be received by another Loan Party and, in the case of a Dividend by a non-Wholly Owned Subsidiary of the Borrower, to the Borrower and any other Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests);

(b) Dividends in an aggregate amount outstanding not to exceed the Cumulative Credit Availability as of the time such Dividends were made; provided that no such payments will be permitted under this Section 6.08(b) unless (i) no Default or Event of Default exists or would result therefrom, (ii) at the time that any such Dividend is made (and immediately after giving effect thereto), the Borrower shall be in compliance, on a Pro Forma Basis, with a Consolidated Net Leverage Ratio of not more than 2.00:1.00 (or for the Test Period ended January 31, 2015 and thereafter, 1.75:1.00), for the most recent Test Period for which financial statements are available, and (iii) prior to the payment or making of such Dividend, the Borrower shall have delivered to the Administrative Agent a certificate executed by a Financial Officer, demonstrating in reasonable detail (1) the amount of Cumulative Credit Availability immediately prior to such Dividend and the amount thereof to be so applied and (2) compliance with this Section 6.08(b);

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(c) the Borrower and each Subsidiary of the Borrower may declare and make dividend payments or other distributions payable solely in the Equity Interests (other than Disqualified Capital Stock) of such person;

(d) repurchases of Equity Interests in the Borrower or any of its Subsidiaries deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

(e) so long as (i) no Default shall have occurred and be continuing or would result therefrom and (ii) the aggregate amount of cash payments made pursuant to this clause (e) does not exceed $2,500,000 in any Fiscal Year of the Borrower (with unused amounts in any Fiscal Year being carried over to the two (2) immediately succeeding Fiscal Years), Dividends by the Borrower to (A) repurchase, retire or otherwise acquire or retire for value Equity Interests issued by the Borrower to any future, present or former employee, officer, director or consultant of the Borrower or any of its Subsidiaries or (B) make payments of principal or interest on promissory notes that were issued in lieu of cash payments for the repurchase, retirement or other acquisition or retirement for value of such Equity Interests, in each case pursuant to any employee or director equity plan, employee, officer or director stock option plan or any other employee or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any employee, director or consultant of the Borrower or any of its Subsidiaries;

(f) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Borrower; provided however that any such cash payment shall not be for the purpose of evading the limitations of this covenant; and

(g) Dividends by the Borrower to the holders of its Equity Interests on or about the Closing Date in a maximum aggregate amount equal to $100,000,000 where such dividends are financed in whole or in part with the proceeds of the Loans in accordance with Section 5.08 hereof.

Section 6.09. Transactions with Affiliates. Enter into, directly or indirectly, any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of the Borrower or any of its Subsidiaries (other than between or among the Borrower and one or more Guarantors), other than on terms and conditions at least as favorable to the Borrower or such Subsidiary as would reasonably be obtained by the Borrower or such Subsidiary at that time in a comparable arm’s-length transaction with a person other than an Affiliate, except that the following shall be permitted:

(a) Dividends permitted by Section 6.08;

(b) Investments permitted by Sections 6.04(e), (f), (l), (n) and (q);

(c) reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock, stock option and other benefit plans) and indemnification arrangements, in each case approved by the Board of Directors of the Borrower or the applicable Subsidiary, to the extent required;

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(d) [Reserved];

(e) issuances by the Borrower of its Equity Interests in any transaction not otherwise prohibited by this Agreement;

(f) the payment of customary fees and reasonable out-of-pocket costs and expenses to, and indemnities provided on behalf of, (i) members of the Board of Directors of the Borrower or any of its Subsidiaries and (ii) the directors or managers of the Borrower or any direct or indirect parent thereof; and

(g) employment agreements entered into by the Borrower or any of its Subsidiaries in the ordinary course of business.

Section 6.10. Financial Covenant

(a) Maximum Consolidated Net Leverage Ratio. Permit the Consolidated Net Leverage Ratio, as of the last day of any Test Period set forth in the table below, to exceed the ratio set forth opposite such Test Period in the table below:

Test Period End Date	Consolidated Net Leverage Ratio
July 28, 2012		3.25 x
October 27, 2012		3.25 x
February 2, 2013		2.75 x
May 4, 2013		2.50 x
August 3, 2013		2.50 x
November 2, 2013		2.50 x
February 1, 2014		2.00 x
May 3, 2014		2.00 x
August 2, 2014		2.00 x
November 1, 2014		2.00 x
January 31, 2015 and Thereafter		1.75 x

Section 6.11. Prepayments of Other Indebtedness; Modifications of Organizational Documents, Acquisition and Certain Other Documents, etc. Directly or indirectly:

(a)(including pursuant to any Synthetic Purchase Agreement) make or offer to make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption, retirement, defeasance, or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Indebtedness incurred under Section 6.01(h) or (o) (other than Permitted First Priority Refinancing Debt) or any other Indebtedness that is required to be subordinated to the Obligations pursuant to the terms of the Loan Documents (collectively, “Junior Financing”) or make any payment in violation of any subordination terms of any Junior Financing Documentation; provided that (I) any Loan Party may (x) make payments of regularly scheduled

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interest, fees and expenses in respect of any Junior Financing or any Refinancing Indebtedness in respect thereof and (y) satisfy indemnification obligations in respect of any obligations under any Junior Financing, (II) any Loan Party may prepay, redeem, repurchase, exchange or acquire any then outstanding Junior Financing (and any permitted refinancing in respect thereof) in an aggregate amount not to exceed the Cumulative Credit Availability as in effect immediately before the respective prepayment, redemption, repurchase and acquisition, so long as (x) no Default or Event of Default then exists or would result therefrom, (y) at the time that any such prepayment, redemption, repurchase or acquisition is made (and immediately after giving effect thereto and to any other related transaction), the Borrower shall be in compliance, on a Pro Forma Basis, with the financial covenant contained in Section 6.10 for the most recent Test Period for which financial statements are available, and (z) prior to the making of such prepayment, redemption, repurchase, or acquisition Borrower shall have delivered to the Administrative Agent a certificate executed by a Financial Officer, demonstrating in reasonable detail (1) the amount of Cumulative Credit Availability immediately prior to such prepayment, redemption, repurchase or acquisition and the amount thereof to be so applied and (2) compliance with this Section 6.11(a), (III) any Loan Party may prepay, redeem, repurchase, exchange or acquire any Junior Financing (and any Refinancing Indebtedness in respect thereof) with proceeds of Refinancing Indebtedness in respect thereof, so long as no Default or Event of Default then exists or results therefrom and (IV) any Loan Party may prepay, redeem, repurchase, exchange or acquire any then outstanding Junior Financing (and any Refinancing Indebtedness in respect thereof) to the extent made in exchange for the substantially concurrent sale of Equity Interests of the Borrower permitted to be issued by it hereunder (other than any such amounts that are received from a Subsidiary of the Borrower), to the extent that such amounts are not otherwise used to pay or make a Dividend under Section 6.08(b) or make an Investment under Section 6.04(p);

(b) amend or modify, or permit the amendment or modification of, any provision of any Junior Financing Documentation (including any documentation governing any Permitted Second Priority Refinancing Debt or any Permitted Unsecured Refinancing Debt (or any Refinancing Indebtedness in respect of the foregoing)) in any manner that is, or could reasonably be expected to be, adverse in any material respect to the interests of any Agent or the Lender, without the consent of the Administrative Agent; or

(c) terminate, amend, modify (including electing to treat any Pledged Interests (as defined in the Security Agreement) as a “security” under Section 8-103 of the UCC) or change any of its Organizational Documents (including by the filing or modification of any certificate of designation) or any agreement to which it is a party with respect to its Equity Interests (including any stockholders’ agreement), or enter into any new agreement with respect to its Equity Interests, other than any such amendments, modifications or changes or such new agreements which are not, and could not reasonably be expected to be, adverse in any material respect to the interests of any Agent or Lender.

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Section 6.12. Limitation on Certain Restrictions on Subsidiaries. Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance, restriction or condition on the ability of any Subsidiary to (i) pay Dividends or make any other distributions on its Equity Interests or any other interest or participation in its profits owned by any Loan Party, or pay any Indebtedness owed to any Loan Party, (ii) make loans or advances to any Loan Party or (iii) transfer any of its properties to any Loan Party, except for such encumbrances, restrictions or conditions existing under or by reason of:

(a) applicable law;

(b) this Agreement, the other Loan Documents and the ABL Loan Documents;

(c) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Subsidiary;

(d) customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business;

(e) customary restrictions and conditions on the Disposition of assets contained in any agreement relating to the Disposition of such assets pending the consummation of such Disposition; provided that (i) such restrictions and conditions apply only to the property to be Disposed and (ii) such Disposition is permitted hereunder;

(f) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clause (b) above (including any Refinancing Indebtedness thereof); provided that such amendments or refinancings are no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing;

(g) Liens permitted by Section 6.02 in favor of the holder of any Indebtedness permitted under Section 6.01 but solely to the extent such encumbrance, restriction or condition relates to the property financed by such Indebtedness;

(h) any agreement in effect at the time a person becomes a direct or indirect Subsidiary of the Borrower, as permitted under this Agreement, so long as (i) such agreement was not entered into in connection with or in contemplation of such person becoming a Subsidiary of the Borrower and (ii) the relevant encumbrance or restriction does not apply to the Borrower or any other Subsidiary of the Borrower;

(i) without affecting the Loan Parties’ obligations under Section 5.11, customary provisions in Organizational Documents entered into in the ordinary course of business that restrict the transfer of ownership interests in or the assets of a partnership, limited liability company, joint venture or similar person;

(j) restrictions on cash or other deposits imposed by suppliers or landlords under contracts entered into in the ordinary course of business;

(k) any instrument governing Indebtedness assumed in connection with any Permitted Acquisition, to the extent the relevant encumbrance or restriction was not agreed to or adopted in connection with, or in anticipation of, the respective Permitted Acquisition and does not apply to any person, or the properties or assets of any person, other than the person or the properties or assets of the person so acquired; or

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(l) any agreement governing Indebtedness entered into after the Closing Date and permitted under Section 6.01 that are, taken as a whole, in the good faith judgment of the Borrower, no more restrictive with respect to the Borrower or any Subsidiary than customary market terms for Indebtedness of such type (and, in any event, are taken as a whole, no more restrictive than the restrictions contained in this Agreement), so long as the Borrower shall have determined in good faith that such restrictions will not affect its obligation or ability to make any payments required hereunder.

Section 6.13. No Further Negative Pledge. Enter into any agreement, instrument, deed or lease which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its properties or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following: (a) this Agreement, the other Loan Documents and the ABL Loan Documents; (b) covenants in documents creating Liens permitted by Section 6.02 prohibiting further Liens (other than Liens permitted under Section 6.02(n)) on the properties encumbered thereby; (c) any prohibition or limitation that (i) exists pursuant to applicable law, or (ii) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property pending the consummation of such sale; provided that (1) such restrictions apply only to the property to be sold, and (2) such sale is permitted hereunder, or (iii) restricts subletting or assignment of any lease governing a leasehold interest of the Borrower or one of its Subsidiaries; and (d) any prohibition or limitation that (i) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.06 pending the consummation of such sale, (ii) restricts subletting or assignment of any lease governing a leasehold interest of the Borrower or any of its Subsidiaries or (iii) exists in any agreement in effect at the time a person becomes a direct or indirect Subsidiary of the Borrower; and (e) any prohibition or limitation imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clause (a) above (including any Refinancing Indebtedness thereof); provided that such amendments and refinancings are no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing.

Section 6.14. Business. Engage (directly or indirectly) in any businesses other than those businesses in which the Borrower and its Subsidiaries are engaged on the Closing Date (or which are substantially related, incidental, ancillary or complimentary thereto or are reasonable extensions thereof).

Section 6.15. Amendments to Organizational Documents. Agree to any material amendment, restatement, supplement or other modification to any of its Organizational Documents after the Closing Date that is materially adverse to the interests of the Lenders without obtaining the prior written consent of the Administrative Agent to such amendment, restatement, supplement or other modification.

Section 6.16. Limitation on Accounting Changes. Make or permit, any change in accounting policies or reporting practices, except changes that are permitted or required by GAAP (subject in each case to the provisions of Section 1.04).

Section 6.17. Fiscal Periods. Change its Fiscal Year or Fiscal Quarters.

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ARTICLE VII

GUARANTEE

Section 7.01. The Guarantee. All Guarantors executing a Joinder Agreement hereby, jointly and severally, guarantee, as primary obligors and not as sureties, to each Secured Party and their respective successors and assigns, the prompt payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) on the Loans made by the Lenders to, and the Notes held by each Lender of, the Borrower, and all other Secured Obligations from time to time owing to the Secured Parties by any Loan Party in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The Guarantors hereby jointly and severally agree that if the Borrower or other Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

Section 7.02. Obligations Unconditional. The obligations of the Guarantors under Section 7.01 shall constitute a guaranty of payment and performance and not of collection and to the fullest extent permitted by applicable Legal Requirements, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full of the Guaranteed Obligations). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

(a) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

(b) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;

(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right

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under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

(d) any Lien or security interest granted to, or in favor of, any Secured Party as security for any of the Guaranteed Obligations shall fail to be valid, perfected or to have the priority required under the Loan Documents; or

(e) the release of any other Guarantor pursuant to Section 7.09.

The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower or any Guarantor under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment and performance without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by the Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and their respective successors and assigns, and shall inure to the benefit of the Secured Parties, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

Section 7.03. Reinstatement. The obligations of the Guarantors under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or any other Guarantors in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

Section 7.04. Subrogation; Subordination. Each Guarantor hereby agrees that until the payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against

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the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to Section 6.04(f) shall be subordinated to such Loan Party’s Secured Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness.

Section 7.05. Remedies. The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and other Loan Documents may be declared to be forthwith due and payable as provided in Article VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in Article VIII) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 7.01.

Section 7.06. Instrument for the Payment of Money. Each Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.

Section 7.07. Continuing Guarantee. The guarantee in this Article VII is a continuing guarantee of payment and performance, and shall apply to all Guaranteed Obligations whenever arising.

Section 7.08. General Limitation on Guarantee Obligations. In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Legal Requirement affecting the rights of creditors generally, if the obligations of any Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the rights of subrogation and contribution established in Sections 7.04 and 7.10, respectively) that is valid and enforceable, not void or voidable and not subordinated to the claims of other creditors as determined in such action or proceeding.

Section 7.09. Release of Guarantors. If, in compliance with the terms and provisions of the Loan Documents, (i) all of the Equity Interests or (ii) all or substantially all of the property of any Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a person or persons (other than any Loan Party or any Affiliate thereof), such Transferred Guarantor shall, upon the consummation of such sale or transfer, be automatically released from its obligations under this Agreement (including under Section 10.03) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and, in the case of the sale of all of the Equity Interests of the Transferred Guarantor, the pledge of such Equity

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Interests to the Collateral Agent pursuant to the Security Documents shall be released, and, so long as the Borrower shall have previously provided the Collateral Agent and the Administrative Agent such certifications or documents the Collateral Agent and/or the Administrative Agent as shall reasonably request, the Collateral Agent shall take such actions as are necessary to effect each release described in this Section 7.09 in accordance with the relevant provisions of the Security Documents.

Section 7.10. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 7.04. The provisions of this Section 7.10 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.01. Events of Default. Upon the occurrence and during the continuance of any of the following events (each, an “Event of Default”):

(a) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof (including a Repayment Date) or at a date fixed for prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise;

(b) default shall be made in the payment of any interest on any Credit Extension or any Fee or any other amount (other than an amount referred to in paragraph (a) above) due under any Loan Document, when and as the same shall become due and payable, whether at the due date thereof (including an Interest Payment Date) or at a date fixed for prepayment (whether voluntary or mandatory) or by acceleration or demand thereof or otherwise, and such default shall continue unremedied for a period of five (5) Business Days;

(c) any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings of Loans hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

(d) default shall be made in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in Sections 5.01(a), 5.01(b), 5.01(c), 5.01(f), 5.02(a), 5.03(a) (with respect to the Borrower), 5.08, 5.14 or in Article VI;

(e) default shall be made in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in any Loan Document (other

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than those specified in paragraphs (a), (b) or (d) immediately above) and such default shall continue unremedied or shall not be waived for a period of thirty (30) days after receiving written notice from the Administrative Agent of such violation;

(f) the Borrower or any of its Subsidiaries shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Material Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Material Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Material Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer to purchase by the obligor; provided that, any such failure or the occurrence of any such other event referred to in subclause (ii) relating to Indebtedness under the ABL Credit Agreement or any Refinancing Indebtedness thereof shall constitute any Event of Default under this Section 8.01(e) only after the earliest to occur of (x) expiration of a forty-five (45)-day period following the commencement of such failure or the date of such occurrence, (y) any acceleration of the Revolving Facility Debt (as defined in the ABL Intercreditor Agreement) outstanding under the ABL Credit Agreement, whether automatic or otherwise or (z) the commencement of any Enforcement Action (as defined in the ABL Intercreditor Agreement) by the ABL Collateral Agent or any holder of ABL Obligations as the result of such failure or occurrence; provided, further, that, for purposes of determining the principal amount of Material Indebtedness, in the case of obligations with respect to Hedging Obligations, the amount counted for this purpose shall be the amount payable by all Loan Parties if such Hedging Obligations were terminated at such time; provided, even further, that this clause (f) shall not apply to secured Indebtedness that becomes due as a result of a sale or transfer of the property securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness;

(g) an Insolvency Proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any of its Subsidiaries or of a substantial part of the property of the Borrower or any of its Subsidiaries, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar Legal Requirement, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of the property of the Borrower or any of its Subsidiaries, or (iii) the winding-up or liquidation of the Borrower or any of its Subsidiaries; and such proceeding or petition shall continue undismissed for sixty (60) days or an Order approving or ordering any of the foregoing shall be entered;

(h) the Borrower or any of its Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar Legal Requirement, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any Insolvency Proceeding or the filing of any petition described in clause (g) above, (iii) apply for or consent to the appointment of a receiver,

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trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of the property of the Borrower or any of its Subsidiaries, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due, or (vii) wind up or liquidate;

(i) one or more final, non-appealable Orders for the payment of money in an aggregate amount in excess of $4,000,000 (to the extent not paid or covered by a reputable insurance company that has been notified of such Order and has not disputed or otherwise contested coverage in writing) shall be rendered against any Loan Party or any combination thereof and the same shall remain undischarged, unvacated or unbonded for a period of thirty (30) consecutive days during which execution shall not be effectively stayed;

(j) one or more ERISA Events shall have occurred that, when taken together with all other such ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower or any of its Subsidiaries or any ERISA Affiliate that would constitute a Material Adverse Effect;

(k) any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Documents (including a valid, enforceable, perfected security interest in, subject only to Permitted Collateral Liens, and Lien on, all of the Collateral thereunder (except as otherwise expressly provided in this Agreement or such Security Document)) in favor of the Collateral Agent, or shall be asserted in writing by or on behalf of any Loan Party not to be, a valid, enforceable, perfected, first priority (subject only to Permitted Collateral Liens) security interest in or Lien on the Collateral covered thereby; provided that it shall not be an Event of Default under this paragraph (k) if the Collateral Agent shall not have, or shall cease to have, a valid, enforceable and perfected first priority (subject only to Permitted Collateral Liens) security interest in or Lien on any Collateral purported to be covered by the Security Documents (i) that is not material to the operations or the businesses of the Loan Parties, taken as a whole, or (ii) to the extent that any such loss of perfection or intended priority results from the failure of the Collateral Agent to maintain possession of certificates or instruments actually delivered to it representing Collateral or to file UCC continuation statements;

(l) any Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by or on behalf of any Loan Party or any other person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Loan Party (directly or indirectly) shall repudiate, revoke, terminate or rescind (or purport to do any of the foregoing) or deny in writing any portion of its liability or obligation for the Obligations; or

(m) there shall have occurred a Change in Control;

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then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments; (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document or otherwise to the contrary notwithstanding; and (iii) exercise any and all of its other rights and remedies under applicable Legal Requirements, hereunder and under the other Loan Documents; and in any event with respect to the Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document or otherwise to the contrary notwithstanding.

In addition, without limiting the foregoing, in the event of a foreclosure (or other similar exercise of remedies) by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other Disposition, the Collateral Agent, the Administrative Agent or any Secured Party may be the purchaser of any or all of such Collateral at any such sale or other Disposition and, in addition, the Collateral Agent or the Administrative Agent, as agent for and representative of all of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or other Disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale.

Section 8.02. [RESERVED]

Section 8.03. Borrower’s Right to Cure. Notwithstanding anything to the contrary contained in Section 8.01, for purposes of determining whether an Event of Default has occurred under the financial covenant set forth in Section 6.10, any equity contribution (in the form of Qualified Capital Stock or other equity having terms reasonably acceptable to the Administrative Agent) made to the Borrower after the last day of any Fiscal Quarter and on or prior to the day that is ten (10) days after the day on which financial statements are required to be delivered for that Fiscal Quarter will, at the request of the Borrower, be included in the calculation of Consolidated EBITDA solely for the purposes of determining compliance with the financial covenant set forth in Section 6.10 at the end of such Fiscal Quarter and any subsequent period that includes such Fiscal Quarter (any such equity contribution, a “Specified Equity Contribution”); provided that (a) Borrower shall not be permitted to so request that a Specified Equity Contribution be included in the calculation of Consolidated EBITDA with respect to any

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Fiscal Quarter unless, after giving effect to such requested Specified Equity Contribution, there will be at least two (2) Fiscal Quarters in the Relevant Four Fiscal Quarter Period in respect of which no Specified Equity Contribution has been made, (b) no more than five (5) Specified Equity Contributions may be made during the term of the Facility, (c) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause the Borrower to be in compliance with the financial covenant set forth in Section 6.10, (d) all Specified Equity Contributions will be disregarded for all other purposes under the Loan Documents (including calculating Consolidated EBITDA for purposes of determining Retained Excess Cash Flow Amount and other items governed by reference to Consolidated EBITDA, and for purposes of the Dividends covenant in Section 6.08), (e) the proceeds of any Specified Equity Contribution shall have been contributed to the Borrower in exchange for Qualified Capital Stock or other equity having terms reasonably acceptable to the Administrative Agent, (f) if the proceeds of the Specified Equity Contribution are used to repay Indebtedness, such Indebtedness shall not be deemed to have been repaid for purposes of calculating the financial covenant set forth in Section 6.10 or for the purposes of calculating the Consolidated Net Leverage Ratio, in each case for the Relevant Four Fiscal Quarter Period, and (g) upon the Administrative Agent’s receipt of a notice from the Borrower that it intends to exercise the cure right (a “Notice of Intent to Cure”), until the tenth day after the day on which financial statements have been or are required to be delivered for that Fiscal Quarter to which such Notice of Intent to Cure relates, none of the Administrative Agent or any Lender shall exercise the right to accelerate the Loans or terminate the Commitments and none of the Administrative Agent, the Collateral Agent or any other Lender or Secured Party shall exercise any right to foreclose on or take possession of the Collateral solely on the basis of an Event of Default having occurred and being continuing under Section 6.10. For purposes of this paragraph, the term “Relevant Four Fiscal Quarter Period” shall mean, with respect to any requested Specified Equity Contribution, the four Fiscal Quarter period ending on (and including) the Fiscal Quarter in which Consolidated EBITDA will be increased as a result of such Specified Equity Contribution.

ARTICLE IX

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

Section 9.01. Appointment.

(a) Each Lender hereby irrevocably designates and appoints each of the Administrative Agent and the Collateral Agent as an agent of such Lender under this Agreement and the other Loan Documents. Each Lender irrevocably authorizes each Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article IX are solely for the benefit of the Agents and the Lenders, and no Loan Party shall have rights as a third party beneficiary of any such provisions. In performing its functions and duties hereunder, each Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Borrower or any of its Subsidiaries. Each of the Bookrunners and any Agent described in the definition thereof may resign from such role at any time, with immediate effect, by giving prior written notice thereof to the Administrative Agent and the Borrower.

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(b) Each Lender irrevocably appoints each other Lender as its agent and bailee for the purpose of perfecting Liens (whether pursuant to Section 8-301(a)(2) of the UCC or otherwise), for the benefit of the Secured Parties, in assets in which, in accordance with the UCC or any other applicable Legal Requirement a security interest can be perfected by possession or control. Should any Lender (other than the Collateral Agent) obtain possession or control of any such Collateral, such Lender shall notify the Collateral Agent thereof, and, promptly following the Collateral Agent’s request therefor, shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in accordance with the Collateral Agent’s instructions. The Lenders hereby acknowledge and agree that the Collateral Agent may act, subject to and in accordance with the terms of any Intercreditor Agreements and the ABL Intercreditor Agreement, as the collateral agent for the Lenders and for the lenders under the Other Loans.

Section 9.02. Agent in Its Individual Capacity. Each person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such person and its Affiliates may accept deposits from, lend money to, act as financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, any Loan Party or Affiliate thereof as if it were not an Agent hereunder and without duty to account therefor to the Lenders.

Section 9.03. Exculpatory Provisions. No Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Legal Requirements, and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose or shall be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the person serving as such Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as any Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 10.02). No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any

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Loan Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, except to confirm receipt of the deliverables required to be delivered to it pursuant to Section 4.01. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties. Each party to this Agreement acknowledges and agrees that the Administrative Agent may from time to time use one or more outside service providers for the tracking of all UCC financing statements (and/or other collateral related filings and registrations from time to time) required to be filed or recorded pursuant to the Loan Documents and the notification to the Administrative Agent, of, among other things, the upcoming lapse or expiration thereof, and that each of such service providers will be deemed to be acting at the request and on behalf of the Borrower and the other Loan Parties. No Agent shall be liable for any action taken or not taken by any such service provider. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to the Lenders for any action taken or omitted by any Agent under or in connection with any of the Loan Documents.

Section 9.04. Reliance by Agent. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent, or otherwise authenticated by a proper person. Each Agent also may rely upon any statement made to it orally and believed by it to be made by a proper person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, each Agent may presume that such condition is satisfactory to such Lender unless each Agent shall have received written notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other Advisors selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or advisors.

Section 9.05. Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.05 and of Section 9.11 shall apply to the Affiliates of the Administrative Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.05 and of Section 9.07 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent, (i)

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such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other person, against any or all of Loan Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to the Administrative Agent and not to any Loan Party, Lender or any other person and no Loan Party, Lender or any other person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent.

Section 9.06. Successor Agent.

(a) The Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to the Lenders and the Borrower, and the Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to the Borrower and the Administrative Agent and signed by the Required Lenders. The Administrative Agent shall have the right to appoint a financial institution to act as Administrative Agent and/or Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower (unless an Event of Default exists and is continuing) and the Required Lenders, and the Administrative Agent’s resignation shall become effective on the earliest of (i) thirty (30) days after delivery of the notice of resignation (regardless of whether a successor has been appointed or not), (ii) the acceptance of such successor the Administrative Agent by the Borrower and the Required Lenders or (iii) such other date, if any, agreed to by the Required Lenders. Upon any such notice of resignation or any such removal, if a successor the Administrative Agent has not already been appointed by the retiring Administrative Agent, the Required Lenders shall have the right, upon five (5) Business Days’ notice to the Borrower, to appoint a successor the Administrative Agent. If neither the Required Lenders nor the Administrative Agent have appointed a successor the Administrative Agent, the Required Lenders shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that, until a successor the Administrative Agent is so appointed by the Required Lenders or the Administrative Agent, any collateral security held by the Administrative Agent in its role as the Collateral Agent on behalf of the Lenders under any of the Loan Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor the Administrative Agent, that successor the Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor the Administrative Agent all sums, securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor the Administrative Agent under the Loan Documents, and (ii) execute and deliver to such successor the Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor the Administrative Agent of the security interests created under the Collateral Documents,

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whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. Except as provided above, any resignation or removal of the Administrative Agent or its successor as Administrative Agent pursuant to this Section 9.06 shall also constitute the resignation or removal of the Collateral Agent or its successor as Collateral Agent. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9.06 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any successor the Administrative Agent appointed pursuant to this Section 9.06 shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder.

(b) In addition to the foregoing, the Collateral Agent may resign at any time by giving prior written notice thereof to the Lenders and the Grantors, and the Collateral Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to the Grantors and the Collateral Agent signed by the Required Lenders. The Administrative Agent shall have the right to appoint a financial institution as the Collateral Agent hereunder, subject to the reasonable satisfaction of the Borrower and the Required Lenders, and the Collateral Agent’s resignation shall become effective on the earliest of (i) thirty (30) days after delivery of the notice of resignation, (ii) the acceptance of such successor Collateral Agent by the Borrower and the Required Lenders or (iii) such other date, if any, agreed to by the Required Lenders. Upon any such notice of resignation or any such removal, the Required Lenders shall have the right, upon five (5) Business Days’ notice to the Administrative Agent, to appoint a successor Collateral Agent. Until a successor Collateral Agent is so appointed by the Required Lenders or the Administrative Agent, any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Collateral Agent under this Agreement and the Collateral Documents, and the retiring or removed Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums, Securities and other items of Collateral held hereunder or under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under this Agreement and the Collateral Documents, and (ii) execute and deliver to such successor Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Collateral Agent shall be discharged from its duties and obligations under this Agreement and the Collateral Documents. After any retiring or removed Collateral Agent’s resignation or removal hereunder as the Collateral Agent, the provisions of this Agreement and the Collateral Documents shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement or the Collateral Documents while it was the Collateral Agent hereunder.

Section 9.07. Indemnification. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have

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been reimbursed by any Loan Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

Section 9.08. Withholding Taxes. To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, or if Administrative Agent reasonably determines that a payment was made to a Lender pursuant to this Agreement without deduction of applicable withholding tax from such payment, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

Section 9.09. [RESERVED]

Section 9.10. Lenders’ Representations, Warranties and Acknowledgment.

(a) Except as otherwise explicitly set forth in this Agreement, each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Borrower and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of the Borrower and its Subsidiaries. Except as otherwise explicitly set forth in this Agreement, no Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to the Lenders.

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(b) Each Lender, by delivering its signature page to this Agreement or an Assignment Agreement and funding its Loan, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by any Agent, the Required Lenders or the Lenders, as applicable, on the Closing Date.

Section 9.11. Collateral Documents and Guaranty.

(a) Agents under Collateral Documents and Guaranty. Each Secured Party hereby further authorizes the Administrative Agent or the Collateral Agent, as applicable, on behalf of and for the benefit of the Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Guaranty, the Collateral and the Loan Documents; provided that neither the Administrative Agent nor the Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Obligations with respect to any Permitted Hedging Agreement. Subject to Section 10.02, without further written consent or authorization from any Secured Party, the Administrative Agent or the Collateral Agent, as applicable, may execute any documents or instruments necessary to (i) in connection with a sale or disposition of assets permitted by this Agreement, release any Lien encumbering any item of Collateral that is the subject of such sale or other disposition of assets or to which the Required Lenders (or such other Lenders as may be required to give such consent under Section 10.02) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.09 or with respect to which the Required Lenders (or such other Lenders as may be required to give such consent under Section 10.02) have otherwise consented.

(b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrower, the Administrative Agent, the Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder and under any of the Loan Documents may be exercised solely by the Administrative Agent or the Collateral Agent, as applicable, for the benefit of the Secured Parties in accordance with the terms hereof and thereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by the Collateral Agent for the benefit of the Secured Parties in accordance with the terms thereof, and (ii) in the event of a foreclosure or similar enforcement action by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition (including, without limitation, pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), the Collateral Agent (or any Lender, except with respect to a “credit bid” pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code,) may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities) shall be entitled, upon instructions from the Required Lenders, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.

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(c) Rights under Hedging Agreements. No Hedging Agreement will create (or be deemed to create) in favor of any Lender Counterparty that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Loan Documents except as expressly provided in Section 9.11(d) of this Agreement and Section 11.1 of the Security Agreement. By accepting the benefits of the Collateral, such Lender Counterparty shall be deemed to have appointed the Collateral Agent as its agent and agreed to be bound by the Loan Documents as a Secured Party, subject to the limitations set forth in this clause (c).

(d) Release of Collateral and Guarantees, Termination of Loan Documents.

(i) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Hedging Agreement) take such actions as shall be required to release its security interest in any Collateral subject to any Disposition permitted by the Loan Documents, and to release any guarantee obligations under any Loan Document of any person subject to such Disposition, to the extent necessary to permit consummation of such Disposition in accordance with the Loan Documents.

(ii) Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than obligations in respect of any Hedging Agreement) have been paid in full and all Commitments have terminated or expired, upon request of the Borrower, the Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Hedging Agreement) take such actions as shall be required to release its security interest in all Collateral, and to release all guarantee obligations provided for in any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Hedging Agreements. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

(e) The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Collateral Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

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Section 9.12. Administrative Agent May File Bankruptcy Disclosure and Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Laws relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file a verified statement pursuant to rule 2019 of the Federal Rules of Bankruptcy Procedure that, in its sole opinion, complies with such rule’s disclosure requirements for entities representing more than one creditor;

(b) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its respective agents and counsel and all other amounts due the Administrative Agent under Sections 2.03 and 10.03) allowed in such judicial proceeding; and

(c) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.03 and 10.03. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Administrative Agent, its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.03 and 10.03 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Lenders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding and any Lender may vote on such a plan or claim in its sole discretion.

Section 9.13. No Other Duties Etc. Anything herein to the contrary notwithstanding, none of the Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the Loan Documents, except as set forth in this Agreement or the Loan Documents and in its capacity, as Administrative Agent, Collateral Agent or Lender hereunder, as applicable.

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ARTICLE X

MISCELLANEOUS

Section 10.01. Notices.

(a) Notices Generally. Any notice or other communication herein required or permitted to be given to a Loan Party, the Collateral Agent or the Administrative Agent, shall be sent to such person’s address as set forth on Annex II or in the other relevant Loan Document, and in the case of any Lender, the address as indicated on Annex II or otherwise indicated to the Administrative Agent in writing. Except as otherwise set forth in Section 4.02(b) or paragraph (b) below, each notice hereunder shall be in writing and may be personally served or sent by telefacsimile (except for any notices sent to the Administrative Agent) or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile, or three (3) Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided, no notice to any Agent shall be effective until received by such Agent; provided further, any such notice or other communication shall at the request of the Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.05 as designated by the Administrative Agent from time to time.

(b) Electronic Communications.

(i) Notices and other communications to any Agent or Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites, including the Platform) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Agent or Lender pursuant to Article II if such person has notified Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (A) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (A) of notification that such notice or communication is available and identifying the website address therefor.

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(ii) Each Loan Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of the Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(iii) The Platform and any Approved Electronic Communications are provided “as is” and “as available”. None of the Agents or any of their respective officers, directors, employees, agents, advisors or representatives (the “Agent Affiliates”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.

(iv) Each Loan Party, each Lender and each Agent agrees that the Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with the Administrative Agent’s customary document retention procedures and policies.

(v) Any notice of Default or Event of Default may be provided by telephone if confirmed promptly thereafter by delivery of written notice thereof.

(c) Private Side Information Contacts. Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to information that is not made available through the “Public Side Information” portion of the Platform and that may contain Non-Public Information with respect to the Borrower, its Subsidiaries or their securities for purposes of United States federal or state securities laws. In the event that any Public Lender has determined for itself to not access any information disclosed through the Platform or otherwise, such Public Lender acknowledges that (i) other Lenders may have availed themselves of such information and (ii) neither the Borrower nor the Administrative Agent has any responsibility for such Public Lender’s decision to limit the scope of the information it has obtained in connection with this Agreement and the other Loan Documents.

Section 10.02. Waivers; Amendment.

(a) No failure or delay by any Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise

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thereof or the exercise of any other right or power. The rights and remedies of each Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 10.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower or any other Loan Party in any case shall entitle the Borrower or any other Loan Party to any other or further notice or demand in similar or other circumstances.

(b) Subject to Section 2.14 and Section 10.02(c), neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Required Lenders (or by the Administrative Agent or the Collateral Agent (in the case of any Security Document) with the written consent of the Required Lenders) and the Loan Party or Loan Parties that are parties thereto; provided that no such agreement shall:

(i) increase or extend the expiry date of the Commitment of any Lender without the written consent of such Lender (it being understood that no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant or Default (or any definition used, respectively, therein) shall constitute an increase in or extension of the expiry date of the Commitment of any Lender for purposes of this clause (i));

(ii) reduce the principal amount or premium, if any, of any Loan or reduce the rate of interest thereon (other than interest pursuant to Section 2.04(c)), or reduce any Fees payable hereunder, or change the form or currency of payment of any Obligation, without the written consent of each Lender directly affected thereby (it being understood that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (ii));

(iii) postpone or extend the maturity of any Loan, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Loan under Section 2.07, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment (other than a waiver of any increase in the interest rate pursuant to Section 2.04(c)), or postpone the scheduled date of expiration of any Commitment without the written consent of each Lender directly affected thereby;

(iv) change Section 2.11(b) or (c) (or any other similar provision contained herein) in a manner that would alter the order of or the pro rata sharing of payments or setoffs required thereby (in each case other than in connection with an assignment pursuant to Sections 10.04(j) or (k), any transactions entered into to extend the Maturity Date of any Class or the incurrence of any Refinancing Indebtedness, in each case not otherwise contemplated hereby), without the written consent of each Lender;

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(v) change the percentage set forth in the definition of “Required Lenders” or any other provision of any Loan Document (including this Section 10.02) specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be);

(vi) release all or substantially all of the Guarantors from their respective Guarantees (except as expressly provided in Article VII), or limit their liability in respect of such Guarantees, without the written consent of each Lender;

(vii) except as expressly permitted in this Agreement, the ABL Intercreditor Agreement, any Intercreditor Agreement or any Security Document, release all or substantially all of the Collateral from the Liens of the Security Documents, subordinate the Collateral Agent’s Liens in all or substantially all of the Collateral (it being understood that this clause (vii) shall not apply to subordination of the Collateral Agent’s Liens to holders of Permitted Liens under Sections 6.02(c), (f), (i) or (k)), or alter the relative priorities of the Secured Obligations entitled to the Liens of the Security Documents (except in connection with securing additional Secured Obligations equally and ratably with the other Secured Obligations), in each case without the written consent of each Lender;

(viii) change any provisions of any Loan Document in a manner that by its terms adversely and directly affects the rights in respect of payments due to the Lenders holding Loans of any Class materially differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each directly affected Class;

(ix) change the order of application of prepayments among Loans under Section 2.08(f) or change the application of prepayments of Loans set forth in Section 2.08(f) in each case without the consent of the Required Lenders and the Lenders holding more than 50% of the principal amount of the outstanding Loans, or

(x) change Section 10.04(b) in a manner which further restricts assignments thereunder without the written consent of each Lender;

provided, further, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, and the Collateral Agent without the prior written consent of the Administrative Agent, the Collateral Agent, as the case may be. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if (x) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment, (y) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of, premium, if any, and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement, and (z) Section 2.13(b) is complied with.

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(c) Without the consent of any other person, the applicable Loan Party or Loan Parties and the Administrative Agent and/or the Collateral Agent may (in its or their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by applicable Legal Requirements to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or assets so that the security interests therein comply with applicable Legal Requirements.

(d) Notwithstanding the foregoing, but subject to the terms of the ABL Intercreditor Agreement and/or any Intercreditor Agreement, in addition to any Credit Extensions and Refinancing Amendments effectuated without the consent of Lenders in accordance with Section 2.15, as applicable, this Agreement (including this Section 10.02 and Section 2.11) may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one or more additional Credit Facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the relevant Loans and the accrued interest and Fees in respect thereof and (ii) to include appropriately the Lenders holding such Credit Facilities in any determination of the Required Lenders and other definitions related to such new Credit Facilities.

(e) Notwithstanding the foregoing, subject to the ABL Intercreditor Agreement and/or any Intercreditor Agreement, any amendment, modification or waiver of, or consent with respect to Section 2.08 relating to the application of any mandatory prepayment that results in a Class of Lenders being allocated a lesser repayment than such Class would otherwise have been entitled to in the absence of such amendment, modification or waiver, shall require the consent of the Required Lenders (but, for this purpose, determined as if no other Classes of Loans or Commitments are then outstanding) for such affected Class of Lenders (except in the case where additional extensions of terms loans are being afforded substantially the same treatment afforded to the relevant Loans pursuant to this Agreement on the Closing Date).

(f) Further, notwithstanding anything to the contrary contained in this Section 10.02, if following the Closing Date, the Administrative Agent and the Borrower shall have agreed in their sole and absolute discretion that there is an ambiguity, inconsistency, manifest error or any error or omission of a technical or immaterial nature, in each case, in any provision of the Loan Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Loan Documents if the same is not objected to in writing by the Required Lenders within five (5) Business Days following receipt of notice thereof (it being understood that the Administrative Agent has no obligation to agree to any such amendment).

Each waiver, amendment, modification, supplement or consent made or given pursuant to this Section 10.02 shall be effective only in the specific instance and for the specific purpose for which given, and such waiver, amendment, modification or supplement shall apply equally to each of the Lenders and shall be binding on the Loan Parties, the Lenders, the Agents and all future holders of the Loans and Commitments.

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Section 10.03. Expenses; Indemnity; Damage Waiver.

(a) Expenses. Whether or not the transactions contemplated hereby shall be consummated, the Borrower agrees to pay within fifteen (15) Business Days of written demand therefor (i) all the actual and reasonable costs and expenses incurred in connection with the negotiation, preparation and execution of the Loan Documents and any consents, amendments, waivers or other modifications thereto; (ii) all the costs of furnishing all opinions by counsel for the Borrower and the other Loan Parties; (iii) the reasonable fees, expenses and disbursements of counsel to Agents in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by the Borrower; (iv) all the actual costs and reasonable expenses of creating, perfecting, recording, maintaining and preserving Liens in favor of the Collateral Agent, for the benefit of the Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or the Required Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (v) all the actual costs and reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers; (vi) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by the Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (vii) all other actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the transactions contemplated by the Loan Documents and any consents, amendments, waivers or other modifications thereto and (viii) after the occurrence of a Default or an Event of Default, all costs and expenses, including reasonable attorneys’ fees and costs of settlement, incurred by any Agent and the Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Default or Event of Default (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases or proceedings. Notwithstanding the foregoing, (x) the reimbursement of legal fees, costs and expenses shall be limited to the actual reasonable and documented fees, disbursements and other charges of one counsel to the Agents and the Lenders, taken as a whole (plus, in the event of a conflict of interest, one additional counsel to each affected group), and, if necessary, of one counsel in any relevant material jurisdiction to such persons, taken as a whole, and (y) the reimbursement of fees, costs and expenses of any auditors, accountants, consultants, appraisers, advisors or agents pursuant to clause (v) or (vi) above shall be limited to the actual reasonable and documented fees, disbursements and other charges of one such auditor, accountant, consultant, appraiser, advisor or agent to the Agents and the Lenders, taken as a whole.

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(b) Indemnity.

(i) In addition to the payment of expenses pursuant to this Section 10.03, whether or not the transactions contemplated hereby shall be consummated, each Loan Party agrees to defend, indemnify, pay and hold harmless, each Agent and Lender and each of their respective officers, directors, employees, agents, representatives and affiliates (each, an “Indemnitee”), from and against any and all Indemnified Liabilities; provided, no Loan Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from (x) the gross negligence, bad faith or willful misconduct of such Indemnitee or of any affiliate, officer, director, employee, agent or other representative of such Indemnitee, as determined by a final judgment of a court of competent jurisdiction, (y) a material breach of its obligations under the Loan Documents by such Indemnitee or of any affiliate, officer, director, employee, agent or other representative of such Indemnitee as determined by a final judgment of a court of competent jurisdiction, or (y) any dispute solely among the Indemnitees other than (1) any claim against an Indemnitee in its capacity as or in fulfilling its role as Agent and (2) any claim arising out of any act or omission of the Borrower or any of its affiliates. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.03 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Loan Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(ii) To the extent permitted by applicable law, no Loan Party shall assert, and each Loan Party hereby waives, any claim against each Lender, each Agent and their respective Affiliates, directors, employees, agents or representatives, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, the Borrower hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

(iii) Each Loan Party also agrees that no Lender, Agent nor their respective Affiliates, directors, employees, agents or representatives will have any liability to any Loan Party or any person asserting claims on behalf of or in right of any Loan Party or any other person in connection with or as a result of this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, in each case, except in the case of any Loan Party to the extent that any losses, claims, damages, liabilities or expenses incurred by such Loan Party or its affiliates, directors, officers, employees, agents representatives, shareholders, partners or other equity holders have been found by a final judgment of a court of competent jurisdiction to have resulted from (x) the gross negligence, bad faith or willful misconduct of such Lender, Agent or their respective Affiliates, officers, directors, employees,

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agents or other representatives, or (y) a material breach by such Lender, Agent or their respective Affiliates, officers, directors, employees, agents or other representatives of their obligations under the Loan Documents or any agreement or instrument contemplated hereby or thereby or referred to herein or therein; provided, however, that in no event will such Lender, Agent, or their respective Affiliates, directors, employees, agents or representatives have any liability for any indirect, consequential, special or punitive damages in connection with or as a result of such Lender’s, Agent’s or their respective Affiliates’, directors’, employees’, agents’ or representatives’ activities related to this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein.

Section 10.04. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby , except that the Loan Parties may not assign or otherwise transfer any of their respective rights or obligations hereunder without the prior written consent of the Administrative Agent, the Collateral Agent and each Lender, which consent may be withheld in their respective sole discretion (and any attempted assignment or transfer by any Loan Party without such consent shall be null and void). Nothing in this Agreement or any other Loan Document, express or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent expressly provided in Section 10.04(e) and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.

(b) Any Lender shall have the right at any time to assign to one or more assignees (other than any Affiliated Lender, any Loan Party or any Affiliate thereof or any Disqualified Institution or a natural person except, in the case of Affiliated Lenders, as provided in Sections 10.04(j) and (k) below) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans of any Class at the time owing to it); provided that:

(i) except in the case of (A) an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, or (B) an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Initial Loan Commitment of any Class or Loans of any Class of the assigning Lender subject to each such assignment (determined as of the date the Assignment Agreement with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000;

(ii) each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender’s rights and obligations under this Agreement, except that this clause (ii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;

(iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment Agreement, together with a processing and recordation

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fee of $3,500; provided that such fee shall not be payable in the case of (A) an assignment by any Lender to an Approved Fund of such Lender, (B) any assignment made in connection with the primary syndication of the Commitments and Loans or (C) an assignment by or to an Arrangers or any affiliate thereof;

(iv) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, each of the Administrative Agent and the Borrower must give its prior written consent to such assignment (which consent shall not be unreasonably withheld, delayed or conditioned); and

(v) notwithstanding anything to the contrary contained herein, no assignments or transfers may be made to a Disqualified Institution;

provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof.

Notwithstanding the foregoing, (i) after the earlier of the occurrence of (x) a Qualifying IPO and (y) twelve (12) months after the Closing Date or (ii) if an Event of Default under Sections 8.01(a) or (b) or, with respect to the Borrower, Sections 8.01(g) or (h) has occurred and is continuing any consent of the Borrower otherwise required under this paragraph shall not be required. Subject to acceptance and recording thereof pursuant to Section 10.04(d), from and after the effective date specified in each Assignment Agreement the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment Agreement, have the rights and obligations of a Lender under this Agreement (provided that any liability of the Borrower to such assignee under Section 2.10, 2.12 or 2.16 shall be limited to the amount, if any, that would have been payable thereunder by the Borrower in the absence of such assignment, except to the extent any such amounts are attributable to a Change in Law occurring after the date of such assignment), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10, 2.12 and 10.03). This Section 10.04(b) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Classes of Loans or Commitments on a non-pro rata basis.

(c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments (by Class) of, and principal amount of the Loans (by Class) owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent, and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice.

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(d) Upon its receipt of a duly completed Assignment Agreement executed by an assigning Lender and an assignee, the processing and recordation fee referred to in Section 10.04(b) and any written consent to such assignment required by Section 10.04(b), the Administrative Agent shall accept such Assignment Agreement and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 10.04(b). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with the requirements of this Section 10.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(e).

(e) Any Lender shall have the right at any time, without the consent of, or notice to the Borrower, the Administrative Agent or any other person to sell participations to any person (other than any Loan Party or any Affiliate thereof or a natural person) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of any Class of its Commitment and any Class of the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Collateral Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) is described in clauses (i), (ii) or (iii) of the proviso to Section 10.02(b) and (2) directly affects such Participant. Subject to Section 10.04(f), each Participant shall be entitled to the benefits of Sections 2.10 and 2.12 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.04(b). To the extent permitted by Legal Requirements, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees in writing to be subject to Section 2.11(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender (and the Borrower, to the extent that the Participant requests payment from the Borrower) shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register to any person (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.

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(f) A Participant shall not be entitled to receive any greater payment under Sections 2.10 or 2.12 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the prior written consent of the Borrower (which consent shall not be unreasonably withheld, delayed or conditioned). A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.12 unless the Borrower are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Sections 2.12(f) and 2.13 as though it were a Lender.

(g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 10.04(g) shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. Without limiting the foregoing, in the case of any Lender that is a fund that invests in bank loans or similar extensions of credit, such Lender may, without the consent of the Borrower, the Administrative Agent or any other person, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities.

(h) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof; provided further that nothing herein shall make the SPC a “Lender” for the purposes of this Agreement, obligate the Borrower or any other Loan Party or the Administrative Agent to deal with such SPC directly, obligate the Borrower or any other Loan Party in any manner to any greater extent than they were obligated to the Granting Lender, or increase costs or expenses of the Borrower. The Loan Parties and the Administrative Agent shall be entitled to deal solely with, and obtain good discharge from, the Granting Lender and shall not be required to investigate or otherwise seek the consent or approval of any SPC, including for the approval of any amendment, waiver or other modification of any provision of any Loan Document. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization,

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arrangement, insolvency or liquidation proceedings under the laws of the United States of America or any state thereof. In addition, notwithstanding anything to the contrary contained in this Section 10.04(h), any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

(i) The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Legal Requirement, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

(j) Notwithstanding anything to the contrary contained in this Section 10.04(j) or any other provision of this Agreement, the Affiliated Lenders may purchase outstanding Loans on the following basis:

(i) The Sponsor (excluding any Debt Fund Affiliate) or any Non-Debt Fund Affiliate may purchase all or any portion of the Loans of one or more Lenders pursuant to an Assignment Agreement between such Affiliated Lender and such Lender or Lenders in an aggregate principal amount not to exceed 25% of the aggregate principal amount of Loans then outstanding with respect to all purchases pursuant to this clause (i) and clause (ii) below; provided that (I) with respect to such purchases, each such Affiliated Lender shall simultaneously provide a copy of such Assignment Agreement and any other agreements between such Affiliated Lender and such Lender with respect to such purchase to the Administrative Agent; and (II) no such Affiliated Lender shall have any right, (A) to require any Agent or other Lender to undertake any action (or refrain from taking any action) with respect to this Agreement or any other Loan Document or (B) to make or bring any claim, in its capacity as a Lender, against the Agent or any Lender with respect to the duties and obligations of such persons under the Loan Documents;

(ii) Any Affiliated Lender may conduct one or more modified Dutch auctions (each, an “Auction”) to purchase all or any portion of the Loans of one or more Lenders in an aggregate principal amount not to exceed 25% of the then outstanding principal amount of Loans with respect to all purchases pursuant to this clause (ii) (such Loans, the “Offer Loans”) and clause (i) above, provided that (A) such Affiliated Lender delivers a notice of the Loans that will be subject to such Auction to the Administrative Agent (for distribution to the Lenders) no later than 12:00 noon (New York City time) at least five (5) Business Days in advance of a proposed consummation date of such Auction indicating (1) the date on which the Auction will conclude, (2) the maximum principal amount of Loans such Affiliated Lender is

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willing to purchase in the Auction and (3) the range of discounts to par at which such Affiliated Lender would be willing to purchase the Offer Loans; (B) the maximum dollar amount of the Auction shall be no less than an aggregate $5,000,000 or an integral multiple of $1,000,000 in excess thereof; (C) such Affiliated Lender shall hold the Auction open for a minimum period of three (3) Business Days; (D) a Lender who elects to participate in the Auction may choose to tender all or part of such Lender’s Offer Loans; (E) the Auction shall be made to the Lenders holding the Offer Loans on a pro rata basis in accordance with their pro rata shares; (F) the Auction shall be conducted pursuant to such procedures as the Administrative Agent may establish which are consistent with this Section 10.04(j) and are reasonably acceptable to such Affiliated Lender and the Administrative Agent that a Lender must follow in order to have its Offer Loans purchased; and (G) in the case of any Auction conducted by the Borrower or any of its Subsidiaries no Default or Event of Default has occurred or is continuing;

(iii) With respect to all purchases made by Affiliated Lenders pursuant to this Section 10.04(j) and in furtherance of the foregoing clauses (i) and (ii), (A) each Affiliated Lender shall pay to the applicable assigning Lender all accrued and unpaid interest, if any, on the purchased Loans to the date of purchase of such Loans, (B) each Affiliated Lender shall represent that, as of the launch date of the related Auction (in the case of an Auction) and the effective date of any Assignment Agreement, it is not in possession of any material non-public information regarding the Borrower, its Subsidiaries, or their respective assets or securities, that (x) has not been disclosed to the assigning Lenders prior to such date and (y) could reasonably be expected to have a material effect upon, or otherwise be material to, a Lender’s decision to assign Loans to such Affiliated Lender, as the case may be (in each case, other than because such assigning Lender does not wish to receive any material non-public information with respect to the Borrower, its Subsidiaries or their respective assets or securities), and (C) to the extent made by the Borrower, such purchases shall not constitute voluntary prepayments pursuant to Section 2.08(a);

(iv) No Affiliated Lender that purchases Loans pursuant to this Section 10.04(j) shall have any right (A) to consent to any amendment, modification, waiver, consent or other such action with respect to any of the terms of this Agreement or any other Loan Document that would require the consent of the Required Lenders, (B) to otherwise vote on any matter related to this Agreement or any other Loan Document that requires the consent of the Required Lenders, and (C) to attend any conference call or meeting with any Agent or Lender (to the extent that the Loan Parties are excluded from attending) or receive any information from any Agent or Lender (to the extent not provided to the Loan Parties); provided that, for the avoidance of doubt, (I) each Affiliated Lender shall have the right to consent to any amendment, modification, waiver, consent or other action with respect to any of the terms of this Agreement or any other Loan Document that would require the consent of all Lenders or the consent of all Lenders directly and adversely affected thereby (other than in respect of releases of the Collateral and Guarantees) if such amendment, modification or waiver adversely affects such Affiliated Lender in any material respect as compared to other Lenders and (II) no amendment, modification, waiver or consent shall affect any Affiliated Lender in a manner that is disproportionate to the effect of any Lender of the same class or that would deprive such Affiliated Lender of its pro rata share of any payments to which it is entitled to share on a pro rata basis hereunder;

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(v) Following purchase of Loans by (x) the Sponsor (excluding any Debt Fund Affiliate) or any Non-Debt Fund Affiliate pursuant to this Section 10.04(j), such Affiliated Lender shall have the right to contribute such Loans to the Borrower or any of its Subsidiaries, which Loans so contributed shall, without further action by any person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by the Borrower or any of its Subsidiaries) and (y) Borrower or any of its Subsidiaries pursuant to this Section 10.04(j), the Loans so purchased shall, without further action by any person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by the Borrower or any such Subsidiaries), in the case of clauses (x) and (y) for all purposes of this Agreement and all other Loan Documents, including, but not limited to (A) the making of, or the application of, any payments to the Lenders under this Agreement or any other Loan Document, (B) the making of any request, demand, authorization, direction, notice, consent or waiver under this Agreement or any other Loan Document or (C) the determination of the Required Lenders, or for any similar or related purpose, under this Agreement or any other Loan Document. In connection with any Loans purchased and cancelled pursuant to this Section 10.04(j), the Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation. Any payment made by an Affiliated Lender in connection with a purchase permitted by this Section 10.04(j) shall not be subject to the provisions of Section 2.11. Failure by an Affiliated Lender to make any payment to a Lender required by an agreement permitted by this Section 10.04(j) shall not constitute an Event of Default under Section 8.01(a); and

(vi) Each Affiliated Lender shall acknowledge and agree that if a case under Sections 1126 and 1129 of the Bankruptcy Code of the United States is commenced against Borrower and/or any other Loan Party, the Borrower and/or any other Loan Party, as applicable, shall seek (and each Affiliated Lender shall consent) to provide that the vote of any Affiliated Lender (in its capacity as a Lender) with respect to any plan of reorganization of the Borrower and/or such Loan Parties, as applicable, shall not be counted except that such Affiliated Lender’s vote (in its capacity as a Lender) may be counted to the extent any such plan of reorganization proposes to treat the Obligations held by such Affiliated Lender in a manner that is less favorable in any material respect to such Affiliated Lender than the proposed treatment of similar Obligations held by Lenders that are not Affiliates of the Borrower or any other Loan Party. To the extent that the vote of any Affiliated Lender (in its capacity as a Lender) is counted with respect to any plan of reorganization of the Borrower and/or such Loan Parties, as applicable, each Affiliated Lender shall vote in such plan of reorganization in the same proportion as the allocation of voting such plan of reorganization by those Lenders who are not Affiliated Lenders. Each Affiliated Lender shall also irrevocably appoint the Administrative Agent (such appointment being coupled with an interest), as such Affiliated Lender’s attorney-in-fact, with full authority in the place and stead of such Affiliated Lender and in the name of such Affiliated Lender, from time to time in the Administrative Agent’s discretion, with prior written notice to such Affiliated Lender, to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this clause (vi).

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(k) Notwithstanding anything to the contrary contained in this Section 10.04(k) or any other provision of this Agreement, any Debt Fund Affiliate may purchase outstanding Loans on the following basis:

(i) Any Debt Fund Affiliate may purchase all or any portion of the Loans of one or more Lenders pursuant to an Assignment Agreement between such Debt Fund Affiliate and such Lender or Lenders in an aggregate principal amount not to exceed, when added to all purchases pursuant to clause (ii) below and purchases of Loans by Affiliated Lenders pursuant to Sections 10.04(j)(i) and (ii), 25% of the aggregate principal amount of the then outstanding Loans; provided that (I) with respect to such purchases, each Debt Fund Affiliate shall simultaneously provide a copy of such Assignment Agreement and any other agreements between such Debt Fund Affiliate and such Lender with respect to such purchase to the Administrative Agent; and (II) no such Debt Fund Affiliate shall have any right, (A) to require any Agent or other Lender to undertake any action (or refrain from taking any action) with respect to this Agreement or any other Loan Document or (B) to make or bring any claim, in its capacity as a Lender, against the Agent or any Lender with respect to the duties and obligations of such persons under the Loan Documents;

(ii) Any Debt Fund Affiliate may conduct one or more Auctions to purchase all or any portion of the Loans of one or more Lenders in an aggregate principal amount not to exceed, when added to all purchases pursuant to clause (i) above and purchases of Loans by Affiliated Lenders pursuant to Sections 10.04(j)(i) and (ii), 25% of the aggregate principal amount of then outstanding Loans, provided that (A) such Debt Fund Affiliate delivers a notice of the Loans that will be subject to such Auction to the Administrative Agent (for distribution to the Lenders) no later than 12:00 noon (New York City time) at least five (5) Business Days in advance of a proposed consummation date of such Auction indicating (1) the date on which the Auction will conclude, (2) the maximum principal amount of Loans such Debt Fund Affiliate is willing to purchase in the Auction and (3) the range of discounts to par at which such Affiliated Lender would be willing to purchase the Offer Loans; (B) the maximum dollar amount of the Auction shall be no less than an aggregate $5,000,000 or an integral multiple of $1,000,000 in excess thereof; (C) such Debt Fund Affiliate shall hold the Auction open for a minimum period of three (3) Business Days; (D) a Lender who elects to participate in the Auction may choose to tender all or part of such Lender’s Offer Loans; and (E) the Auction shall be conducted pursuant to such procedures as the Administrative Agent may establish which are consistent with this Section 10.04(k) and are reasonably acceptable to such Debt Fund Affiliate and the Administrative Agent that a Lender must follow in order to have its Offer Loans purchased;

(iii) With respect to all purchases made by Debt Fund Affiliates pursuant to this Section 10.04(k), (A) each Debt Fund Affiliate shall pay to the applicable assigning Lender all accrued and unpaid interest, if any, on the purchased Loans to the date of purchase of such Loans; and (B) each Debt Fund Affiliate shall represent that, as of the launch date of the related Auction (in the case of an Auction) and the effective date of any Assignment Agreement, it is not in possession of any material non-public information regarding the Borrower, its Subsidiaries, or their respective assets or securities, that (x) has not been disclosed to the assigning Lenders prior to such date and (y) could reasonably be expected to have a material effect upon, or otherwise be material to, a Lender’s decision to assign Loans to such Debt Fund Affiliate, as the case may be (in each case, other than because such assigning Lender does not wish to receive any material non-public information with respect to the Borrower, its Subsidiaries or their respective assets or securities);

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(iv) In connection with any Loans purchased and cancelled pursuant to this Section 10.04(k), the Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation. Any payment made by a Debt Fund Affiliate in connection with a purchase permitted by this Section 10.04(k) shall not be subject to the provisions of Section 2.11. Failure by a Debt Fund Affiliate to make any payment to a Lender required by an agreement permitted by this Section 10.04(k) shall not constitute an Event of Default under Section 8.01(a);

(v) No Debt Fund Affiliate that purchases Loans pursuant to this Section 10.04(k) shall have any right (A) to consent to any amendment, modification, waiver, consent or other such action with respect to any of the terms of this Agreement or any other Loan Document that would require the consent of the Required Lenders, (B) to otherwise vote on any matter related to this Agreement or any other Loan Document that requires the consent of the Required Lenders, and (C) to attend any conference call or meeting with any Agent or Lender (to the extent that the Loan Parties are excluded from attending) or receive any information from any Agent or Lender (to the extent not provided to the Loan Parties); provided that, for the avoidance of doubt, (I) each Debt Fund Affiliate shall have the right to consent to any amendment, modification, waiver, consent or other action with respect to any of the terms of this Agreement or any other Loan Document that would require the consent of all Lenders or the consent of all Lenders directly and adversely affected thereby (other than in respect of releases of the Collateral and Guarantees) if such amendment, modification or waiver adversely affects such Debt Fund Affiliate in any material respect as compared to other Lenders and (II) no amendment, modification, waiver or consent shall affect any Debt Fund Affiliate in a manner that is disproportionate to the effect of any Lender of the same class or that would deprive such Debt Fund Affiliate of its pro rata share of any payments to which it is entitled to share on a pro rata basis hereunder; and

(vi) Each Debt Fund Affiliate shall acknowledge and agree that if a case under sections 1126 and 1129 of the Bankruptcy Code of the United States is commenced against Borrower and/or any other Loan Party, the Borrower and/or any other Loan Party, as applicable, shall seek (and each Debt Fund Affiliate shall consent) to provide that the vote of any Debt Fund Affiliate (in its capacity as a Lender) with respect to any plan of reorganization of the Borrower and/or such Loan Parties, as applicable, shall not be counted except that such Debt Fund Affiliate’s vote (in its capacity as a Lender) may be counted to the extent any such plan of reorganization proposes to treat the Obligations held by such Debt Fund Affiliate in a manner that is less favorable in any material respect to such Debt Fund Affiliate than the proposed treatment of similar Obligations held by Lenders that are not Affiliates of the Borrower or any other Loan Party. To the extent that the vote of any Debt Fund Affiliate (in its capacity as a Lender) is counted with respect to any plan of reorganization of the Borrower and/or such Loan Parties, as applicable, each Debt Fund Affiliate shall vote in such plan of reorganization in the same proportion as the allocation of voting such plan of reorganization by those Lenders who are not Debt Fund Affiliates. Each Debt Fund Affiliate shall also irrevocably appoint the Administrative Agent (such appointment being coupled with an interest), as such Debt Fund Affiliate’s attorney-in-fact, with full authority in the place and stead of such Debt Fund Affiliate and in the name of such Debt Fund Affiliate, from time to time in the Administrative Agent’s discretion, with prior written notice to such Debt Fund Affiliate, to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this clause (vi).

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Section 10.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the reports, certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans , regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any Obligation is outstanding and so long as the Commitments have not expired or terminated. The provisions of Article IX and Sections 2.12, 10.03 and 10.09 to 10.10 shall survive and remain in full force and effect regardless of the consummation of the Transactions and the other transactions contemplated hereby, the repayment of the Loans, and the Commitments or the termination of this Agreement or any provision hereof.

Section 10.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent and/or the Arrangers, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 10.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 10.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Legal Requirements, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of any Loan Party against any and all of the obligations of any Loan Party now or hereafter existing under this Agreement or any other Loan Documents held by such Lender, irrespective of whether or not

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such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Following such set-off, the Lender or Affiliate, as the case may be, taking such action shall use reasonable efforts to provide written notice thereof to the Borrower and the Administrative Agent; provided that any failure to give or delay in giving such notice shall not impact the rights of setoff of the Lenders or their respective Affiliates, as the case may be, or result in any liability to any such Lender or Affiliate.

Section 10.09. Governing Law; Jurisdiction; Consent to Service of Process.

(a) APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

(b) CONSENT TO JURISDICTION. SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER LOAN DOCUMENTS, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN OR, IF THAT COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED IN THE CITY AND COUNTY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH LOAN PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY SECURITY AGREEMENT GOVERNED BY A LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE LOAN PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.01; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE LOAN PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST

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ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

Section 10.10. Waiver of Jury Trial. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.10 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 10.12. Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ and Approved Funds’ directors, officers, employees, agents, Advisors and other representatives, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof), (b) to the extent requested by any regulatory authority or any quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Legal Requirements or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under the Loan Documents or any suit, action or proceeding

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relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.12, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and their obligations, (iii) any actual or prospective investor in an SPC or (iv) any rating agency for the purpose of obtaining a credit rating applicable to any Loan or Loan Party, (g) with the consent of the Borrower or (h) to the extent such Information (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section 10.12 or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or any of its Subsidiaries. In addition, the Agents and the Lenders may disclose the existence of the Loan Documents and information about the Loan Documents to market data collectors, similar service providers to the financing community, and service providers to the Agents and the Lenders. For the purposes of this Section 10.12, “Information” shall mean all information received from the Borrower relating to the Borrower or any of its Subsidiaries or its business that is clearly identified at the time of delivery as confidential, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower. Any person required to maintain the confidentiality of Information as provided in this Section 10.12 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential information.

Section 10.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable Legal Requirements, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 10.13 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

Section 10.14. Assignment Agreement. Each Lender to become a party to this Agreement (other than the Administrative Agent and any other Lender that is a signatory hereto) shall do so by delivering to the Administrative Agent an Assignment Agreement duly executed by such Lender, the Borrower (if the Borrower’s consent to such assignment is required hereunder) and the Administrative Agent.

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Section 10.15. Obligations Absolute. To the fullest extent permitted by applicable law, all obligations of the Loan Parties hereunder shall be absolute and unconditional irrespective of:

(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Loan Party;

(b) any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto against any Loan Party;

(c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any Loan Document or any other agreement or instrument relating thereto;

(d) any exchange, release or non-perfection or loss of priority of any Liens on any or all of the Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

(e) any exercise or non-exercise, or any waiver of any right, remedy, power or privilege under or in respect hereof or any Loan Document; or

(f) any other circumstances which might otherwise constitute a defense available to, or a discharge of, the Loan Parties.

Section 10.16. Waiver of Defenses; Absence of Fiduciary Duties.

(a) Each of the Loan Parties hereby waives any and all suretyship defenses available to it as a Guarantor arising out of the joint and several nature of its respective duties and obligations hereunder (including any defense contained in Article VII).

(b) Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their affiliates. Each Loan Party agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party, its stockholders or its affiliates, on the other. The Loan Parties acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its stockholders or its Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party, its management, stockholders, creditors or any other person. Each Loan Party acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Each Loan Party agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Loan Party, in connection with such transaction or the process leading thereto.

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Section 10.17. USA Patriot Act. Each Lender hereby notifies each Loan Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name, address and taxpayer identification number of each Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Patriot Act.

Section 10.18. [RESERVED]

Section 10.19. Concerning the ABL Facility. The Lenders acknowledge that obligations of the Borrower under the ABL Credit Agreement may be secured by Liens on assets of the Borrower and its Subsidiaries that constitute ABL Priority Collateral. At the request of the Borrower, the Administrative Agent or the Collateral Agent shall enter into the ABL Intercreditor Agreement and other documents establishing the relative rights of the Lenders and of the lenders under the ABL Credit Agreement with respect to the ABL Priority Collateral. Each Lender hereby irrevocably authorizes and directs the Administrative Agent and/or the Collateral Agent to execute and deliver ABL Intercreditor Agreement, the ABL Loan Documents and any documents relating thereto, in each case, on behalf of such Lender and without any further consent, authorization or other action by such Lender, and agrees that no Lender shall have any right of action whatsoever against the Administrative Agent or the Collateral Agent as a result of any action taken by such Agent pursuant to this Section 10.19. The Administrative Agent and the Collateral Agent shall have the benefit of the provisions of Article IX with respect to all actions taken by them pursuant to this Section 10.19 to the full extent thereof.

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed by their respective authorized officers or other authorized signatories as of the day and year first above written.

FIVE BELOW, INC., as Borrower
By:	/s/ Kenneth R. Bull
	Name:	Kenneth R. Bull
	Title:	Chief Financial Officer, Treasurer, Secretary
JEFFERIES FINANCE LLC, as Lender
By:	/s/ E.J. Hess
	Name:	E.J. Hess
	Title:	Managing Director
UBS LOAN FINANCE LLC, as Lender
By:	/s/ Ina R. Otsa
	Name:	Ina R. Otsa
	Title:	Associate Director, Banking Product Services, US
By:	/s/ Mary E. Evans
	Name:	Mary E. Evans
	Title:	Associate Director, Banking Product Services, US
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender
By:	/s/ Heidi H. Samuels
	Name:	Heidi H. Samuels
	Title:	Director
BARCLAYS BANK PLC, as Lender
By:	/s/ Diane Rolfe
	Name:	Diane Rolfe
	Title:	Director

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Lender
By:	/s/ Dusan Lazarov
	Name: Dusan Lazarov
	Title: Director
By:	/s/ Courtney E. Meehan
	Name: Courtney E. Meehan
	Title: Vice President
CREDIT SUISSE AG, CAYMEN ISLANDS BRANCH, as Lender
By:	/s/ Shaheen Malik
	Name: Shaheen Malik
	Title: Vice President
By:	/s/ Patrick L. Freytag
	Name: Patrick L. Freytag
	Title: Associate
GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent
By:	/s/ Robert Ehudin
	Name: Robert Ehudin
	Title: Authorized Signatory
GOLDMAN SACHS BANK USA, as a Lender
By:	/s/ Robert Ehudin
	Name: Robert Ehudin
	Title: Authorized Signatory

Annex I

Initial Lenders and Commitments

Lender	Amount of Initial Loan Commitment
Goldman Sachs Bank USA	$	24,000,000
Barclays Bank PLC	$	18,000,000
Jefferies Finance LLC	$	18,000,000
Credit Suisse AG, Cayman Islands Branch	$	10,000,000
Deutsche Bank Trust Company Americas	$	10,000,000
UBS Loan Finance LLC	$	10,000,000
Wells Fargo Bank, National Association	$	10,000,000
Total:	$	100,000,000.00

Annex II

Address of Principal Office of Administrative Agent and the Collateral Agent

Goldman Sachs Bank USA Goldman Sachs Bank USA 200 West Street New York, NY 10282

Initial Lender Addresses

Goldman Sachs Bank USA	Michelle Latzoni c/o Goldman, Sachs & Co. 30 Hudson Street, 5th Floor Jersey City, NJ 07302
Barclays Bank PLC	Barclays 745 Seventh Avenue New York, NY 10019
Jefferies Finance LLC	Jefferies & Company 520 Madison Ave. New York, NY 10022
Credit Suisse AG, Cayman Islands Branch	Credit Suisse Eleven Madison Avenue New York, NY 10010-3629
Deutsche Bank Trust Company Americas	Deutsche Bank 60 Wall Street New York, NY 10005

UBS Loan Finance LLC	UBS Securities LLC 299 Park Avenue New York, NY 10171
Wells Fargo Bank, National Association	Wells Fargo Bank, National Association 90 South Seventh Street, N9305-051 Minneapolis, MN 55402

EXHIBITS
Exhibit A	Form of Assignment Agreement
Exhibit B	Form of Funding Notice
Exhibit C	Form of Compliance Certificate
Exhibit D	Form of Intercompany Note
Exhibit E	Form of Conversion/Continuation Notice
Exhibit F	United States Tax Compliance Certificate
Exhibit G	Form of Note
Exhibit H	Form of Security Agreement
Exhibit J	Form of Solvency Certificate
Exhibit K	Form of Guarantee Joinder Agreement
Exhibit L	Form of ABL Intercreditor Agreement

[Exhibits H and L have been omitted as these exhibits have been separately filed as exhibits to the Form S-1.]

EXHIBIT A TO

CREDIT AGREEMENT

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (this “Assignment”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as it may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including without limitation any guarantees included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor.

1.	Assignor:
2.	Assignee:	[and is an Affiliate/Approved Fund1 of [identify Lender]] [Assignor is not a Defaulting Lender]
		Markit Entity Identifier (if any):
3.	Borrower:	Five Below, Inc.
4.	Administrative and Collateral Agent:	Goldman Sachs Bank USA, as the administrative agent and collateral agent under the Credit Agreement
5.	Credit Agreement:	The $100,000,000 Credit Agreement dated as of May 16, 2012 among Five Below, Inc., the Lenders parties thereto, Goldman Sachs Bank USA, as Administrative Agent, and the other agents parties thereto
6.	Assigned Interest:

¹ Select as applicable

EXHIBIT A-1

Aggregate Amount of Loans for all Lenders	Amount of /Loans Assigned	Percentage Assigned of Loans
$	$		%

Effective Date:             , 20    [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

7. Notice and Wire Instructions:

[NAME OF ASSIGNOR]		[NAME OF ASSIGNEE]
Notices:		Notices:
	Attention:		Attention:
	Telecopier:		Telecopier:
with a copy to:		with a copy to:
	Attention:		Attention:
	Telecopier:		Telecopier:
Wire Instructions:		Wire Instructions:

The terms set forth in this Assignment are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:

Title:

EXHIBIT A-2

[Consented to and Accepted:

GOLDMAN SACHS BANK USA,

as Administrative Agent

By:

Title:]²

Consented to:

FIVE BELOW, INC.

By:

Title:

²  Required unless assignment is to a Lender, an Affiliate of a Lender or an Approved Fund.

EXHIBIT A-3

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ASSUMPTION AGREEMENT

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with any Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document delivered pursuant thereto, other than this Assignment (herein collectively the “Loan Documents”), or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements to be an assignee under Section 10.04 of the Credit Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, and (vii) if it is a Foreign Lender, attached to this Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. All payments with respect to the Assigned Interests shall be made on the Effective Date as follows:

2.1 From and after the Effective Date, Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to the Assignee.

ANNEX 1-1

3. General Provisions. This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment. This Assignment shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to conflict of laws principles thereof.

[Remainder of page intentionally left blank]

ANNEX 1-2

EXHIBIT B TO

CREDIT AGREEMENT

FUNDING NOTICE

Reference is made to the Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., A PENNSYLVANIA CORPORATION (“Borrower”), the Lenders party thereto from time to time, and GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent. Capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Credit Agreement.

Pursuant to Section 2.01 of the Credit Agreement, Borrower desires that Lenders make the following Loans to Borrower in accordance with the applicable terms and conditions of the Credit Agreement on May [—], 2012 (the “Credit Date”):

Loans
¨	ABR Loans:	$[    ,    ,    ]
¨	Eurodollar Loans, with an initial Interest Period of
	month(s):	$[    ,    ,    ]

Borrower hereby certifies that:

(i) as of the date of such Credit Extension, the representations and warranties contained in each of the Loan Documents are true and correct in all material respects on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties are true and correct in all material respects on and as of such earlier date); provided that, any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects; and

(ii) as of the date of such Credit Extension, no event has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby that would constitute an Event of Default or a Default.

EXHIBIT B-1

The account of Borrower to which the proceeds of the Loans requested on the Credit Date are to be made available by Administrative Agent to the Borrower are as follows:

Bank Name:

Bank Address:

ABA Number:

Account Number:

Attention:

Reference:

Date: [—], 2012	FIVE BELOW, INC.
	By:
	Name:
	Title:

EXHIBIT B-2

EXHIBIT C TO

CREDIT AGREEMENT

FORM OF COMPLIANCE CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

1. I am the Chief Financial Officer of FIVE BELOW, INC. (“Borrower”).

2. I have reviewed the terms of that certain Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., certain Subsidiaries of Borrower, as Guarantors party thereto from time to time, the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA as Administrative Agent and Collateral Agent, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of Borrower and its Subsidiaries during the accounting period covered by the attached financial statements.

3. The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in a separate attachment, if any, to this Certificate, describing in detail, the nature of the condition or event, the period during which it has existed and the action which Borrower has taken, is taking, or proposes to take with respect to each such condition or event.

The foregoing certifications, together with the computations set forth in the Annex A hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered [—] pursuant to Section 5.01(c) of the Credit Agreement.

FIVE BELOW, INC.
By:
Name:	Kenneth R. Bull
Title:	Chief Financial Officer

EXHIBIT C-1

ANNEX A TO

COMPLIANCE CERTIFICATE

FOR THE FISCAL [QUARTER] [YEAR] ENDING [mm/dd/yy].

1.	Consolidated Net Income: (i)-(ii) =			$[    ,    ,    ]
	(i)	the net income (or loss) of Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP:		$[    ,    ,    ]
	(ii)	(a)	the net income (or loss) of any person (other than a direct or indirect Subsidiary of Borrower) in which any other person other than any Loan Party has an ownership interest, except to the extent that cash in amount equal to any such income has actually been received by the Borrower or (subject to clause (b) below) any of its Wholly Owned Subsidiaries from such person during such period:	$[    ,    ,    ]
		(b)	the net income of any Subsidiary of the Borrower during such period to the extent that the declaration and/or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement, instrument, Order or other Legal Requirement applicable to that Subsidiary during such period:	$[    ,    ,    ]
		(c)	earnings (or losses) resulting from any reappraisal, revaluation or write-up (or write-down) of assets:	$[    ,    ,    ]
		(d)	any extraordinary or non-recurring non-cash gain or income (or extraordinary or non-recurring non-cash loss or expenses (it being understood that cash write-off or write-down of receivables shall not be deemed to be an extraordinary or non-recurring loss or expense)), together with any related provision for taxes on any such non-cash gain (or the tax effect of any such non-cash loss), recorded or recognized by any Loan Party during such period:	$[    ,    ,    ]
2.	Consolidated EBITDA: (i)+(ii)–(iii) =			$[    ,    ,    ]
	(i)	Consolidated Net Income:		$[    ,    ,    ]

EXHIBIT C-2

(ii)	to the extent (and in the same proportion) deducted in determining Consolidated Net Income
	(a)	Consolidated Interest Expense:	$[    ,    ,    ]
	(b)	Consolidated Amortization Expense:	$[    ,    ,    ]
	(c)	Consolidated Depreciation Expense:	$[    ,    ,    ]
	(d)	Consolidated Tax Expense:	$[    ,    ,    ]
	(e)	non-recurring cash costs, fees and expenses directly incurred in connection with the Transactions; provided, that no more than $1,500,000 in the aggregate of such costs, fees and expenses paid in cash after the Closing Date may be added back pursuant to this subclause (e):	$[    ,    ,    ]
	(f)	expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to acquisitions, divestitures, restructuring, cost savings initiatives and other similar initiatives after the Closing Date and reasonably projected by the Borrower in good faith to result from actions with respect to which substantial steps have been taken (in the good faith determination of the Borrower) within twelve (12) months after such transaction or initiative is consummated; provided that the aggregate amount of add-backs made pursuant to this subclause (f) for any four (4) consecutive quarter period shall not exceed 2.5% of Consolidated EBITDA for such period (without giving effect to any adjustments pursuant to this subclause (f)):	$[    ,    ,    ]
	(g)	extraordinary charges and non-recurring charges, which non-recurring charges may include severance costs, relocation costs, signing costs, retention or completion bonuses, and costs and expenses payable to third party consultants:	$[    ,    ,    ]
	(h)	the aggregate amount of all non-cash charges:	$[    ,    ,    ]
	(i)	agency fees paid to the Administrative Agent or the Collateral Agent and similar fees paid in respect of the ABL Indebtedness and fees and expenses paid in connection with obtaining or maintaining credit ratings from any ratings agency for the Loans:	$[    ,    ,    ]

EXHIBIT C-3

		(j)	to the extent covered by insurance and actually reimbursed or otherwise paid, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed or otherwise paid by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed or otherwise paid within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not denied within such 180 days or so reimbursed or otherwise paid within such 365 days), expenses with respect to liability or casualty events and expenses or losses relating to business interruption:	$[    ,    ,    ]
		(k)	fees, allowances or other similar arrangements directly or indirectly paid to members of the Board of Directors of any of the Loan Parties or any of their Subsidiaries in such person’s capacity as a member of such Board of Directors in an aggregate amount not to exceed $250,000 in any period of twelve (12) consecutive months:	$[    ,    ,    ]
	(iii)	the sum of the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the recognition of any deferred revenue and the accrual of revenue or recording of receivables in the ordinary course of business):		$[    ,    ,    ]
3.	Consolidated Interest Expense:			$[    ,    ,    ]
4.	Consolidated Current Assets:			$[    ,    ,    ]
5.	Consolidated Current Liabilities:			$[    ,    ,    ]
6.	[Excess Cash Flow: (i)-(ii) =			$[    ,    ,    ]
	(i)	the sum, without duplication, of the amounts for such Excess Cash Flow Period of
		(a)	Consolidated EBITDA:	$[    ,    ,    ]
		(b)	the decrease, if any, in the Net Working Capital:	$[    ,    ,    ]

EXHIBIT C-4

	(ii)		the sum, without duplication, of
			(a) the amount of any cash Consolidated Tax Expense paid by the Borrower and its Subsidiaries:	$[    ,    ,    ]
			(b) the amount of Debt Service for such Excess Cash Flow Period:	$[    ,    ,    ]
			(c) permanent repayments and prepayments of Indebtedness made by the Borrower and its Subsidiaries (other than repayments and prepayments of Loans) but only to the extent that (A) (i) such repayments and prepayments by their terms cannot be reborrowed or redrawn, and (ii) such repayments and prepayments do not occur in connection with a refinancing of all or a portion of such Indebtedness, and (B) the amounts used to make such payments are not funded from Externally Generated Funds:	$[    ,    ,    ]
			(d) the increase, if any, in the Net Working Capital:	$[    ,    ,    ]
			(e) cash items of expense (including losses) not deducted in calculating Consolidated EBITDA:	$[    ,    ,    ]
			(f) the amount of any non-cash gain included in Consolidated EBITDA recognized as a result of any Asset Sale:	$[    ,    ,    ]
			(g) Capital Expenditures made in cash to the extent not funded from Externally Generated Funds:]1	$[    ,    ,    ]
7.	Net Working Capital: (i)-(ii) =			$[    ,    ,    ]
	(i)	Consolidated Current Assets:		$[    ,    ,    ]
	(ii)	Consolidated Current Liabilities:		$[    ,    ,    ]
8	Consolidated Net Leverage Ratio: (i)/(ii) =			$[    ,    ,    ]
	(i)	Consolidated Indebtedness net of up to $10,000,000 of unrestricted cash and Cash Equivalents of the Loan Parties:		$[    ,    ,    ]
	(ii)	Consolidated EBITDA:		$[    ,    ,    ]
			Actual:	.    :1.00
			Required:	.    :1.00

¹  To be included with delivery of annual financial statements only

EXHIBIT C-5

9.	[Retained Excess Cash Flow Amount: (i)/2 =		$[    ,    ,    ]
	(i)	the amounts of Excess Cash Flow for all Excess Cash Flow Periods ending on or prior to the final day of the period of this Annex:]2	$[    ,    ,    ]
10.	[Cumulative Credit Availability: (i)+(ii)+(iii)-(iv)-(v)-(vi)-(vii)=		$[    ,    ,    ]
	(i)	the Retained Excess Cash Flow Amount:	$[    ,    ,    ]
	(ii)	the cumulative amount of Net Cash Proceeds received after the Closing Date that have been contributed as capital to the Borrower or otherwise received by the Borrower in respect of the issuance of Qualified Capital Stock by the Borrower, but excluding any such sale or issuance by the Borrower of its Equity Interests upon exercise of any warrant or option to directors, officers or employees of the Borrower:	$[    ,    ,    ]
	(iii)	the cumulative amount of Net Cash Proceeds that have been contributed as capital to the Borrower or otherwise received by the Borrower in connection with a Qualifying IPO less the amount of such Net Cash Proceeds used to prepay the Loans in accordance with Section 2.08(b) of the Credit Agreement:	$[    ,    ,    ]
	(iv)	the cumulative amount of Investments made in reliance on Section 6.04(o) of the Credit Agreement:	$[    ,    ,    ]
	(v)	the cumulative amount of Dividends made in reliance on Section 6.08(b) of the Credit Agreement:	$[    ,    ,    ]
	(vi)	the cumulative amount of Acquisition Consideration paid in respect of Permitted Acquisitions in reliance on Cumulative Credit Availability pursuant to paragraph (viii) of the definition of “Permitted Acquisition” in the Credit Agreement:	$[    ,    ,    ]

²  To be included with delivery of annual financial statements only.

EXHIBIT C-6

(vii)
  the cumulative amount of (i) voluntary or optional payments or prepayments on or (ii) redemptions, retirements, defeasances, or acquisitions for value of or (iii) any prepayments or redemptions as a result of any Disposition, change of control or similar event of, Junior Financing made in reliance on clause (II) of the proviso in Section 6.11(a) of the Credit Agreement:³ $[    ,    ,    ]

³  To be included with delivery of annual financial statements only.

EXHIBIT C-7

EXHIBIT D TO

CREDIT AGREEMENT

FORM OF INTERCOMPANY NOTE

Note Number:                     Dated:                        , 201  

FOR VALUE RECEIVED, each of FIVE BELOW, INC. (“Borrower”), and certain Subsidiaries of Borrower (collectively, the “Group Members” and each, a “Group Member”) party to this subordinated intercompany note (this “Promissory Note”) promises to pay to the order of such other Group Member that has made loans to such Group Member (each Group Member which borrows money pursuant to this Promissory Note is referred to herein as a “Payor” and each Group Member which makes loans and advances pursuant to this Promissory Note is referred to herein as a “Payee”), on demand, in lawful money as may be agreed upon from time to time by the relevant Payor and Payee, in immediately available funds and at the appropriate office of the Payee, the aggregate unpaid principal amount of all loans and advances heretofore and hereafter made by such Payee to such Payor and any other Indebtedness now or hereafter owing by such Payor to such Payee as shown either on Schedule A attached hereto (and any continuation thereof) or in the books and records of such Payee. The failure to show any such Indebtedness or any error in showing such Indebtedness shall not affect the obligations of any Payor hereunder. Capitalized terms used herein but not otherwise defined herein shall have the meanings given such terms in the Credit Agreement dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”), by and among Borrower, the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent thereunder (the “Collateral Agent”).

The unpaid principal amount hereof from time to time outstanding shall bear interest at a rate equal to the rate as may be agreed upon in writing from time to time by the relevant Payor and Payee. Interest shall be due and payable at such times as may be agreed upon from time to time by the relevant Payor and Payee. Upon demand for payment of any principal amount hereof, accrued but unpaid interest on such principal amount shall also be due and payable. Interest shall be paid in any lawful currency as may be agreed upon by the relevant Payor and Payee and in immediately available funds. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 365 days.

Each Payor and any endorser of this Promissory Note hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

This Promissory Note has been pledged by each Payee that is a Loan Party to the Collateral Agent, for the benefit of the Secured Parties, as security for such Payee’s obligations, if any, under the Loan Documents to which such Payee is a party. Each Payor acknowledges and agrees that after the occurrence of and during the continuation of an Event of Default (as defined in the Credit Agreement), the Collateral Agent and the other Secured Parties may exercise all the rights of each Payee that is a Loan Party under this Promissory Note and will not be subject to any abatement, reduction, recoupment, defense, setoff or counterclaim available to such Payor.

EXHIBIT D-1

Each Payee agrees that any and all claims of such Payee against any Payor that is a Loan Party or any endorser of this Promissory Note, or against any of their respective properties, shall be subordinate and subject in right of payment to the Secured Obligations until all of the Secured Obligations have been performed and paid in full (other than contingent indemnification obligations not due and payable) and all commitments to extend credit under any Loan Document have been terminated; provided, that each Payor that is a Loan Party may make payments to the applicable Payee so long as no Event of Default shall have occurred and be continuing; and provided, further, that all loans and advances made by a Payee pursuant to this Promissory Note shall be received by the applicable Payor subject to the provisions of the Loan Documents. Notwithstanding any right of any Payee to ask, demand, sue for, take or receive any payment from any Payor, all rights, Liens and security interests of such Payee, whether now or hereafter arising and howsoever existing, in any assets of any Payor (whether constituting part of the security or collateral given to any Secured Party to secure payment of all or any part of the Secured Obligations or otherwise) shall be and hereby are subordinated to the rights of the Secured Parties in such assets. Except as expressly permitted by the Loan Documents, the Payees shall have no right to possession of any such asset or to foreclose upon, or exercise any other remedy in respect of, any such asset, whether by judicial action or otherwise, unless and until all of the Secured Obligations shall have been performed and paid in full (other than contingent indemnification obligations not due and payable) and all commitments have been expired or terminated.

After the occurrence of and during the continuation of an Event of Default, if all or any part of the assets of any Payor, or the proceeds thereof, are subject to any distribution, division or application to the creditors of any Payor, whether partial or complete, voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding, or if the business of any Payor is dissolved or if (except as expressly permitted by the Loan Documents) all or substantially all of the assets of any Payor are sold, then, and in any such event, any payment or distribution of any kind or character, whether in cash, securities or other investment property, or otherwise, which shall be payable or deliverable upon or with respect to any indebtedness of such Payor to any Payee (“Payor Indebtedness”) shall be paid or delivered directly to the Collateral Agent for application to any of the Secured Obligations, due or to become due, until the date on which the Secured Obligations shall have been performed and paid in full (other than contingent indemnification obligations not due and payable) and all commitments to extend credit under any Loan Document shall have expired or been terminated. After the occurrence of and during the continuation of an Event of Default, each Payee that is a Loan Party irrevocably authorizes, empowers and appoints the Collateral Agent as such Payee’s attorney-in-fact (which appointment is coupled with an interest and is irrevocable) to demand, sue for, collect and receive every such payment or distribution and give acquittance therefor and to make and present for and on behalf of such Payee such proofs of claim and take such other action, in the Collateral Agent’s own names or in the name of such Payee or otherwise, as the Collateral Agent may deem necessary or advisable for the enforcement of this Promissory Note. After the occurrence of and during the continuation of an Event of Default, each Payee that is a Loan Party also agrees to execute, verify, deliver and file any such proofs of claim in respect of the Payor Indebtedness requested by the Collateral Agent. After the occurrence of and during the continuation of an Event of Default, the Collateral Agent may vote such proofs of claim in any such proceeding (and the applicable Payee shall not be entitled to withdraw such vote), receive and collect any

EXHIBIT D-2

and all dividends or other payments or disbursements made on Payor Indebtedness in whatever form the same may be paid or issued and apply the same on account of any of the Secured Obligations in accordance with the Credit Agreement. Upon the occurrence and during the continuation of any Event of Default, should any payment, distribution, security or other investment property or instrument or any proceeds thereof be received by any Payee that is a Loan Party upon or with respect to Payor Indebtedness owing to such Payee prior to such time as the Secured Obligations have been performed and paid in full (other than contingent indemnification obligations not due and payable) and all commitments to extend credit under any Loan Document have expired or been terminated, such Payee that is a Loan Party shall receive and hold the same for the benefit of the Secured Parties, and shall forthwith deliver the same to the Collateral Agent, for the benefit of the Secured Parties, in precisely the form received (except for the endorsement or assignment of such Payee where necessary or advisable in the Collateral Agent’s judgment), for application to any of the Secured Obligations in accordance with the Credit Agreement, due or not due, and, until so delivered, the same shall be segregated from the other assets of such Payee for the benefit of the Secured Parties. Upon the occurrence and during the continuance of an Event of Default, if such Payee fails to make any such endorsement or assignment to the Collateral Agent, the Collateral Agent or any of its officers, employees or representatives are hereby irrevocably authorized to make the same. Each Payee that is a Loan Party agrees that until the Secured Obligations have been performed and paid in full (other than contingent indemnification obligations not due and payable) and all commitments to extend credit under any Loan Document have expired or been terminated, such Payee will not (i) assign or transfer, or agree to assign or transfer, to any Person (other than in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreement or otherwise) any claim such Payee has or may have against any Payor, (ii) upon the occurrence and during the continuance of an Event of Default, discount or extend the time for payment of any Payor Indebtedness, or (iii) otherwise amend, modify, supplement, waive or fails to enforce any provision of this Promissory Note.

The Secured Parties shall be third party beneficiaries hereof and shall be entitled to enforce the subordination and other provisions hereof.

Notwithstanding anything to the contrary contained herein, in any other Loan Document or in any such promissory note or other instrument, this Promissory Note shall not be deemed replaced, superseded or in any way modified by any promissory note or other instrument entered into on or after the date hereof which purports to create or evidence any loan or advance by any Group Member to any other Group Member.

THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

From time to time after the date hereof, additional Subsidiaries of the Group Members may become parties hereto by executing a counterpart signature page to this Promissory Note (each additional Subsidiary, an “Additional Payor”). Upon delivery of such counterpart

EXHIBIT D-3

signature page to the Payees, notice of which is hereby waived by the other Payors, each Additional Payor shall be a Payor and shall be as fully a party hereto as if such Additional Payor were an original signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Payor hereunder. This Promissory Note shall be fully effective as to any Payor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Payor hereunder.

This Promissory Note may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

[Remainder of page intentionally left blank]

EXHIBIT D-4

IN WITNESS WHEREOF, each Payor has caused this Promissory Note to be executed and delivered by its proper and duly authorized officer as of the date set forth above.

FIVE BELOW, INC.

By:

Name:

Title:

[NAME OF EACH SUBSIDIARY OF FIVE BELOW, INC.]

By:

Name:

Title:

EXHIBIT D-5

Schedule A

TRANSACTIONS UNDER PROMISSORY NOTE

Date Name of
Payor Name of
Payee Amount of
Advance
This Date Amount of
Principal
Paid This
Date Outstanding
Principal
Balance
from Payor
to Payee
This Date Notation
Made By

EXHIBIT D-6

ENDORSEMENT

FOR VALUE RECEIVED, each of the undersigned does hereby sell, assign and transfer to                      all of its right, title and interest in and to the Intercompany Note, dated                     , 201     (as amended, supplemented or otherwise modified from time to time, the “Promissory Note”), made by FIVE BELOW, INC. (“Borrower”) and certain Subsidiaries of the Borrower or any other person that is or becomes a party thereto, and payable to the undersigned. This endorsement is intended to be attached to the Promissory Note and, when so attached, shall constitute an endorsement thereof. Capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Promissory Note.

The initial undersigned shall be the Group Members (as defined in the Promissory Note) party to the Loan Documents on the date of the Promissory Note. From time to time after the date thereof, additional Subsidiaries of the Group Members may become parties to the Promissory Note (each, an “Additional Payee”) and a signatory to this endorsement by executing a counterpart signature page to the Promissory Note and to this endorsement. Upon delivery of such counterpart signature page to the Payors, notice of which is hereby waived by the other Payees, each Additional Payee shall be a Payee and shall be as fully a Payee under the Promissory Note and a signatory to this endorsement as if such Additional Payee were an original Payee under the Promissory Note and an original signatory hereof. Each Payee expressly agrees that its obligations arising under the Promissory Note and hereunder shall not be affected or diminished by the addition or release of any other Payee under the Promissory Note or hereunder. This endorsement shall be fully effective as to any Payee that is or becomes a signatory hereto regardless of whether any other Person becomes or fails to become or ceases to be a Payee to the Promissory Note or hereunder.

Dated:                     

FIVE BELOW, INC.

By:

Name:

Title:

[NAME OF EACH GUARANTOR]

By:

Name:

Title:

EXHIBIT D-7

EXHIBIT E TO

CREDIT AGREEMENT

FORM OF CONVERSION/CONTINUATION NOTICE

Reference is made to the Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., A PENNSYLVANIA CORPORATION, the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent.

Pursuant to Section 2.06 of the Credit Agreement, Borrower desires to convert or to continue the following Loans, each such conversion and/or continuation to be effective as of [—], 201[—]:

1.	Term Loans:
	$[    ,    ,    ]	Eurodollar Loans to be continued with Interest Period of [    ] month(s)
	$[    ,    ,    ]	ABR Loans to be converted to Eurodollar Loans with Interest Period of [    ] month(s)
	$[    ,    ,    ]	Eurodollar Loans to be converted to ABR Loans

Borrower hereby certifies that as of the date hereof, no event has occurred and is continuing or would result from the consummation of the conversion and/or continuation contemplated hereby that would constitute an Event of Default or a Default.

Date:[—], 2012	FIVE BELOW, INC.
	By:
	Name:
	Title:

EXHIBIT E-1

EXHIBIT F TO

CREDIT AGREEMENT

FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE

Reference is made to the Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., certain Subsidiaries of Borrower party thereto from time to time, as Guarantors, the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA as Administrative Agent and Collateral Agent. Pursuant to Section 2.12(e) of the Credit Agreement, the undersigned hereby certifies that it is not a “bank” or other Person described in Section 881(c)(3) of the Code.

[NAME OF LENDER]

By:

Name:

Title:

EXHIBIT F-1

EXHIBIT G TO

CREDIT AGREEMENT

FORM OF NOTE

$[    ,    ,    ]
[—], 2012	New York, New York

FOR VALUE RECEIVED, FIVE BELOW, INC., a Pennsylvania Corporation (“Borrower”), promises to pay [—] (“Payee”) or its registered assigns the principal amount of [Dollar Amount] ($[    ,    ,    ]) in the installments referred to below.

Borrower also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent.

Borrower shall make scheduled principal payments on this Note as set forth in Sections 2.02 and 2.07 of the Credit Agreement.

This Note is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Term Loan evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Note shall be made in Dollars in same day funds at the Principal Office of Administrative Agent or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement. Unless and until an Assignment and Assumption Agreement effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, Borrower, each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of Borrower hereunder with respect to payments of principal of or interest on this Note.

This Note is subject to mandatory prepayment and to prepayment at the option of Borrower, each as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF BORROWER AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

EXHIBIT G-1

Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of Borrower, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

Borrower promises to pay all costs and expenses, including reasonable attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and enforcement of this Note. Borrower and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

[Remainder of page intentionally left blank]

EXHIBIT G-2

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

FIVE BELOW, INC.

By:

Name:

Title:

EXHIBIT G-3

EXHIBIT J TO

CREDIT AGREEMENT

FORM OF SOLVENCY CERTIFICATE

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

1. I am the chief financial officer of FIVE BELOW, INC., a Pennsylvania Company (“Borrower”).

2. Reference is made to that certain Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA as Administrative Agent and Collateral Agent.

3. I have reviewed the Credit Agreement and each of the other Loan Documents and am familiar with the financial condition of the Borrower, and, in my opinion, have made, or have caused to be made under my supervision, such examination or investigation as is necessary to enable me to express an informed opinion as to the matters referred to herein.

4. Based upon my review and examination described in paragraph 3 above, I certify that as of the date hereof, (a) the sum of the debt (including contingent liabilities) of Borrower does not exceed the fair value of the present assets of Borrower, (b) the present fair saleable value of the assets of Borrower is not less than the amount that will be required to pay the probable liabilities (including contingent liabilities) of Borrower on its debts as they become absolute and matured, (c) the capital of Borrower is not unreasonably small in relation to the business of Borrower contemplated as of the date hereof and (d) Borrower does not intend to incur, or believe that it will incur, debts (including current obligations and contingent liabilities) beyond its ability to pay such debts as they mature in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

The foregoing certifications are made and delivered as of May [—], 2012

Name:	Kenneth R. Bull
Title:	Chief Financial Officer

EXHIBIT J-1

EXHIBIT K TO

CREDIT AGREEMENT

FORM OF GUARANTEE JOINDER AGREEMENT

This GUARANTEE JOINDER AGREEMENT, dated [—], 201[—] (this “Joinder Agreement”) is delivered pursuant to that certain Credit Agreement, dated as of May 16, 2012 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among FIVE BELOW, INC., the Lenders party thereto from time to time and GOLDMAN SACHS BANK USA, as Administrative Agent and Collateral Agent.

Section 1. Pursuant to Section 5.11 of the Credit Agreement, the undersigned hereby:

(a) agrees that this Joinder Agreement may be attached to the Credit Agreement and that by the execution and delivery hereof, the undersigned becomes a Guarantor under the Credit Agreement and agrees to be bound by all of the terms thereof;

(b) represents and warrants that each of the representations and warranties contained in each of the Loan Documents and applicable to the undersigned are true and correct in all material respects on and as of the date set forth below, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties are true and correct in all material respects on and as of such earlier date); provided that, any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects; and

(c) agrees to irrevocably and unconditionally guaranty the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code and in accordance with Article 7 of the Credit Agreement.

Section 2.

The undersigned agrees from time to time, upon request of Administrative Agent, to take such additional actions and to execute and deliver such additional documents and instruments as Administrative Agent may request to effect the transactions contemplated by, and to carry out the intent of, this Guarantee Joinder Agreement. Neither this Guarantee Joinder Agreement nor any term hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the party (including, if applicable, any party required to evidence its consent to or acceptance of this Guarantee Joinder Agreement) against whom enforcement of such change, waiver, discharge or termination is sought. Any notice or other communication herein required or permitted to be given shall be given pursuant to Section 10.01 of the Credit Agreement, and all for purposes thereof, the notice address of the undersigned shall be the address as set forth on the signature page hereof. In case any provision in or obligation under this Guarantee Joinder Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

EXHIBIT K-1

THIS GUARANTEE JOINDER AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

[Remainder of page intentionally left blank]

EXHIBIT K-2

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

[NAME OF SUBSIDIARY]

By:

Name:

Title:

Address for Notices:
	Attention:
	Telecopier
with a copy to:
	Attention:
	Telecopier

ACKNOWLEDGED AND ACCEPTED,

as of the date above first written:

GOLDMAN SACHS BANK USA,

as Administrative Agent and Collateral Agent

By:

Name:

Title:

EXHIBIT K-3

EX-10.29

Exhibit 10.29

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of May 16, 2012 (as it may be amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), among Five Below, Inc. (the “Borrower”) and each of the subsidiaries of the Borrower party hereto from time to time as an Additional Grantor (as herein defined) (including the Borrower, each, a “Grantor”), and Goldman Sachs Bank USA, as collateral agent for the Secured Parties (as herein defined) (in such capacity as collateral agent, together with its successors and permitted assigns, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to the credit agreement of even date herewith (as amended, amended and restated, supplemented, or otherwise modified from time to time, including all schedules thereto, the “Credit Agreement”) among the Borrower, Goldman Sachs Bank USA, as collateral agent and administrative agent for the Lenders (in its capacity as Administrative Agent, together with its successors and assigns in such capacity, the “Term Loan Agent”), the other agents party thereto, and the lenders party thereto as “Lenders” (such Lenders, together with their respective successors and assigns in such capacity, each, individually a “Term Loan Lender” and, collectively, the “Term Loan Lenders”), the Term Loan Lenders have agreed to make the Loans available to the Borrower under the Credit Agreement; and

WHEREAS, pursuant to the second amended and restated loan and security agreement dated May 16, 2012 (as amended, amended and restated, supplemented, or otherwise modified from time to time, including all schedules thereto, the “ABL Credit Agreement”) among the Borrower and Wells Fargo Bank, National Association as “Lender” (together with its successors and assigns in such capacity, the “ABL Lender”), the ABL Lender has agreed to make certain financial accommodations available to the Borrower.

NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. 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 or in the Credit Agreement; provided, however, that to the extent that the Code is used to define any term herein and if such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:

(a) “ABL Credit Agreement” has the meaning specified therefor in the recitals to this Agreement.

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(b) “ABL Lender” has the meaning specified therefor in the recitals to this Agreement.

(c) “Agreement” has the meaning specified therefor in the preamble to this Agreement.

(d) “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101, et seq.), as amended, and any successor statute.

(e) “Books” means books and records (including each Grantor’s Records indicating, summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, each Grantor’s Records relating to such Grantor’s business operations or financial condition, and each Grantor’s goods or General Intangibles related to such information).

(f) “Borrower” has the meaning specified therefor in the preamble to this Agreement.

(g) “Code” means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Term Loan Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

(h) “Collateral” has the meaning specified therefor in Section 2.1.

(i) “Collateral Agent” shall have the meaning set forth in the preamble to this Agreement.

(j) “Collateral Support” shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

(k) “Collateral Records” shall mean books, records, ledger cards, files, correspondence, customer lists, supplier lists, blueprints, technical specifications, manuals, computer software and related documentation, computer printouts, tapes, disks and other electronic storage media and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

(l) “Control” shall mean with respect to any Deposit Accounts, control within the meaning of Section 9-104 of the UCC.

(m) “Copyright Licenses” shall mean any and all agreements, material inbound licenses and covenants providing for the granting of any right in or to any Copyright or otherwise providing for a covenant not to sue for infringement or other violation of any Copyright (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement

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relating to an exclusive copyright license listed in Schedule 5.2(II) under the heading “Exclusive Copyright Licenses” (as such schedule may be amended or supplemented from time to time) and the right to sue or otherwise recover for past, present and future infringement or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

(n) “Copyrights” means all United States, and foreign copyrights (whether or not the underlying works of authorship have been published), including but not limited to copyrights in software and all rights in and to databases, all designs (including but not limited to industrial designs, Protected Designs and Community designs), and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, as well as all moral rights, reversionary interests, and termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications listed or required to be listed in Schedule 5.2(II) under the heading “Copyrights” (as such schedule may be amended and supplemented from time to time), (ii) all extensions and renewals thereof, (iii) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (iv) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing thereunder or pertaining thereto throughout the world and copyright registrations.

(o) “Documents” means all documents (as that term is defined in the Code) to the extent evidencing, governing, securing or otherwise related to Accounts or other Collateral described in clauses (a) through (l) of Section 2.1.

(p) “Excluded Bank Accounts” shall mean (a) any bank accounts established by the Borrower or its Subsidiaries used exclusively for payroll, payroll taxes or employee benefits, escrow, customs, insurance, or fiduciary purposes or compliance with legal requirements, to the extent such legal requirements prohibit the granting of a Lien thereon, (b) any accounts for the purpose of maintaining cash and Cash Equivalents subject to Permitted Liens of the type permitted pursuant to Section 6.02(f) of the Credit Agreement or (c) any other account (other than any deposit account that constitutes identifiable proceeds of any Term Loan First Lien Collateral) that is excluded from the collateral securing the ABL Credit Agreement from time to time.

(q) “Grantor” has the meaning specified therefor in the preamble to this Agreement.

(r) “Insurance” shall mean all insurance policies covering any or all of the Collateral (regardless of whether Collateral Agent is the loss payee thereof).

(s) “Insolvency or Liquidation Proceeding” has the meaning specified therefor in the Intercreditor Agreement.

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(t) “Intellectual Property” means Copyrights, Patents, Trademarks and Trade Secrets, and all other intellectual and industrial property rights recognized by any jurisdiction worldwide.

(u) “Intellectual Property Security Agreements” means each intellectual property security agreement executed and delivered by the applicable Grantors, substantially in the form set forth in Exhibit B, Exhibit C or Exhibit D, as applicable.

(v) “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement, dated May 16, 2012, among, inter alios, the Borrower, the Term Loan Agent, the ABL Lender and other parties permitted to benefit from security over the Revolving Facility First Lien Collateral and Term Loan First Lien Collateral from time to time that accede thereto.

(w) “Investment Related Property” shall mean: (i) all “investment property” (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, Pledged Debt, and certificates of deposit.

(x) “Material Intellectual Property” means Intellectual Property that is owned by or licensed to a Grantor and necessary to the conduct of any Grantor’s business.

(y) “Negotiable Collateral” means “letters of credit”, “letter-of-credit rights”, “instruments”, “promissory notes”, “drafts” (as each such term is defined in the Code) and “Documents”, in each case to the extent evidencing, governing, securing or otherwise related to Accounts or other Collateral.

(z) “Patent Licenses” shall mean all agreements, licenses and covenants providing for the granting of any right in or to any Patent or otherwise providing for a covenant not to sue for infringement or other violation of any Patent (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Patent Licenses” (as such schedule may be amended or supplemented from time to time).

(aa) “Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, without limitation: (i) each patent and patent application required to be listed in Schedule 5.2(II) under the heading “Patents” (as such schedule may be amended or supplemented from time to time), (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all patentable inventions and improvements thereto, (iv) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

(bb) “person” has the meaning specified therefor in the Credit Agreement.

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(cc) “Pledge Supplement” shall mean any supplement to this Agreement in substantially the form of Exhibit A.

(dd) “Pledged Debt” shall mean all indebtedness for borrowed money owed to such Grantor, whether or not evidenced by any Instrument, including, without limitation, all indebtedness described on Schedule 5.2(I) under the heading “Pledged Debt” (as such schedule may be amended or supplemented from time to time), issued by the obligors named therein, the instruments, if any, evidencing any of the foregoing, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing.

(ee) “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and any other participation or interests in any equity or profits of any business entity including, without limitation, any trust and all management rights relating to any entity whose equity interests are included as Pledged Equity Interests.

(ff) “Pledged LLC Interests” shall mean all interests in any limited liability company and each series thereof including, without limitation, all limited liability company interests listed on Schedule 5.2(I) under the heading “Pledged LLC Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited liability company or on the books and records of any Securities Intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests and all rights as a member of the related limited liability company.

(gg) “Pledged Partnership Interests” shall mean all interests in any general partnership, limited partnership, limited liability partnership or other partnership including, without limitation, all partnership interests listed on Schedule 5.2(I) under the heading “Pledged Partnership Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any Securities Intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests and all rights as a partner of the related partnership.

(hh) “Pledged Stock” shall mean all shares of capital stock owned by such Grantor, including, without limitation, all shares of capital stock described on Schedule 5.2(I) under the heading “Pledged Stock” (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any Securities Intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares.

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(ii) “Receivables” shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed.

(jj) “Receivables Records” shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors, secured parties or agents thereof, and certificates, acknowledgments, or other writings, including, without limitation, lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or non-written forms of information related in any way to the foregoing or any Receivable.

(kk) “Records” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(ll) “Revolving Facility First Lien Collateral” has the meaning specified therefor in the Intercreditor Agreement.

(mm) “Revolving Facility First Lien Collateral Transition Date” has the meaning specified therefor in the Intercreditor Agreement.

(nn) “Security Interest” has the meaning specified therefor in Section 2.1.

(oo) “Supporting Obligations” means “supporting obligations” (as such term is defined in the Code) and includes letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, instruments, or Investment Related Property, in each case to the extent evidencing governing, securing or otherwise related to Account or other Collateral described in clauses (a) through (g) of Section 2.1.

(pp) “Term Loan First Lien Collateral” has the meaning specified therefor in the Intercreditor Agreement.

(qq) “Term Loan Lender” and “Term Loan Lenders” have the respective meanings specified therefor in the recitals to this Agreement.

(rr) “Term Loan Lien” has the meaning specified therefor in the Intercreditor Agreement.

(ss) “Trademark Licenses” shall mean all agreements, licenses and covenants providing for the granting of any right in or to any Trademark or otherwise providing for a covenant not to sue for infringement or other violation of any Trademark (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Trademark Licenses” (as such schedule may be amended or supplemented from time to time).

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(tt) “Trademarks” shall mean all United States, and foreign trademarks, trade names, trade dress, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, whether or not registered, and with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications required to be listed in Schedule 5.2(II) under the heading “Trademarks” (as such schedule may be amended or supplemented from time to time), (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by any of the foregoing, (iv) the right to sue or otherwise recover for any past, present and future infringement, dilution or other violation of any of the foregoing or for any injury to the related goodwill, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

(uu) “Trade Secret Licenses” shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Trade Secret Licenses” (as such schedule may be amended or supplemented from time to time).

(vv) “Trade Secrets” shall mean all trade secrets and all other confidential or proprietary information and know-how whether or not the foregoing has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to the foregoing, and with respect to any and all of the foregoing: (i) the right to sue or otherwise recover for any past, present and future misappropriation or other violation thereof, (ii) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (iii) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

(ww) “URL” means “uniform resource locator,” an internet web address.

1.2 Definitions: Interpretation.

(a) In this Agreement, the following capitalized terms shall have the meaning given to them in the Code (and, if defined in more than one Article of the Code, shall have the meaning given in Article 9 thereof): Account, Account Debtor, Bank, As-Extracted Collateral, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity Contract, Commodity Intermediary, Deposit Account, Document, Equipment, Farm Products, General Intangibles, Goods, Health-Care-Insurance Receivables, Instrument, Inventory, Letter of Credit Right, Manufactured Homes, Money, Proceeds, Record, Securities Account, Securities Intermediary, Security Certificate, Supporting Obligations and Uncertificated Security.

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(b) The incorporation by reference of terms defined in the Credit Agreement shall survive any termination of the Credit Agreement until this Agreement is terminated as provided in Section 12 hereof. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The terms “lease” and “license” shall include sub-lease and sub-license, as applicable. If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the Code or the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the Code or the UCC, as applicable.

SECTION 2. GRANT OF SECURITY.

2.1 Grant of Security. Each Grantor hereby unconditionally grants, assigns, and pledges to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in and a continuing lien on all of such Grantor’s right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now or hereafter existing or in which any Grantor now has or hereafter acquires an interest and wherever the same may be located (all of which being hereinafter collectively referred to as the “Security Interest”) in all of the following personal property of such Grantor, whether now owned or hereafter acquired or arising and wherever located (collectively, the “Collateral”):

(a) Accounts;

(b) Chattel Paper;

(c) Documents;

(d) General Intangibles (including, without limitation, Intellectual Property);

(e) Goods (including, without limitation, Inventory and Equipment);

(f) Instruments;

(g) Insurance;

(h) Investment Related Property and Deposit Accounts;

(i) Letter of Credit Rights;

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(j) Money;

(k) Receivables and Receivables Records;

(l) Commercial Tort Claims now or hereafter described on Schedule 5.2;

(m) to the extent not otherwise included above, all other personal property of any kind and all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; and

(n) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing.

Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable to any Grantor, the ABL Lender or the Collateral Agent from time to time with respect to any of the Investment Related Property.

2.2 Certain Limited Exclusions. Notwithstanding anything contained in this Agreement to the contrary, the term “Collateral” shall not include:

(a) Owned Real Property with a fair market value equal to or less than $2,000,000 and any Leased Real Property;

(b) motor vehicles and other assets subject to certificates of title;

(c) commercial tort claims with reasonably predicted value equal to or less than $500,000;

(d) any permit, lease, license, contract or agreement held by any Grantor or to which any Grantor is a party, and any of its rights, title or interest thereunder, if and to the extent that a security interest is prohibited by or in violation of (i) any law, rule or regulation applicable to such Grantor, or (ii) a term, provision or condition of any such permit, lease, license, contract or agreement (unless such law, rule, regulation, term, provision or condition would be rendered ineffective with respect to the creation of the security interest hereunder pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity); provided however that the Collateral shall include (and such security interest shall attach) immediately at such time as the relevant contractual or legal prohibition shall no longer be applicable and to the extent severable, shall attach immediately to any portion of such permit, lease, license, contract or agreement not subject to the prohibitions specified in (i) and (ii) above; provided further that the exclusions referred to in this Section 2.2 shall not include any Proceeds of any such permit, lease, license, contract or agreement;

(e) in any of the outstanding capital stock of a Foreign Subsidiary in excess of 65% of the voting power of all classes of capital stock of such Foreign Subsidiary entitled to vote; provided that immediately upon the amendment of the Internal Revenue Code of 1986, as

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amended, to allow the pledge of a greater percentage of the voting power of capital stock in a Foreign Subsidiary without adverse tax consequences, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each such Foreign Subsidiary;

(f) any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

(g) any Excluded Bank Accounts;

(h) any property or asset only to the extent and for so long as the grant of a security interest in such property or asset is prohibited by any applicable law or requires a consent not obtained, and has not been obtained after use by the applicable Loan Party of commercially reasonable efforts to obtain such consent, of any Governmental Authority pursuant to applicable Legal Requirement (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction);

(i) capital stock or equity interests of a person (other than a Wholly Owned Subsidiary) the pledge of which would violate the Organizational Documents of such person that is binding on or relating to such capital stock or equity interests but solely to the extent and for so long as such restrictions exists;

(j) any property (and proceeds and products thereof) that is subject to a Lien securing Purchase Money Obligations or Capital Lease Obligations, in each case permitted under the Credit Agreement, to the extent the documents relating to such Lien securing such Purchase Money Obligations or Capital Lease Obligations would not permit such property (and proceeds and products thereof) to be subject to the Liens created under the Security Documents (provided that immediately upon the ineffectiveness, lapse or termination of any such restriction, the Collateral shall include, and the security interest granted by each Grantor shall attached to, such property (and proceeds and products thereof));

(k) any governmental licenses or state or local franchises, charters and authorizations, to the extent security interests in such licenses, franchises, charters and authorizations are prohibited or restricted by Applicable Law;

(l) any property or assets of any Excluded Subsidiary; and

(m) proceeds and products from any and all of the foregoing excluded collateral described in clauses (a) through and including (f), (j) (but only to the extent described in such clause) and (k), unless such proceeds or products would otherwise constitute Term Loan First Lien Collateral.

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Notwithstanding the foregoing, assets will be excluded from the Collateral in circumstances where in the reasonable judgment and sole discretion of the Collateral Agent the costs of obtaining a security interest in such assets exceed the practical benefit to the Secured Parties afforded thereby.

SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.

3.1 Security for Obligations. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all Secured Obligations.

3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary, (a) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Collateral Agent or any other Secured Party, (b) each Grantor shall remain liable under each of the agreements included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related thereto, nor shall the Collateral Agent nor any Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (c) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral.

SECTION 4. CERTAIN PERFECTION REQUIREMENTS.

4.1 Delivery Requirements.

(a) With respect to any Certificated Securities included in the Collateral, each Grantor shall deliver to the Collateral Agent or its designee the Security Certificates evidencing such Certificated Securities duly indorsed by an effective indorsement (within the meaning of Section 8-107 of the UCC), or accompanied by share transfer powers or other instruments of transfer duly endorsed by such an effective endorsement, in each case, to the Collateral Agent or its designee or in blank. In addition, each Grantor shall cause any certificates evidencing any Pledged Equity Interests, including, without limitation, any Pledged Partnership Interests or Pledged LLC Interests, to be similarly delivered to the Collateral Agent or its designee regardless of whether such Pledged Equity Interests constitute Certificated Securities.

(b) With respect to any Uncertificated Security of a Wholly Owned Subsidiary included in the Collateral, each Grantor shall cause the issuer of such Uncertificated Security to register the Collateral Agent or its designee as the registered owner thereof on the books and records of the issuer.

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4.2 Intellectual Property Recording Requirements.

(a) In the case of any Collateral (whether now owned or hereafter acquired) consisting of issued U.S. Patents and applications therefor, each Grantor shall execute and deliver to the Collateral Agent or its designee a Patent Security Agreement in substantially the form of Exhibit C hereto (or a supplement thereto) covering all such Patents in appropriate form for recordation with the U.S. Patent and Trademark Office with respect to the security interest of the Collateral Agent.

(b) In the case of any Collateral (whether now owned or hereafter acquired) consisting of registered U.S. Trademarks and applications therefor, each Grantor shall execute and deliver to the Collateral Agent or its designee a Trademark Security Agreement in substantially the form of Exhibit B hereto (or a supplement thereto) covering all such Trademarks in appropriate form for recordation with the U.S. Patent and Trademark Office with respect to the security interest of the Collateral Agent.

(c) In the case of any Collateral (whether now owned or hereafter acquired) consisting of registered U.S. Copyrights and exclusive Copyright Licenses in respect of registered U.S. copyrights for which any Grantor is the licensee, each Grantor shall execute and deliver to the Collateral Agent or its designee a Copyright Security Agreement in substantially the form of Exhibit D hereto (or a supplement thereto) covering all such Copyrights and Copyright Licenses in appropriate form for recordation with the U.S. Copyright Office with respect to the security interest of the Collateral Agent.

4.3 Other Actions. With respect to any Pledged Equity Interests included in the Collateral, if the Grantors own less than 100% of the equity interests in any issuer of such Pledged Equity Interests, Grantors shall use their commercially reasonable efforts to obtain the consent of each other holder of equity interests in such issuer, as necessary, to the security interest of the Collateral Agent hereunder and following an Event of Default, the transfer of such Pledged Equity Interests to the Collateral Agent or its designee, and to the substitution of the Collateral Agent or its designee as a partner or member with all the rights and powers related thereto. Each Grantor consents to the grant by each other Grantor of a Lien in all Investment Related Property to the Collateral Agent and without limiting the generality of the foregoing consents to the transfer of any Pledged Equity Interest to the Collateral Agent or its designee following an Event of Default and to the substitution of the Collateral Agent or its designee as a stockholder in any corporation, a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto.

4.4 Timing and Notice. With respect to any Collateral in existence on the Closing Date, each Grantor shall comply with the requirements of Section 4 on the date hereof and, with respect to any Collateral hereafter owned or acquired, such Grantor shall comply with such requirements within twenty (20) days of Grantor acquiring rights therein. Each Grantor shall promptly inform the Collateral Agent of its acquisition of any Collateral for which any action is required by Section 4 hereof (including, for the avoidance of doubt, the filing of any applications for, or the issuance or registration of, any Patents, Copyrights or Trademarks).

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4.5 Deposit Accounts. After the occurrence of the Revolving Facility First Lien Collateral Transition Date, each Grantor shall use commercially reasonable efforts to ensure that within sixty (60) days of the Revolving Facility First Lien Collateral Transition Date that the Collateral Agent shall have Control over all Deposit Accounts over which the Revolving First Lien Collateral Agent had Control immediately prior to the Revolving Facility First Lien Collateral Transition Date; provided that, no Grantor shall take any action for the purpose of evading the requirements of this Section 4.5. Each Grantor shall cause the depositary institution maintaining such Deposit Account to enter into an agreement substantially in the form of the account control agreement previously executed in favor of the Revolving First Lien Collateral Agent and otherwise in form and substance reasonably satisfactory to the Collateral Agent, pursuant to which such depositary institution shall agree to comply with the Collateral Agent’s instructions with respect to disposition of funds in such Deposit Account upon and during the continuance of an Event of Default without further consent by such Grantor. Notwithstanding the foregoing, if the Revolving Facility First Lien Collateral Transition Date shall occur within sixty (60) days of the Maturity Date, the Grantors shall have no obligation to enter into the aforementioned account control agreements.

SECTION 5. REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties. Each Grantor hereby represents and warrants to, and agrees with, the Collateral Agent, for the benefit of the Secured Parties, as follows:

(a) With respect to each Grantor as of the date hereof:

(i) its exact legal name, the location of its chief executive office or sole place of business (together with the applicable mailing address), jurisdiction and type of organization, and organizational identification number are specified in Schedule 5.1(A);

(ii) any trade name or fictitious business name currently used by it or by which it is known or conducts business is specified in Schedule 5.1(B);

(iii) it has not changed its name, jurisdiction of organization or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form, change in jurisdiction of organization or otherwise) within the past two (2) years except as specified in Schedule 5.1(C);

(iv) it has not changed its chief executive office within the past two (2) years except as specified in Schedule 5.1(D); and

(v) it has not acquired the equity interests of another entity or substantially all the assets of another entity within the past two (2) years except as specified in Schedule 5.1(E);

(b) It is not (i) a transmitting utility (as defined in Section 9-102(a)(80) of the Code)), (ii) primarily engaged in farming operations (as defined in Section 9-102(a)(35) of the

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Code)), (iii) a trust, (iv) a foreign air carrier within the meaning of the Federal Aviation Act of 1958, as amended, or (v) a branch or agency of a bank which bank is not organized under the law of the United States or any state thereof;

(c) This Agreement creates a valid security interest in the Collateral of each of Grantors in favor of the Collateral Agent, to the extent a security interest therein can be created under the Code, securing the payment of the Secured Obligations. Except as otherwise permitted herein or to the extent a security interest in the Collateral cannot be perfected by the filing of a financing statement under the Code, all filings and other actions necessary or desirable to perfect and ensure the appropriate priority of such security interest have been duly taken or will have been taken upon the filing of financing statements listing each applicable Grantor, as a debtor, and the Collateral Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 5.1(A) attached hereto. Upon the making of such filings, the Collateral Agent shall have a first priority perfected security interest in the Term Loan First Lien Collateral and a second priority perfected security interest in the Revolving Facility First Lien Collateral (in each case, to the extent provided in the Intercreditor Agreement and subject to Permitted Liens) of each Grantor, in each case to the extent a security interest therein may be perfected by the filing of a financing statement. To the extent required by the terms of this Agreement, all action by any Grantor necessary to protect and perfect such security interest on each item of Collateral has been duly taken;

(d) Each Grantor has the right and requisite authority to pledge the Collateral pledged by such Grantor to the Collateral Agent as provided herein;

(e) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Related Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other person, except Permitted Liens;

(f) Except to the extent satisfied or waived on or before the date hereof, no consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property constituting Collateral or the remedies in respect of the Collateral pursuant to this Agreement;

(g) On the date hereof, the Grantor owns no Investment Related Property other than as listed on Schedule 5.2(I) hereto (including the issuer thereof, class of equity interest, par value, certificate numbers, number of shares and percentage of the issued and outstanding equity interests of the issuers thereof);

(h) On the date hereof, such Grantor does not have any Securities Accounts or Deposit Accounts that are not listed on Schedule 5.2(I) hereto;

(i) On the date hereof, all locations where the Grantors maintain any Books relating to accounts receivable are listed in Schedule 5.2(I) hereto;

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(j) On the date hereof, (1) all real estate owned by a Grantor (including the record owner, address, mortgagee (if any), mortgage description (if any) (including mortgage amount), lessee (if any) and lease description (if any) (including lease expiration date and rent)), and (2) all real estate ground leased by a Grantor (including the record owner, address and lease expiration), are listed in Schedule 5.2(I) hereto;

(k) Except for the financing statements filed by the ABL Lender and the financing statements described in Schedule 5.4 hereto, no financing statement covering any of the Collateral or any Proceeds thereof is on file in any public office on the date hereof; and

(l) With regards to Intellectual Property, each Grantor hereby represents and warrants, on the Closing Date, that:

(i) it is the sole and exclusive owner of the entire right, title, and interest in and to all Intellectual Property listed on Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time), and owns or has the valid right to use and, where such Grantor does so, sublicense others to use, all other Intellectual Property used in or necessary to conduct its business, free and clear of all Liens, claims and licenses, except for Permitted Liens and the licenses set forth on Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time), except for those for which the failure to own or be licensed, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect;

(ii) all Material Intellectual Property of such Grantor is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, nor, in the case of Patents, is any of the Material Intellectual Property the subject of a reexamination proceeding, and such Grantor has performed all acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and every registration and application of Copyrights, Patents and Trademarks of such Grantor in full force and effect;

(iii) except as set forth in Schedule 3.06 of the Credit Agreement, no holding, decision, ruling, or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity, enforceability, or scope of, or such Grantor’s right to register, own or use, any Material Intellectual Property of such Grantor, and no such action or proceeding is pending or, to the best of such Grantor’s knowledge, threatened;

(iv) all registrations, issuances and applications for Copyrights, Patents and Trademarks of such Grantor are standing in the name of such Grantor, and none of the Trademarks, Patents, Copyrights or Trade Secrets owned by such Grantor has been licensed by such Grantor to any Affiliate or third party, except as disclosed in Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time), and all exclusive Copyright Licenses in respect of registered Copyrights have been properly recorded in the U.S. Copyright Office or, where appropriate, any foreign counterpart;

(v) such Grantor has not made a previous assignment, sale, transfer, exclusive license, or similar arrangement constituting a present or future assignment, sale, transfer, exclusive license or similar arrangement of any Material Intellectual Property that has not been terminated or released;

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(vi) such Grantor has been using appropriate statutory notice of registration in connection with its use of registered Trademarks, proper marking practices in connection with its use of Patents, and appropriate notice of copyright in connection with the publication of Copyrights;

(vii) such Grantor controls the nature and quality in accordance with industry standards of all products sold and all services rendered under or in connection with all Trademarks of such Grantor, in each case consistent with industry standards, and has taken all action necessary to ensure that all licensees of the Trademarks owned by such Grantor comply with such Grantor’s standards of quality; and

(viii) except as set forth in Schedule 3.06 of the Credit Agreement, no settlement or consents, covenants not to sue, co-existence agreements, non-assertion assurances, or releases have been entered into by such Grantor or bind such Grantor in a manner that could adversely affect such Grantor’s rights to own, license or use any Material Intellectual Property.

5.2 Special Collateral. None of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) As-Extracted Collateral, (3) Manufactured Homes, (4) Health-Care-Insurance Receivables; (5) timber to be cut, or (6) aircraft, aircraft engines, satellites, ships or railroad rolling stock.

SECTION 6. COVENANTS AND AGREEMENTS

Each Grantor hereby covenants and agrees that:

6.1 Grantor Information and Status. Without limiting any prohibitions or restrictions on mergers or other transactions set forth in the Credit Agreement, it shall not change such Grantor’s name, identity, corporate structure (e.g. by merger, consolidation, change in corporate form or otherwise), sole place of business, chief executive office, organizational identification number, type of organization or jurisdiction of organization or establish any trade names unless it shall have (a) notified the Collateral Agent in writing at least thirty (30) days prior to any such change or establishment, identifying such new proposed name, identity, corporate structure, sole place of business, chief executive office, jurisdiction of organization or trade name and providing such other information in connection therewith as the Collateral Agent may reasonably request and (b) taken all actions necessary or advisable to maintain the continuous validity, perfection and the same or better priority of the Collateral Agent’s security interest in the Collateral granted or intended to be granted and agreed to hereby, which in the case of any merger or other change in corporate structure shall include, without limitation, executing and delivering to the Collateral Agent a completed Pledge Supplement together with all Supplements to Schedules thereto, upon completion of such merger or other change in corporate structure confirming the grant of the security interest hereunder.

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6.2 Collateral Identification; Special Collateral.

(a) In the event that it hereafter acquires any Collateral of a type described in Section 5.2 hereof, it shall promptly notify Collateral Agent thereof in writing and take such actions and execute such documents and make such filings all at Grantor’s expense as the Collateral Agent may reasonably request in order to ensure that the Collateral Agent has a valid, perfected, first priority security interest in such Collateral, subject in the case of priority only, to any Permitted Liens.

(b) In the event that it hereafter acquires or has any Commercial Tort Claim in excess of $500,000 individually or $1,000,000 in the aggregate it shall deliver to the Collateral Agent a completed Pledge Supplement together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims.

6.3 Ownership of Collateral and Absence of Other Liens.

(a) Except for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, other than Permitted Liens, and such Grantor shall defend the Collateral against all persons at any time claiming any interest therein;

(b) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall promptly notify the Collateral Agent in writing of any event that may have a Material Adverse Effect on the value of the Collateral or any portion thereof, the ability of any Grantor or the Collateral Agent to dispose of the Collateral or any portion thereof, or the rights and remedies of the Collateral Agent in relation thereto, including, without limitation, the levy of any legal process against the Collateral or any portion thereof; and

(c) it shall not sell, transfer or assign (by operation of law or otherwise) or exclusively license to another person any Collateral except as otherwise permitted by the Credit Agreement and the Intercreditor Agreement.

6.4 Status of Security Interest.

(a) Subject to the limitations set forth in subsections (b) through (d) of this Section 6.4, each Grantor shall maintain the security interest of the Collateral Agent hereunder in all Term Loan First Lien Collateral as valid, perfected, first priority Liens and in all Revolving Facility First Lien Collateral as valid perfected, second priority Liens (subject, in each case of priority only, to Permitted Liens).

(b) Notwithstanding any provision of this Agreement to the contrary, no Grantor shall be required to take any action to perfect any Collateral that can only be perfected by control in accordance with the provisions of the UCC, except as and to the extent specified in Section 4 hereof.

(c) Notwithstanding any provision of this Agreement to the contrary, no Grantor shall be required to take any action in any jurisdiction outside of the United States in order to create or perfect any security interests in any Collateral, including any Intellectual Property registered in any jurisdiction other than the United States.

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(d) Notwithstanding any provision of this Agreement to the contrary, no Grantor shall be required to take any action to perfect any security interests in Letter of Credit Rights other than the filing of a UCC financing statement in the appropriate filing office.

6.5 Goods and Receivables.

(a) It shall keep the Equipment, Inventory and any Documents evidencing any Equipment and Inventory in the locations specified on Schedule 5.5 (as such schedule may be amended or supplemented from time to time) except for sales of Inventory in the ordinary course of the Grantor’s business and except to move Inventory directly from one location set forth or permitted herein to another such location permitted herein and except for Inventory shipped from the manufacturer thereof to the Grantor which is in transit to the locations set forth or permitted herein, unless it shall have notified the Collateral Agent in writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement together with all Supplements to Schedules thereto, at least thirty (30) days prior to any change in locations, identifying such new locations and providing such other information in connection therewith as the Collateral Agent may reasonably request;

(b) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Receivables, including, but not limited to, the originals of all documentation with respect to all Receivables and records of all payments received and all credits granted on the Receivables, all merchandise returned and all other dealings therewith; and

(c) the Collateral Agent shall have the right at any time following the occurrence and during the continuation of an Event of Default, subject to the terms of the Intercreditor Agreement, to (i) notify, or require any Grantor to notify, any Account Debtor of the Collateral Agent’s security interest in the Receivables and any Supporting Obligation; (ii) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent; (iii) notify, or require any Grantor to notify, each person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to the Collateral Agent; and (iv) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. If the Collateral Agent notifies any Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables received by such Grantor shall be forthwith (and in any event within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent or its designee if required, in the account maintained under the sole dominion and control of the Collateral Agent, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of the Collateral Agent hereunder and shall be segregated from other funds of such Grantor and such

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Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon.

6.6 Pledged Equity Interests, Investment Related Property.

(a) Except as provided in the next sentence, in the event such Grantor receives any dividends, interest or distributions on any Pledged Equity Interest or other Investment Related Property, upon the merger, consolidation, liquidation or dissolution of any issuer of any Pledged Equity Interest or Investment Related Property, then (i) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (ii) subject to the other provisions of this Agreement, such Grantor shall immediately take all steps, if any, necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Collateral Agent over such Investment Related Property (including, without limitation, delivery thereof to the Collateral Agent) and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Collateral Agent and shall segregate such dividends, distributions, securities or other property from all other property of such Grantor. Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent authorizes each Grantor to retain all ordinary cash dividends and distributions paid in the normal course of the business of the issuer and consistent with the past practice of the issuer and all scheduled payments of interest.

(b) Voting.

(i) So long as no Event of Default shall have occurred and be continuing, except as otherwise provided under the covenants and agreements relating to Investment Related Property in this Agreement or elsewhere herein or in the Credit Agreement, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; and

(ii) Upon the occurrence and during the continuation of an Event of Default:

(1) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and

(2) in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (A) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (B) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 8.1.

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(c) Except as expressly permitted by the Credit Agreement, without the prior written consent of the Collateral Agent, it shall not vote to enable or take any other action to: (i) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that adversely changes the rights of such Grantor with respect to any Investment Related Property or adversely affects the validity, perfection or priority of the Collateral Agent’s security interest therein, (ii) permit any wholly-owned issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (iii) other than as permitted under the Credit Agreement, permit any wholly-owned issuer of any Pledged Equity Interest to dispose of all or a material portion of their assets, (iv) waive any default under or breach of any terms of organizational document relating to the wholly-owned issuer of any Pledged Equity Interest or the terms of any Pledged Debt, or (v) cause any wholly-owned issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided, however, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (c), such Grantor shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall (subject to the other provisions of this Agreement) take all steps necessary or advisable to establish the Collateral Agent’s “control” thereof.

(d) Except as expressly permitted by the Credit Agreement, without the prior written consent of the Collateral Agent, it shall not permit any wholly-owned issuer of any Pledged Equity Interest to merge or consolidate unless (i) such issuer creates a security interest that is perfected by a filed financing statement (that is not effective solely under section 9-508 of the UCC) in collateral in which such new debtor has or acquires rights; (ii) all the outstanding capital stock or other equity interests of the surviving or resulting corporation, limited liability company, partnership or other entity is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding equity interests of any other constituent Grantor; provided that if the surviving or resulting Grantor upon any such merger or consolidation an issuer which is a Foreign Subsidiary, then such Grantor shall only be required to pledge equity interests in accordance with Section 2.2; and (iii) Grantor promptly complies with the delivery and control requirements of Section 4 hereof (subject to the other provisions of this Agreement).

6.7 Intellectual Property.

(a) Each Grantor shall not do any act or omit to do any act whereby any of the Material Intellectual Property may lapse or become abandoned, canceled, dedicated to the public, forfeited, unenforceable or otherwise impaired, or which would adversely affect the validity, grant, or enforceability of the security interest granted therein.

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(b) Each Grantor shall not, with respect to any Trademarks which constitute Material Intellectual Property, cease the use of any such Trademarks or fail to maintain the level of the quality of products sold and services rendered under any of such Trademarks at a level at least substantially consistent with the quality of such products and services as of the date hereof, and such Grantor shall take all steps necessary to insure that licensees of such Trademarks use such consistent standards of quality.

(c) Each Grantor shall, within thirty (30) days of the creation or acquisition or exclusive license of any copyrightable work that would constitute Material Intellectual Property, apply to register the Copyright in the United States Copyright Office in a manner consistent with the Grantor’s past practice or otherwise with industry standards and, in the case of an exclusive Copyright License in respect of a registered Copyright, record such license, in the United States Copyright Office.

(d) Each Grantor shall promptly notify the Collateral Agent if it knows or has reason to know that any item of Material Intellectual Property may become (i) abandoned or dedicated to the public or placed in the public domain, (ii) invalid or unenforceable, (iii) subject to any adverse determination or development regarding such Grantor’s ownership, registration or use or the validity or enforceability of such item of Material Intellectual Property (including the institution of, or any adverse development with respect to, any action or proceeding in the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any court) or (iv) the subject of any reversion or termination rights.

(e) Each Grantor shall take all commercially reasonable steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any state registry, to pursue any application and maintain any registration or issuance of each Trademark, Patent, and Copyright owned by or exclusively licensed to any Grantor, including, but not limited to, those items on Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time).

(f) Each Grantor shall use commercially reasonable efforts so as not to permit the inclusion in any contract to which it hereafter becomes a party of any provision that could or may in any way materially impair or prevent the creation of a security interest in, or the assignment of, such Grantor’s rights and interests in any property included within the definitions of any Intellectual Property acquired under such contracts.

(g) In the event that any Material Intellectual Property owned by or exclusively licensed to any Grantor is infringed, misappropriated, diluted or otherwise violated by a third party, such Grantor shall promptly take all commercially reasonable actions to stop such infringement, misappropriation, dilution or other violation and protect its rights in such Material Intellectual Property, which actions may include the initiation of a suit for injunctive relief and to recover damages.

(h) Each Grantor shall take all steps commercially reasonably necessary to protect the secrecy of all Trade Secrets, including, as may be applicable, entering into confidentiality agreements with employees and consultants and labeling and restricting access to secret information and documents.

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(i) Each Grantor shall use proper statutory notice in connection with its use of any of the Material Intellectual Property.

(j) Each Grantor shall continue to collect, at its own expense, all amounts due or to become due to such Grantor in respect of the Intellectual Property or any portion thereof. In connection with such collections, such Grantor may take (and, at the Collateral Agent’s reasonable direction, shall take) such action as such Grantor or the Collateral Agent may deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding the foregoing, the Collateral Agent shall have the right at any time, to notify, or require any Grantor to notify, any obligors with respect to any such amounts of the existence of the security interest created hereby.

SECTION 7. FURTHER ASSURANCES.

7.1 Further Assurances.

(a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall:

(i) file such financing or continuation statements, or amendments thereto, record security interests in Intellectual Property and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to effect, reflect, perfect and preserve the security interests granted or purported to be granted hereby;

(ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in any Intellectual Property with any intellectual property registry in which said Intellectual Property is registered or issued or in which an application for registration or issuance is pending, including, without limitation, the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the foreign counterparts on any of the foregoing;

(iii) in the event that a Grantor obtains an ownership interest in any item of Intellectual Property that is not on the date hereof a part of the Collateral, or files an application for the registration of any Intellectual Property with the United States Copyright Office or the United States Patent and Trademark Office, except an intent-to-use trademark application, or receives a registration from the United States Patent and Trademark Office for an intent-to-use trademark application, (a) the provisions of this Agreement shall automatically apply thereto, and (b) any such additional Intellectual Property or additional Intellectual Property application or registration shall automatically become part of the Collateral subject to the terms and conditions of this Agreement. Within twenty (20) days of obtaining an ownership interest in any application or registration for material additional Intellectual Property, or of filing any

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additional Intellectual Property application, or of receiving a registration from the United States Patent and Trademark Office for any intent-to-use trademark application, each Grantor shall give written notice to the Collateral Agent reasonably identifying such material additional Intellectual Property or such additional Intellectual Property application or such registration, and such Grantor shall execute and deliver to the Collateral Agent with such written notice, a supplement to the Patent Security Agreement, Trademark Security Agreement, or Copyright Security Agreement, as applicable, or otherwise in form and substance reasonably satisfactory to the Collateral Agent, covering such material additional Intellectual Property or such additional Intellectual Property application or such registration, which may be recorded with the United States Patent and Trademark Office or United States Copyright Office, necessary to perfect the security interest granted hereunder in such additional Intellectual Property or such additional Intellectual Property application or such registration;

(iv) at any reasonable time following the occurrence and during the continuance of an Event of Default, upon request by the Collateral Agent, assemble the Collateral and allow inspection of the Collateral by the Collateral Agent, or persons designated by the Collateral Agent;

(v) at the Collateral Agent’s reasonable request, appear in and defend any action or proceeding that may affect such Grantor’s title to or the Collateral Agent’s security interest in all or any part of the Collateral; and

(vi) furnish the Collateral Agent with such information regarding the Collateral, including, without limitation, the location thereof, as the Collateral Agent may reasonably request from time to time.

(b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records, including, without limitation, financing or continuation statements, Intellectual Property Security Agreements and amendments and supplements to any of the foregoing, in any jurisdictions and with any filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect or otherwise protect the security interest granted to the Collateral Agent herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein, including, without limitation, describing such property as “all assets, whether now owned or hereafter acquired, developed or created” or words of similar effect. Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

(c) Each Grantor hereby authorizes the Collateral Agent to modify this Agreement after obtaining such Grantor’s approval of or signature to such modification by amending Schedule 5.2 (as such schedule may be amended or supplemented from time to time) to include reference to any right, title or interest in any existing Intellectual Property or any Intellectual Property acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property in which any Grantor no longer has or claims any right, title or interest.

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7.2 Additional Grantors. From time to time subsequent to the date hereof, additional persons may become parties hereto as additional Grantors (each, an “Additional Grantor”), by executing a Pledge Supplement. Upon delivery of any such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Borrower to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other person becomes or fails to become or ceases to be a Grantor hereunder.

SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.

8.1 Power of Attorney. Until termination of the Collateral Agent’s Security Interest with respect to any Collateral as provided in Section 12 hereof, each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to take any action and to execute any instrument which the Collateral Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of the Collateral Agent; provided, however, that the Collateral Agent shall keep the contents of such mail confidential to the extent required under the Credit Agreement or any Loan Document, shall only use the information contained in such mail for purposes germane to this Agreement, and promptly return such mail (other than any Collateral or payments thereon) to the applicable Grantor following use or inspection thereof;

(c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;

(d) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral;

(e) to take any action necessary to fulfill in whole or in part the obligations of any Grantor to any Account Debtor obligated to such Grantor in respect of any Account of such Grantor; and

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(f) to collect any amounts due under Accounts or Collateral that is Negotiable Collateral of such Grantor.

To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

8.2 No Duty on the Part of Collateral Agent or Secured Parties. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers. The Collateral Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

8.3 Appointment Pursuant to Credit Agreement. The Collateral Agent has been appointed as collateral agent pursuant to the Credit Agreement. The rights, duties, privileges, immunities and indemnities of the Collateral Agent hereunder are subject to the provisions of the Credit Agreement.

SECTION 9. DUTIES OF THE COLLATERAL AGENT

9.1 Standard Of Care; Collateral Agent May Perform. The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor under Section 10.03 of the Credit Agreement.

SECTION 10. REMEDIES.

10.1 Generally.

(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of the Collateral Agent on default under the UCC (whether or not the UCC applies to

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the affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously:

(i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties;

(ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process;

(iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; and

(iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable.

(b) The Collateral Agent or any other Secured Party may be the purchaser of any or all of the Collateral at any public or private (to the extent the portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as Collateral Agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private

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sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be liable for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way limit the rights of the Collateral Agent hereunder.

(c) The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(d) The Collateral Agent shall have no obligation to marshal any of the Collateral.

10.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by the Collateral Agent in the event that an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.01 of the Credit Agreement and in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by the Collateral Agent against, the Secured Obligations in the following order of priority: first, to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to the Collateral Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith, and all amounts for which the Collateral Agent is entitled to indemnification hereunder (in its capacity as the Collateral Agent and not as a Lender) and all advances made by the Collateral Agent hereunder for the account of the applicable Grantor, and to the payment of all costs and expenses paid or incurred by the Collateral Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second, to the extent of any excess of such proceeds, to the payment of all other Secured Obligations for the ratable benefit of the Secured Parties; and third, to the extent of any excess of such proceeds, to the payment to or upon the order of the applicable Grantor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

10.3 Sales on Credit. If Collateral Agent sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by purchaser and received by Collateral Agent and applied to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, the Collateral Agent may resell the Collateral and Grantor shall be credited with proceeds of the sale.

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10.4 Investment Related Property. Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

10.5 Grant of Intellectual Property License. For the purpose of enabling the Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies under Section 8 of the Credit Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of such Trademarks, to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired, developed or created by such Grantor, wherever the same may be located. Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

10.6 Intellectual Property.

(a) Anything contained herein to the contrary notwithstanding, in addition to the other rights and remedies provided herein, upon the occurrence and during the continuation of an Event of Default:

(i) the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agent’s sole discretion, to enforce any

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Intellectual Property rights of such Grantor, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement, and such Grantor shall promptly, upon demand, reimburse and indemnify the Collateral Agent as provided in Section 9 hereof in connection with the exercise of its rights under this Section 10.6, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property rights as provided in this Section 10.6, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement, misappropriation, dilution or other violation of any of such Grantor’s rights in the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any person so infringing, misappropriating, diluting or otherwise violating as shall be necessary to prevent such infringement, misappropriation, dilution or other violation;

(ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent or such Collateral Agent’s designee all of such Grantor’s right, title and interest in and to any Intellectual Property (and any goodwill associated therewith) and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement;

(iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Collateral Agent (or any other Secured Party) receives cash proceeds in respect of the sale of, or other realization upon, any such Intellectual Property;

(iv) within five (5) Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s power and authority, such personnel in such Grantor’s employ on the date of such Event of Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with any Trademarks or Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agent’s behalf and to be compensated by the Collateral Agent at such Grantor’s expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and

(v) the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of any Intellectual Property of such Grantor, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done;

(b) all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Collateral Agent hereunder, shall

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be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 10.7 hereof; and

(c) Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to any Intellectual Property of such Grantor shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantor’s sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agent’s security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any other Liens granted by or on behalf of the Collateral Agent and the Secured Parties.

10.7 Cash Proceeds. If any Event of Default shall have occurred and be continuing, in addition to the rights of the Collateral Agent specified in Section 6.5 with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, “Cash Proceeds”) shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required) and held by the Collateral Agent. Any Cash Proceeds received by the Collateral Agent (whether from a Grantor or otherwise) may, in the sole discretion of the Collateral Agent, (A) be held by the Collateral Agent for the ratable benefit of the Secured Parties, as Collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may be applied by the Collateral Agent against the Secured Obligations then due and owing.

SECTION 11. COLLATERAL AGENT.

11.1 The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and, by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of Collateral), solely in accordance with this Agreement, the Intercreditor Agreement and the Credit Agreement; provided, the Collateral Agent shall, after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, exercise, or refrain from exercising, any remedies provided for herein in accordance with the instructions of the holders (the “Majority Holders”) of a majority of the aggregate “settlement amount” as defined in the Hedging Agreements (or, with respect to any

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Hedging Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Hedging Agreement) under all Hedging Agreements. For purposes of the foregoing sentence, settlement amount under any Hedging Agreement that has not been terminated shall be the settlement amount as of the last Business Day of the month preceding any date of determination and shall be calculated by the appropriate swap counterparties and reported to the Collateral Agent upon request; provided any Hedging Agreement with a settlement amount that is a negative number shall be disregarded for purposes of determining the Majority Holders. In furtherance of the foregoing provisions of this Section, each Secured Party, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Secured Party that all rights and remedies hereunder may be exercised solely by the Collateral Agent for the benefit of Secured Parties in accordance with the terms of this Section. The provisions of the Credit Agreement relating to the Collateral Agent including, without limitation, the provisions relating to resignation or removal of the Collateral Agent and the powers and duties and immunities of the Collateral Agent are incorporated herein by this reference and shall survive any termination of the Credit Agreement.

SECTION 12. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.

12.1 Continuing Security Interest; Transfer Of Loans. This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of all Secured Obligations (subject to the Borrower’s right pursuant to Section 9.11(d) of the Credit Agreement to request termination of the security interest upon payment in full of all of the Secured Obligations other than the Hedging Obligations) be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and assigns. Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations the security interest granted hereby shall automatically terminate hereunder and of record and all rights to the Collateral shall revert to the Grantors. Upon any such termination the Collateral Agent shall, at the Grantors’ expense, execute and deliver to the Grantors or otherwise authorize the filing of such documents as the Grantors shall reasonably request, including financing statement amendments to evidence such termination. Upon any disposition of property permitted by the Credit Agreement, the Liens granted herein shall be deemed to be automatically released and such property shall automatically revert to the applicable Grantor with no further action on the part of any person. The Collateral Agent shall, at the applicable Grantor’s expense, execute and deliver or otherwise authorize the filing of such documents as such Grantor shall reasonably request, in form and substance reasonably satisfactory to the Collateral Agent, including financing statement amendments to evidence such release.

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SECTION 13. MISCELLANEOUS.

13.1 Miscellaneous.

(a) Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 10.01 of the Credit Agreement. No failure or delay on the part of the Collateral Agent in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. This Agreement shall be binding upon and inure to the benefit of the Collateral Agent and the Grantors and their respective successors and assigns. No Grantor shall, without the prior written consent of the Collateral Agent given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder. This Agreement and the other Loan Documents embody the entire agreement and understanding between the Grantors and the Collateral Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

(b) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

(c) THE PROVISIONS OF THE CREDIT AGREEMENT UNDER THE HEADINGS “CONSENT TO JURISDICTION” AND “WAIVER OF JURY TRIAL” ARE INCORPORATED HEREIN BY THIS REFERENCE AND SUCH INCORPORATION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT.

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SECTION 14. INTERCREDITOR AGREEMENT.

14.1 Intercreditor Agreement.

Reference is made to the Intercreditor Agreement. Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Obligations Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written.

GRANTOR:
FIVE BELOW, INC.
By:	/s/ Kenneth R. Bull
Name:	Kenneth R. Bull
Title:	Chief Financial Officer, Treasurer, Secretary

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

COLLATERAL AGENT:
GOLDMAN SACHS BANK USA
By:	/s/ Robert Ehudin
Title:	Authorized Signatory

EXHIBIT A

TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

Supplement No.             (this “Supplement”) dated as of                     , to the Security Agreement dated as of May [•], 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) by each of the parties listed on the signature pages thereto and those additional entities that thereafter become parties thereto (collectively, jointly and severally, “Grantors” and each individually “Grantor”) and Goldman Sachs Bank USA in its capacity as Collateral Agent on behalf of the Secured Parties (together with its successors and assigns in such capacity, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of May     , 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Five Below, Inc., a Pennsylvania company (the “Borrower”), Goldman Sachs Bank USA, as collateral agent and administrative agent for the Lenders, the other agents party thereto, and the lenders party thereto as “Lenders” (such Lenders, together with their respective successors and assigns in such capacity, each, individually a “Lender” and, collectively, the “Lenders”), the Lenders have agreed to make certain financial accommodations available to the Borrower under the Credit Agreement; and

WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement or the Credit Agreement, as applicable; and

WHEREAS, pursuant to the Credit Agreement and the Security Agreement, certain Subsidiaries of the Grantors must execute and deliver a joinder to the Credit Agreement and other Loan Documents, including the Security Agreement, and the joinder to the Security Agreement by the undersigned new Grantor or Grantors (collectively, the “New Grantors”) may be accomplished by the execution of this Supplement in favor of the Collateral Agent, for the benefit of the Secured Parties; and

WHEREAS, each New Grantor (a) is a Subsidiary of the Borrower and, as such, benefits by virtue of the Loans and (b) by becoming a Guarantor will benefit from certain rights granted to the Guarantors pursuant to the terms of the Credit Agreement.

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows:

1. In accordance with Section 7.2 of the Security Agreement, each New Grantor, by its signature below, becomes a “Grantor” under the Security Agreement with the same force and

EXHIBIT A-1

effect as if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b) represents and warrants that the representations and warranties made by it as a “Grantor” thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby grant, assign, and pledge to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and security title to all assets of such New Grantor, including all property of the type described in Section 2 of the Security Agreement, to secure the full and prompt payment of the Secured Obligations, including any interest thereon, plus reasonable attorneys’ fees and expenses if the Secured Obligations represented by the Security Agreement are collected by law, through an attorney-at-law, or under advice therefrom. Schedule 5.1, Schedule 5.2, Schedule 5.4 and Schedule 5.5 to the Security Agreement shall be deemed a part thereof for all purposes of the Security Agreement. Each reference to a “Grantor” in the Security Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference. Each New Grantor authorizes the Collateral Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments thereto (i) describing the Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that contain any information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance. Each New Grantor also hereby ratifies any and all financing statements or amendments previously filed by the Collateral Agent in any jurisdiction in connection with the Loan Documents.

2. Each New Grantor represents and warrants to the Collateral Agent and the Secured Parties that this Supplement has been duly executed and delivered by such New Grantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission shall be as effective as delivery of a manually executed counterpart hereof.

4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

5. This Supplement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict of laws principles thereof.

6. THE VALIDITY OF THIS JOINDER, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

EXHIBIT A-2

7. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS JOINDER SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE COLLATERAL AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COLLATERAL AGENT AND EACH NEW GRANTOR 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 7.

8. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE COLLATERAL AGENT AND EACH NEW GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS JOINDER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COLLATERAL AGENT AND EACH NEW GRANTOR 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 JOINDER MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

EXHIBIT A-3

IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

NEW GRANTORS:	[Name of New Grantor]
	By:
	Name:
	Title:
	[Name of New Grantor]
	By:
	Name:
	Title:
COLLATERAL AGENT:	GOLDMAN SACHS BANK USA
	By:
	Name:
	Title:

EXHIBIT A-4

EXHIBIT B

TO SECURITY AGREEMENT

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT, dated as of May     , 2012 (as it may be amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entity identified as grantor on the signature pages hereto (the “Grantor”) in favor of Goldman Sachs Bank USA as collateral agent for the Secured Parties (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Grantor is party to a Security Agreement dated as of May [    ], 2012 (the “Security Agreement”) between the Grantor and the other grantors party thereto and the Collateral Agent pursuant to which the Grantor granted a security interest to the Collateral Agent in the Trademark Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Grantor hereby agrees with the Collateral Agent as follows:

SECTION 1. Defined Terms

Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest in Trademark Collateral

SECTION 2.1 Grant of Security. Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired, developed, created or arising and wherever located (collectively, the “Trademark Collateral”):

all United States, and foreign trademarks, trade names, trade dress, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, whether or not registered, and with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications listed or required to be listed in Schedule A attached hereto, (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by any of the foregoing, (iv) the right to sue or otherwise recover for any past, present and future infringement, dilution or other violation of any of the foregoing or for any injury to the related goodwill, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

EXHIBIT B-1

SECTION 2.2 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event shall the Trademark Collateral include or the security interest granted under Section 2.1 hereof attach to any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law.

SECTION 3. Security Agreement

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties pursuant to the Security Agreement, and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5. Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT B-2

IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

		FIVE BELOW, INC.
		By:
		Name:
		Title:
STATE OF	)
	)	ss.
COUNTY OF	)

On this             day of             ,          before me personally appeared             , proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of Five Below, Inc., who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

Notary Public

EXHIBIT B-3

Accepted and Agreed:

GOLDMAN SACHS BANK USA,

as Collateral Agent

By:                                                                                            

Authorized Signatory

EXHIBIT B-4

SCHEDULE A

TO

TRADEMARK SECURITY AGREEMENT

TRADEMARK REGISTRATIONS AND APPLICATIONS

Mark	Serial No.	Filing Date	Registration No.	Registration Date
5B ESSENTIALS	77883624	1-DEC-2009	3,817,923	13-JUL-2010
FIVE BELOW (Stylized)	78220962	3-MAR-2003	2,813,080	10-FEB-2004
FIVE BELOW	85287880	6-APRIL-2011	4,048,994	01-NOV-2011
ROOM 2 ROOM	77982709	22-MAR-2010	4,091,585	24-JAN-2012
PARTIKI	77917650	22-JAN-2010	3,959,025	10-MAY-2011
FIVE BELOW hot stuff. cool prices.	77638110	22-DEC-2008	3,650,837	07-JUL-2009
FIVE & TEN BELOW	77/515,581	07-JUL-2008	N/A	N/A
ROOM 2 ROOM	77/964,598	22-MAR-2010	N/A	N/A
TEN BELOW	77/515,567	7-JUL-2008	N/A	N/A

EXHIBIT B-5

EXHIBIT C

TO SECURITY AGREEMENT

FORM OF PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT, dated as of [            ], 20[    ] (as it may be amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entities identified as grantors on the signature pages hereto (collectively, the “Grantors”) in favor of Goldman Sachs Bank USA, as collateral agent for the Secured Parties (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Grantors are party to a Security Agreement dated as of May [    ], 2012 (the “Security Agreement”) between each of the Grantors and the other grantors party thereto and the Collateral Agent pursuant to which the Grantors granted a security interest to the Collateral Agent in the Patent Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Grantors hereby agree with the Collateral Agent as follows:

SECTION. 1. Defined Terms

Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest

Each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired, developed, created or arising and wherever located (collectively, the “Patent Collateral”):

all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, but not limited to: (i) each patent and patent application listed or required to be listed in Schedule A attached hereto, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all patentable inventions and improvements thereto, (iv) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

EXHIBIT C-1

SECTION 3. Security Agreement

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties pursuant to the Security Agreement, and the Grantors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Patent Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Agreement is deemed to conflict with Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5. Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT C-2

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

		[NAME OF GRANTOR]
		By:
		Name:
		Title:
STATE OF	)
	)	ss.
COUNTY OF	)

On this         day of             ,          before me personally appeared                     , proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of                     , who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

Notary Public

		[NAME OF GRANTOR]
		By:
		Name:
		Title:
STATE OF	)
	)	ss.
COUNTY OF	)

On this         day of             ,          before me personally appeared                     , proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of                     , who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

EXHIBIT C-3

Accepted and Agreed:

GOLDMAN SACHS BANK USA,

as Collateral Agent

By:
	Authorized Signatory

EXHIBIT C-4

SCHEDULE A

TO

PATENT SECURITY AGREEMENT

PATENTS AND PATENT APPLICATIONS

Title Application No. Filing Date Patent No. Issue Date

EXHIBIT C-1

EXHIBIT D

TO SECURITY AGREEMENT

FORM OF COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT, dated as of [            ], 20[    ] (as it may be amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by the entities identified as grantors on the signature pages hereto (collectively, the “Grantors”) in favor of Goldman Sachs Bank USA, as collateral agent for the Secured Parties (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).

WHEREAS, the Grantors are party to a Security Agreement dated as of May [    ], 2012 (the “Security Agreement”) between each of the Grantors and the other grantors party thereto and the Collateral Agent pursuant to which the Grantors granted a security interest to the Collateral Agent in the Copyright Collateral (as defined below) and are required to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Grantors hereby agree with the Collateral Agent as follows:

SECTION 1. Defined Terms

Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

SECTION 2. Grant of Security Interest

Each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired, developed, created or arising and wherever located (collectively, the “Copyright Collateral”):

all United States, and foreign copyrights (whether or not the underlying works of authorship have been published), including but not limited to copyrights in software and all rights in and to databases, all designs (including but not limited to industrial designs, Protected Designs and Community designs), and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, as well as all moral rights, reversionary interests, and termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications listed or required to be listed in Schedule A attached hereto, (ii) all extensions and renewals thereof, (iii) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (iv) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing thereunder or pertaining thereto throughout the world; and

EXHIBIT D-1

any and all agreements, licenses and covenants providing for the granting of any exclusive right to such Grantor in or to any registered Copyright including, without limitation, each agreement required to be listed in Schedule A attached hereto, or otherwise providing for a covenant not to sue for infringement or other violation of any Copyright (whether such Grantor is licensee or licensor thereunder) and the right to sue or otherwise recover for past, present and future infringement or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

SECTION 3. Security Agreement

The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Collateral Agent for the Secured Parties pursuant to the Security Agreement, and the Grantors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyright Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. In the event that any provision of this Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control.

SECTION 4. Governing Law

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK (OTHER THAN ANY MANDATORY PROVISIONS OF LAW RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).

SECTION 5. Counterparts

This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

[Remainder of page intentionally left blank]

EXHIBIT D-2

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

		[NAME OF GRANTOR]
		By:
		Name:
		Title:
STATE OF	)
	)	ss.
COUNTY OF	)

On this          day of             ,          before me personally appeared                     , proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of                     , who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

		Notary Public
		[NAME OF GRANTOR]
		By:
		Name:
		Title:
STATE OF	)
	)	ss.
COUNTY OF	)

On this         day of             ,          before me personally appeared                     , proved to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument on behalf of                     , who being by me duly sworn did depose and say that he/she is an authorized officer of said corporation, that the said instrument was signed on behalf of said corporation as authorized by its Board of Directors and that he/she acknowledged said instrument to be the free act and deed of said corporation.

[ADD SIGNATURE BLOCKS AND NOTARY BLOCKS FOR ANY OTHER GRANTORS]

EXHIBIT D-3

Accepted and Agreed:

GOLDMAN SACHS BANK USA,

as Collateral Agent

By:
	Authorized Signatory

EXHIBIT D-4

EX-10.30

Exhibit 10.30

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and between

FIVE BELOW, INC.,

as Borrower,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

Dated: May 16, 2012

TABLE OF CONTENTS

		Page
SECTION 1.	DEFINITIONS		1
SECTION 2.	CREDIT FACILITIES		27
2.1.	Revolving Loans		27
2.2.	Letters of Credit		27
2.3.	Mandatory Prepayments		29
2.4.	Cash Dominion; Borrower Account Protocols		30
SECTION 3.	INTEREST AND FEES		31
3.1.	Interest		31
3.2.	Letter of Credit Fees		32
3.3.	Changes in Laws and Increased Costs of Loans		32
SECTION 4.	CONDITIONS PRECEDENT AND POST-CLOSING DELIVERIES		33
4.1.	Conditions Precedent to Initial Revolving Loans and Letters of Credit		33
4.2.	Conditions Precedent to All Revolving Loans and Letters of Credit		36
4.3.	Post-Closing Deliveries		36
SECTION 5.	GRANT AND PERFECTION OF SECURITY INTEREST		36
5.1.	Continuing Grant of Security Interest		36
5.2.	Excluded Collateral		38
5.3.	Perfection of Security Interests		39
SECTION 6.	COLLECTION AND ADMINISTRATION		42
6.1.	Borrower’s Loan Accounts		42
6.2.	Statements		42
6.3.	Collection of Accounts		43
6.5.	Taxes		45
6.6.	Authorization to Make Revolving Loans		46
6.7.	Use of Proceeds		46
SECTION 7.	COLLATERAL REPORTING AND COVENANTS		46
7.1.	Collateral Reporting		46
7.2.	Accounts Covenants		48
7.3.	General Inventory Covenants		49
7.4.	Periodic Appraisals		50
7.5.	Power of Attorney		50
7.6.	Right to Cure		51
7.7.	Access to Premises; Periodic Field Audits		51

-i-

SECTION 8.	REPRESENTATIONS AND WARRANTIES	52
8.1.	Corporate Existence, Power and Authority	52
8.2.	Name; State of Organization; Chief Executive Office; Collateral Locations	52
8.3.	Financial Statements; No Material Adverse Change	52
8.4.	Priority of Liens; Title to Properties	53
8.5.	Tax Returns	53
8.6.	Litigation	53
8.7.	Compliance with Other Agreements and Applicable Laws	53
8.8.	Environmental Compliance	54
8.9.	Credit Card Agreements	54
8.10.	Employee Benefits	55
8.11.	Bank Accounts	56
8.12.	Intellectual Property	56
8.13.	Subsidiaries; Affiliates; Capitalization; Solvency	56
8.14.	Labor Disputes	56
8.15.	Material Contracts	57
8.16.	Payable Practices	57
8.17.	Accuracy and Completeness of Information	57
8.18.	Survival of Warranties; Cumulative	57
SECTION 9.	AFFIRMATIVE AND NEGATIVE COVENANTS	57
9.1.	Maintenance of Existence	57
9.2.	New Collateral Locations	58
9.3.	Compliance with Laws, Regulations, Etc.	58
9.4.	Payment of Taxes and Claims	59
9.5.	Insurance	59
9.6.	Financial Statements and Other Notices	59
9.7.	Sale of Assets, Consolidation, Merger, Dissolution, Etc.	61
9.8.	Encumbrances	63
9.9.	Indebtedness	66
9.10.	Loans, Investments, Etc.	68
9.11.	Restricted Payments	68
9.12.	Creation of Subsidiaries	68
9.13.	Compliance with ERISA	68
9.14.	End of Fiscal Years; Fiscal Quarters	69
9.15.	Credit Card Agreements	69
9.16.	Change in Business	69
9.17.	License Agreements	69
9.18.	Foreign Assets Control Regulations, Etc.	70
9.19.	Leased Personal Property	70
9.20.	Costs and Expenses	70
9.21.	Further Assurances	71
9.22.	Minimum Excess Collateral Availability	71
9.23.	Sale and Leaseback Transactions	71

-ii-

SECTION 10.	EVENTS OF DEFAULT AND REMEDIES	72
10.1.	Events of Default	72
10.2.	Remedies	74
SECTION 11.	JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.	77
11.1.	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	77
11.2.	Waiver of Notices	79
11.3.	Amendments and Waivers	79
11.4.	Waiver of Counterclaims	79
11.5.	Indemnification	79
11.6.	Waiver of Special Damages	80
SECTION 12.	TERM OF AGREEMENT; MISCELLANEOUS	80
12.1.	Term	80
12.2.	Interpretative Provisions	80
12.3.	Notices	82
12.4.	Partial Invalidity	83
12.5.	Successors	83
12.6.	Assignments; Participations	83
12.7.	Entire Agreement	83
12.8.	USA Patriot Act	84
12.9.	Counterparts, Etc.	84
12.10.	Release	84
12.11.	Intercreditor Agreement	84

-iii-

INDEX

TO

EXHIBITS AND SCHEDULES

Exhibit A	Form of Borrowing Base Certificate
Exhibit B	Information Certificate
Exhibit C	Form of Covenant Compliance Certificate
Exhibit D	Form of Intercreditor Agreement
Schedule 1.30	Credit Card Agreements
Schedule 1.36	Customs Brokers

[Exhibits A through D have been omitted as certain of these exhibits are either subject to post-closing determinations or have been separately filed as exhibits to Amendment No. 1 to the Form S-1. The Company agrees to furnish supplementally a copy of these exhibits to the Securities and Exchange Commission upon request.]

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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Second Amended and Restated Loan and Security Agreement dated May 16, 2012 (the “Agreement”) is entered into by and between FIVE BELOW, INC., a Pennsylvania corporation (the “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as successor by merger to Wachovia Bank, N.A. (the “Lender”).

W I T N E S S E T H:

WHEREAS, Borrower and Lender are parties to that certain Amended and Restated Loan and Security Agreement dated January 28, 2010 (as amended from time to time, the “Original Loan Agreement”); and

WHEREAS, Borrower and Lender have agreed to modify and extend the Original Loan Agreement in accordance with the terms referenced herein; and

WHEREAS, this Agreement shall be an amendment and restatement of and substitution for the Original Loan Agreement, but shall in no way be construed as a repayment, novation or satisfaction of the Obligations as defined in the Original Loan Agreement;

WHEREAS, the Obligations and all Collateral securing the Obligations under the Original Loan Agreement and this Agreement are and shall at all times be deemed to be continuous;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Original Loan Agreement is hereby amended and restated in its entirety and the parties hereto agree as follows:

SECTION 1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1. “ABL Priority Collateral” shall mean the “Revolving Facility First Lien Collateral” as defined in the Intercreditor Agreement.

1.2. “Accounts” shall mean all present and future rights of Borrower to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) consisting of Credit Card Receivables.

1.3. “Adjusted Borrowing Base” shall mean, at any time, the amount equal to the Borrowing Base minus the Minimum Excess Collateral Availability.

1.4. “Affiliate” shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten percent (10%) or more of any class of Voting Stock of such Person or other equity interests in such Person, and (b) any Person of which such Person beneficially owns or holds ten percent (10%) or more of any class of Voting Stock or in which such Person beneficially owns or holds ten percent (10%) or more of the equity interests. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

1.5. “Applicable L/C Rate” shall mean, at any time, the rate equal to the LMIR Rate, plus the applicable percentage set forth in the definition of “Applicable Margin” for LMIR Rate Loans.

1.6. “Applicable Margin” shall mean, at any time, as to the Interest Rate for LMIR Rate Loans and the Interest Rate for Prime Rate Loans, the applicable percentage (on a per annum basis) set forth below if the Borrower’s Quarterly Average Excess Availability for the immediately preceding fiscal quarter is at or within the amounts indicated for such percentage as of the last day of the immediately preceding calendar quarter:

Quarterly Average Excess Availability	Applicable Margin for LMIR Rate Loans			Applicable Margin for Prime Rate Loans
Availability: less than 33% of then effective Maximum Credit		2.25	%		1.25	%
Availability: less than 75% but greater than or equal to 33% of then effective Maximum Credit		2.00	%		1.00	%
Availability: greater than or equal to 75% of then effective Maximum Credit		1.75	%		0.75	%

provided, that, (i) the Applicable Margin shall be calculated and established once each calendar quarter and shall remain in effect until adjusted thereafter after the end of such calendar quarter, (ii) each adjustment of the Applicable Margin shall be effective as of the first day of a calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter, and (iii) notwithstanding anything herein to the contrary, the Applicable Margin beginning as of the Closing Date through the fiscal quarter ending July 31, 2012 shall be 2.00% for LMIR Rate Loans and 1.00% for Prime Rate Loans.

1.7. “Asset Sale” shall mean any Disposition of any property by the Borrower. Notwithstanding the foregoing, none of the following shall constitute “Asset Sales”; (a) any

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Disposition of assets permitted by, or expressly referred to in, Section 9.7 (other than Section 9.7(b)(viii)); (b) so long as the Term Loan Agreement is in effect, any Disposition of the Term Priority Collateral; and (c) any Disposition of any property by the Borrower for fair market value resulting in less than $250,000 in Net Cash Proceeds per Disposition (or series of related Dispositions) and less than $750,000 in Net Cash Proceeds in any fiscal year.

1.8. “Attributable Indebtedness” shall mean, when used with respect to any Sale and Leaseback Transaction, as at the time of determination, the present value (discounted at a rate equivalent to Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments (and substantially similar payments) during the remaining term of the lease included in any such Sale and Leaseback Transaction.

1.9. “Bank Product Provider” shall mean Lender, an Affiliate of Lender, or any other financial institution (but in the case of an Affiliate of Lender or any other financial institution, only to the extent approved by Lender) that provides any Bank Products to Borrower.

1.10. “Bank Products” shall mean any one or more of the following types or services or facilities provided to Borrower by a Bank Product Provider: (a) credit cards or stored value cards or (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of Borrower pursuant to agreement or overdraft for any accounts of Borrower maintained at any Bank Product Provider that are subject to the control of Lender pursuant to any Deposit Account Control Agreement to which Lender or any Affiliate of Lender is a party, as applicable, and (ii) controlled disbursement services and (iii) Hedge Agreements if and to the extent permitted hereunder.

1.11. “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101, et seq.), as amended, and any successor statute.

1.12. “Borrower” shall mean Five Below, Inc., a Pennsylvania corporation, in its capacity as Borrower under this Agreement.

1.13. “Borrowing Base” shall mean, at any time, the amount equal to: ninety percent (90%) of the Eligible Credit Card Receivables of Borrower, plus ninety percent (90%) of the Net Recovery Percentage of Eligible Inventory of Borrower multiplied by the Value thereof, minus Reserves attributable to Borrower.

1.14. “Borrowing Base Certificate” shall mean a certificate substantially in the form of Exhibit “A” hereto, as such form may from time to time be modified by Lender, which is duly completed (including all schedules thereto) and executed by the Senior Vice President of Finance or other chief financial officer of Borrower and delivered to Lender.

1.15. “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the Commonwealth of Pennsylvania, and a day on which Lender is open for the transaction of business, except that if a determination of a Business Day shall relate to any LMIR Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

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1.16. “Capital Expenditures” shall mean all expenditures for, or contracts for expenditures for, any fixed or capital assets or improvements, or for replacements, substitutions or additions thereto, which have a useful life of more than one (1) year, including, but not limited to, the direct or indirect acquisition of such assets by way of offset items or otherwise and shall include the principal amount of capitalized lease payments during the applicable period.

1.17. “Capital Leases” shall mean any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) which in accordance with GAAP, is required to be reflected as a liability on Borrower’s balance sheet.

1.18. “Capital Stock” shall mean any and all shares, interests, participations or other equivalents (however designated) of Borrower’s capital stock or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

1.19. “Cash Dominion Event” shall mean the occurrence of either: (a) an Event of Default under this Agreement; or (b) the failure of the Borrower at any time during any Non-Peak Period to maintain Excess Borrowing Availability greater than or equal to twenty percent (20%) of the then-effective Maximum Credit.

1.20. “Cash Dominion Period” shall mean, with respect to any Cash Dominion Event, the period beginning as of the occurrence of such Cash Dominion Event and ending after the Borrower has maintained ninety (90) consecutive days during which (a) Excess Borrowing Availability is greater than or equal to thirty-five percent (35%) of the then-effective Maximum Credit; and (b) no Event of Default has occurred or is continuing.

1.21. “Cash Equivalents” shall mean, as of any date of determination, as to any person, any of the following: (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person, (b) time deposits and certificates of deposit or bankers’ acceptances of Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state or commonwealth thereof or the District of Columbia having, capital and surplus aggregating in excess of $250,000,000 and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act of 1933, as amended from time to time, and any successor statute) with maturities of not more than one year from the date of acquisition by such person, (c) commercial paper issued by any person meeting the qualifications specified in clause (b) above, or incorporated in the United States of America rated at least A-1 or the equivalent thereof by Standard & Poor’s Rating Service or Fitch Rating Limited or at least P-1 or the equivalent thereof by Moody’s Investors Service Inc., and in each case maturing not more than one year after the date of acquisition by such person, (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000, (e)

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repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985, (f) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) through (e) above, and (ii) has the highest rating obtainable from either Standard & Poor’s Rating Service or Moody’s Investors Service Inc., and (e) demand deposit accounts maintained in the ordinary course of business.

1.22. “Casualty Event” shall mean any loss of title (other than through a consensual Disposition of such property in accordance with this Agreement) or any loss of or damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of the Borrower. “Casualty Event” shall include any taking of all or any part of any Real Property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Legal Requirement, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any person or any part thereof by any Governmental Authority, or any settlement in lieu thereof. Notwithstanding the foregoing, “Casualty Event” shall not include the loss of title or loss of or damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, (a) any property of the Borrower with a fair market value of less than $700,000 in Net Cash Proceeds per such event and less than $1,500,000 in Net Cash Proceeds in any fiscal year of Borrower; and (b) so long as the Term Loan Agreement is in effect, the Term Priority Collateral.

1.23. “Change of Control” shall mean (a) the transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Borrower to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of Borrower or the adoption of a plan by the stockholders of Borrower relating to the dissolution or liquidation of Borrower; (c) any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than Permitted Investors shall have acquired beneficial ownership of more than 35 percent of the voting power of the outstanding Voting Stock of the Borrower; or (d) any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) other than Permitted Investors shall have acquired beneficial ownership of sufficient voting power of the outstanding Voting Stock such that such Person or group becomes entitled to name or replace a voting majority of the Board of Directors; provided, however, that notwithstanding anything set forth in this Agreement to the contrary, nothing contained in this definition shall be deemed to prevent a Qualifying IPO.

1.24. “Closing Date” shall mean May 16, 2012.

1.25. “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

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1.26. “Collateral” shall have the meaning set forth in Section 5.1 hereof.

1.27. “Collateral Access Agreement” shall mean an agreement in writing, in form and substance satisfactory to Lender, from any lessor of premises to Borrower, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Lender with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other person.

1.28. “Commitment” shall mean the Lender’s commitment to provide the Credit Facility.

1.29. “Credit Card Acknowledgments” shall mean, collectively, the agreements in favor of Lender, by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements, acknowledging Lender’s first priority security interest in the monies due and to become due to Borrower (including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Payment Account, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.30. “Credit Card Agreements” shall mean all agreements now or hereafter entered into by Borrower with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, including, but not limited to, the agreements listed on Schedule 1.30 hereto.

1.31. “Credit Card Issuer” shall mean any person (other than Borrower) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc. or Novus Services, Inc.

1.32. “Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

1.33. “Credit Card Receivables” shall mean, collectively, (a) all present and future rights of Borrower to payment from any Credit Card Issuer, Credit Card Processor or other third party arising from sales of goods or rendition of services to customers who have purchased such goods or services using a credit or debit card and (b) all present and future rights of Borrower to payment from any Credit Card Issuer, Credit Card Processor or other third party in connection with the sale or transfer of Accounts arising pursuant to the sale of goods or rendition of services to customers who have purchased such goods or services using a credit card or a debit card, including, but not limited to, all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.

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1.34. “Credit Facility” shall mean the Revolving Loans and Letters of Credit provided to or for the benefit of Borrower pursuant to Sections 2.1 and 2.2 hereof.

1.35. “Current Borrowing Base Report” shall have the meaning set forth in Section 7.1 (a)(i) hereof.

1.36. “Customs Broker” shall mean the persons listed on Schedule 1.36 hereto or such other person selected by Borrower after written notice by Borrower to Lender who are reasonably acceptable to Lender to perform port of entry services to process Inventory imported by Borrower from outside the United States of America and to supply facilities, labor and materials to Borrower in connection therewith.

1.37. “DACA Account” shall mean any deposit or other bank account of the Borrower subject to a Deposit Account Control Agreement.

1.38. “DACA Account Bank” shall mean a Non-Wells Fargo Account Bank with which Borrower and Lender have entered into a Deposit Account Control Agreement.

1.39. “Default” shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

1.40. “Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance satisfactory to Lender, by and among Lender, Borrower and any bank at which Borrower maintains a deposit account, which provides that such bank will comply with instructions originated by Lender directing disposition of the funds in the deposit account without further consent by Borrower and has such other terms and conditions as Lender may reasonably require.

1.41. “Discretionary DACA Protocol Event” shall mean the Borrower’s maintenance of Excess Borrowing Availability at any time during any Non-Peak Period less than thirty-five percent (35%) but greater than or equal to twenty percent (20%) of the then-effective Maximum Credit.

1.42. “Disposition” shall mean, with respect to any property, any conveyance, sale, lease, sublease, assignment, transfer or other disposition of such property.

1.43. “Distribution Center” shall mean the proposed second distribution center of Borrower which is anticipated to be located in the southern United States of America or in the mid-western region of the United States of America and purchased or developed by Borrower at a cost of approximately $28,000,000.

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1.44. “Eligible Credit Card Receivables” shall mean Credit Card Receivables of Borrower which are and continue to be acceptable to Lender, in each case based on the criteria set forth below as determined by Lender in good faith. Credit Card Receivables shall be Eligible Credit Card Receivables if:

(a) such Credit Card Receivables arise from the actual and bona fide sale and delivery of goods or rendition of services by Borrower in the ordinary course of the business of Borrower which transactions are completed in accordance with the terms and provisions contained in any agreements binding on Borrower or the other party or parties related thereto;

(b) such Credit Card Receivables are not past due (beyond any stated applicable grace period, if any, therefor) pursuant to the terms set forth in the Credit Card Agreements with the Credit Card Issuer or Credit Card Processor of the credit card or debit card used in the purchase which give rise to such Credit Card Receivables;

(c) such Credit Card Receivables are not unpaid more than five (5) Business Days after the date of the sale of Inventory giving rise to such Credit Card Receivables;

(d) all material procedures required by the Credit Card Issuer or the Credit Card Processor of the credit card or debit card used in the purchase which gave rise to such Credit Card Receivables shall have been followed by Borrower and all documents required for the authorization and approval by such Credit Card Issuer or Credit Card Processor shall have been obtained in connection with the sale giving rise to such Credit Card Receivables;

(e) the required authorization and approval by such Credit Card Issuer or Credit Card Processor shall have been obtained for the sale giving rise to such Credit Card Receivables;

(f) Borrower shall have submitted all materials required by the Credit Card Issuer or Credit Card Processor obligated in respect of such Credit Card Receivables in order for Borrower to be entitled to payment in respect thereof;

(g) the Credit Card Issuer or Credit Card Processor obligated in respect of such Credit Card Receivable has not failed to remit any monthly payment in respect of such Credit Card Receivable;

(h) such Credit Card Receivables comply with the applicable terms and conditions contained in Section 7.2 of this Agreement;

(i) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to, any right of setoff against such Credit Card Receivables (other than setoffs to fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with Borrower as of the date hereof or as such practices may change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstance of Borrower); provided, that the portion of the Credit Card Receivables owing by such Credit Card Issuer or Credit Card Processor in excess of the amount asserted to be owing or owing by Borrower to such Credit Card Issuer or Credit Card Processor pursuant to such setoffs, fees and chargebacks may be deemed Eligible Credit Card Receivables;

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(j) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not set off against amounts otherwise payable by such Credit Card Issuer or Credit Card Processor to Borrower for the purpose of establishing a reserve or collateral for obligations of Borrower to such Credit Card Issuer or Credit Card Processor (notwithstanding that the Credit Card Issuer or Credit Card Processor may have setoffs for fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with Borrower as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of Borrower); provided, that the portion of the Credit Card Receivables owing by such Credit Card Issuer or Credit Card Processor in excess of the amount set off by such Credit Card Issuer or Credit Card Processor to establish such reserves or collateral may be deemed Eligible Credit Card Receivables;

(k) there are no facts, events or occurrences which would materially impair the validity, enforceability or collectability of such Credit Card Receivables or materially reduce the amount payable or materially delay payment thereunder (other than for setoffs for fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with Borrower as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of Borrower);

(l) such Credit Card Receivables are subject to the first priority, valid and perfected security interest and lien of Lender, in the sole discretion of Lender, and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any security interest or lien in favor of any person other than Lender except as otherwise permitted in this Agreement, in each case subject to and in accordance with the terms and conditions applicable hereunder to any such permitted security interest or lien;

(m) there are no proceedings or actions which are pending or to the best of Borrower’s knowledge threatened, against the Credit Card Issuers or Credit Card Processors with respect to such Credit Card Receivables which would reasonably be expected to result in any material adverse change in the financial condition of any such Credit Card Issuer or Credit Card Processor;

(n) such Credit Card Receivables are owed by Credit Card Issuers or Credit Card Processors deemed creditworthy at all times by Lender in good faith;

(o) no event of default has occurred under the Credit Card Agreement of Borrower with the Credit Card Issuer or Credit Card Processor who has issued the credit card or debit card or handles payments under the credit card or debit card used in the sale which gave rise to such Credit Card Receivables which event of default gives such Credit Card Issuer or Credit Card Processor the right to cease or suspend payments to Borrower, except as may have been waived in writing by such Credit Card Issuer or Credit Card Processor, and the Credit Card Issuer or Credit Card Processor has not sent any written notice of default and/or notice of its intention to cease or suspend payments to Borrower in respect of such Credit Card Receivables, and such Credit Card Agreements are otherwise in full force and effect and constitute the legal, valid, binding and enforceable obligations of the parties thereto;

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(p) the terms of the sale giving rise to such Credit Card Receivables and all practices of Borrower with respect to such Credit Card Receivables comply in all material respects with applicable Federal, State, and local laws and regulations; and

(q) the customer using the credit card or debit card giving rise to such Credit Card Receivable shall not have returned the merchandise purchased giving rise to such Credit Card Receivable.

General criteria for Eligible Credit Card Receivables may only be changed and any new criteria for Eligible Credit Card Receivables may only be established by Lender in good faith and in accordance with its customary practices for similarly situated borrowers, upon notice to Borrower, based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) existing on the date hereof to the extent Lender has no written notice thereof from Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Credit Card Receivables in the good faith determination of Lender. Any Credit Card Receivables which are not Eligible Credit Card Receivables shall nevertheless be part of the Collateral.

1.45. “Eligible In-Transit Inventory” shall mean all finished goods Inventory owned, prepaid or to be owned by Borrower that is not covered by a Letter of Credit and that is or will be in transit from outside of the United States to one of Borrower’s locations in the continental United States, and which (a) as of the date such Inventory becomes owned by Borrower (i) is fully insured, (ii) is subject to a first priority security interest in and lien upon such goods in favor of Lender (except for any possessory lien upon such goods in the possession of handlers, stores of goods, a freight carrier or shipping company securing only the freight charges for the transportation of such goods to Borrower), (iii) all documents, notices, instruments, statements and bills of lading relating thereto, if any, which Lender may deem necessary or desirable to evidence ownership by Borrower and/or to give effect to and protect the liens, security interests and other rights of Lender in connection therewith are delivered to Lender, and (iv) is subject to a Collateral Access Agreement when in the possession, custody or control of any Customs Broker; and (b) are and remain acceptable to Lender for lending purposes in its sole discretion.

1.46. “Eligible Inventory” shall mean Inventory (including Eligible L/C Inventory) consisting of finished goods held for resale in the ordinary course of the business of Borrower which are acceptable to Lender, in each case based on the criteria set forth below as determined by Lender in good faith. In general, Eligible Inventory shall not include (a) work-in-process; (b) raw materials; (c) spare parts for equipment; (d) packaging and shipping materials; (e) supplies used or consumed in Borrower’s business; (f) Inventory at premises which are not owned or not leased and controlled by Borrower; provided, that, Eligible Inventory shall include (i) Inventory at retail store locations in the United States of America which are leased by Borrower or owned and operated by a person other than Borrower, and (ii) Inventory at retail store locations outside the United States of America which are leased by Borrower or owned and operated by a person other than Borrower and at all other non-retail locations leased by Borrower or owned and operated by a person other than Borrower (both inside and outside of the United States of America), only to the extent that Lender has received a Collateral Access Agreement from the lessor or the owner or operator with respect to such location, and, if required by Lender

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in the case of this subclause (ii), (A) UCC financing statements (or, in the case of Inventory outside the United States, other evidence of perfection as determined in Lender’s reasonable discretion) between the lessor or owner and operator, as consignee/bailee, and Borrower, as consignor/bailor, in form and substance satisfactory to Lender, which are duly assigned to Lender and (B) written notice of Lender’s first priority security interest in such Inventory to any lender to the lessor or owner and operator of such location; (g) Inventory which is in transit from outside of the United States to one of Borrower’s locations in the continental United States, other than Eligible In-Transit Inventory; provided, that, in no event shall the Eligible In-Transit Inventory component of Eligible Inventory exceed $500,000 at any one time; (h) Inventory subject to a security interest or lien in favor of any person other than Lender except those security interests or liens (i) permitted in this Agreement that are subordinate to the security interest of Lender pursuant to an intercreditor agreement in form and substance satisfactory to Lender between Lender and the holder of such other security interest or lien, and (ii) arising from time to time in favor of common carriers transporting Inventory from one Borrower location to another for a period of no greater than 5 Business Days; (i) bill and hold goods; (j) Slow Moving Inventory, other than Packaway Inventory; provided, that, (i) any item of Packaway Inventory shall only constitute Eligible Inventory from the date of Borrower’s acquisition of such Inventory until the conclusion of the second selling season to which such item relates and during which Borrower should reasonably hold such item out for sale, immediately following Borrower’s acquisition of such item, and (ii) in no event shall the Value of Packaway Inventory exceed five percent (5%) of Inventory at any one time; (k) Inventory which is not subject to the first priority, valid and perfected security interest of Lender, as determined in the sole discretion of Lender; (l) damaged and/or defective Inventory; (m) returned Inventory which is not held for sale in the ordinary course of business; and (n) Inventory purchased or sold on consignment.

General criteria for Eligible Inventory may only be changed and any new criteria for Eligible Inventory may only be established by Lender in good faith and in accordance with its customary practices for similarly situated borrowers, upon notice to Borrower, based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Lender has no written notice thereof from Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Inventory in the good faith determination of Lender. Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.

1.47. “Eligible LC Inventory” shall mean all finished goods Inventory owned or to be owned by Borrower and covered by a documentary Letter of Credit, and which finished goods Inventory is or will be in transit to one of Borrower’s locations in the continental United States, and which finished goods Inventory (a) as of the date such Inventory becomes owned by Borrower (i) is fully insured, (ii) is subject to a first priority security interest in and lien upon such goods in favor of Lender (except for any possessory lien upon such goods in the possession of handlers, storers of goods, a freight carrier or shipping company securing only the freight charges for the transportation of such goods to Borrower), and (iii) all documents, notices, instruments, statements and bills of lading relating thereto, if any, which Lender may deem necessary or desirable to evidence ownership by Borrower and/or to give effect to and protect the liens, security interests and other rights of Lender in connection therewith are delivered to Agent; and (b) are and remain acceptable to Lender for lending purposes in its sole discretion.

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1.48. “Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between Borrower and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

1.49. “Equipment” shall mean all of Borrower’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

1.50. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, together with all rules, regulations and interpretations thereunder or related thereto.

1.51. “ERISA Affiliate” shall mean any person required to be aggregated with Borrower under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.52. “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan, other than events as to which the requirement of notice has been waived in regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of any liability under

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Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate in excess of $100,000 and (g) any other event or condition with respect to any Pension Plan maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of Borrower in excess of $100,000.

1.53. “Event of Default” shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

1.54. “Excess Borrowing Availability” shall mean the amount, as determined by Lender, calculated at any date, equal to: (a) the lesser of (i) the Adjusted Borrowing Base, or (ii) the Maximum Credit (in each case after giving effect to any Reserves then in effect); minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations of Borrower, plus (ii) the amount of all then outstanding Letter of Credit Obligations.

1.55. “Excess Collateral Availability” shall mean the amount, as determined by Lender, calculated at any date, equal to: (a) the Borrowing Base (after giving effect to any Reserves then in effect) minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations of Borrower, plus (ii) the amount of all then outstanding Letter of Credit Obligations.

1.56. “Exchange Act” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

1.57. “Excluded Accounts” shall mean (a) any bank accounts established by Borrower or its Subsidiaries used exclusively for payroll, payroll taxes or employee benefits, escrow, customs, insurance, or fiduciary purposes or compliance with legal requirements, to the extent such legal requirements prohibit the granting of a lien thereon, (b) any accounts for the purpose of maintaining cash and Cash Equivalents subject to Permitted Liens of the type described in Sections 9.8(f), (j) and (m); or (c) any other account (other than any deposit account that constitutes or contains proceeds of any ABL Priority Collateral) that is excluded from the collateral securing the Term Loan Agreement.

1.58. “Fee Letter” shall mean the letter agreement executed by Borrower and Lender of even date herewith regarding the payment of certain fees by Borrower to Lender in connection with and on account of the financial accommodations made to Borrower hereunder.

1.59. “Financing Agreements” shall mean, collectively, this Agreement, the Fee Letter, and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now, prior to, or at any time hereafter executed and/or delivered by Borrower in connection with its credit obligations to Lender.

1.60. “Foreign Subsidiary” shall mean (a) a Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any state thereof or the District of Columbia (and including a Subsidiary of such a Subsidiary) and (b) any direct or indirect Subsidiary that is (i) a “controlled foreign corporation” within the meaning of Section 957(a) of the Code and any Subsidiary of such controlled foreign corporation or (ii) a domestic corporation or domestic partnership for U.S. federal income tax purposes, all or substantially all of whose assets consist of Capital Stock in one or more entities described in clause (i) above.

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1.61. “Funding Bank” shall have the meaning set forth in Section 3.3(a)

1.62. “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied.

1.63. “Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.64. “Hazardous Materials” shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

1.65. “Hedge Agreement” shall mean an agreement between Borrower and a Bank Product Provider that is a rate swap agreement, basis swap, forward rate agreement, commodity swap, forward commodity contracts, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices.

1.66. “Indebtedness” shall mean, with respect to Borrower, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of Borrower or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (other than an account payable to a trade creditor (whether or not an Affiliate) incurred in the ordinary course of business of Borrower and payable in accordance with customary trade practices); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of Borrower to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation,

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any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by Borrower; (f) all reimbursement obligations and other liabilities of Borrower with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker’s acceptances, drafts or similar documents or instruments issued for Borrower’s account; (g) all indebtedness of Borrower in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of Borrower, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of Borrower, all as of such time; (h) all obligations, liabilities and indebtedness of Borrower (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) all obligations owed by Borrower under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which Borrower is a general partner or a joint venturer to the extent Borrower is liable therefor as a result of Borrower’s ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that Borrower is not liable therefor or Borrower has no liability therefor as a matter of law and (k) the principal and interest portions of all rental obligations of Borrower under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP.

1.67. “Information Certificate” shall mean the Information Certificate of Borrower attached as Exhibit “B” hereto, containing material information with respect to Borrower, its businesses and assets provided by or on behalf of Borrower to Lender in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein.

1.68. “Intellectual Property” shall mean Borrower’s now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office, or in any similar office or agency of the United States of America, any State, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to Borrower’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

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1.69. “Intercreditor Agreement” shall mean that certain Lien Subordination and Intercreditor Agreement dated as of the Closing Date among the Lender, the Term Loan Agent and the Borrower substantially in the form attached as Exhibit “D” hereto, as the same may be amended, amended and restated, supplemented or otherwise modified in accordance with its terms.

1.70. “Interest Rate” shall mean,

(a) as to Prime Rate Loans, a rate equal to the Prime Rate plus the Applicable Margin for Prime Rate Loans, and

(b) as to LMIR Rate Loans, a rate equal to the LMIR Rate plus the Applicable Margin for LMIR Rate Loans.

Notwithstanding anything to the contrary contained in this definition, the Interest Rate shall mean the percentage per annum set forth above plus (in each case) two percent (2%) per annum, at Lender’s option, (i) for the period (A) from and after the effective date of termination or non-renewal hereof until such time as all Obligations are indefeasibly paid and satisfied in full in immediately available funds, or (B) from and after the date of the occurrence of any Event of Default, and for so long as such Event of Default is continuing as determined by Lender and (ii) on Revolving Loans to Borrower at any time outstanding in excess of the Adjusted Borrowing Base or Maximum Credit (whether or not such excess(es) arise or are made with or without Lender’s knowledge or consent and whether made before or after an Event of Default).

1.71. “Inventory” shall mean all of Borrower’s now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by Borrower as lessor; (b) are held by Borrower for sale or lease or to be furnished under a contract of service; (c) are furnished by Borrower under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

1.72. “Investments” shall have the meaning set forth in Section 9.10.

1.73. “Legal Requirements” shall mean, as to any person, the organizational documents of such person, and any treaty, law (including the common law), statute, ordinance, code, rule, regulation, guidelines, license, permit requirement, order or determination of an arbitrator or a court or other Governmental Authority, and the interpretation or administration thereof, in each case applicable to or binding upon such person or any of its property or to which such person or any of its property is subject.

1.74. “Lender” shall mean Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank, N.A., and its successors and assigns.

1.75. “Letter of Credit Documents” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other

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documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations.

1.76. “Letter of Credit Limit” shall mean $5,000,000.

1.77. “Letter of Credit Obligations” shall mean, at any time, the aggregate undrawn amount of all Letters of Credit outstanding at such time.

1.78. “Letters of Credit” shall mean all letters of credit (whether documentary or stand-by and whether for the purchase of inventory, equipment or otherwise) issued by Lender for the account of any Borrower pursuant to this Agreement, and all amendments, renewals, extensions or replacements thereof.

1.79. “License Agreement” shall mean any agreement or other arrangement pursuant to which Borrower has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person and material to the conduct of the business of the Borrower, excluding commercially available off-the-shelf software.

1.80. “LMIR Rate”, for any day, shall mean the rate for one month U.S. dollar deposits as reported on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) as of 11:00 a.m., London time (rounded upwards, if necessary, to the nearest 1/100^th of one percent (1%)), on such day, or if such day is not a London business day, then the immediately preceding London business day (or if not so reported, then as determined by Bank from another recognized source or interbank quotation).

1.81. “LMIR Rate Loan” means a Revolving Loan, or portion thereof, during any period in which it bears interest at an annual rate based upon the LMIR Rate. All LMIR Rate Loans shall be denominated in US Dollars.

1.82. “Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, performance or operations of Borrower; (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Lender upon the Collateral; (d) the Collateral or its value taken as a whole; (e) the ability of Borrower to repay the Obligations or of Borrower to perform its obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Lender under this Agreement or any of the other Financing Agreements.

1.83. “Material Contract” shall mean any contract or other agreement (other than the Financing Agreements and the Term Loan Documents), whether written or oral, to which Borrower is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect, including, without limitation, any Credit Card Agreement. Material Contracts shall not include purchase orders for inventory or for furniture and fixtures in the ordinary course of business, and shall only include leases of real property to which Borrower is a party to the extent that the leased premises is any non-retail location.

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1.84. “Maximum Credit” shall mean, at any time, the amount of $20,000,000, plus the amount of any Maximum Credit Incremental Increase then in effect in accordance with the provisions of Section 2.1(c) hereof.

1.85. “Maximum Credit Incremental Increase” shall have the meaning set forth in Section 2.1(c).

1.86. “Minimum Excess Collateral Availability” shall have the meaning set forth in Section 9.22 of this Agreement.

1.87. “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by Borrower or any ERISA Affiliate or with respect to which Borrower or any ERISA Affiliate may incur any liability.

1.88. “Net Cash Proceeds” shall mean, with respect to any sale, lease, transfer or other disposition of any asset, any Asset Sale, any Casualty Event, or the sale or issuance of any Indebtedness by Borrower, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of Borrower in connection with such transaction after deducting therefrom only (without duplication) (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, accountant’s fees, investment banking fees, finder’s fees, other similar fees and commissions and reasonable out-of-pocket expenses, (b) the amount of taxes reasonably estimated by Borrower to be actually and reasonably attributable to such transaction, and (c) the amount of any Indebtedness secured by a security interest, lien or other encumbrance (other than a security interest, lien or other encumbrance created under any Financing Agreements) on such asset that, by the terms of such transaction, is required to be repaid upon such disposition, in each case to the extent, but only to the extent, that the amounts so deducted are actually paid to Borrower.

1.89. “Net Recovery Percentage” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the recovery on the aggregate amount of the Inventory at such time on a “going out of business sale” basis as set forth in the most recent appraisal of Inventory received by Lender in accordance with Section 7.4, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the applicable original cost of the aggregate amount of the Inventory subject to appraisal. The Net Recovery Percentage for Inventory used in Section 1.10 shall be based on the percentage in the most recent appraisal applicable to the time period for which the Borrowing Base is being calculated.

1.90. “Non-DACA Account” shall mean any deposit or other bank account of the Borrower not subject to a current and effective Deposit Account Control Agreement.

1.91. “Non-Peak Period” shall mean all times during any calendar year other than the Peak Period.

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1.92. “Non-Wells Fargo Account” shall mean any deposit or other bank account maintained by the Borrower at any financial institution other than Wells Fargo Bank, National Association.

1.93. “Non-Wells Fargo Account Bank” shall mean any bank at which a Non-Wells Fargo Account is maintained.

1.94. “Obligations” shall mean (a) any and all Revolving Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower to Lender and/or any of their Affiliates, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements or on account of any Letter of Credit and all other Letter of Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to Borrower under the Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured; and (b) all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower to Lender or any Bank Product Provider arising under or pursuant to any Bank Products, whether now existing or hereafter arising.

1.95. “Other Taxes” shall have the meaning given to such term in Section 6.5(c).

1.96. “Packaway Inventory” means Inventory which is held by Borrower for sale only during certain selling seasons of the year, including, without limitation, holiday items.

1.97. “Payment Account” shall mean account no. 2079951067231 maintained by Lender and/or such other account or accounts maintained by Lender which Lender may from time to time designate to Borrower as the Payment Account for purposes of this Agreement and the other Financing Agreements.

1.98. “Peak Period” shall mean the period between October 1 through December 1 in any calendar year.

1.99. “Pension Plan” shall mean a “pension plan” (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which Borrower sponsors, maintains, or to which Borrower or any ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

1.100. “Permits” shall have the meaning given to such term in Section 8.7(b).

1.101. “Permitted Investors” shall mean and include (i) any Person or group that is a stockholder of the Borrower on the date hereof or his/her/its respective Affiliates, and (ii) equity investors participating in any Qualifying IPO.

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1.102. “Permitted Investments” shall mean each of the following:

(a) (i) accounts receivables owing to Borrower if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) investments in cash and Cash Equivalents, (iii) endorsement of instruments held for collection in the ordinary course of business, (iv) lease, utility and other similar deposits in the ordinary course of business and (v) accounts receivable and notes receivable from financially troubled counterparts in the ordinary course of business in order to prevent or limit loss;

(b) loans and advances by Borrower to directors, employees or officers of Borrower not to exceed the principal amounts set forth in Section 9.10 at any time;

(c) obligations of account debtors to Borrower arising from Accounts which are past due evidenced by a promissory note made by such account debtor payable to Borrower, the principal amount of which note shall not exceed $25,000 in any one case or $100,000 in the aggregate at any time outstanding; provided, that, promptly upon the receipt by Borrower of the original of any such promissory note, such promissory note shall be endorsed to the order of Lender by Borrower and promptly delivered to Lender as so endorsed;

(d) Investments outstanding on the date hereof;

(e) Hedge Agreements permitted pursuant to Section 9.9(c) or Section 9.9(m);

(f) Investments in securities of trade creditors or customers in the ordinary course of business that are received in settlement of bona fide disputes or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

(g) Investments made as a result of consideration received in connection with a sale or other disposition made in compliance with Section 9.7(b);

(h) Restricted Payments in compliance with Section 9.11;

(i) other Investments in an aggregate amount not to exceed $3,500,000 on the date such Investments are made to the extent, and only to the extent: (A) at the time such Investments are made Excess Borrowing Availability is not less than $3,000,000; and (B) such Investments are not made with Revolving Loan Proceeds;

(j) so long as no Default or Event of Default then exists or would result therefrom, the Borrower may make Investments that are made in exchange for the substantially concurrent sale of Capital Stock of the Borrower permitted to be issued by it hereunder;

(k) promissory notes or other obligations of directors, officers or other employees of the Borrower in connection with such directors’, officers’ or employees’ purchase of Capital Stock of the Borrower, so long as no cash is advanced by the Borrower in connection with such Investment; and

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(l) Investments that may arise as a result of the consummation of Sale and Leaseback Transactions permitted under Section 9.23.

1.103. “Permitted Liens” shall have the meaning given to such term in Section 9.8.

1.104. “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.105. “Primary Non-Wells Fargo Account Bank” shall mean any bank or financial institution at which Non-Wells Fargo Accounts are maintained to the extent that such Non-Wells Fargo Accounts receive deposits from eight (8) or more of the Borrower’s retail locations.

1.106. “Prime Rate” shall mean the higher of (i) the rate from time to time publicly announced by Lender as its “prime rate,” whether or not such announced rate is the best rate available at Lender and subject to each increase or decrease in such “prime rate,” effective as of the first day of the month after any such increase or decrease occurs; and (ii) the rate which is the Federal Funds Rate in effect from time to time, plus one-half percent (.50%).

1.107. “Prime Rate Loans” shall mean any Revolving Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof. All Prime Rate Loans shall be denominated in US Dollars.

1.108. “Qualifying IPO” shall mean the first bona fide underwritten primary or secondary (or combination of primary and secondary) public offering (other than a public offering pursuant to a registration statement on Form S-8) by the Borrower after the Closing Date pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act.

1.109. “Quarterly Average Excess Availability” shall mean, at any time, the average of the daily Excess Borrowing Availability of Borrower for the immediately preceding fiscal quarter as calculated by Lender.

1.110. “Real Property” shall mean all now owned and hereafter acquired real property of Borrower, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

1.111. “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in

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connection with any Account; (c) all payment intangibles of Borrower; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued or payable to Borrower or otherwise in favor of or delivered to Borrower in connection with any Account or any Credit Card Receivables; and (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to Borrower, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by Borrower or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of Borrower) or otherwise associated with any Accounts, Inventory or general intangibles of Borrower (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to Borrower in connection with the termination of any Pension Plan or other employee benefit plan and any other amounts payable to Borrower from any Pension Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which Borrower is a beneficiary).

1.112. “Records” shall mean all of Borrower’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Borrower with respect to the foregoing maintained with or by any other person).

1.113. “Reserves” shall mean as of any date of determination, such amounts as Lender may from time to time establish and revise in good faith in accordance with its customary practices for similarly situated borrowers, reducing the amount of Revolving Loans and Letters of Credit which would otherwise be available to Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) any of the Collateral of the types or categories included in the Borrowing Base or related thereto or its value or (ii) the assets or business of Borrower or (iii) the security interests and other rights of Lender in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Lender’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Lender is or may have been incomplete, inaccurate or misleading in any material respect; or (c) to reflect outstanding Letter of Credit Obligations as provided in Section 2.2 hereof; or (d) on account of the aggregate amount of all then outstanding and unpaid trade payables and other obligations of Borrower which are outstanding more than sixty (60) days past due as of the end of the immediately preceding month, except for such trade payables and other obligations being disputed in good faith by Borrower; or (e) in respect of any state of facts which Lender determines in good faith constitutes a Default or an Event of Default. Notwithstanding the foregoing, to the extent that Lender establishes Reserves with respect to specific Collateral categories, the Value of any Collateral that becomes the subject of such a Reserve shall be included as a Reserve only once, irrespective of whether or not such Collateral Value could be included in more than one Reserve category.

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Without limiting the generality of the foregoing, Reserves may be established to reflect any of the following: (a) that dilution with respect to the Credit Card Receivables (based on the ratio of the aggregate amount of non-cash reductions in Credit Card Receivables for any period to the aggregate dollar amount of the sales of Borrower giving rise to Credit Card Receivables for such period) as calculated by Lender for any period, is or is reasonably anticipated to be greater than five percent (5%), (b) inventory shrinkage, (c) reserves in respect of markdowns and cost variances (pursuant to discrepancies between the purchase order price of Inventory and the actual cost thereof), (d) any and all amounts in respect of sales, use and/or withholding taxes which are past due, (e) any and all rental payments, service changes or other amounts which are past due to lessors of personal property, (f) up to fifty percent (50%) of the aggregate amount of merchandise gift certificates and coupons as certified by the Borrower in its Financial Statements, (g) an increase in the number of days of the turnover of Inventory or a change in the mix of the Inventory that results in an overall decrease in the value thereof or a deterioration in its nature or quality (but only to the extent not addressed by the lending formulas in a manner satisfactory to Lender), (h) variances between the perpetual inventory records of Borrower and the results of any test counts of Inventory conducted by Lender with respect thereto, in excess of the percentage acceptable to Lender, (i) the aggregate amount of deposits, if any, received by Borrower from its retail customers in respect of unfilled orders for merchandise and the purchase price of layaway goods, (j) obligations, liabilities or indebtedness (contingent or otherwise) of Borrower to Lender, any Affiliate of Lender or any other financial institution acceptable to Lender (but in each case as to any Affiliate of Lender or other financial institution, only to the extent approved by Lender) arising under or in connection with any Hedge Agreement of Borrower with Lender, any Affiliate of Lender or any other financial institution acceptable to Lender, to the extent that such obligation, liabilities or indebtedness constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Lender in any Collateral, (k) any and all duty and freight charges in respect of Inventory in transit to the Borrower from outside the United States, (l) any and all rental payments, service charges or other amounts past due to lessors or owners and operators of real property at which any Inventory or Records are located, except to the extent such amounts are being disputed by Borrower in good faith, as determined by Lender in its sole discretion, (m) any and all rental payments, service charges or other amounts to become due to any lessor or owner and operator of any retail location outside the United States or any non-retail location other than the Borrower’s corporate headquarters (whether inside or outside the United States) at which any Inventory or Records are located unless such lessor or owner and operator is a party to a Collateral Access Agreement with Lender; provided, that, the Reserves established pursuant to this clause (m) shall not exceed at any time the aggregate of amounts payable for the next three (3) months to such lessor or owner and operator of such location; provided further, that, the foregoing limitation on the amount of the Reserves shall only apply so long as (i) no Event of Default shall exist or have occurred and be continuing, (ii) neither Borrower nor Lender shall have received notice of any event of default by the Borrower under the lease with respect to such location, and (iii) Borrower has not granted to such lessor or owner and operator a security interest or lien upon any assets of Borrower.

The amount of any Reserve established by Lender shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as determined by Lender in good faith. In the event that based on the calculation of the Borrowing Base or the Adjusted Borrowing Base by Lender at the time, the establishment of a Reserve at such time will result in

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there being no Excess Borrowing Availability at such time, Lender shall give Borrower one (1) Business Days’ notice prior to establishing such new Reserves. Promptly upon the receipt of such notice, Borrower shall take such action as may be required so that the event, condition or matters that is the basis for the Reserve no longer exists in a manner and to the extent reasonably satisfactory to Lender. In no event shall such notice and opportunity limit the right of Lender to establish such Reserve unless Lender shall have determined that the event, condition or other matter that is the basis for such new Reserve no longer exists or has otherwise been addressed in a manner and to the extent reasonably satisfactory to Lender so that Lender determines that such Reserve does not need to be established.

1.114. “Restricted Payment” shall mean (a) any cash dividend or other cash distribution, direct or indirect, on account of any shares of any class of Capital Stock of Borrower, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment on account of, or purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of Borrower other than redemptions of existing Capital Stock funded from the proceeds of the issuance of new Capital Stock, (c) any cash payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any shares of any class of Capital Stock of Borrower now or hereafter outstanding other than such payments made with respect to required tax withholdings on the vesting, exercise and/or delivery of any outstanding warrants, options or other rights to acquire any shares of any class of Capital Stock or any employee or former employee of Borrower and/or its Affiliates, or (d) any payment to any Affiliate, officer or director of Borrower, except as specifically permitted by this Agreement, made to any Affiliate of Borrower who is an employee or service provider of Borrower and/or its Affiliates in the ordinary course of business or otherwise set forth in the Borrower’s annual budgeted financial statements for the applicable year.

1.115. “Revolving Loan Limit” shall mean, at any time, the amount equal to the Maximum Credit minus the then outstanding principal amount of the Revolving Loans and the Letters of Credit provided to Borrower.

1.116. “Revolving Loans” shall mean the loans now or hereafter made by or on behalf of Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances).

1.117. “Sale and Leaseback Transaction” shall have the meaning given to such term in Section 9.23.

1.118. “Servicing Fee” shall have the meaning given to such term in Section 3.2(d).

1.119. “Slow Moving Inventory” means Inventory which has been marked out of stock by Borrower, which Inventory is subject to verification by Lender in connection with each field examination of the Collateral.

1.120. “Solvent” shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to

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believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

1.121. “Store Accounts” shall have the meaning set forth in Section 6.3(a) hereof.

1.122. “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

1.123. “Termination Date” shall have the meaning set forth in Section 12.1(a) hereof.

1.124. “Term Administrative Agent” shall mean Goldman Sachs Bank USA, in its capacity as administrative agent under the Term Loan Documents, or any successor administrative agent under the Term Loan Documents.

1.125. “Term Collateral Agent” shall mean Goldman Sachs Bank USA in its capacity as collateral agent under the Term Loan Documents, or any successor collateral agent under the Term Loan Documents.

1.126. “Term Lenders” shall mean the lenders from time to time party to the Term Loan Agreement.

1.127. “Term Loan Agreement” shall mean that certain Credit Agreement dated as of the Closing Date, by and among the Borrower, as borrower, the guarantors party thereto from time to time, the Term Lenders, Goldman Sachs Bank USA, as Sole Lead Arranger and as Sole Lead Bookrunner, the Term Administrative Agent and the Term Collateral Agent, in form and substance reasonably satisfactory to the Lender, as the same may be amended, restated, modified, supplemented, extended, renewed, refunded, replaced or refinanced from time to time in one or more agreements (in each case with the same or new lenders, institutional investors or agents), including any agreement extending the maturity thereof or otherwise instructing all or any portion of the Indebtedness thereunder or increasing the amount loaned or issued thereunder or altering the maturity thereof, in each case as and to the extent permitted by this Agreement and the Intercreditor Agreement.

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1.128. “Term Loan Documents” shall mean the Term Loan Agreement and all security agreements, guarantees, pledge agreements and other agreements or instruments executed in connection therewith.

1.129. “Term Loan Event of Default” shall mean an “Event of Default” as defined in the Term Loan Agreement.

1.130. “Term Loan Maturity Date” shall mean the “Final Maturity Date” as defined in the Term Loan Agreement.

1.131. “Term Priority Collateral” shall mean the “Term Loan First Lien Collateral” as defined in the Intercreditor Agreement.

1.132. “Term Secured Parties” shall mean the “Secured Parties” as defined in the Term Loan Agreement.

1.133. “UCC” shall mean the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Lender may otherwise determine).

1.134. “US Dollars”, “US$” and “$” shall each mean lawful currency of the United States of America.

1.135. “Value” shall mean, as determined by Lender in good faith, with respect to Inventory, the lower of (a) cost computed on a weighted average cost basis in accordance with GAAP or (b) market value; provided, that, for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate on the sale thereof to Borrower or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Lender prior to the date hereof, if any.

1.136. “Voting Stock” shall mean with respect to Borrower, (a) one (1) or more classes of Capital Stock of Borrower having general voting powers to elect at least a majority of the board of directors, managers or trustees of Borrower, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of Borrower convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of Borrower described in clause (a) of this definition.

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SECTION 2. CREDIT FACILITIES

2.1. Revolving Loans.

(a) Subject to and upon the terms and conditions contained herein, Lender agrees to make Revolving Loans to Borrower from time to time in amounts requested by Borrower in US Dollars up to the aggregate amount outstanding at any time equal to the lesser of: (i) the Adjusted Borrowing Base of Borrower at such time and (ii) the Revolving Loan Limit at such time.

(b) On the terms and subject to the conditions hereof, Borrower may from time to time borrow, prepay and reborrow Revolving Loans. Lender shall not be required to make any Revolving Loan, if, after giving effect thereto, the aggregate outstanding principal amount of Revolving Loans and Letter of Credit Obligations would exceed the Maximum Credit.

(c) Until the Termination Date, Borrower may request an increase in the amount of the Maximum Credit, up to an aggregate Maximum Credit of not more than $30,000,000, in increments of not less than $2,500,000 (as the case may be, a “Maximum Credit Incremental Increase”), as follows: (A) Borrower shall notify Lender in writing that it is requesting a Maximum Credit Incremental Increase no less than five (5) Business Days prior to the proposed effective date of such Maximum Credit Incremental Increase; and (B) no Default or Event of Default shall exist or have occurred and be continuing at the time that Borrower exercises such option, and the exercise of such option in itself will not cause an Event of Default.

(d) Except in Lender’s discretion, or as otherwise provided herein, (i) the aggregate amount of the Revolving Loans and the Letter of Credit Obligations outstanding at any time shall not exceed the Maximum Credit, and (ii) the aggregate principal amount of the Revolving Loans and Letter of Credit Obligations outstanding at any time to Borrower shall not exceed the Adjusted Borrowing Base.

(e) In the event that (i) the aggregate amount of the Revolving Loans and the Letter of Credit Obligations outstanding at any time exceed the Maximum Credit, or (ii) except as otherwise provided herein, the aggregate principal amount of the Revolving Loans and Letter of Credit Obligations outstanding to Borrower exceed the Adjusted Borrowing Base, such event shall not limit, waive or otherwise affect any rights of Lender in such circumstances or on any future occasions and Borrower shall, immediately repay to Lender the entire amount of any such excess(es).

2.2. Letters of Credit.

(a) Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of Borrower, Lender agrees to issue, for the account of Borrower, one or more Letters of Credit denominated in US Dollars, containing terms and conditions acceptable to Lender.

(b) The Borrower shall give Lender three (3) Business Days’ prior written notice of Borrower’s request for the issuance of a Letter of Credit. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, the

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effective date (which date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of issuance), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Borrower shall attach to such notice the proposed terms of the Letter of Credit. The renewal or extension of any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

(c) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit shall be available unless each of the following conditions precedent have been satisfied in a manner satisfactory to Lender: (i) the Borrower shall have delivered to Lender at such times and in such manner as Lender may require, an application, in form and substance reasonably satisfactory to Lender, for the issuance of the Letter of Credit and such other Letter of Credit Documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to Lender, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that Lender refrain from, the issuance of letters of credit generally or the issuance of such Letter of Credit, and (iii) except in Lender’s sole discretion, after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit Limit.

(d) Borrower shall reimburse Lender immediately in US Dollars, with respect to any draw on any Letter of Credit. Each drawing under any Letter of Credit or other amount payable in connection therewith, if not immediately repaid from the Payment Account, shall constitute a request by Borrower for a Revolving Loan in the amount of such drawing or other amount then due. The date of such Revolving Loan shall be the date of the drawing or as to other amounts, the due date therefor.

(e) Borrower shall indemnify and hold Lender harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Lender may suffer or incur in connection with any Letter of Credit and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by Lender or correspondent with respect to any Letter of Credit, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or willful misconduct of Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. Borrower assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and for such purposes the drawer or beneficiary shall be deemed Borrower’s agent. Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances thereunder. Borrower

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hereby releases and holds Lender harmless from and against any acts, waivers, errors, delays or omissions with respect to or relating to any Letter of Credit, except for the gross negligence or willful misconduct of Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction. The provisions of this subsection (e) shall survive the payment of Obligations and the termination of this Agreement.

(f) In connection with Inventory purchased pursuant to any Letter of Credit, Borrower shall, at Lender’s request, instruct all suppliers, carriers, forwarders, Customs Brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Lender holds a security interest that upon Lender’s request, such items are to be delivered to Lender and/or subject to Lender’s order, and if they shall come into such Borrower’s possession, to deliver them, upon Lender’s request, to Lender in their original form. Except as otherwise provided herein, Lender shall not exercise such right to request such items so long as no Default or Event of Default shall exist or have occurred and be continuing. Except as Lender may otherwise specify, Borrower shall designate Lender as the consignee on all bills of lading and other negotiable and non-negotiable documents.

(g) The obligations of Borrower to pay Letter of Credit Obligations shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement.

2.3. Mandatory Prepayments. Notwithstanding the provisions of Section 6.4 hereof, so long as no Event of Default exists or has occurred and is continuing:

(a) Asset Sales. Not later than five (5) Business Days following the receipt of Net Cash Proceeds of any Asset Sale by Borrower, Borrower shall apply 100% of such Net Cash Proceeds to make prepayments in accordance with Section 6.4; provided that:

(i) so long as no Event of Default shall then exist or would arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an officer’s certificate to Lender on or prior to such date stating that such Net Cash Proceeds are reasonably expected to be reinvested in assets of Borrower used or useful in the operations of Borrower within 365 days following the receipt of such proceeds (which officer’s certificate shall set forth the estimates of the proceeds to be so expended), which time frame may be extended to 545 days following the date of receipt of such proceeds if Borrower shall have entered into a binding agreement within such original 365-day time frame to make such reinvestment and such reinvestment shall not be complete within the original 365-day time frame; provided that, if the property subject to such Asset Sale constituted Collateral, then all property purchased or otherwise acquired with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the perfected Lien (subject only to Permitted Liens) of this Agreement in favor of Lender; and

(ii) if all or any portion of such Net Cash Proceeds is not so reinvested within such 365-day period (or, if applicable, 545-day period), such unused portion shall be applied on the last day of such period as a mandatory prepayment as otherwise provided in this Section 2.3(a).

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(b) Casualty Events. Not later than five (5) Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by Borrower, Borrower shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with Section 6.4.

2.4. Cash Dominion; Borrower Account Protocols. Borrower shall, at all times, use Lender as its primary depository institution and, except as expressly authorized in this Agreement, shall not open or maintain any Non-Wells Fargo Account. All current Non-Wells Fargo Accounts are disclosed in the Information Certificate and these and any future Non-Wells Fargo Accounts (which may be opened and maintained only as expressly authorized herein) shall be subject in every way to the following terms and conditions:

(a) Borrower will use commercially reasonable efforts to deliver to Lender a Deposit Account Control Agreement with respect to each Primary Non-Wells Fargo Account Bank within ninety (90) days after the Closing Date.

(b) Borrower shall not, directly or indirectly after the date hereof, open, establish or maintain any new Non-Wells Fargo Account unless each of the following conditions is satisfied: (A) such new Non-Wells Fargo Account shall be reasonably necessary for the efficient operation of one or more of the Borrower’s retail locations and such locations are not within commercially reasonable driving distance to a Lender branch bank or a DACA Account Bank; (B) Lender shall have received notice of such new Non-Wells Fargo Account with the regular quarterly financial reports submitted by the Borrower for the fiscal quarter within which such Non-Wells Fargo Account was opened; and (C) to the extent that the opening of such Non-Wells Fargo Account renders the applicable bank a Primary Non-Wells Fargo Account Bank, Borrower shall use commercially reasonable efforts to deliver to Lender a Deposit Account Control Agreement with respect to such newly-designated Primary Non-Wells Fargo Account Bank within sixty (60) days of notifying Lender of such Non-Wells Fargo Account in its applicable quarterly financial report.

(c) So long as Borrower maintains Excess Borrowing Availability at all times greater than or equal to thirty-five percent (35%) of the Maximum Credit in effect at such time, Borrower may maintain the Non-DACA Accounts subject to the restrictions set forth in subparagraphs (a) and (b) above and subparagraphs (d) and (e) below.

(d) Within ninety (90) days of the occurrence of any Discretionary DACA Protocol Event, Lender may in its reasonable discretion require that Borrower use commercially reasonable efforts to enter into a Deposit Account Control Agreement with each Primary Non-Wells Fargo Account Bank within ninety (90) days of such notice. If Borrower is unable to deliver a Deposit Account Control Agreement with any Primary Non-Wells Fargo Account Bank within such ninety (90) day period, Lender may in its reasonable discretion within ten (10) Business Days of the end of such ninety (90) day period direct Borrower to replace the accounts held by such Primary Non-Wells Fargo Account Bank with new accounts held by Lender or a DACA Account Bank, and Borrower will comply with such directive within a commercially reasonable period of time not to exceed sixty (60) days.

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(e) Following the occurrence of any Cash Dominion Event, Borrower shall use commercially reasonable efforts to enter into a Deposit Account Control Agreement with each Primary Non-Wells Fargo Account Bank within twenty (20) Business Days’ written notice to the Borrower from Lender of such Cash Dominion Event. If Borrower is unable to enter into a Deposit Account Control Agreement with any Primary Non-Wells Fargo Account Bank within such twenty (20) Business Day period, Lender may during the resulting Cash Dominion Period require that Borrower close any or all accounts held with such Primary Non-Wells Fargo Account Bank.

SECTION 3. INTEREST AND FEES

3.1. Interest.

(a) Borrower shall pay interest in respect of all unpaid principal amounts of the Revolving Loans from the respective dates such principal amounts are advanced until paid (whether at stated maturity, on acceleration or otherwise) at a rate per annum equal to: (i) for Revolving Loans made or outstanding as Prime Rate Loans, the Applicable Margin in effect from time to time for such Prime Rate Loans plus the Prime Rate in effect from time to time; and (ii) for Revolving Loans made or outstanding as LMIR Rate Loans, the Applicable Margin in effect from time to time for such LMIR Rate Loans plus the LMIR Rate in effect from time to time. All interest accruing hereunder on and after the date of any Event of Default or termination hereof shall be payable on demand. The applicable Interest Rate will be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed.

(b) Borrower may from time to time request (i) LMIR Rate Loans, (ii) that Prime Rate Loans be converted to LMIR Rate Loans, and (iii) that LMIR Rate Loans be converted to Prime Rate Loans, in each case in accordance with the terms and conditions of Section 6.6 hereof. Such request from Borrower shall specify the amount of the LMIR Rate Loans, the amount of the Prime Rate Loans to be converted to LMIR Rate Loans, or the amount of LMIR Rate Loans to be converted to Prime Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Lender of any such request from Borrower, such LMIR Rate Loans shall be made or Prime Rate Loans shall be converted to LMIR Rate Loans, or LMIR Rate Loans shall be converted to Prime Rate Loans, or such LMIR Rate Loans shall continue, as the case may be, provided, that, (i) no Default or Event of Default shall exist or have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination of this Agreement, (iii) Borrower shall have complied with such customary procedures as are established by Lender from time to time for requests by Borrower for LMIR Rate Loans, (iv) Lender shall have determined that the LMIR Rate is available to Lender and can be readily determined as of the date of the request for such LMIR Rate Loan by Borrower. Any request by or on behalf of a Borrower for LMIR Rate Loans, to convert Prime Rate Loans to LMIR Rate Loans, or to convert LMIR Rate Loans to Prime Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Lender shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any LMIR Rate Loans, but the provisions hereof shall be deemed to apply as if Lender had purchased such deposits to fund the LMIR Rate Loans.

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(c) Any LMIR Rate Loans shall, at Lender’s option, upon notice by Lender, be subsequently converted to Prime Rate Loans in the event that this Agreement shall terminate or not be renewed. Borrower shall pay to Lender, for the benefit of Lender, upon demand by Lender (or Lender may, at its option, charge any loan account of Borrower) any amounts required to compensate Lender for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of LMIR Rate Loans to Prime Rate Loans pursuant to any of the foregoing.

(d) Interest shall be payable by Borrower to Lender, monthly in arrears not later than the first day of each calendar month with respect to all Revolving Loans. The interest rate on Prime Rate Loans and LMIR Rate Loans shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate and the LMIR Rate, as the case may be, effective on the date of any change in such applicable rates. In no event shall charges constituting interest payable by Borrower to Lender exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto. Lender shall provide Borrower with a monthly statement of interest expenses incurred in connection with the Revolving Loans for the immediately preceding month.

3.2. Letter of Credit Fees. Borrower shall pay to Lender, a fee at a rate equal to the Applicable L/C Rate on the average daily maximum amount available to be drawn under all Letters of Credit for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding calendar month, computed for each day from the date of issuance to the date of expiration; except that Borrower shall pay, at Lender’s option, without notice, such fee at a rate two percent (2%) greater than the otherwise applicable rate on such average daily maximum amount for: (i) the period from and after the date of termination or non-renewal hereof until Lender has received full and final payment of all Obligations (notwithstanding entry of a judgment against Borrower) and (ii) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by Lender. Such letter of credit fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrower to pay such fee shall survive the termination or non-renewal of this Agreement. In addition to the letter of credit fees provided above, Borrower shall pay to Lender the letter of credit fronting and negotiation fees agreed to by Borrower and Lender from time to time and the customary charges from time to time of Lender with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit.

3.3. Changes in Laws and Increased Costs of Loans.

(a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to Lender or any banking or financial institution from whom Lender borrows funds or obtains credit (a “Funding Bank”), or (ii) a Funding Bank or Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank or Lender determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the

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interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank or Lender complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s policies with respect to capital adequacy) by an amount deemed by Lender to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to Lender of funding or maintaining the Revolving Loans, the Letters of Credit or the Commitment, then Borrower shall from time to time upon demand by Lender pay to Lender additional amounts sufficient to indemnify Lender against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Borrower by Lender and shall be conclusive, absent manifest error.

(b) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof occurring after the date hereof shall make it unlawful for Lender to make or maintain LMIR Rate Loans as contemplated by this Agreement, (i) Lender shall promptly give written notice of such circumstances to Borrower (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of Lender hereunder to make LMIR Rate Loans and convert Prime Rate Loans to LMIR Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for Lender to make or maintain LMIR Rate Loans, Lender shall then have a commitment only to make a Prime Rate Loan when a LMIR Rate Loan is requested and (iii) Revolving Loans then outstanding as LMIR Rate Loans, if any, shall be converted automatically to Prime Rate Loans.

SECTION 4. CONDITIONS PRECEDENT AND POST-CLOSING DELIVERIES

4.1. Conditions Precedent to Initial Revolving Loans and Letters of Credit. The obligation of Lender to make the initial Revolving Loans or to issue the initial Letters of Credit hereunder is subject to the satisfaction of, or waiver of, immediately prior to or concurrently with the making of such Revolving Loan or the issuance of such Letter of Credit of each of the following conditions precedent:

(a) Lender shall have received or shall have confirmed prior receipt, in form and substance satisfactory to Lender, all releases, terminations and such other documents as Lender may request to evidence and effectuate the termination and release of the interest of any third party in and to any assets and properties of Borrower (except as to Permitted Liens), duly authorized, executed and delivered by such third party, including, but not limited to, (i) UCC termination statements for all UCC financing statements previously filed by such third party or its predecessors, as secured party and Borrower, as debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by Borrower in favor of such third party, in form acceptable for recording with the appropriate Governmental Authority;

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(b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be satisfactory in form and substance to Lender, and Lender shall have received all information and copies of all documents, including records of requisite corporate action and proceedings which Lender may have requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate officers or Governmental Authority (and including a copy of the certificate of incorporation of Borrower certified by the Secretary of State);

(c) the Intercreditor Agreement shall have been executed by the parties thereto;

(d) Lender shall have received or shall have confirmed prior receipt of all financial information, projections, budgets, business plans, cash flows and such other information as Lender shall request from time to time from Borrower, all in form and substance satisfactory to Lender, including, without limitation, (i) audited financial statements for the fiscal year ending January 28, 2012 (including balance sheets, statements of income and loss, statements of cash flow and statements of shareholders’ equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Borrower as of the end of such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited financial statements, which accountants shall be an independent accounting firm selected by Borrower and acceptable to Lender, that such audited financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Lender as of the end of and for the fiscal year then ended; provided that, to the extent that such financial statements are in draft form only, the sole contingency for completion and delivery of such audited financial statements in accordance with the requirements of this subsection (i) shall be the closing on the Credit Facility as contemplated by the terms of this Agreement; (ii) budgeted monthly balance sheets, income statements, statements of cash flows and availability of Borrower for the period up through the fiscal year ending February 2, 2013; (iii) projected annual financial statements of Borrower for the period of three (3) years after the Closing Date; (iv) an opening pro forma balance sheet for Borrower; and (v) any updates or modifications to the budgeted financial statements of Borrower previously provided by Borrower to Lender;

(e) Lender shall have received an opinion letter from counsel to Borrower with respect to the Financing Agreements and such other matters as Lender shall require, in form and substance satisfactory to Lender;

(f) [intentionally left blank];

(g) Lender shall have received or shall have confirmed prior receipt, in form and substance satisfactory to Lender, all consents, waivers, acknowledgments and other agreements from third persons which Lender may deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, but not including any such materials designated for post-closing delivery in Section 4.3 hereof;

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(h) the Excess Borrowing Availability of Borrower as determined by Lender, as of the date hereof, shall be not less than $15,000,000 after giving effect to any Revolving Loans made or to be made on the date hereof and Letters of Credit issued or to be issued on the date hereof in connection with the initial transactions hereunder, as well as the payment of all fees and expenses in connection therewith;

(i) [intentionally left blank];

(j) Lender shall have received or shall have confirmed prior receipt of the Term Loan Agreement and all other documents executed in connection with the Term Loan including, without limitation, any solvency certification;

(k) Lender shall have received evidence, in form and substance satisfactory to Lender, that Lender has a valid perfected first priority security interest in all of the Collateral (subject only to Permitted Liens);

(l) Lender shall have received or shall have confirmed prior receipt and reviewed lien and judgment search results for the jurisdiction of organization of Borrower and for any and all other jurisdictions in which assets of Borrower are located as reasonably required by Lender, which search results shall be in form and substance satisfactory to Lender;

(m) Lender shall have received or shall have confirmed prior receipt evidence of insurance and loss payee endorsements in favor of Lender as to Borrower’s casualty and business interruption insurance, each in form and substance satisfactory to Lender, and any other certificates of insurance policies and/or endorsements naming Lender as loss payee as required by Lender under this Agreement or any other Financing Agreement;

(n) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Lender, in form and substance satisfactory to Lender;

(o) Borrower shall have paid all costs and expenses of Lender incurred in connection with the negotiation, preparation and administration of this Agreement and the other Financing Agreements, including, without limitation, the fees and costs of counsel to the Lender; and

(p) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Revolving Loan or providing each such Letter of Credit and after giving effect thereto.

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4.2. Conditions Precedent to All Revolving Loans and Letters of Credit. The obligation of Lender to make the Revolving Loans, including the initial Revolving Loans, or to issue any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, immediately prior to or concurrently with the making of each such Revolving Loan or the issuance of such Letter of Credit, each of the following conditions precedent:

(a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct, in all material respects, with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Revolving Loan or providing each such Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate, in all material respects, on and as of such earlier date);

(b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which (A) purports to enjoin, prohibit, restrain or otherwise affect (1) the making of the Revolving Loans or providing the Letters of Credit, or (2) the consummation of the transactions contemplated pursuant to the terms hereof or the other Financing Agreements or (B) has or could have a reasonable likelihood of having a Material Adverse Effect; and

(c) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Revolving Loan or providing each such Letter of Credit and after giving effect thereto.

4.3. Post-Closing Deliveries. Within ninety (90) days of the Closing Date (subject to any extension of such period by Lender in its sole and absolute discretion), Borrower shall use commercially reasonable efforts to deliver to Lender in form and substance reasonably satisfactory to Lender:

(a) Deposit Account Control Agreements as provided in Section 2.4(a);

(b) Collateral Access Agreements for Borrower’s corporate headquarters and distribution center in Delaware;

(c) A certificate of good standing from the Secretary of State of Illinois; and

(d) A Credit Card Acknowledgment from Paymentech, LLC.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

5.1. Continuing Grant of Security Interest. To secure payment and performance of all Obligations, Borrower reaffirms its prior grant of and hereby grants to Lender a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Lender, as security, all personal and real property and fixtures, and interests in property and fixtures, of Borrower, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by Lender, collectively, the “Collateral”), including:

(a) all Accounts;

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(b) all general intangibles, including, without limitation, all Intellectual Property;

(c) all goods, including, without limitation, Inventory and Equipment, except for any Equipment that is subject at any time to the purchase money security interest of any Person (other than Lender or an Affiliate of Lender), which lien secures Indebtedness due and owing to such Person in accordance with the terms of Section 9.9 hereof;

(d) all Real Property and fixtures;

(e) all chattel paper, including, without limitation, all tangible and electronic chattel paper;

(f) all instruments, including, without limitation, all promissory notes;

(g) all documents;

(h) all deposit accounts;

(i) all letters of credit, banker’s acceptances and similar instruments and including all letter-of-credit rights;

(j) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors;

(k) all 1) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and 2) monies, credit balances, deposits and other property of Borrower now or hereafter held or received by or in transit to Lender or at any other depository or other institution from or for the account of Borrower, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

(l) all commercial tort claims, including, without limitation, those identified in the Information Certificate;

(m) to the extent not otherwise described above, all Receivables;

(n) all Records; and

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(o) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral.

5.2. Excluded Collateral. Notwithstanding anything contained in this Agreement to the contrary, the term “Collateral” shall not include:

(a) fee-owned real property with a fair market value equal to or less than $2,000,000 and any leasehold interest;

(b) motor vehicles and other assets subject to certificates of title;

(c) commercial tort claims with reasonably predicted value equal to or less than $500,000;

(d) any permit, lease, license, contract or agreement held by Borrower or to which Borrower is a party, and any of its rights, title or interest thereunder, if and to the extent that a security interest is prohibited by or in violation of (a) any law, rule or regulation applicable to Borrower, or (b) a term, provision or condition of any such permit, lease, license, contract or agreement (unless such law, rule, regulation, term, provision or condition would be rendered ineffective with respect to the creation of the security interest hereunder pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity); provided however that the Collateral shall include (and such security interest shall attach) immediately at such time as the relevant contractual or legal prohibition shall no longer be applicable and to the extent severable, shall attach immediately to any portion of such permit, lease, license, contract or agreement not subject to the prohibitions specified in (a) and (b) above; provided further that the exclusions referred to in clause (a) of this Section 5.2 shall not include any proceeds (as defined in the UCC) of any such permit, lease, license, contract or agreement;

(e) in any of the outstanding capital stock of a Foreign Subsidiary in excess of 65% of the voting power of all classes of capital stock of such Foreign Subsidiary entitled to vote; provided that immediately upon the amendment of the Code to allow the pledge of a greater percentage of the voting power of capital stock in a Foreign Subsidiary without adverse tax consequences, the Collateral shall include, and the security interest granted by Borrower shall attach to, such greater percentage of capital stock of each such Foreign Subsidiary;

(f) any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

(g) any Excluded Accounts;

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(h) any property or asset only to the extent and for so long as the grant of a security interest in such property or asset is prohibited by any applicable law or requires a consent not obtained, and has not been obtained after use by Borrower of commercially reasonable efforts to obtain such consent, of any Governmental Authority pursuant to applicable Legal Requirements (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction);

(i) Capital Stock of a person (other than a wholly owned Subsidiary) the pledge of which would violate the organizational documents of such person that is binding on or relating to such capital stock or equity interests but solely to the extent and for so long as such restrictions exists;

(j) any property (and proceeds thereof) that is subject to a lien securing purchase money Indebtedness or Capital Leases, in each case permitted hereunder, to the extent the documents relating to such lien securing such purchase money Indebtedness or Capital Leases would not permit such property (and proceeds thereof) to be subject to the liens created hereunder (provided that immediately upon the ineffectiveness, lapse or termination of any such restriction, the Collateral shall include, and the security interest granted by Borrower shall attach to, such property (and proceeds thereof));

(k) any governmental licenses or state or local franchises, charters and authorizations, to the extent security interests in such licenses, franchises, charters and authorizations are prohibited or restricted by applicable law; and

(l) proceeds and products from any and all of the foregoing excluded collateral described in clauses (a) through (k), unless such proceeds or products would otherwise constitute ABL Priority Collateral.

Notwithstanding the foregoing, assets will be excluded from the Collateral in circumstances where in the reasonable judgment and sole discretion of Lender the costs of obtaining a security interest in such assets exceed the practical benefit to Lender afforded thereby.

5.3. Perfection of Security Interests.

(a) Borrower irrevocably and unconditionally authorizes Lender (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Lender or its designee as the secured party and Borrower as debtor, as Lender may require, and including any other information with respect to Borrower or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Lender may determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Borrower hereby ratifies and approves all financing statements naming Lender or its designee as secured party and Borrower, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Lender prior to the date hereof and ratifies and confirms the authorization of Lender to file such financing statements (and amendments, if any). Borrower hereby authorizes Lender to adopt on behalf of Borrower any symbol required for authenticating any electronic filing. In no event shall

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Borrower at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Lender or its designee as secured party and Borrower as debtor without Lender’s prior written authorization.

(b) Borrower does not have any chattel paper (whether tangible or electronic) or any instruments as of the date hereof with a value individually in excess of $100,000, except as set forth in the Information Certificate. In the event that Borrower shall be entitled to or shall receive any chattel paper or instrument after the date hereof with a value individually in excess of $100,000 that constitutes ABL Priority Collateral (collectively the “ABL Chattel Paper/Instruments”), Borrower shall promptly notify Lender thereof in writing. Promptly upon the receipt thereof by or on behalf of Borrower, Borrower shall deliver, or cause to be delivered to Lender, all ABL Chattel Paper/Instruments that Borrower has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify, in each case except as Lender may otherwise agree. At Lender’s option, Borrower shall, or Lender may at any time on behalf of Borrower, cause the original of any such ABL Chattel Paper/Instruments to be conspicuously marked in a form and manner acceptable to Lender with the following legend referring to such chattel paper or instruments as applicable: “This [chattel paper][instrument] is subject to the security interest of Wells Fargo Bank, National Association and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party.”

(c) In the event that any Borrower shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) with a value individually in excess of $100,000, Borrower shall promptly notify Lender thereof in writing. Promptly upon Lender’s request, Borrower shall take, or cause to be taken, such actions as Lender may request to give Lender control of such electronic chattel paper under the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

(d) Borrower does not have any deposit accounts as of the date hereof, except as set forth in the Information Certificate.

(e) Borrower does not own or hold, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, except as set forth in the Information Certificate.

(i) In the event that Borrower shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities with a value in excess of $100,000 that constitutes ABL Priority Collateral, Borrower shall promptly endorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify.

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(ii) Borrower shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account as permitted herein) constituting ABL Priority Collateral with any securities intermediary or commodity intermediary unless such account is with Lender, or subject to a control agreement in favor of Lender in form and substance satisfactory to Lender.

(f) Borrower is not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker’s acceptance or similar instrument as of the date hereof with a value in excess of $100,000, except as set forth in the Information Certificate. In the event that Borrower shall be entitled to or shall receive any right to payment under any letter of credit, banker’s acceptance or any similar instrument with a value in excess of $100,000 that constitutes ABL Priority Collateral, whether as beneficiary thereof or otherwise after the date hereof, such Borrower shall promptly notify Lender thereof in writing. Borrower shall immediately, as Lender may specify, either (i) deliver, or cause to be delivered to Lender, with respect to any such letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance satisfactory to Lender, consenting to the assignment of the proceeds of such letter of credit to Lender by Borrower and agreeing to make all payments thereon directly to Lender or as Lender may otherwise direct, or (ii) cause Lender to become, at Borrower’s expense, the transferee beneficiary of the letter of credit, banker’s acceptance or similar instrument (as the case may be).

(g) Borrower does not have any commercial tort claims as of the date hereof with a value in excess of $100,000, except as set forth in the Information Certificate. In the event that Borrower shall at any time after the date hereof have any commercial tort claims with a value in excess of $100,000 that constitutes ABL Priority Collateral, Borrower shall promptly notify Lender thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by Borrower to Lender of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by Borrower to Lender shall be deemed to constitute such grant to Lender. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Lender provided in Section 5.2(a) hereof or otherwise arising by the execution by Borrower of this Agreement or any of the other Financing Agreements, Lender is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Lender or its designee as secured party and Borrower as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, Borrower shall promptly upon Lender’s request, execute and deliver, or cause to be executed and delivered, to Lender such other agreements, documents and instruments as Lender may require in connection with such commercial tort claim.

(h) Borrower does not have any goods, documents of title or other Collateral in the custody, control or possession of a third party as of the date hereof, except as set forth in the Information Certificate and except for goods located in the United States of America in transit to a location of Borrower permitted herein in the ordinary course of business of such

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Borrower in the possession of the carrier transporting such goods. Upon the reasonable request by Lender, Borrower shall use commercially reasonable efforts to deliver or cause to be delivered to Lender a Collateral Access Agreement (i) with each lessor of premises for each and every non-retail location at which Collateral is located, including, without limitation, any distributions centers and warehouses; and (ii) with each Customs Broker. In the event that any goods, documents of title or other Collateral are at any time after the date hereof in the custody, control or possession of any other person not referred to in the Information Certificate or such carriers, Borrower shall promptly notify Lender thereof in writing. Promptly upon Lender’s reasonable request, Borrower shall use commercially reasonable efforts to deliver to Lender a Collateral Access Agreement duly authorized, executed and delivered by such person and the Borrower.

(i) Subject to the terms of the Intercreditor Agreement, Borrower shall take any other actions reasonably requested by Lender from time to time to cause the attachment, perfection and priority (subject only to Permitted Liens) of, and the ability of Lender to enforce, the security interest of Lender in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that Borrower’s signature thereon is required therefor, (ii) causing Lender’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Lender to enforce, the security interest of Lender in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States of America as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Lender to enforce, the security interest of Lender in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by the UCC or by other law, as applicable in any relevant jurisdiction.

SECTION 6. COLLECTION AND ADMINISTRATION

6.1. Borrower’s Loan Accounts. Lender shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Revolving Loans, Letters of Credit and other Obligations and the Collateral, (b) all payments made by or on behalf of Borrower, and (c) all other appropriate debits and credits as provided in this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Lender’s customary practices as in effect from time to time.

6.2. Statements. Lender shall render to Borrower each month a statement setting forth the balance in the Borrower’s loan account(s) maintained by Lender for Borrower pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Lender but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrower and conclusively binding upon Borrower as an account stated except to the extent that Lender receives a written notice from Borrower of any specific exceptions of Borrower thereto within thirty (30) days after the date such statement has been received by Borrower. Until such time as Lender shall have rendered to Borrower a written statement as provided above, the balance in Borrower’s loan account(s) shall be presumptive evidence of the amounts due and owing to Lender by Borrower.

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6.3. Collection of Accounts.

(a) Borrower shall establish and continue to maintain, at its expense, deposit account arrangements and merchant payment arrangements with Lender, the approved Non-Wells Fargo Account Banks set forth on Schedule 8.11 to the Information Certificate, and such other banks as Borrower may hereafter designate in accordance with section 5.3(d) hereof. The Non-Wells Fargo Account Banks set forth on Schedule 8.11 to the Information Certificate constitute all of the banks (other than the Lender) with which Borrower has deposit account arrangements and merchant payment arrangements as of the date hereof and identifies each of the Non-Wells Fargo Accounts at such banks.

(b) Borrower shall deposit all proceeds from sales of Inventory in every form, including, without limitation, cash, checks, credit card sales drafts, credit card sales or charge slips or receipts and other forms of daily store receipts, from each retail store location of Borrower on each Business Day into the store account of Borrower used solely for such purpose (each, a “Store Account”), or otherwise into the Payment Account.

(c) Borrower shall send, or cause to be sent to the Payment Account, all such funds deposited into the Store Accounts by wire transfer or other electronic funds transfer no less frequently than (i) weekly during any Non-Peak Period, (ii) bi-weekly during any Peak Period, or (iii) more frequently upon Lender’s request at any time that an Event of Default has occurred and is continuing, in each case except for nominal amounts which are required to be maintained in such Store Accounts under the terms of Borrower’s arrangements with the banks at which such Store Accounts are maintained.

(d) Following the occurrence of any Cash Dominion Event, Borrower shall direct all Non-Wells Fargo Account Banks (or the Lender shall instruct all Primary Non-Wells Fargo Account Banks) to forward all funds deposited into the Store Accounts by daily electronic funds transfer to the Payment Account, subject only to holdback of nominal amounts which are required to be maintained in such Non-Wells Fargo Accounts by such Non-Wells Fargo Account Bank.

(e) For purposes of calculating the amount of the Revolving Loans available to Borrower, payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Lender of immediately available funds in the Payment Account provided such payments and notice thereof are received in accordance with Lender’s usual and customary practices as in effect from time to time and within sufficient time to credit Borrower’s loan account on such day, and if not, then on the next Business Day. For the purposes of calculating interest on the Obligations, such payments or other funds received will be applied (conditional upon final collection) to the Obligations on the date of receipt of immediately available funds by Lender in the Payment Account provided such payments or other funds and notice thereof are received in accordance with Lender’s usual and customary practices as in effect from time to time and within sufficient time to credit Borrower’s loan account on such day, and if not, then on the next Business Day. The economic benefit of the timing in the application of payments (and the administrative charge with respect thereto, if applicable) shall be for the sole benefit of Lender.

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(f) Borrower and its employees and agents shall, acting as trustee for Lender, receive, as the property of Lender, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Receivables or other ABL Priority Collateral which come into their possession or under their control and promptly upon receipt thereof, shall deposit or cause the same to be deposited into a Wells Fargo Account or an approved Non-Wells Fargo Account, or remit the same or cause the same to be remitted, in kind, to Lender. Borrower agrees to reimburse Lender on demand for any amounts owed or paid to any Non-Wells Fargo Account Bank or any other bank, financial institution or other person involved in the transfer of funds to or from a Non-Wells Fargo Account arising out of Lender’s payments to or indemnification of such bank, financial institution or other person. The obligations of Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

6.4. Payments.

(a) All Obligations shall be payable to the Payment Account or such other place as Lender may designate from time to time. Subject to the other terms and conditions contained herein, Lender shall apply payments received or collected from Borrower or for the account of Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to pay any fees, indemnities or expense reimbursements then due to Lender from Borrower; second, to pay interest due in respect of any Revolving Loans or Letter of Credit Obligations; third, to pay principal due in respect of the Revolving Loans and to pay Obligations then due arising under or pursuant to any Hedge Agreements of Borrower with a Bank Product Provider (up to the amount of any then effective Reserve established in respect of such Obligations), on a pro rata basis; fourth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Lender determines or to be held as cash collateral in connection with any Letter of Credit Obligations or other contingent Obligations (but not including for this purpose any Obligations arising under or pursuant to any Bank Products); and fifth, to pay or prepay any Obligations arising under or pursuant to any Bank Products (other than to the extent provided for above) on a pro rata basis. Notwithstanding anything to the contrary contained in this Agreement, (i) unless so directed by Borrower, or unless a Default or an Event of Default shall exist or have occurred and be continuing, Lender shall not apply any payments which it receives to any LMIR Rate Loans, except in the event that there are no outstanding Prime Rate Loans; and (ii) to the extent Borrower uses any proceeds of the Revolving Loans or Letters of Credit to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Obligations shall be deemed applied first to the Obligations arising from Revolving Loans and Letters of Credit that were not used for such purposes and second to the Obligations arising from Revolving Loans and Letters of Credit the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which Borrower acquired such rights in or the use of such Collateral.

(b) At Lender’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged

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directly to the Payment Account or other loan account(s) of Borrower maintained by Lender. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Lender. Borrower shall be liable to pay to Lender, and does hereby indemnify and hold Lender harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4(b) shall remain effective notwithstanding any contrary action which may be taken by Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

6.5. Taxes.

(a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, charges, withholdings, liabilities, restrictions or conditions of any kind, excluding (A) taxes measured by Lender’s net income, and franchise taxes imposed on it, by the jurisdiction (or any political subdivision thereof) under the laws of which Lender is organized, (B) any United States withholding taxes payable with respect to payments under the Financing Agreements under laws (including any statute, treaty or regulation) in effect on the date hereof applicable to Lender, but not excluding any United States withholding taxes payable as a result of any change in such laws occurring after the date hereof and (C) taxes measured by Lender’s net income, and franchise taxes imposed on it as a result of a present or former connection between Lender and the jurisdiction of the Governmental Authority imposing such tax or any taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, fees, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).

(b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable in respect of the Obligations to Lender (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 6.5), Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law and (iv) Borrower shall deliver to Lender evidence of such payment.

(c) Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States of America or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, in each case arising from any payment made hereunder or under any of the other Financing Agreements or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Financing Agreements (collectively, “Other Taxes”).

(d) Borrower shall indemnify Lender for the full amount of Taxes and Other Taxes paid by Lender, and any liability (including for penalties, interest and expenses)

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arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date Lender makes written demand therefor.

(e) As soon as practicable after any payment of Taxes or Other Taxes by Borrower, Borrower shall furnish to Lender, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof.

(f) Without prejudice to the survival of any other agreements of Borrower hereunder or under any of the other Financing Agreements, the agreements and obligations of Borrower contained in this Section 6.5 shall survive the termination of this Agreement and the payment in full of the Obligations.

6.6. Authorization to Make Revolving Loans. Lender is authorized to make the Revolving Loans based upon telephonic or other instructions received from anyone purporting to be an officer of Borrower or other authorized person or, at the discretion of Lender, if such Revolving Loans are necessary to satisfy any Obligations. All requests for Revolving Loans or Letters of Credit hereunder shall specify the date on which the requested advance is to be made (which day shall be a Business Day) and the amount of the requested Revolving Loan. Requests received after 11:00 a.m. Philadelphia time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. All Revolving Loans and Letters of Credit under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of Borrower when deposited to the credit of Borrower or otherwise disbursed or established in accordance with the instructions of Borrower or in accordance with the terms and conditions of this Agreement.

6.7. Use of Proceeds. Borrower shall use the proceeds of the Revolving Loans and Letters of Credit only for general operating, working capital and other proper corporate purposes of Borrower not otherwise prohibited by the terms hereof. None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Revolving Loans to be considered a “purpose credit” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

7.1. Collateral Reporting.

(a) Borrower shall provide Lender with the following documents in a form reasonably satisfactory to Lender:

(i) unless the conditions of Section 7.1(a)(ii) apply, on the second Business Day of each month, and continuing on the second Business Day of each succeeding month, the following (collectively, a “Current Borrowing Base Report”): a Borrowing Base Certificate setting forth the calculation of the Borrowing Base and the Adjusted Borrowing Base as of the last Business Day of the immediately preceding month, duly completed and executed by the Senior Vice President of Finance or other chief financial officer

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of Borrower, together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed, including but not limited to a Borrowing Base Certificate as of the last Business Day of the immediately preceding month duly completed and executed by the Senior Vice President of Finance or other chief financial officer of Borrower, together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed, including but not limited to a current aging of Credit Card Receivables identifying those outstanding more than five (5) Business Days since the sale date giving rise thereto and an explanation as to why the designated Credit Card Receivables are past due by more than five (5) Business Days and an inventory summary report by category and identifying in the case of each of such category of inventory, the applicable store and warehouse where such Inventory is located;

(ii) if Borrower’s average Excess Borrowing Availability for any week during which a Revolving Loan is outstanding shall be less than twenty-five percent (25%) of the Maximum Credit, and for so long as the average Excess Borrowing Availability of the immediately preceding week remains less than twenty-five percent (25%) of the Maximum Credit, on the second Business Day of each week a Current Borrowing Base Report for the immediate preceding week then-ended;

(iii) as soon as possible after the end of each month (but in any event within thirty (30) days after the end thereof), on a monthly basis or more frequently as Lender may reasonably request, a perpetual inventory report by department, location and category (and including the amounts of Inventory and the value thereof at any leased locations and at premises of warehouses, processors or other third parties), a general ledger inventory report, a detailed inventory reconciliation, and a report on all Packaway Inventory designated by seasonal sale periods;

(iv) as soon as possible after the end of any month for which Lender makes a request to the Borrower (but in any event within thirty (30) days following such request), (A) an accounts payable aging (including information indicating the amounts owing to owners and lessors of leased premises, warehouses, fulfillment centers, processors and other third parties from time to time in possession of any Collateral) together with a detailed accounts payable reconciliation and a report on any unvouched, unbilled or otherwise undocumented payables, and (B) reports on sales and use tax collections, deposits and payments, including monthly sales and use tax accruals;

(v) as soon as possible after the end of each month (but in any event within ten (10) Business Days after the end thereof), in each case certified by the Senior Vice President of Finance or other chief financial officer of Borrower as true and correct: (A) addresses of all new retail store locations opened by Borrower and existing retail store locations closed or sold, in each case since the date of the most recent certificate delivered to Lender containing the information required under this clause; and (B) a report of any new deposit account established or used by Borrower with any bank or financial institution other than Lender since the date of the most recent certificate delivered to Lender containing the information required under this clause, including the account number, the name and address of the financial institution at which such account is maintained, the purpose of such account and, if any, the amount held in such account on or about the date of such report;

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(vi) upon Lender’s reasonable request, (A) reports of sales for each category of Inventory, (B) reports of aggregate Inventory purchases (including all costs related thereto, such as freight, duty and taxes) and identifying items of Inventory in transit to Borrower related to the applicable documentary letter of credit and/or bill of lading number, (C) copies of remittance advices and reports, and copies of deposit slips and bank statements, (D) copies of shipping and delivery documents, (E) copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by Borrower, and (F) reports by retail store location of sales and operating profits for each such retail store location; and

(vii) such other reports as to the Collateral as Lender shall reasonably request from time to time.

(b) Nothing contained in any Borrowing Base Certificate shall be deemed to limit, impair or otherwise affect the rights of Lender contained herein and in the event of any conflict or inconsistency between the calculation of the Borrowing Base or the Adjusted Borrowing Base as set forth in any Borrowing Base Certificate and as determined by Lender in its good faith, the determination of Lender shall govern and be conclusive and binding upon Borrower, absent manifest error. Without limiting the foregoing, Borrower shall furnish to Lender any information which Lender may reasonably request regarding the determination and calculation of any of the amounts set forth in any Borrowing Base Certificate. The Borrowing Base and/or the Adjusted Borrowing Base may be adjusted based on the information set forth in the reports received by Lender pursuant to Section 7.1(a) above.

(c) If any of Borrower’s records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, Borrower hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to Lender and to follow Lender’s instructions with respect to further services at any time that an Event of Default exists or has occurred and is continuing.

7.2. Accounts Covenants.

(a) Borrower shall notify Lender promptly of the assertion of any claims, offsets, defenses or counterclaims by any account debtor, Credit Card Issuer or Credit Card Processor or any disputes with any of such persons or any settlement, adjustment or compromise thereof, to the extent any of the foregoing exceeds $75,000 in any one case or $100,000 in the aggregate. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor, Credit Card Issuer or Credit Card Processor except in the ordinary course of Borrower’s business in accordance with the current practices of Borrower as in effect on the date hereof. So long as no Event of Default exists or has occurred and is continuing, Borrower shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor, Credit Card Issuer or Credit Card Processor. At any time that an Event of Default exists or has occurred and is continuing (but not prior to the occurrence and continuance of an Event of Default), Lender shall (i) have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors, Credit Card Issuers or Credit Card Processors or grant any credits, discounts or allowances, and (ii) be entitled to notify any or all account debtors (including Credit Card Issuers and Credit Card Processors), secondary obligors or other obligors in respect thereof to make payment of Receivables directly to Lender.

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(b) With respect to each Account: (i) no payments shall be made thereon except payments made pursuant to the terms of this Agreement, (ii) there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to Lender in accordance with the terms of this Agreement and (iii) none of the transactions giving rise thereto will violate in any material respect any applicable State or Federal Laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(c) Borrower shall notify Lender promptly of: (i) any notice of a material default by Borrower under any of the Credit Card Agreements or of any default which has a reasonable likelihood of resulting in the Credit Card Issuer or Credit Card Processor ceasing to make payments or suspending payments to Borrower, (ii) any notice from any Credit Card Issuer or Credit Card Processor that such person is ceasing or suspending, or will cease or suspend, any present or future payments due or to become due to Borrower from such person, or that such person is terminating or will terminate any of the Credit Card Agreements, and (iii) the failure of Borrower to comply with any material terms of the Credit Card Agreements or any terms thereof which has a reasonable likelihood of resulting in the Credit Card Issuer or Credit Card Processor ceasing or suspending payments to Borrower.

(d) Lender shall have the right at any time or times, in Lender’s name or in the name of a nominee of Lender, to verify the validity, amount or any other matter relating to any Receivables or other Collateral, by mail, telephone, facsimile transmission or otherwise.

7.3. General Inventory Covenants. With respect to the Inventory: (i) Borrower shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, Borrower’s cost therefor and daily withdrawals therefrom and additions thereto; (ii) Borrower shall conduct a physical count of the Inventory in form, scope and methodology acceptable to Lender (A) no more than once in any twelve (12) month period, at Borrower’s expense, (B) at any time or times as Lender may reasonably request, at Lender’s expense, (C) at any time or times as Lender may request at any time an Event of Default exists or has occurred and is continuing, at Borrower’s expense, or (D) at any time or times as Lender may reasonably request in the event of test count variances in excess of the shrinkage reserve established by Lender, at Borrower’s expense, in each case, the results of which shall be reported to Lender and Borrower shall promptly deliver confirmation in a form reasonably satisfactory to Lender that appropriate adjustments have been made to the inventory records of Borrower to reconcile the inventory count to Borrower’s inventory records; and (iii) Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Lender, except for sales of Inventory in the ordinary course of Borrower’s business and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to Borrower which is in transit to the locations set forth or permitted herein.

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7.4. Periodic Appraisals. Borrower shall cooperate with Lender in periodic appraisals conducted with respect to Inventory as follows: (a) at Lender’s option, two (2) times per year at Borrower’s sole cost and expense during any calendar year in which Borrower has at any time had Excess Borrowing Availability less than 50% of the Maximum Credit; (b) otherwise, one (1) time per calendar year at Borrower’s sole cost and expense; (c) at any time at Borrower’s sole cost and expense following the occurrence of an Event of Default; and (d) if no Event of Default has occurred, one occasion in addition to those occasions referenced in (a) an (b) above at Lender’s sole cost and expense. Prior notice hereunder need not be given by the Lender to the Borrowers if an Event of Default shall have occurred under this Agreement.

7.5. Power of Attorney. Borrower hereby irrevocably designates and appoints Lender as Borrower’s true and lawful attorney-in-fact, and authorizes Lender, in such Borrower’s, or Lender’s name, to: (a) at any time an Event of Default exists or has occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise all of Borrower’s rights and remedies to collect any Receivables or other Collateral, (iv) sell or assign any Receivables upon such terms, for such amount and at such time or times as the Lender deems advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign Borrower’s name on any proof of claim in bankruptcy or other similar document against an account debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral to an address designated by Lender, and open and dispose of all mail addressed to Borrower and handle and store all mail relating to the Collateral, (ix) do all acts and things which are necessary, in Lender’s determination, to fulfill Borrower’s obligations under this Agreement and the other Financing Agreements, (x) take control in any manner of any item of payment in respect of Receivables or constituting Collateral or otherwise received in or for deposit in the Payment Account or otherwise received by Lender, (xi) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral are sent or received; (xii) endorse Borrower’s name upon any items of payment in respect of Receivables or constituting Collateral or otherwise received by Lender and deposit the same in Lender’s account for application to the Obligations, (xiii) endorse Borrower’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivables or any goods pertaining thereto or any other Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (xiv) clear Inventory, the purchase of which was financed with a Letter of Credit, through U.S. Customs or foreign export control authorities in Borrower’s name, Lender’s name or the name of Lender’s designee, and to sign and deliver to customs officials powers of attorney in Borrower’s name for such purpose, and to complete in Borrower’s or Lender’s name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, and (xv) sign the Borrower’s name on any verification of Receivables and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof. Borrower hereby releases Lender and its respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Lender’s own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

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7.6. Right to Cure. Lender may, at its option, upon notice to Borrower, (a) cure any default by Borrower under any material agreement with a third party that materially affects the Collateral, its value or the ability of Lender to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Lender therein or the ability of the Borrower to perform its obligations hereunder or under any of the other Financing Agreements, (b) pay or bond on appeal any judgment entered against Borrower, (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and (d) pay any amount, incur any expense or perform any act which, in Lender’s judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Lender with respect thereto. Lender may add any amounts so expended to the Obligations and charge any Borrower’s account therefor, such amounts to be repayable by Borrower on demand. Lender shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Borrower. Any payment made or other action taken by Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

7.7. Access to Premises; Periodic Field Audits. From time to time as reasonably requested by Lender, at the cost and expense of Borrower, (a) Lender or its designee shall have complete access to all of Borrower’s premises during normal business hours and after reasonable notice to Borrower, or at any time and without notice to Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of Borrower’s books and records, including the Records, and (b) Borrower shall promptly furnish to Lender such copies of such books and records or extracts therefrom as Lender may request, and Lender may use during normal business hours such of Borrower’s personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing, and if an Event of Default exists or has occurred and is continuing, for the collection of Receivables and realization of other Collateral. In particular, and without limiting the foregoing, Borrower shall permit, during normal business hours, and upon prior notice, representatives of the Lender or Lender’s outside audit department to make such periodic inspections of books, records and assets of the Borrower as such representatives deem necessary and proper which at a minimum shall include field audits conducted by the Lender or Lender’s representatives: (a) two (2) times per calendar year at Borrower’s sole cost and expense during any calendar year in which Borrower has, for any period of one month during such calendar year if at least one Revolving Loan is outstanding during such month, average Excess Borrowing Availability less than 50% of the Maximum Credit; (b) otherwise, one (1) time per calendar year at Borrower’s sole cost and expense during any calendar year; (c) at any time at Borrower’s sole cost and expense following the occurrence of an Event of Default; and (d) if no Event of Default has occurred, one occasion in addition to those occasions referenced in (a) an (b) above at Lender’s sole cost and expense. Prior notice hereunder need not be given by the Lender to Borrower if an Event of Default shall have occurred under this Agreement.

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SECTION 8. REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Lender the following (which shall survive the execution and delivery of this Agreement):

8.1. Corporate Existence, Power and Authority. Borrower is a corporation duly organized and in good standing under the laws of its jurisdiction of organization and is duly qualified as a foreign corporation and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect on Borrower’s financial condition, results of operation or business or the rights of Lender in or to any of the Collateral. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within Borrower’s corporate powers, (b) have been duly authorized, (c) are not in contravention of law or the terms of any Borrower’s certificate of incorporation, bylaws, or other organizational documentation, or any indenture, material agreement or material undertaking to which Borrower is a party or by which Borrower or its property are bound and (d) will not result in the creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of Borrower, other than in favor of Lender. This Agreement and the other Financing Agreements to which Borrower is a party constitute legal, valid and binding obligations of Borrower enforceable in accordance with their respective terms, except to the extent that the availability of equitable remedies may be subject to judicial discretion, and to the extent that enforcement of certain rights and remedies may be limited by the provisions of the Bankruptcy Code or other laws affecting the rights of creditors generally.

8.2. Name; State of Organization; Chief Executive Office; Collateral Locations.

(a) The exact legal name of Borrower is as set forth on the signature page of this Agreement and in the Information Certificate. Borrower has not, during the five years prior to the date of this Agreement, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in the Information Certificate.

(b) Borrower is an organization of the type and organized in the jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets forth the organizational identification number of Borrower.

(c) The chief executive office and mailing address of Borrower concerning Accounts is 1818 Market Street, Suite 1900, Philadelphia, Pennsylvania 19103.

(d) The locations of all assets of Borrower are as stated in the Information Certificate.

8.3. Financial Statements; No Material Adverse Change. All financial statements relating to Borrower which have been or may hereafter be delivered by Borrower to Lender have been prepared in accordance with GAAP (except as to any interim financial statements, to the extent such statements are subject to normal year-end adjustments and do not include any notes) and fairly present in all material respects the financial condition and the results of operation of Borrower as at the dates and for the periods set forth therein. Except as

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disclosed in any interim financial statements furnished by Borrower to Lender prior to the date of this Agreement, there has been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements of Borrower furnished by Borrower to Lender prior to the date of this Agreement. The budgeted projections that have been delivered to Lender or any projections hereafter delivered to Lender have been prepared in light of the past operations of the business of Borrower and are based upon estimates and assumptions stated therein, all of which Borrower has determined to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Borrower of the future financial performance of Borrower and of the other information projected therein for the periods set forth therein.

8.4. Priority of Liens; Title to Properties. The security interests and liens granted to Lender under this Agreement and the other Financing Agreements constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to the existing liens indicated on the Information Certificate, liens securing the Term Loan, and other Permitted Liens. Borrower has good and marketable title to all of its other properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Lender and such others as are specifically listed on the Information Certificate or permitted under Section 9.8 hereof.

8.5. Tax Returns. Borrower has filed, or caused to be filed, in a timely manner all tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Borrower has paid or caused to be paid all taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

8.6. Litigation. Except as set forth on the Information Certificate, (a) there is no investigation by any Governmental Authority pending, or to the best of Borrower’s knowledge threatened, against or affecting Borrower, its assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to the best of Borrower’s knowledge threatened, against Borrower or its assets or goodwill, or against or affecting any transactions contemplated by this Agreement, in each case, which if adversely determined against Borrower has or could reasonably be expected to have a Material Adverse Effect.

8.7. Compliance with Other Agreements and Applicable Laws.

(a) Borrower is not in default in any respect under, or in violation in any respect of the terms of, any material agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound, in each case where such default has or could reasonably be expected to have a Material Adverse Effect. Borrower is in compliance in all material respects with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to its businesses, including,

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without limitation, those set forth in or promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all Environmental Laws.

(b) Borrower has obtained all material permits, licenses, approvals, consents, certificates, orders or authorizations of any Governmental Authority required for the lawful conduct of its business (the “Permits”). All of the Permits are valid and subsisting and in full force and effect. There are no actions, claims or proceedings pending or, to the best of Borrower’s knowledge, threatened that seek the revocation, cancellation, suspension or modification of any of the Permits.

8.8. Environmental Compliance.

(a) Except as set forth on the Information Certificate, Borrower has not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner which at any time violates in any material respect any applicable Environmental Law or Permit, and the operations of Borrower comply in all material respects with all Environmental Laws and all Permits.

(b) Except as set forth on the Information Certificate, there has been no investigation by any Governmental Authority or any proceeding, complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person (nor is any pending or to the best of Borrower’s knowledge threatened), with respect to any non-compliance with or violation of the requirements of any Environmental Law by Borrower or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or any other environmental, health or safety matter, which adversely affects in any material respect or could reasonably be expected to adversely affect in any material respect Borrower or its business, operations or assets or any properties at which Borrower has transported, stored or disposed of any Hazardous Materials.

(c) Except as set forth on the Information Certificate, Borrower has no material liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials.

(d) Borrower has all Permits required to be obtained or filed in connection with the operations of Borrower under any Environmental Law and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect.

8.9. Credit Card Agreements. Set forth on the Information Certificate is a correct and complete list of all of the Credit Card Agreements and all other agreements, documents and instruments existing as of the date hereof between or among Borrower, its Affiliates, the Credit Card Issuers, the Credit Card Processors and any of their Affiliates. The Credit Card Agreements constitute all of such agreements necessary for Borrower to operate its

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business as presently conducted with respect to credit cards and debit cards and no Receivables of Borrower arise from purchases by customers of Inventory with credit cards or debit cards, other than those which are issued by Credit Card Issuers with whom Borrower has entered into one of the Credit Card Agreements set forth on Schedule 1.26 hereto or with whom Borrower has entered into a Credit Card Agreement in accordance with Section 9.15 hereof. Each of the Credit Card Agreements constitutes the legal, valid and binding obligations of the Borrower and to the best of the Borrower’s knowledge, is enforceable in accordance with their respective terms and is in full force and effect. No material default or material event of default, or act, condition or event which after notice or passage of time or both, would constitute a material default or a material event of default under any of the Credit Card Agreements (other than any Credit Card Agreement with a Credit Card Issuer or Credit Card Processor where the sales using the applicable card are less than seven (7%) percent of all such sales in the immediately preceding fiscal year) exists or has occurred that would entitle the other party thereto to suspend, withhold or reduce amounts that would otherwise be payable to Borrower. Borrower, and to the best of Borrower’s knowledge, the other parties thereto, have complied in all material respects with all of the terms and conditions of the Credit Card Agreements (other than any Credit Card Agreement with a Credit Card Issuer or Credit Card Processor where the sales using the applicable card are less than seven (7%) percent of all such sales in the immediately preceding fiscal year) to the extent necessary for Borrower to be entitled to receive all payments thereunder. Borrower has delivered, or caused to be delivered to Lender, true, correct and complete copies of all of the Credit Card Agreements. Each of the Credit Card Issuers and Credit Card Processors which are a party to a Credit Card Agreement with Borrower will be subject to a Credit Card Acknowledgment acceptable to Lender in accordance with the terms hereof.

8.10. Employee Benefits.

(a) Each Pension Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal law. Each Pension Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and to the best of Borrower’s knowledge, nothing has occurred which would cause the loss of such qualification. Borrower has made all required contributions to any Pension Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan.

(b) There are no pending, or to the best of Borrower’s knowledge, threatened claims (other than claims for benefits in the ordinary course of the operation of such plan), lawsuits, or action by any Governmental Authority, with respect to any Pension Plan.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) based on the latest valuation of each Pension Plan and on the actuarial methods and assumptions employed for such valuation (determined in accordance with the assumptions used for funding such Pension Plan pursuant to Section 412 of the Code), the aggregate current value of accumulated benefit liabilities of such Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate current value of the assets of such Pension Plan; (iii) Borrower has not incurred and does not reasonably expect to incur, any liability under Title IV of ERISA with

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respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) Borrower has not incurred and does not reasonably expect to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower and its ERISA Affiliates have not engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.

8.11. Bank Accounts. All of the deposit accounts, investment accounts or other accounts in the name of or used by Borrower maintained at any bank or other financial institution are set forth on the Information Certificate.

8.12. Intellectual Property. Excluding commercially available off-the-shelf software, all of the Intellectual Property material to the business of the Borrower which Borrower owns or licenses is set forth on the Information Certificate. Borrower owns or licenses or otherwise has the right to use all Intellectual Property necessary for the operation of its business as presently conducted or proposed to be conducted.

8.13. Subsidiaries; Affiliates; Capitalization; Solvency.

(a) Borrower does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership, in each case other than as set forth in the Information Certificate.

(b) The issued and outstanding shares of Capital Stock of Borrower on the date hereof are directly and beneficially owned and held by the persons indicated in the Information Certificate, and in each case all of such shares have been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any kind, except as disclosed in writing to Lender prior to the date hereof.

(c) After giving effect to the consummation of the transactions contemplated by this Agreement and the other Financing Agreements, Borrower is Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Lender and the other transaction contemplated hereunder.

8.14. Labor Disputes.

(a) Set forth on the Information Certificate is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to Borrower and any union, labor organization or other bargaining agent in respect of the employees of Borrower on the date hereof.

(b) There is (i) no significant unfair labor practice complaint pending against Borrower or, to the best of Borrower’s knowledge, threatened against it, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement pending on the date hereof against Borrower, and (ii) no significant strike, labor dispute, slowdown or stoppage pending against Borrower or, to the best of Borrower’s knowledge, threatened against Borrower.

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8.15. Material Contracts. Other than the Credit Card Agreements which are listed on Schedule 1.30 hereto, the Information Certificate sets forth all Material Contracts to which Borrower is a party or is bound as of the date hereof. Borrower has delivered true, correct and complete copies of such Material Contracts to Lender on or before the date hereof. Borrower is not in breach or in default in any material respect of or under any Material Contract and has not received any notice of the intention of any other party thereto to terminate any Material Contract.

8.16. Payable Practices. Borrower has not made any material change in the historical accounts payable practices from those in effect immediately prior to the date hereof.

8.17. Accuracy and Completeness of Information. All information furnished by or on behalf of Borrower in writing to Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Information Certificate is true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading. No event or circumstance has occurred which has had or could reasonably be expected to have a Material Adverse Effect, which has not been fully and accurately disclosed to Lender in writing prior to the date hereof.

8.18. Survival of Warranties; Cumulative. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be true and correct in all material respects on and as of the date of each additional borrowing or other credit accommodation hereunder with the same effect as though made on and as of such date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date) and shall be conclusively presumed to have been relied on by Lender regardless of any investigation made or information possessed by Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which Borrower shall now or hereafter give, or cause to be given, to Lender.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

9.1. Maintenance of Existence.

(a) Borrower shall at all times preserve, renew and keep in full force and effect (i) its corporate existence and rights and franchises with respect thereto; and (ii) maintain in full force and effect all licenses, trademarks, tradenames, approvals, authorizations, leases, contracts and Permits necessary to carry on the business as presently or proposed to be conducted, except where failure to do so would not reasonably be expected to have a Material Adverse Effect.

(b) Borrower shall not change its name without the prior written consent of Lender.

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(c) Without the prior written consent of Lender, Borrower shall not change its chief executive office, mailing address, organizational identification number, type of organization, jurisdiction of organization or other legal structure.

9.2. New Collateral Locations. Borrower may open new locations, whether retail store locations or otherwise, provided that the following conditions are satisfied, as determined by Lender in its sole discretion: (a) such location is within the United States of America, Canada or Puerto Rico; and (b) Borrower has executed and delivered, or caused to be executed and delivered, to Lender such agreements, documents, and instruments as Lender may deem reasonably necessary or desirable to protect its interests in the Collateral at such location, including, without limitation, at request of Lender, Borrower shall have used commercially reasonable efforts to obtain a Collateral Access Agreement in respect of such location.

9.3. Compliance with Laws, Regulations, Etc.

(a) Borrower shall at all times comply in all material respects with all laws, rules, regulations, licenses, approvals, orders and other Permits applicable to it and duly observe in all material respects all requirements of any foreign, Federal, State or local Governmental Authority.

(b) Borrower shall give written notice to Lender immediately upon Borrower’s receipt of any notice of, or Borrower’s otherwise obtaining knowledge of, (i) the occurrence of any event involving the release, spill or discharge, threatened or actual, of any Hazardous Material or (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: 1) any material non-compliance with or violation of any Environmental Law by Borrower or 2) the release, spill or discharge, threatened or actual, of any Hazardous Material other than in the ordinary course of business and other than as permitted under any applicable Environmental Law. Copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial investigations shall be promptly furnished, or caused to be furnished, by Borrower to Lender. Borrower shall take prompt action to respond to any material non-compliance with any of the Environmental Laws and shall regularly report to Lender on such response.

(c) Without limiting the generality of the foregoing, whenever Lender reasonably determines that there is non-compliance, or any condition which requires any action by or on behalf of Borrower in order to avoid any non-compliance with any Environmental Law, Borrower shall, at Lender’s reasonable request and Borrower’s expense: (i) cause an independent environmental engineer reasonably acceptable to Lender to conduct such tests of the site where non-compliance or alleged non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Lender a report as to such non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Lender a supplemental report of such engineer whenever the scope of such non-compliance, or Borrower’s response thereto or the estimated costs thereof, shall change in any material respect.

(d) Borrower shall indemnify and hold harmless Lender and its respective directors, officers, employees, agents, invitees, representatives, successors and

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assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and expenses) directly or indirectly arising out of or attributable to the Borrower’s use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of Borrower and the preparation and implementation of any closure, remedial or other required plans. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

9.4. Payment of Taxes and Claims. Borrower shall duly pay and discharge all taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP.

9.5. Insurance. Borrower shall at all times maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Said policies of insurance shall be reasonably satisfactory to Lender as to form, amount and insurer. Borrower shall furnish certificates, policies or endorsements to Lender, and Lender shall reasonably require as proof of such insurance, and, if Borrower fails to do so, Lender is authorized, but not required, to obtain such insurance at the expense of Borrower. All policies shall provide for at least thirty (30) days prior written notice to Lender of any cancellation or reduction of coverage and that Lender may act as attorney for Borrower in obtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling, amending and canceling such insurance (but in any case subject to the terms of the Intercreditor Agreement). Borrower shall cause Lender to be named as a loss payee and an additional insured (but without any liability for any premiums) under such insurance policies and Borrower shall obtain non-contributory lender’s loss payable endorsements to all insurance policies in form and substance reasonably satisfactory to Lender. Lender’s loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Lender as its interests may appear and further specify that Lender shall be paid regardless of any act or omission by Borrower. Without limiting any other rights of Lender, but subject to the terms of the Intercreditor Agreement and Section 2.3 hereof, any insurance proceeds received by Lender at any time may be applied to payment of the Obligations, whether or not then due, in any order and in such manner as Lender may determine. Upon application of such proceeds to the Revolving Loans, Revolving Loans may be available subject and pursuant to the terms hereof to be used for the costs of repair or replacement of the Collateral lost or damages resulting in the payment of such insurance proceeds.

9.6. Financial Statements and Other Notices.

(a) Borrower shall keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of Borrower in accordance with GAAP. Borrower shall promptly furnish to Lender all such financial and other information as Lender shall reasonably request relating to the

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Collateral and the assets, business and operations of Borrower, and Borrower shall notify the auditors and accountants of Borrower that Lender is authorized to obtain such information directly from them. Without limiting the foregoing, Borrower shall furnish or cause to be furnished to Lender, the following:

(i) within forty-five (45) days after the end of each fiscal quarter, quarterly unaudited financial statements (including balance sheets, statements of income and loss, statements of cash flow and statements of shareholders’ equity), all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Borrower as of the end of and through such fiscal period, certified to be correct by the Senior Vice President of Finance or other chief financial officer of Borrower, subject to normal year-end adjustments and accompanied by a Compliance Certificate substantially in the form of Exhibit “C” hereto;

(ii) within 105 days after the end of each fiscal year (and 90 days after the end of each fiscal year following a Qualifying IPO), audited financial statements of Borrower (including balance sheets, statements of income and loss, statements of cash flow and statements of shareholders’ equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Borrower as of the end of and for such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited financial statements, which accountants shall be an independent accounting firm selected by Borrower and acceptable to Lender, that such audited financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Lender as of the end of and for the fiscal year then ended; and

(iii) at such time as available, but in no event later than forty-five (45) days after the end of the prior fiscal year, budgeted financial statements (including forecasted balance sheets and statements of income and loss, and statements of cash flow and statements of shareholders’ equity of Borrower for the next fiscal year, all in reasonable detail, and in a format consistent with the budgeted financial statements delivered by Borrower to Lender prior to the date hereof, together with such supporting information as Lender may reasonably request. Such budgeted financial statements shall be prepared on a monthly basis for the next succeeding year and on an annual basis for the following year. Such budgeted financial statements shall represent the reasonable best estimate by Borrower of the future financial performance of Borrower for the periods set forth therein and shall have been prepared on the basis of the assumptions set forth therein which Borrower believes are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions (it being understood that actual results may differ from those set forth in such budgeted financial statements).

(b) Borrower shall promptly notify Lender in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $750,000 or which if adversely determined would result in any material adverse change in Borrower’s business, properties, assets, goodwill or condition, financial or otherwise, (ii) any Material Contract being terminated or amended or any new Material Contract entered into (in which event Borrower shall provide Lender with a copy of such Material

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Contract), (iii) any order, judgment or decree in excess of $750,000 shall have been entered against Borrower any of its properties or assets, (iv) any notification of a material violation of laws or regulations received by Borrower, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.

(c) Borrower shall furnish or cause to be furnished to Lender such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrower, as Lender may, from time to time, reasonably request. Lender is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrower to any court or other Governmental Authority, prospective assignee of Lender or any Affiliate of Lender (in each case as to such prospective assignee or Affiliate if Lender, subject to a confidentiality agreement). Borrower hereby irrevocably authorizes and directs all accountants or auditors to deliver to Lender, at Borrower’s expense, copies of the financial statements of Borrower and any reports or management letters prepared by such accountants or auditors on behalf of Borrower and to disclose to Lender such information as they may have regarding the business of Borrower. Any documents, schedules, invoices or other papers delivered to Lender may be destroyed or otherwise disposed of by Lender one (1) year after the same are delivered to Lender, except as otherwise designated by Borrower to Lender in writing.

9.7. Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower shall not directly or indirectly:

(a) merge into or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it;

(b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other Person, except for:

(i) sales of Inventory in the ordinary course of business and sale of cash and Cash Equivalent in the ordinary course of business,

(ii) the sale or other Disposition of Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of Borrower) so long as such sales or other Dispositions do not involve Equipment having an aggregate fair market value in excess of $250,000 for all such Equipment disposed of in any fiscal year of Borrower or as Lender may otherwise agree,

(iii) the issuance and sale by Borrower of Capital Stock of Borrower after the date hereof; provided, that, (A) Lender shall have received not less than ten (10) Business Days’ prior written notice of such issuance and sale by Borrower, which notice shall specify the parties to whom such shares are to be sold, the terms of such sale, the total amount which it is anticipated will be realized from the issuance and sale of such stock and the net cash proceeds which it is anticipated will be received by Borrower from such sale, (B) the terms of such Capital Stock, and the terms and conditions of the purchase and sale thereof, shall not include any terms that include any limitation on the right of Borrower to request or receive Revolving Loans or Letters of Credit or the right of Borrower to amend or modify any of the

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terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or affect the arrangements of Borrower with Lender or are more restrictive or burdensome to Borrower than the terms of any Capital Stock in effect on the date hereof, and (C) after giving effect thereto, no Default or Event of Default shall exist or have occurred,

(iv) the issuance of Capital Stock of Borrower consisting of common stock pursuant to a stock option or stock grant or similar equity plan or 401(k) plans of Borrower and/or its Affiliates for the benefit of their respective employees, directors, officers and consultants, provided, that, in no event shall Borrower be required to issue, or shall Borrower issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default,

(v) sales or other Dispositions by Borrower of assets in connection with the closing or sale of a retail store location of Borrower in the ordinary course of Borrower’s business which consist of leasehold interests in the premises of such store, the Equipment and fixtures located at such premises and the books and records relating exclusively and directly to the operations of such store; provided, that, as to each and all such sales and closings, (A) on the date of, and after giving effect to, any such closing or sale, the aggregate number of retail store locations closed or sold by Borrower in any fiscal year minus the number of retail stores opened by Borrower in such fiscal year, shall not exceed the amount equal to ten percent (10%) of the number of retail store locations of Borrower as of the end of the immediately preceding fiscal year, (B) Lender shall have received not less than ten (10) Business Days prior written notice of such sale or closing, which notice shall set forth in reasonable detail satisfactory to Lender, the parties to such sale or other disposition, the assets to be sold or otherwise disposed of, the purchase price and the manner of payment thereof and such other information with respect thereto as Lender may request, (C) after giving effect thereto, no Event of Default shall exist or have occurred and be continuing, (D) such sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction, and (E) any and all proceeds payable or delivered to Borrower in respect of such sale or other disposition shall be paid or delivered, or caused to be paid or delivered, to Lender in accordance with the terms of this Agreement (except to the extent such proceeds reflect payment in respect of Indebtedness secured by a properly perfected first priority security interest in the assets sold, in which case, such proceeds shall be applied to such indebtedness secured thereby),

(vi) the sale and issuance by the Borrower of its Capital Stock in a Qualifying IPO;

(vii) the abandonment, sale or other disposition of Intellectual Property that is, in the reasonable good faith judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower;

(viii) other sales or disposition; provided that (i) the aggregate consideration received in respect of all such sales and other dispositions pursuant to this clause (viii) shall not exceed $1,000,000 in any period of twelve (12) consecutive months, (ii) such sales or other dispositions are made for fair market value and on an arm’s-length commercial basis, and (iii) at least 75% of the consideration payable in respect of such sales or other dispositions is in the form of cash or Cash Equivalents;

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(ix) leases, subleases, licenses or sublicenses of real or personal property in the ordinary course of business so long as no such lease, sublease, license or sublicense adversely affects the Lender’s security interest in the asset or property subject thereto in any material respect;

(x) any Investments made in compliance with Section 9.10;

(xi) any Restricted Payments made in compliance with Section 9.11;

(xii) subject to Section 2.3(b), any Disposition that constitutes a Casualty Event;

(xiii) any sale or other Disposition of accounts receivable arising in the ordinary course of business in connection with the collection or compromise thereof and not as part of any financing transaction; and

(xiv) any Disposition of the Distribution Center or any constituent parts thereof in the context of a Sale and Leaseback Transaction permitted hereunder;

(c) wind up, liquidate or dissolve; or

(d) as to Sections 9.7(a) and 9.7(c), agree to do any of the foregoing.

9.8. Encumbrances. Borrower shall not create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except for (collectively, “Permitted Liens”):

(a) the security interests and liens of Lender and any Bank Product Provider and the rights of setoff of Lender and any Bank Product Provider provided for herein or under applicable law;

(b) liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower as case may be and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP;

(c) non-consensual statutory liens (other than liens securing the payment of taxes, including but not limited to carriers’, warehousemen’s, landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ liens and other similar liens) arising in the ordinary course of Borrower’s business to the extent: (i) such liens secure obligations which are not overdue or are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books to the

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extent required by GAAP or (ii) such liens secure obligations relating to claims or liabilities which are fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP;

(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of Borrower as presently conducted thereon or materially impair the value of the Real Property which may be subject thereto;

(e) (i) purchase money security interests in Equipment (including Capital Leases) to secure Indebtedness permitted under Section 9.9(b) hereof and (ii) purchase money security interests (including Capital Leases) in the Distribution Center (or any of its constituent parts), as applicable, to secure Indebtedness permitted under Section 9.9(b) hereof, in each case so long as such security interests are limited to the Equipment or the Distribution Center (or any of its constituent parts), as applicable, acquired with such Indebtedness, and the Indebtedness secured thereby does not exceed the cost of the Equipment in the Distribution Center (or any of its constituent parts), as applicable, so acquired;

(f) pledges and deposits of cash by Borrower after the date hereof in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security benefits consistent with the current practices of Borrower as of the date hereof;

(g) liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other materials which are not owned by Borrower located on the premises of Borrower (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of Borrower and the precautionary UCC financing statement filings in respect thereof;

(h) liens or rights of setoff against credit balances of Borrower with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrower in the ordinary course of business, but not liens on or rights of setoff against any other property or assets of Borrower, pursuant to the Credit Card Agreements (as in effect on the date hereof) to secure the obligations of Borrower to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks;

(i) statutory or common law liens or rights of setoff of depository banks with respect to funds of Borrower at such banks to secure fees and charges in connection with returned items or the standard fees and charges of such banks in connection with the deposit accounts maintained by Borrower at such banks (but not any other Indebtedness or obligations);

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(j) deposits of cash with the owner or lessor of premises leased and operated by Borrower in the ordinary course of the business of Borrower to secure the performance by Borrower of its obligations under the terms of the lease for such premises;

(k) judgments and other similar liens arising in connection with court proceedings that do not constitute an Event of Default, provided, that, (i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such liens is in effect and (iv) Lender may establish a Reserve with respect thereto;

(l) the security interests and liens set forth in the Information Certificate and any security interests and liens granted as a replacement or substitute therefor; provided that any such replacement or substitute security interest or lien (i) does not secure an aggregate amount of Indebtedness or other obligations, if any, greater than that secured on the date hereof and (ii) does not encumber any property other than the property subject thereto on the date hereof;

(m) liens (i) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, government contracts, trade contracts, performance and return of money bonds and other similar obligations (in each case, exclusive of obligations for the payment of Indebtedness for borrowed money) or (ii) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers;

(n) liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower in the ordinary course of business of the Borrower in accordance with the past practices of the Borrower;

(o) liens on property rented to, or leased by, the Borrower pursuant to a Sale and Leaseback Transaction; provided that (i) such Sale and Leaseback Transaction is permitted by Section 9.23, (ii) such liens do not encumber any other property of the Borrower, and (iii) such Liens secure only the Attributable Indebtedness incurred in connection with such Sale and Leaseback Transaction;

(p) licenses or sublicenses of Intellectual Property granted by the Borrower in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Borrower or any of its Subsidiaries;

(q) leases, subleases, licenses and sublicenses of the properties of Borrower, in each case entered into in the ordinary course of the Borrower’s business so long as such leases, subleases, licenses and sublicenses do not (i) individually or in the aggregate, interfere in any material respect with the ordinary conduct of the business of the Borrower or (ii) secure an Indebtedness;

(r) liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the Uniform Commercial Code as in effect in the State of New York or any similar section under any applicable UCC, covering only the items being collected upon;

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(s) liens encumbering the underlying fee interest of any Real Property for which Borrower has only a leasehold or subleasehold interest in the Real Property;

(t) all matters set forth in any lease that is a leasehold interest included as Real Property (but only to the extent that Borrower only has a leasehold or subleasehold interest in the Real Property);

(u) liens not otherwise permitted under this Section 9.8 securing obligations that do not in the aggregate exceed $1,500,000 at any time outstanding; and

(v) liens granted to the Term Collateral Agent, for the benefit of itself and the Term Secured Parties, to secure Indebtedness evidenced by the Term Loan Documents to the extent such Liens are subject to the terms and conditions of the Intercreditor Agreement.

9.9. Indebtedness. Borrower shall not incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness, performance, obligations or dividends of any other Person, except:

(a) the Obligations;

(b) (i) purchase money Indebtedness for Equipment (including Capital Leases) arising after the date hereof in an aggregate amount not to exceed (i) $10,500,000 at any time outstanding with respect to purchase money Indebtedness and Capital Leases related to assets other than the Distribution Center and (ii) $28,000,000 with respect to purchase money Indebtedness and Capital Leases related to the Distribution Center; provided, however, that, in the case of purchase money Indebtedness, (A) such Indebtedness is incurred within ninety (90) days after such acquisition, installation, construction or improvement of such fixed or capital assets (including Capital Stock of any person owning the applicable fixed or capital assets) by such person and (B) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be;

(c) Indebtedness of Borrower entered into in the ordinary course of business pursuant to a Hedge Agreement; provided, that, (i) such arrangements are not for speculative purposes, (ii) such Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes part of the Obligations arising under or pursuant to Hedge Agreements with any Bank Product Provider that are secured under the terms hereof or except to the extent secured by pledges or deposits of cash as permitted herein, and (iii) the terms and amounts of such Indebtedness shall be reasonably acceptable to Lender;

(d) the Indebtedness set forth in the Information Certificate and any renewals or refinancings thereof which do not increase the principal amount of such Indebtedness; provided, that, (i) Borrower may only make regularly scheduled payments of principal and interest in respect of such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise to such Indebtedness as in effect on the date hereof, (ii) Borrower shall not, directly or indirectly, 1) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto as in effect on the date hereof except, that, Borrower may, after prior written notice to Lender, amend, modify, alter

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or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or 2) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, and (iii) Borrower shall furnish to Lender all notices or demands in connection with such Indebtedness either received by Borrower or on its behalf, promptly after the receipt thereof, or sent by Borrower or on its behalf, concurrently with the sending thereof, as the case may be;

(e) outstanding and unpaid trade payables incurred in the ordinary course of Borrower’s business;

(f) Indebtedness in respect of workers’ compensation claims, self-insurance obligations or bid, performance or surety bonds or bankers’ acceptances issued for the account of the Borrower, in each case in the ordinary course of business, including guarantees or obligations of the Borrower with respect to letters of credit supporting such workers’ compensation claims, self-insurance obligations or bid, performance or surety obligations or bankers’ acceptances (in each case other than for an obligation for borrowed money);

(g) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five (5) Business Days of incurrence;

(h) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

(i) Indebtedness of the Borrower in an aggregate principal amount for the Borrower not to exceed $5,000,000 at any time outstanding;

(j) Indebtedness representing deferred compensation to employees of the Borrower incurred in the ordinary course of business;

(k) cash management obligations and other Indebtedness incurred in the ordinary course of business in respect of netting services and similar arrangements in each case in connection with cash management and deposit accounts;

(l) Indebtedness consisting of the financing of insurance premiums, in the ordinary course of business, not to exceed one year of such premiums;

(m) (i) Indebtedness in respect of the Term Loan Documents in an aggregate principal amount outstanding not to exceed $100,000,000, and (ii) the amount of any Permitted Hedging Agreements (as defined in the Term Loan Credit Agreement) at any time; and

(n) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest (other than pay-in-kind interest) on obligations described in clauses (a) through (m) of this Section 9.9.

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9.10. Loans, Investments, Etc. Borrower shall not directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the capital stock or Indebtedness or all or a substantial part of the assets or property of any other Person, or form or acquire any Subsidiaries (all of the foregoing, collectively, “Investments”), except for (a) Permitted Investments; (b) loans to directors, employees or officers incident to hiring or relocation expenses in the aggregate for all such directors, employees or officers not to exceed $500,000 outstanding at any time, provided that any write off or debt forgiveness of any loan or portion thereof made by the Borrower in this context shall reduce the $500,000 by an amount corresponding with such write off or debt forgiveness; and (c) miscellaneous loans to directors, employees or officers other than for hiring and relocation expenses in the aggregate of all such loans not to exceed $250,000 outstanding at any time, provided that any write off or debt forgiveness of any loan or portion thereof made by the Borrower in this context shall reduce the $250,000 by an amount corresponding with such write off or debt forgiveness.

9.11. Restricted Payments. Borrower shall not declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment other than (a) expense reimbursements and payments of salary, bonuses, equity, benefits and other compensation in the ordinary course of business of the Borrower, (b) $100,000,000 funded first from the proceeds of the Term Loan in accordance with the Term Loan Agreement, and second from the Borrower’s cash-on-hand to the extent Term Loan proceeds net of applicable fees and costs (as such fees and costs are stipulated on the Closing Date) do not total $100,000,000; (c) the Borrower may declare and make dividend payments or other distributions payable solely in its Capital Stock; (d) repurchases of Capital Stock in the Borrower deemed to occur upon exercise of stock options or warrants if such Capital Stock represents a portion of the exercise price of such options or warrants; and (e) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of Borrower (provided however that any such cash payment shall not be for the purpose of evading the limitations of this covenant); unless in each case (i) Lender shall have received not less than ten (10) Business Days’ prior written notice of Borrower’s intention to declare or make, or agreement to declare or make, such Restricted Payment, and (ii) after giving effect to such Restricted Payment, (A) except in the case of Restricted Payments funded by the proceeds of new equity capital raised by the Borrower, Excess Borrowing Availability shall be no less than $3,000,000, and (B) no Default or Event of Default shall exist or have occurred and be continuing.

9.12. Creation of Subsidiaries. Without the prior written consent of Lender, Borrower shall not, directly or indirectly, create any Subsidiary.

9.13. Compliance with ERISA. Borrower shall (i) maintain each Pension Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal law; (i) cause each Pension Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (ii) not terminate any Pension Plan so as to incur any material liability to the Pension Benefit Guaranty Corporation; (iii) not allow or suffer to exist any prohibited transaction involving any Pension Plan or any trust created thereunder which would subject Borrower to a material tax or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (iv) make all required contributions to any Pension

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Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Pension Plan; (v) not allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such Pension Plan; (vi) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (vii) not allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any Pension Plan that is a single employer plan, which termination could result in any material liability to the Pension Benefit Guaranty Corporation.

9.14. End of Fiscal Years; Fiscal Quarters. Borrower shall, for financial reporting purposes, cause its fiscal years and quarters to end on dates in accordance with the standard 52/53 week calendar.

9.15. Credit Card Agreements. Borrower shall (a) observe and perform all material terms, covenants, conditions and provisions of the Credit Card Agreements to be observed and performed by it at the times set forth therein; (b) at all times maintain in full force and effect the Credit Card Agreements and not terminate, cancel, surrender, modify, amend, waive or release any of the Credit Card Agreements, or consent to or permit to occur any of the foregoing; except, that, Borrower may terminate or cancel any of the Credit Card Agreements in the ordinary course of the business of Borrower; provided, that, Borrower shall give Lender not less than fifteen (15) days prior written notice of its intention to so terminate or cancel any of the Credit Card Agreements; (c) not enter into any new Credit Card Agreements with any new Credit Card Issuer unless (i) Lender shall have received not less than fifteen (15) days prior written notice of the intention of Borrower to enter into such agreement (together with such other information with respect thereto as Lender may request) and (ii) Borrower delivers, or causes to be delivered to Lender, a Credit Card Acknowledgment in favor of Lender; (d) give Lender immediate written notice of any Credit Card Agreement entered into by Borrower after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Lender may request, provided that the requirements of this subsection (d) shall not be deemed to be a waiver of Borrower’s obligations under subsection (c) hereof; and (e) furnish to Lender, promptly upon the request of Lender, such information and evidence as Lender may reasonably require from time to time concerning the observance, performance and compliance by Borrower or the other party or parties thereto with the terms, covenants or provisions of the Credit Card Agreements.

9.16. Change in Business. Borrower shall not engage in any business other than the business of Borrower on the date hereof and any business reasonably related, ancillary or complimentary to the business in which Borrower is engaged on the date hereof.

9.17. License Agreements.

(a) Borrower shall (i) promptly and faithfully observe and perform all of the material terms, covenants, conditions and provisions of the material License Agreements to which it is a party to be observed and performed by it, at the times set forth therein.

(b) Borrower will either exercise any option to renew or extend the term of each material License Agreement to which it is a party in such manner as will cause the

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term of such material License Agreement to be effectively renewed or extended for the period provided by such option and give prompt written notice thereof to Lender or give Lender prior written notice that Borrower does not intend to renew or extend the term of any such material License Agreement or that the term thereof shall otherwise be expiring, not less than sixty (60) days prior to the date of any such non-renewal or expiration.

9.18. Foreign Assets Control Regulations, Etc. None of the requesting or borrowing of the Revolving Loans or the requesting or issuance, extension or renewal of any Letter of Credit or the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (including, but not limited to (a) Executive order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56). Borrower will not become a “blocked person” as described in the Executive Order, the Trading with the Enemy Act or the Foreign Assets Control Regulations and will not, to its knowledge, engage in any dealings or transactions, or be otherwise associated, with any such “blocked person”.

9.19. Leased Personal Property. Upon the reasonable request of Lender or at any time as requested by Lender upon the occurrence and during the continuation of an Event of Default, Borrower shall deliver, or cause to be delivered, to Lender a duly executed agreement, in form and substance reasonably satisfactory to Lender, with each lessor of material personal property leased by Borrower, including, without limitation, any computer equipment or software leased by Borrower and material to the conduct of the business of the Borrower, that provides Lender with access to such personal property.

9.20. Costs and Expenses. Borrower shall pay to Lender on demand all costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Lender’s rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable); (b) all costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering reports and inspections, appraisal fees and search fees, background checks, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining bank accounts, together with Lender’s customary charges and fees with respect thereto; (c) charges, fees or expenses charged in connection with any Letter of Credit; (d) all reasonable costs and expenses of preserving and protecting the Collateral; (e) all costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Lender, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this

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Agreement and the other Financing Agreements or defending any claims made or threatened against Lender arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (f) subject to the limitations of Sections 7.3 and 7.7 hereof, all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Lender during the course of periodic field examinations of the Collateral and Borrower’s operations, plus a per diem charge at Lender’s then standard rate for Lender’s examiners in the field and office; (g) all fees due and owing to Lender under the Fee Letter; and (h) the reasonable fees and disbursements of counsel (including legal assistants) to Lender in connection with any of the foregoing.

9.21. Further Assurances. At the request of Lender at any time and from time to time, Borrower shall, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be reasonably necessary or proper to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements. Lender may at any time and from time to time request a certificate from an officer of Borrower representing that all conditions precedent to the making of Revolving Loans and providing Letters of Credit contained herein are satisfied. In the event of such request by Lender, Lender may, at Lender’s option, cease to make any further Revolving Loans or provide any further Letters of Credit until Lender has received such certificate and, in addition, Lender has determined that such conditions are satisfied.

9.22. Minimum Excess Collateral Availability. Borrower shall at all times maintain Excess Collateral Availability of no less than an amount equal to the greater of the following (as the case may be, the “Minimum Excess Collateral Availability”): (a) ten percent (10%) of the then-effective Maximum Credit; or (b) $3,000,000.

9.23. Sale and Leaseback Transactions. Borrower shall not enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “Sale and Leaseback Transaction”) unless (a) the sale of such property is entered into in the ordinary course of business and is made for cash consideration in an amount not less than the fair market value of such property, (b) the Sale and Leaseback Transaction is permitted by Section 9.7 and is consummated within sixty (60) days after the date on which such property is sold or transferred, (c) any Liens arising in connection with its use of the property are permitted by Section 9.8(o), (d) the Sale and Leaseback Transaction would be permitted under Section 9.9, assuming the Attributable Indebtedness with respect to the Sale and Leaseback Transaction constituted Indebtedness under Section 9.9 and (e) the Attributable Indebtedness incurred with respect to such Sale and Leaseback Transactions shall not exceed (i) for any property other than the Distribution Center, $1,250,000 with respect to any single Sale and Leaseback Transaction and $2,500,000 in the aggregate in any period of twelve (12) consecutive months and (ii) for the Distribution Center, $28,000,000.

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SECTION 10. EVENTS OF DEFAULT AND REMEDIES

10.1. Events of Default. The occurrence or existence of any one or more of the following events is referred to herein individually as an “Event of Default”, and collectively as “Events of Default”:

(a) Borrower fails to pay (i) any principal of any Revolving Loan when and as the same shall become due and payable or (ii) any interest on any Revolving Loan or any fee or any other amount due under any Financing Agreement, when and as the same shall become due and payable;

(b) Borrower fails to perform or abide by any of the covenants contained in Section 9 of this Agreement and such failure shall continue for ten (10) days; provided, that, such ten (10) day period shall not apply in the case of: (i) any failure to observe any such covenant which is not capable of being cured at all or within such ten (10) day period or which has been the subject of a prior failure within a six (6) month period or (ii) an intentional breach by Borrower of any such covenant;

(c) Borrower fails to perform any of the other terms, covenants, conditions or provisions contained in this Agreement or in any of the other Financing Agreements and such failure shall continue for ten (10) Business Days after the earlier to occur of (i) Lender’s provision of written notice of such failure to Borrower, and (ii) Borrower’s knowledge of such failure; provided, that, such ten (10) Business Day period shall not apply in the case of: (i) any failure to observe any such term, covenant, condition or provision which is not capable of being cured at all or within such ten (10) Business Day period or which has been the subject of a prior failure within a six (6) month period or (ii) an intentional breach by Borrower of any such term, covenant, condition or provision;

(d) any representation, warranty or statement of fact made by Borrower to Lender in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect;

(e) any judgment for the payment of money is rendered against Borrower in excess of $500,000 in any one case or in excess of $500,000 in the aggregate (to the extent not covered by insurance where the insurer has assumed responsibility in writing for such judgment) and shall remain undischarged or unvacated for a period in excess of thirty (30) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against Borrower or any of the Collateral;

(f) Borrower makes an assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a meeting of its creditors or principal creditors in connection with a moratorium or adjustment of the Indebtedness due to them;

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction

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now or hereafter in effect (whether at law or in equity) is filed against Borrower or all or any part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or Borrower shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(h) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by Borrower or for all or any part of its property;

(i) any default by Borrower under (A) any agreement, document or instrument relating to any Indebtedness owing to any person other than Lender, or any capitalized lease obligations, contingent indebtedness in connection with any guarantee, letter of credit, indemnity or similar type of instrument in favor of any person other than Lender, in any case in an amount in excess of $500,000, or (B) any lease of real property for which the leased premises is the Borrower’s corporate headquarters or one of the Borrower’s distribution centers, in each such case under (A) and (B) which default continues for more than the applicable cure period, if any, with respect thereto; provided that, any such default referred to in subclause (A) relating to Indebtedness under the Term Loan Documents shall constitute an Event of Default under this Section 10.1 only after the earliest to occur of (x) expiration of a forty-five (45)-day period following the commencement of such failure or the date of such occurrence, (y) any acceleration of the Term Loan Credit Agreement (as defined in the Intercreditor Agreement), whether automatic or otherwise or (z) the commencement of any Enforcement Action (as defined in the Intercreditor Agreement) by the Term Collateral Agent or any holder of the Term Loan Documents as the result of such default;

(j) any default by Borrower under any Material Contract (including, without limitation, any of the Credit Card Agreements), which default continues for more than the applicable cure period, if any, with respect thereto which default has or could reasonably be expected to have a Material Adverse Effect, or any Credit Card Issuer or Credit Card Processor (other than with a Credit Card Issuer or Credit Card Processor where the sales using the applicable card are less than ten percent (10%) of all such sales in the immediately preceding fiscal year) withholds payment of amounts otherwise payable to Borrower to fund a reserve account or otherwise hold as collateral, or shall require Borrower to pay funds into a reserve account or for such Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, or Borrower shall provide a letter of credit, guarantee, indemnity or similar instrument to or in favor of such Credit Card Issuer or Credit Card Processor such that in the aggregate, all of such funds in the reserve account, other amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar instruments shall exceed $1,000,000, or any such Credit Card Issuer or Credit Card Processor shall debit or deduct any amounts in excess of $250,000 in the aggregate in any fiscal year of Borrower from any deposit account of any Borrower;

(k) any Credit Card Issuer or Credit Card Processor shall send written notice to Borrower that it is ceasing to make or suspending payments to Borrower of amounts

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due or to become due to Borrower or shall cease or suspend such payments, or shall send written notice to Borrower that it is terminating its arrangements with Borrower or such arrangements shall terminate as a result of any event of default under such arrangements, which continues for more than the applicable cure period, if any, with respect thereto, unless Borrower shall have entered into arrangements with another Credit Card Issuer or Credit Card Processor, as the case may be, within sixty (60) days after the date of any such notice;

(l) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Lender) in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein and subject to the terms of the Intercreditor Agreement);

(m) an ERISA Event shall occur which results in or could reasonably be expected to result in liability of Borrower in an aggregate amount in excess of $2,000,000;

(n) the occurrence of any Change of Control; or

(o) the indictment by any Governmental Authority, or as Lender may reasonably and in good faith determine, the threatened indictment by any Governmental Authority of Borrower of which any Borrower or Lender receives notice, in either case, as to which there is a reasonable possibility of an adverse determination, in the good faith determination of Lender, under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against Borrower, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture of (i) any of the Collateral having a value in excess of $2,000,000 or (ii) any other property of Borrower which is necessary or material to the conduct of its business.

10.2. Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing, Lender shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which rights and remedies may be exercised without notice to or consent by Borrower, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Lender hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Lender’s discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by Borrower of this Agreement or any of the other Financing Agreements.

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(b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, Lender may, at its option (i) upon notice to Borrower, accelerate the payment of all Obligations and demand immediate payment thereof (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(f), 10.1(g) and 10.1(h), all Obligations shall automatically become immediately due and payable), and (ii) terminate the Commitment whereupon the obligation of Lender to make any Revolving Loan or to issue any Letter of Credit shall immediately terminate (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(f), 10.1(g) and 10.1(h), the Commitment and any other obligation of the Lender hereunder shall automatically terminate).

(c) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Lender may, in its discretion (i) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (ii) require Borrower, at Borrower’s expense, to assemble and make available to Lender any part or all of the Collateral at any place and time designated by Lender, (iii) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (iv) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker’s board, at any office of Lender or elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon credit or for future delivery, with the Lender having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of Borrower, which right or equity of redemption is hereby expressly waived and released by Borrower and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by Lender upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Lender. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Lender to Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Borrower waives any other notice. In the event Lender institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, Borrower waives the posting of any bond which might otherwise be required. At any time an Event of Default exists or has occurred and is continuing, upon Lender’s request, Borrower will either, as Lender shall specify, furnish cash collateral to Lender to be used to secure and fund the reimbursement obligations to Lender in connection with any Letter of Credit Obligations or furnish cash collateral to Lender for the Letter of Credit Obligations. Such cash collateral shall be in the amount equal to one hundred ten (110%) percent of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations.

(d) At any time or times that an Event of Default exists or has occurred and is continuing, Lender may enforce the rights of the Borrower against any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other Receivables.

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Without limiting the generality of the foregoing, Lender may (i) notify any or all account debtors (including Credit Card Issuers and Credit Card Processors), secondary obligors or other obligors in respect thereof that the Receivables have been assigned to Lender and that Lender has a security interest therein and Lender may direct any or all account debtors (including Credit Card Issuers and Credit Card Processors), secondary obligors and other obligors to make payment of Receivables directly to Lender, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Receivables or other obligations included in the Collateral and thereby discharge or release the account debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables or such other obligations, but without any duty to do so, and Lender shall not be liable for any failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto, (iv) take whatever other action Lender may deem necessary or desirable for the protection of its interests, (v) request that all invoices and statements sent to any account debtor state that the Accounts and such other obligations have been assigned to Lender and are payable directly and only to Lender, and (vi) request that Borrower deliver to Lender such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Lender may require. In the event any account debtor returns Inventory when an Event of Default exists or has occurred and is continuing, the Borrower shall, upon Lender’s request, hold the returned Inventory in trust for Lender, segregate all returned Inventory from all of its other property, dispose of the returned Inventory solely according to Lender’s instructions, and not issue any credits, discounts or allowances with respect thereto without Lender’s prior written consent.

(e) To the extent that applicable law imposes duties on Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), Borrower acknowledges and agrees that it is not commercially unreasonable for Lender (i) to fail to incur expenses reasonably deemed significant by Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as Borrower, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Lender against risks of loss, collection or

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disposition of Collateral or to provide to Lender a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Lender in the collection or disposition of any of the Collateral. Borrower acknowledges that the purpose of this subsection (e) is to provide non-exhaustive indications of what actions or omissions by Lender would not be commercially unreasonable in the exercise by Lender of remedies against the Collateral and that other actions or omissions by Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this subsection (e). Without limitation of the foregoing, nothing contained in this subsection (e) shall be construed to grant any rights to Borrower or to impose any duties on Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this subsection (e).

(f) For the purpose of enabling Lender to exercise the rights and remedies hereunder, Borrower hereby grants to Lender, to the extent assignable, an irrevocable, non-exclusive license (exercisable at any time an Event of Default shall exist or have occurred and for so long as the same is continuing) without payment of royalty or other compensation to Borrower, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by Borrower, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

(g) At any time an Event of Default exists or has occurred and is continuing, Lender may apply the cash proceeds of Collateral actually received by Lender from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due or may hold such proceeds as cash collateral for the Obligations. Borrower shall remain liable to Lender for the payment of any deficiency with interest at the highest rate provided for herein and all reasonable costs and expenses of collection or enforcement, including reasonable attorneys’ fees and expenses.

(h) Without limiting the foregoing, upon the occurrence and during the continuation of a Default or an Event of Default, Lender may, at Lender’s option, without notice, (i) cease making Revolving Loans or arranging for Letters of Credit or reduce the lending formulas or amounts of Revolving Loans and Letters of Credit available to Borrower and/or (ii) terminate any provision of this Agreement providing for any future Revolving Loans to be made by Lender or Letters of Credit to be issued by Lender.

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.

11.1. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise,

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shall be governed by the internal laws of the Commonwealth of Pennsylvania, but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the Commonwealth of Pennsylvania.

(b) Borrower and Lender irrevocably consent and submit to the non-exclusive jurisdiction of the state courts for the Commonwealth of Pennsylvania and the United States District Court for the Eastern District of Pennsylvania, whichever Lender may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Lender shall have the right to bring any action or proceeding against Borrower or its property in the courts of any other jurisdiction which Lender deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against Borrower or its property).

(c) Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Lender’s option, by service upon Borrower in any other manner provided under the rules of any such courts.

(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Lender shall not have any liability to Borrower (whether in tort, contract, equity or otherwise) for losses suffered by Borrower in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement or any other Financing Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Lender that the losses were the result of acts or omissions constituting gross negligence or willful misconduct by Lender. In any such litigation, Lender shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the performance by it of the terms of this Agreement and each other Financing Agreement.

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11.2. Waiver of Notices. Borrower hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on Borrower which Lender may elect to give shall entitle Borrower to any other or further notice or demand in the same, similar or other circumstances.

11.3. Amendments and Waivers. Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Lender, and as to amendments to any of the Financing Agreements, by Borrower. Any and all amendments, waivers, discharges or terminations shall be effective and binding as to Lender only in the specific instance and for the specific purpose for which given.

11.4. Waiver of Counterclaims. Borrower waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other than compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

11.5. Indemnification. Borrower shall indemnify and hold Lender and its respective officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an “Indemnitee”), harmless from and against any and all losses, claims, damages, liabilities, reasonable costs or expenses (including reasonable attorneys’ fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including amounts paid in settlement, court costs, and the reasonable fees and expenses of counsel except that Borrower shall not have any obligation under this Section to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Borrower as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion which it is permitted to pay under applicable law to Lender in satisfaction of indemnified matters under this Section. No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or any of the other Financing Agreements or the transaction contemplated hereby or thereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

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11.6. Waiver of Special Damages. To the extent permitted by applicable law, neither Borrower nor Lender shall assert, and each of Borrower and Lender hereby waives, any claim against the officers, directors, agents, employees, advisors, counsel and Affiliates of the other party, on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby.

SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS

12.1. Term.

(a) This Agreement and the other Financing Agreements shall continue in full force and effect until the earliest to occur of the following (as the case may be, the “Termination Date”): (i) May 16, 2017; (ii) the date which is 45 days prior to the Term Loan Maturity Date; or (iii) at the election of Lender in its sole discretion, upon the occurrence of an Event of Default.

(b) No termination of this Agreement or any of the other Financing Agreements shall relieve or discharge Borrower of its respective duties, obligations and covenants under this Agreement or any of the other Financing Agreements until all Obligations have been fully and finally discharged and paid, and Lender’s continuing security interest in the Collateral and the rights and remedies of Lender hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid. Accordingly, Borrower waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Lender shall not be required to send such termination statements to Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations paid and satisfied in full in immediately available funds. Upon the termination of this Agreement in accordance with its terms and the payment and satisfaction in full of all Obligations, including the satisfaction of all indemnification and other obligations of Borrower which survive the payment of the Obligations and the termination or non-renewal of this Agreement as provided herein, in each case as determined by Lender in its sole discretion, Lender shall, at the request and expense of Borrower, prepare, file and/or record all necessary instruments, documents, releases, satisfactions and terminations, including UCC termination statements, to evidence and effectuate the termination of the Credit Facility and any interest of Lender in and to the Collateral.

12.2. Interpretative Provisions.

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

(b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural, unless the context otherwise requires.

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(c) All references to Borrower or Lender pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

(d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(e) The word “including” when used in this Agreement shall mean “including, without limitation” and the word “will” when used in this Agreement shall be construed to have the same meaning and effect as the word “shall”.

(f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.3 hereof or is cured in a manner satisfactory to Lender, if such Event of Default is capable of being cured as determined by Lender in good faith.

(g) All references to the term “good faith” used herein when applicable to Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned. Borrower shall have the burden of proving any lack of good faith on the part of Lender as alleged by Borrower.

(h) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the financial statements of Borrower most recently received by Lender prior to the date hereof. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is unqualified and also does not include any explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or the scope of the audit.

(i) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including”.

(j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

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(k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(l) This Agreement and other Financing Agreements may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

(m) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Lender and Borrower, and are the products of all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed against Lender merely because of Lender’s involvement in their preparation.

12.3. Notices. All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

If to Borrower:	Five Below, Inc. 1818 Market Street, Suite 1900 Philadelphia, PA 19103 Attention:    Kenneth R. Bull                         Chief Financial Officer Telephone No.: (215) 207-2604 Telecopy No.: (215) 546-1695
with a copy to:	Pepper Hamilton LLP 3000 Two Logan Square Eighteenth and Arch Streets Philadelphia, PA 19103-2799 Attention: Barry Abelson, Esquire Telephone No.: (215) 981-4282 Telecopy No.: (215) 981-4750
If to Lender:	Wells Fargo Bank, National Association c/o Peter Foley Wells Fargo Retail Finance One Boston Place, 19th Floor Boston, MA 02108 Telephone No.: 617-854-7283 Telecopy No.: 855-461-3726

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with a copy to: Duane Morris LLP United Plaza 30 S. 17^th Street Philadelphia, PA 19103 Attention: James J. Holman, Esquire Lauren Lonergan Taylor, Esquire Telephone No.: (215) 979-1000 Telecopy No.: (215) 979-1020

12.4. Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

12.5. Successors. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Lender, Borrower and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Lender. Any such purported assignment without such express prior written consent shall be void. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrower and Lender with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

12.6. Assignments; Participations. Lender may sell, assign, transfer, negotiate, grant participations in, or otherwise dispose of all or any part of Lender’s interest in the Revolving Loans at any time. Borrower hereby authorizes Lender to provide without any notice to the Borrower, any information concerning the Borrower, including information pertaining to Borrower’s financial condition, business operations or general creditworthiness, to any person or entity which may succeed to or participate in all or any part of the Lender’s interest in the Revolving Loans; provided, that, such person or entity agrees to hold such information confidential in accordance with a confidentiality agreement in form and substance reasonably acceptable to Borrower and Lender.

12.7. Entire Agreement. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represent the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

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12.8. USA Patriot Act. Pursuant to the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), Lender hereby notifies Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into a business relationship with it, which information includes the name and address of Borrower and other information that will allow Lender to identify such person in accordance with the Act and any other applicable law. Borrower is hereby advised that any Revolving Loans or Letters of Credit hereunder are subject to satisfactory results of such verification.

12.9. Counterparts, Etc. This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements. Any party delivering an executed counterpart of any such agreement by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

12.10. Release. In consideration of Lender entering into this Agreement, Borrower hereby fully and unconditionally releases and forever discharges Lender and its respective directors, officers, employees, subsidiaries, branches, affiliates, attorneys, agents, representatives, successors and assigns and all persons, firms, corporations and organizations acting on any of their behalves (collectively, the “Released Parties”), of and from any and all claims, allegations, causes of action, costs or demands and liabilities, of whatever kind or nature, from the beginning of the world to the date on which this Agreement is effective, whether known or unknown, liquidated or unliquidated, fixed or contingent, asserted or unasserted, foreseen or unforeseen, matured or unmatured, suspected or unsuspected, anticipated or unanticipated, which Borrower has, had, claims to have had or hereafter claims to have against the Released Parties by reason of any act or omission on the part of the Released Parties, or any of them, on account of or in any way affecting, concerning or arising out of or founded upon this Agreement, including all such loss or damage of any kind heretofore sustained or that may arise as a consequence of the dealings among the parties in connection with the administration or enforcement of the Revolving Loans, the Obligations, this Agreement or any of the other Financing Agreements (collectively, all of the foregoing are the “Claims”) prior to the date hereof. Borrower represents and warrants that the foregoing constitutes a full and complete release of all Claims.

12.11. Intercreditor Agreement.

(a) Reference is made to the Intercreditor Agreement. Lender (a) consents to the subordination of liens provided for in the Intercreditor Agreement and (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement. The foregoing provisions are intended as an inducement to Lender to extend credit, and Lender is an intended third party beneficiary of such provisions and the provisions of the Intercreditor Agreement.

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(b) Reference is made to the Intercreditor Agreement. Notwithstanding any other provision contained herein, this Agreement, the liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Obligations Security Documents (as defined in the lntercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

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IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be duly executed as of the day and year first above written.

LENDER:		BORROWER:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as successor by merger to Wachovia Bank, N.A.		FIVE BELOW, INC.
By:	/s/ Matthew N. Williams	By:	/s/ Kenneth R. Bull
Name:	Matthew N. Williams	Name:	Kenneth R. Bull
Title:	Managing Director	Title:	Chief Financial Officer, Treasurer,
			Secretary

[Signature Page to Second Amended and Restated Loan and Security Agreement]

SCHEDULE 1.26

Credit Card Agreements

Name of Company	Name of Processor	Date
Five Below, Inc.	Paymentech, LLC		10/27/2009

SCHEDULE 1.32

Customs Broker

Samuel Shapiro & Co., Inc.

Exhibits

Exhibit “A” Form of Borrowing Base Certificate

Exhibit “B” Information Certificate

Exhibit “C” Form of Compliance Certificate

Exhibit “D” Form of Intercreditor Agreement

[Exhibits A through D have been omitted as certain of these exhibits are either subject to post-closing determinations or have been separately filed as exhibits to Amendment No. 1 to the Form S-1. The Company agrees to furnish supplementally a copy of these exhibits to the Securities and Exchange Commission upon request.]

EX-10.31

Exhibit 10.31

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT

dated as of May 16, 2012,

among

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Revolving Facility Agent,

GOLDMAN SACHS BANK USA,

as Term Loan Agent,

FIVE BELOW, INC.

and

The Subsidiaries of Five Below, Inc. from time to time party hereto

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of May 16, 2012 (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), among Wells Fargo Bank, National Association, a national banking association, as successor by merger to Wachovia Bank, National Association, Goldman Sachs Bank USA, as agent for the Term Loan Secured Parties referred to herein; Five Below, Inc.; and the Subsidiaries of Five Below, Inc. from time to time party hereto.

Reference is made to (a) the Revolving Facility Credit Agreement, under which the Revolving Facility Lenders have extended and agreed to extend credit to the Company and (b) the Term Loan Credit Agreement, under which the Term Loan Lenders have extended credit to the Company.

As of the date hereof, Wells Fargo Bank, National Association is the sole lender under the Revolving Facility Credit Agreement. Accordingly, until such time as the Revolving Facility Obligations may be held by one or more additional lenders, each of the terms “Revolving Facility Agent,” “Revolving Facility Lenders,” “Revolving Facility Required Parties,” and “Revolving Facility Secured Parties,” shall be deemed to mean Wells Fargo Bank, National Association, in its individual capacity.

In consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Revolving Facility Agent (for itself and on behalf of the Revolving Facility Secured Parties), the Term Loan Agent (for itself and on behalf of the Term Loan Secured Parties), Five Below, Inc. and the Subsidiaries of Five Below, Inc. from time to time party hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Construction, Certain Defined Terms. (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, replaced, supplemented or otherwise modified, (ii) any reference herein to any person shall be construed to include such person’s successors and permitted assigns, but shall not be deemed to include the Subsidiaries of such person unless express reference is made to such Subsidiaries, (iii) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles and Sections shall be construed to refer to Articles and Sections of this Agreement and (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

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(b) Any capitalized term used and not otherwise defined herein shall have the meaning assigned to it in Article 1 of the Revolving Facility Credit Agreement, as in effect on the date hereof. All terms used in this Agreement that are defined in Article 1, 8 or 9 of the UCC (whether capitalized herein or not) and not otherwise defined herein or in the Revolving Facility Credit Agreement shall have the meanings assigned to them in Article 1, 8 or 9 of the UCC. If a term is defined in Article 9 of the UCC and another Article of the UCC, such term shall have the meaning assigned to it in Article 9 of the UCC.

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

“Bank Product Obligations” means, with respect to any Bank Product Recipient, any obligations of such Bank Product Recipient owed to any holder of Revolving Facility Obligations or an Affiliate thereof in respect of any financial accommodation extended to such Bank Product Recipient by such Person (other than any Revolving Facility Obligation pursuant to the Revolving Facility Credit Agreement), including (a) credit cards or stored value cards or (b) cash management or related services, including (1) the automated clearinghouse transfer of funds for the account of the Company pursuant to agreement or overdraft for any accounts of the Company maintained at any Bank Product Provider that are subject to the control of Revolving Facility Secured Parties pursuant to any Deposit Account Control Agreement to which any Revolving Facility Lender or any Affiliate of any Revolving Facility Lender is a party, as applicable, and (2) controlled disbursement services and (3) hedge agreements if and to the extent permitted under the Revolving Facility Credit Agreement and the Term Loan Credit Agreement.

“Bank Product Obligations Cap” has the meaning ascribed thereto in Section 2.01(d).

“Bank Product Recipient” means, collectively, Company and each of its Subsidiaries.

“Borrowing Base” shall mean, at any time, the amount equal to: ninety percent (90%) of the Eligible Credit Card Receivables of the Company, plus ninety percent (90%) of the Net Recovery Percentage of Eligible Inventory of the Company multiplied by the Value thereof, minus Reserves attributable to the Company.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

“Collateral” means the Revolving Facility Collateral and the Term Loan Collateral.

“Company” means Five Below, Inc., a Pennsylvania corporation.

“DIP Cap” means, on any date of determination, the sum of the aggregate outstanding principal amount of loans (including any advances or overadvances permitted by the Revolving Facility Credit Agreement), letter of credit accommodations (including the undrawn amount of any letter of credit) and other financial accommodations made, issued or incurred under the Revolving Facility Documents and Bank Product Obligations up to an aggregate maximum

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amount equal to the sum of (x) the then outstanding Revolving Facility Obligations Cap, minus any permanent reductions of the revolving loan commitment under the Revolving Facility Documents (other than as a result of Permitted Refinancing) and (y) $2,000,000; provided that the DIP Cap shall not exceed, (i) prior to the consummation of a Qualifying IPO, $40,000,000, and (ii) after the consummation of a Qualifying IPO, $50,000,000.

“Enforcement Action” means, except as otherwise provided in the final sentence of this definition:

(a) the taking by any Secured Party of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings or the noticing of any public or private sale pursuant to Article 9 of the Uniform Commercial Code or other applicable law;

(b) the exercise by any Secured Party of any right or remedy provided to a secured creditor on account of a Lien under any of the Revolving Facility Documents or the Term Loan Documents, as applicable, under applicable law, in an Insolvency or Liquidation Proceeding or otherwise, including the election to retain any of the Collateral in satisfaction of a Lien;

(c) the taking of any action by any Secured Party or the exercise of any right or remedy by any Secured Party in respect of the collection on, set off against, marshaling of, injunction respecting or foreclosure on the Collateral or the proceeds thereof;

(d) the appointment or the application of a Secured Party, of a receiver, receiver and manager or interim receiver of all or part of the Collateral;

(e) the sale, lease, license or other disposition of all or any portion of the Collateral by private or public sale conducted by any Secured Party or any other means at the direction of any Secured Party permissible under applicable law;

(f) the exercise of any other right of a secured creditor under Part 6 of Article 9 of the Uniform Commercial Code or under provisions of similar effect under other applicable law; and

(g) the exercise by any Secured Party of any voting rights relating to any Capital Stock included in the Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute an Enforcement Action: (i) the filing of a proof of claim in an Insolvency or Liquidation Proceeding or the seeking of adequate protection, (ii) a store closing sale, going out of business sale or other dispositions by any Grantor of any of the Revolving Facility First Lien Collateral in accordance with the terms of the Revolving Facility Credit Agreement and the Term Loan Credit Agreement, (iii) the exercise of control over any of the Grantors’ deposit or securities accounts, (iv) the reduction of advance rates or sub-limits by the Revolving Facility Agent and the Revolving Facility Lenders, (v) the change in eligibility criteria for components of the borrowing base under the Revolving Facility Credit Agreement by the Revolving Facility Agent and the Revolving Facility Lenders, (vi) the imposition of reserves under the Revolving Facility Credit Agreement by the Revolving Facility Agent and the Revolving Facility Lenders, or (vii) the refusal of the Revolving Facility Agent or the Revolving Facility Lenders to make further advances or issue additional letters of credit under the Revolving Facility Agreement.

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“First Lien Collateral Transition Date” means the Revolving Facility First Lien Collateral Transition Date or the Term Loan First Lien Collateral Transition Date, as applicable.

“Grantor” means the Company and each Subsidiary of the Company that shall have created any Lien on any of its assets or properties to secure any of the Obligations.

“Insolvency or Liquidation Proceeding” means:

(a) any case commenced by or against Company or any other Grantor under the Bankruptcy Code or any similar federal or state law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to Company or any other Grantor or any similar case or proceeding relative to Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;

(b) any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency;

(c) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with respect to Company or any other Grantor or any of its assets;

(d) any other proceeding of any type or nature in which substantially all claims of creditors of Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims; or

(e) an analogous procedure or step in any jurisdiction.

“Junior Documents” means (a) in respect of the Term Loan First Lien Collateral, the Revolving Facility Documents, and (b) in respect of the Revolving Facility First Lien Collateral, the Term Loan Documents.

“Junior Liens” means (a) in respect of the Revolving Facility First Lien Collateral, the Term Loan Liens on such Collateral, and (b) in respect of the Term Loan First Lien Collateral, the Revolving Facility Liens on such Collateral. For the avoidance of doubt, Liens granted to the Revolving Facility Lenders in excess of (i) $2,000,000 in connection with Bank Product Obligations; and (ii) the Revolving Facilities Obligations Cap in connection with Revolving Facility Obligations other than Bank Product Obligations shall, in each case, be subordinated and junior in all respects to the Term Loan Liens.

“Junior Obligations” means (a) with respect to the Term Loan Obligations (to the extent such Obligations are secured by the Term Loan First Lien Collateral), the Revolving Facility Obligations, and (b) with respect to Revolving Facility Obligations (to the extent such Obligations are secured by the Revolving Facility First Lien Collateral), the Term Loan Obligations.

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“Junior Obligations Collateral” means, with respect to any Senior Obligations, the Collateral securing the related Junior Obligations.

“Junior Obligations Event of Default” means (a) with respect to the Term Loan First Lien Collateral, any Revolving Facility Event of Default, and (b) with respect to the Revolving Facility First Lien Collateral, any Term Loan Event of Default.

“Junior Obligations Secured Parties” means (a) with respect to the Term Loan First Lien Collateral, the Revolving Facility Secured Parties, and (b) with respect to the Revolving Facility First Lien Collateral, the Term Loan Secured Parties.

“Junior Obligations Security Documents” means (a) with respect to the Revolving Facility First Lien Collateral, the Term Loan Security Documents, and (b) with respect to the Term Loan First Lien Collateral, the Revolving Facility Security Documents.

“Junior Representative” means (a) with respect to the Term Loan First Lien Collateral, the Revolving Facility Agent, and (b) with respect to the Revolving Facility First Lien Collateral, the Term Loan Agent.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest therein and any filing of or agreement to give any financing statement under the UCC (or equivalent statutes of any jurisdiction).

“Obligations” means, collectively, the Term Loan Obligations and the Revolving Facility Obligations.

“Officer” means with respect to any Person, the chairman of the board (if an officer), chief executive officer, president, vice president (or the equivalent thereof), chief financial officer, treasurer or controller of such Person.

“Officer’s Certificate” means a certificate signed on behalf of Company by one of its Officers.

“Payment in Full” means (a) with respect to the Revolving Facility, payment in full in cash of all Revolving Facility Obligations (other than unripened or contingent indemnity obligations under the relevant Revolving Facility Documents for which no demand has been made), the termination of all commitments to extend credit under the Revolving Facility, the termination or cash collateralization of letters of credit under the Revolving Credit Agreement, the termination or cash collateralization of Bank Product Obligations at termination value, and the termination of the Revolving Facility Credit Agreement, and (b) with respect to the Term Loan Facility, the payment in full in cash of all the Term Loan Obligations (other than unripened or contingent indemnity obligations under the relevant Term Loan Documents for which no demand has been made) and the termination of the Term Loan Credit Agreement. “Paid in Full” shall have the correlative meaning.

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“Permitted Second Priority Refinancing Debt” shall mean any “Permitted Second Priority Refinancing Debt” as defined in the Term Loan Credit Agreement as in effect on the date hereof.

“Qualifying IPO” shall mean the first bona fide underwritten primary or secondary (or combination of primary and secondary) public offering (other than a public offering pursuant to a registration statement on Form S-8) by the Company of its common Capital Stock after the date hereof pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act.

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, amend and restate, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for, such indebtedness in whole or in part; provided that the Refinancing indebtedness is secured by Liens in respect of the same assets and properties that secured the Refinanced indebtedness prior to such Refinancing.

“Refinanced” and “Refinancing” shall have correlative meanings.

“Representative” means (a) in the case of any Revolving Facility Obligations, the Revolving Facility Agent, and (b) in the case of any Term Loan Obligations, the Term Loan Agent.

“Revolving Facility Agent” means Wells Fargo Bank, National Association, in its capacity as agent under the Revolving Facility Credit Agreement, together with its successors in such capacity.

“Revolving Facility Collateral” means all assets and properties subject to Liens created by the Revolving Facility Security Documents to secure the Revolving Facility Obligations.

“Revolving Facility Credit Agreement” means the Second Amended and Restated Loan and Security Agreement dated May 16, 2012 by and between the Company and Wells Fargo Bank, National Association, as amended, amended and restated, extended, renewed, restated, supplemented, refinanced, replaced or otherwise modified from time to time, with the same or different lenders and agents.

“Revolving Facility Debt” means indebtedness for borrowed money, fees, costs and letters of credit incurred under the Revolving Facility Documents in an aggregate principal amount (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Company and its Subsidiaries thereunder) not to exceed, as of any date of incurrence, the Revolving Facility Obligations Cap as of such date of incurrence; provided that Bank Product Obligations will not be treated as Revolving Facility Debt.

“Revolving Facility Documents” means, collectively, the Revolving Facility Credit Agreement and the Revolving Facility Security Documents.

“Revolving Facility Event of Default” means any “Event of Default,” as defined in the Revolving Facility Credit Agreement.

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“Revolving Facility First Lien Collateral” means any and all of the following assets and properties now owned or at any time hereafter acquired by any Grantor:(a) all Accounts; (b) all Inventory; (c) to the extent evidencing, governing, securing or otherwise related to the items referred to in the preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel Paper, (iii) Instruments and (iv) Documents; (d) all Payment Intangibles (including corporate tax refunds), other than any Payment Intangibles that represent tax refunds in respect of or otherwise relate to real property, Fixtures or Equipment; (e) all payments received from the Grantors’ credit card clearinghouses and processors or otherwise in respect of all credit card charges for sales of Inventory by the Grantors; (f) all collection accounts, deposit accounts and commodity accounts and any cash or other assets in any such accounts; (g) to the extent relating to any of the items referred to in the preceding clauses (a) through (f) constituting Revolving Facility First Lien Collateral, all Supporting Obligations and Letter-of-Credit Rights; (h) all books and records related to the foregoing; and (i) all Products and Proceeds of any and all of the foregoing in whatever form received, including proceeds of insurance policies related to Inventory of any Grantor and business interruption insurance.

“Revolving Facility First Lien Collateral Transition Date” means the earlier of (a) the date on which all the Revolving Facility Obligations shall have been Paid in Full, and (b) the date on which all Revolving Facility First Lien Collateral shall have been released from the Liens created under the Revolving Facility Documents.

“Revolving Facility Lenders” means the Lender or Lenders under and as defined in the Revolving Facility Credit Agreement.

“Revolving Facility Liens” means the Liens on the Revolving Facility Collateral created under Revolving Facility Security Documents to secure the Revolving Facility Obligations.

“Revolving Facility Obligations” means “Obligations” as defined in the Revolving Facility Credit Agreement (as defined on the date hereof).

“Revolving Facility Obligations Cap” means as of any date of incurrence of any Revolving Facility Debt, an aggregate principal amount not to exceed the greater of (i) the amount of the Borrowing Base (as set forth on an Officer’s Certificate or otherwise reasonably determined by the Revolving Facility Agent) as of such date of incurrence of Revolving Facility Debt, and (ii) (x) prior to the consummation of a Qualifying IPO, $40,000,000 and (y) after the consummation of a Qualifying IPO, $50,000,000; provided that (x) the Revolving Facility Obligations Cap may be reduced at any time by an amendment to this Agreement executed by the Revolving Facility Agent and Company without the consent of the Term Loan Agent and (y) the Revolving Facility Agent and the holders of Revolving Facility Obligations, acting in good faith, shall be entitled to rely conclusively on an Officer’s Certificate of Company representing that any incurrence of any Revolving Facility Debt does not exceed the Revolving Facility Obligations Cap.

“Revolving Facility Required Parties” means, to the extent applicable, “Required Lenders” as it may, in the future, be defined under the Revolving Facility Credit Agreement, and in the absence of such future definition shall mean Wells Fargo Bank, National Association.

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“Revolving Facility Secured Parties” means, at any time, the Revolving Facility Agent, each Revolving Facility Lender and each other holder of, or obligee in respect of, any Revolving Facility Obligations outstanding at such time.

“Revolving Facility Security Documents” means, collectively, the Revolving Facility Credit Agreement, and any other documents now existing or entered into after the date hereof that create Liens on any assets or properties of the Company or any of the Company’s Subsidiaries to secure any Revolving Facility Obligations.

“Secured Parties” means, collectively, the Term Loan Secured Parties and the Revolving Facility Secured Parties.

“Security Documents” means, collectively, the Term Loan Security Documents and the Revolving Facility Security Documents.

“Senior Liens” means (a) in respect of the Revolving Facility First Lien Collateral, the Revolving Facility Liens on such Collateral, and (b) in respect of the Term Loan First Lien Collateral, the Term Loan Liens on such Collateral.

“Senior Obligations” means (a) with respect to the Revolving Facility Obligations (to the extent such Obligations are secured by the Term Loan First Lien Collateral), the Term Loan Obligations, and (b) with respect to Term Loan Obligations (to the extent such Obligations are secured by the Revolving Facility First Lien Collateral), the Revolving Facility Obligations (to the extent not in excess of the Revolving Facility Obligations Cap and Bank Product Obligations Cap, as applicable).

“Senior Obligations Collateral” means (a) with respect to the Term Loan Obligations, the Revolving Facility First Lien Collateral, and (b) with respect to the Revolving Facility Obligations, the Term Loan First Lien Collateral.

“Senior Obligations Required Parties” means (a) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Required Parties, and (b) with respect to the Term Loan First Lien Collateral, the Term Loan Required Parties.

“Senior Obligations Secured Parties” means (a) with respect to the Term Loan First Lien Collateral, the Term Loan Secured Parties, and (b) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Secured Parties.

“Senior Obligations Security Documents” means (a) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Security Documents, and (b) with respect to the Term Loan First Lien Collateral, the Term Loan Security Documents.

“Senior Representative” means (a) with respect to the Term Loan First Lien Collateral, the Term Loan Agent, and (b) with respect to the Revolving Facility First Lien Collateral, the Revolving Facility Agent.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of

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the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person of a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding.

“Term Loan Agent” means Goldman Sachs Bank USA, in its capacity as collateral agent for the Term Loan Secured Parties, together with its successors in such capacity.

“Term Loan Collateral” means all assets and properties subject to Liens created by the Term Loan Security Documents to secure the Term Loan Obligations.

“Term Loan Credit Agreement” means the Credit Agreement dated as of May 16, 2012, among the Company, the Subsidiaries of the Company from time to time party thereto, the Term Loan Lenders, the Term Loan Agent and the other agents party thereto, as amended, amended and restated, extended, renewed, restated, supplemented, refinanced, replaced or otherwise modified from time to time, with the same or different lenders and agents.

“Term Loan Documents” means the Term Loan Credit Agreement and the Term Loan Security Documents.

“Term Loan Event of Default” means any “Event of Default,” as defined in the Term Loan Credit Agreement.

“Term Loan First Lien Collateral” means any and all of the following assets and properties now owned or at any time hereafter acquired by any Grantor: (a) all real property; (b) all machinery, Equipment and Fixtures; (c) all books and records relating to machinery, Equipment and Fixtures; (d) all General Intangibles, Chattel Paper, Documents, Instruments, or supporting obligations which represent proceeds of or in respect of the Term Loan First Lien Collateral (other than General Intangibles, Chattel Paper, Instruments and Documents that are Revolving Facility First Lien Collateral) described in clauses (a), (b) and (c) above; (e) all Payment Intangibles that represent tax refunds in respect of or otherwise relate to real property, Fixtures or Equipment; (f) all intercompany indebtedness of Borrower and its Subsidiaries; (g) all patents and patent license rights, trademarks and trademark license rights, copyrights and copyright license rights, trade secrets and processes and other Intellectual Property (as defined in the Term Loan Security Agreement); (h) Commercial Tort Claims (as defined in the Term Loan Security Agreement) to the extent otherwise related to any Term Loan First Lien Collateral; (i) all contract rights of the Company and its Subsidiaries under service or maintenance agreements, warranties directly relating to the assets described in the preceding clause (a) and (b); (j) hedging transactions permissible and pursuant to the Term Loan Security Agreement or Term Loan Credit Agreement; (k) all permits and licenses related to any of the foregoing (including any permits or licenses related to the ownership or operation of real property, Fixtures or Equipment of any Grantor); (l) all of the Capital Stock of any Subsidiary of the Company excluding any of the outstanding Capital Stock of a Foreign Subsidiary (as defined in the Term Loan Credit

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Agreement) in excess of 65% of the voting power of all classes of Capital Stock of such Controlled Foreign Corporation entitled to vote; provided that immediately upon the amendment of the Internal Revenue Code to allow the pledge of a greater percentage of the voting power of Capital Stock in a Foreign Subsidiary without adverse tax consequences, the Term Loan First Lien Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of Capital Stock of each Foreign Subsidiary; (m) all proceeds (including, without limitation, insurance and condemnation Proceeds (other than any such Proceeds that are Revolving First Lien Collateral)) and products of the property and assets described in the foregoing clauses (a) through (l); and (n) all other Collateral not constituting Revolving Facility First Lien Collateral.

“Term Loan First Lien Collateral Transition Date” means the earlier of (a) the date on which all the Term Loan Obligations shall have been Paid in Full and (b) the date on which all Term Loan First Lien Collateral shall have been released from the Liens created under the Term Loan Documents.

“Term Loan Lenders” means the Lenders under and as defined in the Term Loan Credit Agreement.

“Term Loan Liens” means the Liens on the Term Loan Collateral created under the Term Loan Security Documents to secure the Term Loan Obligations.

“Term Loan Mortgages” means any mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the Term Loan Agent, for the benefit of the Term Loan Agent and the Term Loan Secured Parties, on real property of a Grantor, including any amendment, restatement, modification or supplement thereto, including any replacement in connection with a refinancing of the Term Loan Credit Agreement.

“Term Loan Obligations” means “Obligations” as defined in the Term Loan Credit Agreement.

“Term Loan Required Parties” means the “Required Lenders,” as such term is defined in the Term Loan Credit Agreement.

“Term Loan Secured Parties” means the “Secured Parties” as such term is defined in the Term Loan Credit Agreement.

“Term Loan Security Agreement” means the Security Agreement dated as of May 16, 2012, among the Company, the Subsidiaries of the Company from time to time party thereto and the Term Loan Agent, in its capacity as collateral agent, as amended, amended and restated, extended, renewed, restated, supplemented or otherwise modified from time to time, including any amendment, restatement, modification or supplement thereto, including any replacement in connection with a refinancing of the Term Loan Credit Agreement.

“Term Loan Security Documents” means the Term Loan Security Agreement, the Term Loan Mortgages, and any other documents now existing or entered into after the date hereof that create Liens on any assets or properties of the Company or any of the Company’s Subsidiaries to secure any Term Loan Obligations.

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“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

ARTICLE 2

SUBORDINATION OF JUNIOR LIENS; CERTAIN AGREEMENTS

Section 2.01. Subordination of Junior Liens.

(a) The grant of the Revolving Facility Liens pursuant to the Revolving Facility Security Documents and Term Loan Liens pursuant to the Term Loan Security Documents creates two separate and distinct Liens on the Collateral.

(b) All Junior Liens in respect of any Collateral are expressly subordinated and made junior in right, priority, operation and effect to any and all Senior Liens in respect of such Collateral, notwithstanding anything contained in this Agreement, the Term Loan Documents, the Revolving Facility Documents or any other agreement or instrument to the contrary, and irrespective of the time, order or method of creation, attachment or perfection of such Junior Liens and such Senior Liens or any failure, defect or deficiency or alleged failure, defect or deficiency in any of the foregoing.

(c) It is acknowledged that, subject, in the case of the Revolving Facility Debt and the Bank Product Obligations, to the Revolving Facility Obligations Cap and Bank Product Obligations Cap, as applicable, (i) the aggregate amount of the Senior Obligations may, subject to the limitations set forth in the Term Loan Credit Agreement and the Revolving Facility Credit Agreement, be increased from time to time, (ii) a portion of the Senior Obligations consists or may consist of indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and (iii) the Senior Obligations may be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the subordination hereunder of the Junior Liens securing the Junior Obligations or the provisions of this Agreement defining the relative rights of the Revolving Facility Secured Parties and the Term Loan Secured Parties. The lien priorities provided for herein shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Junior Obligations (or any part thereof) or the Senior Obligations (or any part thereof), by the release of any Collateral or guarantees securing any Senior Obligations or by any action that any Representative or Secured Party may take or fail to take in respect of any Collateral.

(d) To the extent the aggregate amount of Revolving Facility Debt and Bank Product Obligations exceed the Revolving Facility Obligations Cap or Bank Product Obligations Cap, as applicable, (i) first, Bank Product Obligations will be expressly subordinated and made junior in right, priority, operation and effect to any and all Term Loan Obligations in respect of such Collateral until the aggregate amount of Revolving Facility Obligations senior in any respect to the Term Loan Obligations is equal to the Revolving Facility Obligations Cap and (ii) second, any Revolving Facility Debt will be expressly subordinated and made junior in right, priority, operation and effect to any and all Term Loan Obligations secured by such Collateral until the aggregate amount of Revolving Facility Obligations senior in any respect to the Term Loan

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Obligations is equal to the Revolving Facility Obligations Cap. Additionally, at no time shall the amount of Bank Product Obligations secured by Liens senior to the Term Loan Liens be greater than $2,000,000 (the “Bank Product Obligations Cap”).

Section 2.02. No Action With Respect to Junior Obligations Collateral Subject to Senior Liens. (a) Subject to Sections 2.04 and 2.13, no Junior Representative (in such capacity) or other Junior Obligations Secured Party (in such capacity) shall commence or instruct any Junior Representative to commence any Enforcement Action in respect of, any Junior Obligations Collateral under any Junior Obligations Security Document, applicable law or otherwise, at any time when such Junior Obligations Collateral shall be subject to any Senior Lien and any Senior Obligations secured by such Senior Lien shall remain outstanding or any commitment to extend credit that would constitute Senior Obligations secured by such Senior Lien shall remain in effect, it being agreed that only the Senior Representative, acting in accordance with the applicable Senior Obligations Security Documents, shall be entitled to take any such actions or exercise any such remedies. Notwithstanding the foregoing, any Junior Representative may, subject to Section 2.05, take all such actions as it shall deem necessary to (i) perfect or continue the perfection of its Junior Liens or (ii) to create, preserve or protect (but not to enforce or realize) the Junior Liens on any Collateral.

(b) The parties hereto acknowledge and agree that it is their intention that the Collateral securing the Senior Obligations be identical to the Collateral securing the Junior Obligations. In furtherance of the foregoing, the parties hereto agree that, so long as both Senior Obligations and Junior Obligations are outstanding, none of the Grantors shall, or shall permit any of its Subsidiaries to, (i) grant or permit any additional Liens on any asset to secure any Junior Obligation unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the Senior Obligations or (ii) grant or permit any additional Liens on any asset to secure any Senior Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the Junior Obligations, with each such Lien to be subject to the provisions of this Agreement.

Section 2.03. No Duties of Senior Representative. Each Junior Obligations Secured Party acknowledges and agrees that neither the Senior Representative nor any other Senior Obligations Secured Party shall have any duties or other obligations to such Junior Obligations Secured Party with respect to any Senior Obligations Collateral, other than to transfer to the Junior Representative any proceeds of any such Collateral that constitutes Junior Obligations Collateral remaining in its possession following any sale, transfer or other disposition of such Collateral, the Payment in Full of the Senior Obligations secured thereby, or, if the Senior Representative shall be in possession of all or any part of such Collateral after such payment and satisfaction in full in cash and termination, such Collateral or any part thereof remaining, in each case without representation or warranty on the part of the Senior Representative or any Senior Obligations Secured Party. In furtherance of the foregoing, each Junior Obligations Secured Party acknowledges and agrees that until the Senior Obligations secured by any Collateral shall have been Paid in Full, the Senior Representative shall be entitled, for the benefit of the holders of such Senior Obligations, to sell, transfer or otherwise dispose of or deal with such Collateral as provided herein and in the Senior Obligations Security Documents without regard to any Junior Lien or any rights to which the holders of the Junior Obligations would otherwise be entitled as a result of such Junior Lien. Without limiting the foregoing, each Junior Obligations Secured

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Party agrees that neither the Senior Representative nor any other Senior Obligations Secured Party shall have any duty or obligation first to marshal or realize upon any type of Collateral (or any other Collateral securing the Senior Obligations), or to sell, dispose of or otherwise liquidate all or any portion of the Collateral (or any other Collateral securing the Senior Obligations), in any manner that would maximize the return to the Junior Obligations Secured Parties, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Junior Obligations Secured Parties from such realization, sale, disposition or liquidation. Following the associated First Lien Collateral Transition Date, the Junior Obligations Secured Parties may under the UCC or otherwise, assert their rights to any proceeds remaining following a sale, disposition or other liquidation of Collateral by, or on behalf of the Senior Obligations Secured Parties. Each of the Junior Obligations Secured Parties waives any claim such Junior Obligations Secured Party may now or hereafter have against the Senior Representative or any other Senior Obligations Secured Party (or their representatives) arising out of (i) any actions which the Senior Representative or the Senior Obligations Secured Parties take or omit to take (including, actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Senior Obligations from any account debtor, guarantor or any other party) in accordance with the Senior Obligations Security Documents or any other agreement related thereto or to the collection of the Senior Obligations or the valuation, use, protection or release of any security for the Senior Obligations, (ii) any election by the Senior Representative or any Senior Obligations Secured Parties, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code and/or (iii) any borrowing of, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code to, the Company or any of its Subsidiaries as debtor-in-possession.

Section 2.04. No Interference; Application of Proceeds; Payment Over; Reinstatement. (a) Each Junior Obligations Secured Party acknowledges and agrees that, in its capacity as a Junior Obligations Secured Party, (i) it will not take or cause to be taken any action, the purpose or effect of which is, or could be, to make any Junior Lien pari passu with, or give such Junior Obligations Secured Party any preference or priority relative to, any Senior Lien with respect to the Collateral subject to such Junior Lien or any part thereof, (ii) it will not contest, challenge or question in any proceeding the validity or enforceability of any Senior Obligations or Senior Obligations Security Document, or the validity, attachment, perfection or priority of any Senior Lien, or the validity or enforceability of the priorities, rights or duties established by, or any provisions of, this Agreement, (iii) no covenant, agreement or restriction contained in the Senior Obligations Security Documents, any Revolving Facility Document or Term Loan Document, as applicable, shall be deemed to restrict in any way the rights and remedies of a Senior Representative or any holder of Senior Obligations with respect to the Senior Obligations (subject in the case of the Revolving Facility Debt and Bank Product Obligations, to the Revolving Facility Obligations Cap), (iv) it will not take any action, the purpose or intent of which is to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of any Senior Obligations Collateral subject to any Junior Lien by any Senior Obligations Secured Party or any Senior Representative acting on their behalf, (v) it shall have no right to (A) direct any Senior Representative or any holder of Senior Obligations to exercise any right, remedy or power with respect to the Collateral subject

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to any Junior Lien or (B) consent to the exercise by any Senior Representative or any other Senior Obligations Secured Party of any right, remedy or power with respect to the Collateral subject to any Junior Lien, (vi) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against any Senior Representative or other Senior Obligations Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither any Senior Representative nor any other Senior Obligations Secured Party shall be liable for, any action taken or omitted to be taken by such Senior Representative or other Senior Obligations Secured Party in compliance with this Agreement with respect to any Collateral securing any Senior Obligations that is subject to any Junior Lien, (vii) it will not commence or join with any other party to commence an Insolvency or Liquidation Proceeding against Company or any other Grantor, (viii) it will not seek, and hereby waives any right, to have any Senior Obligations Collateral subject to any Junior Lien or any part thereof marshaled upon any foreclosure or other disposition of such Collateral, and (ix) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement.

(b) Prior to the Revolving Facility First Lien Collateral Transition Date, whether or not any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor has been commenced, all Revolving Facility First Lien Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Collateral upon the exercise of remedies by the Revolving Facility Agent or Revolving Facility Secured Parties, shall be applied by the Revolving Facility Agent to the Revolving Facility Obligations in such order as specified in the relevant Revolving Facility Documents (subject to the terms of this Agreement, including those with respect to Bank Product Obligations). After the Revolving Facility First Lien Collateral Transition Date, the Revolving Facility Agent shall deliver to the Term Loan Agent any Revolving Facility First Lien Collateral and proceeds of such Collateral held by it in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied by the Term Loan Agent in such order as specified in the Term Loan Security Agreement and/or the other relevant Term Loan Documents. The Revolving Facility Agent shall provide the Term Loan Agent and the Company with notice of a pending Revolving Facility First Lien Collateral Transition Date within five (5) Business Days of the Revolving Facility Agent becoming aware of the pendency of such date in order that the Term Loan Agent may make the necessary preparations for the transfer of any Collateral.

(c) Prior to the Term Loan First Lien Collateral Transition Date, whether or not any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor has been commenced, all Term Loan First Lien Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Collateral upon the exercise of remedies by the Term Loan Agent or the Term Loan Secured Parties, shall be applied by the Term Loan Agent to the Term Loan Obligations in such order as specified in the Term Loan Security Agreement and/or the other relevant Term Loan Documents. After the Term Loan First Lien Collateral Transition Date, the Term Loan Agent shall deliver to the Revolving Facility Agent any Term Loan First Lien Collateral and proceeds of such Collateral held by it in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied by the Revolving Facility Agent in such order as specified in the relevant Revolving Facility Documents. The Term Loan Agent shall provide the Revolving Facility Agent and the Company with notice of a pending Term Loan First Lien Collateral

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Transition Date within five (5) Business Days of the Term Loan Agent becoming aware of the pendency of such date in order that the Revolving Facility Agent may make the necessary preparations for the transfer of any Collateral.

(d) The Junior Representative and each other Junior Obligations Secured Party hereby agrees that if it shall obtain possession of any Senior Obligations Collateral or shall realize any proceeds or payment in respect of any such Collateral, pursuant to any Junior Obligations Security Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceedings or through any other exercise of remedies, at any time when any Senior Obligations secured or intended to be secured by such Collateral shall remain outstanding or any commitment to extend credit that would constitute Senior Obligations secured or intended to be secured by such Senior Lien shall remain in effect, then it shall hold such Collateral, proceeds or payment in trust for the Senior Obligations Secured Parties and transfer such Collateral, proceeds or payment, as the case may be, to the Senior Representative reasonably promptly after obtaining actual knowledge or notice from the Senior Obligations Secured Parties that it has possession of such Senior Obligations Collateral or proceeds or payments in respect thereof. Each Junior Obligations Secured Party agrees that if, at any time, it obtains actual knowledge or receives notice that all or part of any payment with respect to any Senior Obligations previously made shall be rescinded for any reason whatsoever, such Junior Obligations Secured Party shall promptly pay over to the Senior Representative any payment received by it in respect of any Collateral subject to any Senior Lien securing such Senior Obligations and shall promptly turn any Collateral subject to any such Senior Lien then held by it over to the Senior Representative, and the provisions set forth in this Agreement shall be reinstated as if such payment had not been made, until the payment and satisfaction in full in cash of the Senior Obligations. All Junior Liens will remain attached to and enforceable against all proceeds so held or remitted, but shall be otherwise subject to the terms of this Agreement.

Section 2.05. Automatic Release of Junior Liens. The Junior Representative and each other Junior Obligations Secured Party agrees that any Junior Lien on any Senior Obligations Collateral shall terminate and be released automatically and without further action if the applicable Senior Liens on such Senior Obligations Collateral are released and such release (a) is in connection with the sale, transfer or other disposition of such Senior Obligations Collateral subject to such Junior Lien, so long as such sale, transfer or other disposition is then permitted by the Junior Documents, (b) occurs in connection with the foreclosure upon or other exercise of rights and remedies with respect to such Senior Obligations Collateral (including any sale or other disposition in connection therewith by any Grantor at the direction or with the consent of the Senior Representative at any time that a Senior Obligations Event of Default has occurred and is continuing) or (c) shall have been approved by the Senior Obligations Required Parties, so long as no Junior Obligations Event of Default shall have occurred and be continuing at such time; provided that such Junior Lien shall remain in place with respect to any proceeds of a sale, transfer or other disposition pursuant to this Section 2.05 that remain after the applicable First Lien Collateral Transition Date. The Junior Representative agrees to execute and deliver all such releases and other instruments as shall reasonably be requested by the Senior Representative or the Company to evidence and confirm any release of Junior Obligations Collateral provided for in this Section, but shall be otherwise subject to the terms of this Agreement.

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Section 2.06. Certain Agreements With Respect to Insolvency or Liquidation Proceedings.

(a) This Agreement shall continue in full force and effect notwithstanding the commencement of any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor.

(b) If the Company or any of its Subsidiaries shall become subject to an Insolvency or Liquidation Proceeding, and shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral with the consent of the DIP Lenders under Section 363 of the Bankruptcy Code, each Term Loan Secured Party agrees that it will raise no objection or opposition (or support any Person in objecting or opposing) to any such financing or to the Liens securing the same (“DIP Financing Liens”) or to any use of cash collateral that constitutes Revolving Facility First Lien Collateral (“DIP Cash Collateral”), unless the Revolving Facility Agent shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral (and, to the extent that such DIP Financing Liens are senior to, or rank pari passu with, the Revolving Facility Liens in respect of the Revolving Facility First Lien Collateral, the Term Loan Agent will, for itself and on behalf of the other Term Loan Secured Parties, subordinate the Term Loan Liens in respect of the Revolving Facility First Lien Collateral to the Revolving Facility Liens and the DIP Financing Liens), so long as such DIP Financing and the use of DIP Cash Collateral meet the following requirements: (i) the Term Loan Secured Parties retain a Lien on the Collateral and, with respect to all the Term Loan First Lien Collateral, including proceeds thereof arising after the commencement of such proceeding, in each case, with the same priority relative to the priority of the Liens of the Revolving Facility Secured Parties as existed prior to the commencement of the case under the Bankruptcy Code; (ii) to the extent that the Revolving Facility Agent is granted adequate protection in the form of a Lien, the Term Loan Agent is permitted to seek a Lien (without objection from the Revolving Facility Agent or any holder of the Revolving Facility Obligations) on Collateral arising after the commencement of the Insolvency or Liquidation Proceeding, (iii) the terms of the DIP Cash Collateral use or the DIP Financing require that any Lien on the Term Loan First Lien Collateral to secure such DIP Financing is subordinate to the Liens securing the Term Loan Obligations with respect thereto, (iv) the terms of such DIP Financing or use of DIP Cash Collateral do not require Company or any Grantor to seek approval for any plan of reorganization that is inconsistent with this Agreement and (v) the aggregate principal amount of such DIP Financing does not exceed the DIP Cap. The foregoing shall not prevent any Term Loan Lender from proposing any other DIP Financing to the Borrower or any Grantor or to a court of competent jurisdiction; provided, however, that no such proposal will be made unless it unconditionally provides that the Revolving Facility Obligations shall be repaid in full upon the effective date of such proposed DIP Financing.

(c) Until the Revolving Facility First Lien Collateral Transition Date has occurred, the Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, in the event of any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor, the Term Loan Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion for any sale, transfer or other disposition of any Revolving Facility First Lien Collateral free and clear of the Liens of Term Loan Agent and the other Term

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Loan Secured Parties or other claims under Sections 363, 365 or 1129 of the Bankruptcy Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, and shall be deemed to have consented to any such sale, transfer or other disposition of any Revolving Facility First Lien Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the Revolving Facility Agent; provided, that, the proceeds of such sale, transfer or other disposition of any Collateral to be applied to the Revolving Facility Obligations or the Term Loan Obligations are applied in accordance with Section 2.04.

(d) Until the Term Loan First Lien Collateral Transition Date has occurred, the Revolving Facility Agent, for itself and on behalf of the other Revolving Facility Secured Parties, agrees that, in the event of any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor, the Revolving Facility Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion for any sale, transfer or other disposition of any Term Loan Facility First Lien Collateral free and clear of the Liens of Revolving Facility Agent and the other Revolving Facility Secured Parties or other claims under Sections 363, 365 or 1129 of the Bankruptcy Code, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, and shall be deemed to have consented to any such sale, transfer or other disposition of any Revolving Facility First Lien Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the Term Loan Agent; provided, that, the proceeds of such sale, transfer or other disposition of any Collateral to be applied to the Term Loan Facility Obligations or the Revolving Facility Obligations are applied in accordance with Section 2.04.

(e) Without limiting the generality of the foregoing, the Junior Representative or any Junior Obligations Secured Party for whom it is acting shall not obtain or seek to obtain a Lien on any Senior Obligations Collateral that would be priming or pari passu with respect to any Senior Obligation in any Insolvency or Liquidation Proceeding by or against the Company or any other Grantor or object to the treatment under a plan of reorganization or arrangement of the claims with respect to the Obligations owing to the Senior Representative and the Secured Parties for whom it is acting to the extent that such treatment provides for payments or distributions in respect of the Collateral in accordance with the priorities of the right to payment and Liens set forth in this Agreement.

Section 2.07. Adequate Protection.

(a) In any Insolvency or Liquidation Proceeding:

(i) if any or all of the Revolving Facility Secured Parties are granted adequate protection in the form of additional collateral in connection with any use of DIP Cash Collateral or a DIP Financing and such additional collateral is the type of asset or property that would constitute Revolving Facility First Lien Collateral, then (A) the Term Loan Agent, on behalf of itself or any of the Term Loan Secured Parties, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens securing the Revolving Facility Obligations and such use of DIP Cash Collateral or DIP Financing (and all obligations relating thereto) on the same basis as the other Liens on Revolving Facility First Lien Collateral securing the Term Loan Obligations are so subordinated to the Liens on Revolving Facility First Lien Collateral securing the Revolving Facility Obligations

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under this Agreement and (B) subject to clause (ii) below, the Revolving Facility Agent, on behalf of itself and the other Revolving Facility Secured Parties, agrees that none of them shall contest (or support any other Person contesting) (1) any request by the Term Loan Agent or any other Term Loan Secured Party for adequate protection pursuant to the preceding clause (A) or (2) any objection to any motion, relief, action or proceeding in support of a request for adequate protection pursuant to the preceding clause (A); and

(ii) in the event the Junior Representative, on behalf of itself or any other Junior Obligations Secured Parties, seeks or requests adequate protection in respect of Junior Obligations and such adequate protection is granted in the form of additional collateral of a type of asset or property that would constitute Senior Obligations Collateral, then the Junior Representative, on behalf of itself and the other Junior Obligations Secured Parties, agrees that the Senior Representative shall also be granted a Lien on such additional collateral as security for the Senior Obligations and that any Lien on such additional collateral securing the applicable Junior Obligations shall be subordinated to the Lien on such collateral securing the Senior Obligations (and all obligations relating thereto) and to any other Liens granted to the Senior Obligations Secured Parties as adequate protection on the same basis as the other Liens on Senior Obligations Collateral securing the Junior Obligations are so subordinated to the Liens on Senior Obligations Collateral securing the Senior Obligations under this Agreement.

(b) Except as otherwise provided in this Section 2.07, no Junior Obligations Secured Party may seek or assert any right it may have for adequate protection of its interest in the Senior Obligations Collateral without the prior written consent of the Senior Representative.

Section 2.08. Reinstatement. In the event that any of the Senior Obligations shall be paid in full in cash and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Article 2 shall be fully applicable thereto until all such Senior Obligations shall again have been paid in full in cash.

Section 2.09. Entry Upon Premises by the Revolving Facility Agent. (a) If the Revolving Facility Agent takes any Enforcement Action with respect to the Revolving Facility First Lien Collateral, the Term Loan Secured Parties (i) shall reasonably cooperate with the Revolving Facility Agent in its efforts to enforce its security interest in the Revolving Facility First Lien Collateral and to finish any work-in­process and assemble the Revolving Facility First Lien Collateral, (ii) shall not take any action to hinder or restrict in any respect the Revolving Facility Agent from enforcing its security interest in the Revolving Facility First Lien Collateral or from finishing any work-in-process or assembling the Revolving Facility First Lien Collateral, and (iii) shall permit the Revolving Facility Agent, its employees, agents, advisers and representatives, at the sole cost and expense of the Revolving Facility Secured Parties, to enter upon and use the Term Loan First Lien Collateral (including (x) equipment, processors, computers and other machinery related to the storage or processing of records, documents or files and (y) intellectual property and general intangibles), for a period not to exceed 120 days after the taking of such Enforcement Action, for purposes of (A) assembling and storing the Revolving Facility First Lien Collateral and completing the processing of and turning into finished goods or otherwise preparing for sale any Revolving Facility First Lien Collateral consisting of work-in-process, (B)

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selling any or all of the Revolving Facility First Lien Collateral located on such Term Loan First Lien Collateral, whether in bulk, in lots or to customers in the ordinary course of business or otherwise (by public auction, private sale or a “store closing”, “going out of business” or similar sale, whether in bulk, in lots or to customers in the ordinary course of business or otherwise and which sale may include augmented Inventory of the same type sold in the Company’s and the Subsidiaries’ business), (C) removing any or all of the Revolving Facility First Lien Collateral located on such Term Loan First Lien Collateral, and/or (D) taking reasonable actions to protect, secure, and otherwise enforce the rights of the Revolving Facility Secured Parties in and to the Revolving Facility First Lien Collateral; provided, however, nothing contained in this Agreement shall restrict the rights of the Term Loan Agent from selling, assigning or otherwise transferring any Term Loan First Lien Collateral prior to the expiration of such 120 day period if the purchaser, assignee or transferee thereof agrees to be bound by the provisions of this Section. If any stay or other order prohibiting the exercise of remedies with respect to the Revolving Facility First Lien Collateral has been entered by a court of competent jurisdiction or otherwise arises by operation of the Bankruptcy Code, such 120 day period shall be tolled during the pendency of any such stay or other order. If the Revolving Facility Agent conducts a public auction or private sale of the Revolving Facility First Lien Collateral at any of the real property included within the Term Loan First Lien Collateral, the Revolving Facility Agent shall provide the Term Loan Agent with reasonable notice and use reasonable efforts to hold such auction or sale in a manner which would not unduly disrupt the Term Loan Agent’s use of such real property during such time period.

(b) During the period of actual occupation, use and/or control by the Revolving Facility Secured Parties or their agents or representatives of any Term Loan First Lien Collateral, the Revolving Facility Secured Parties shall (i) be responsible for the ordinary course third-party expenses related thereto for such period of actual occupation, use or control, including costs with respect to heat, electricity, water, insurance and real property taxes with respect to that portion of any premises so used or occupied, (ii) use the Term Loan First Lien Collateral in accordance with applicable law, and (iii) be obligated to repair at their expense any physical damage to such Term Loan First Lien Collateral, or other assets or property resulting from such occupancy, use or control, and to leave such Term Loan First Lien Collateral or other assets or property in substantially the same condition as it was at the commencement of such occupancy, use or control, ordinary wear and tear excepted. The Revolving Facility Secured Parties jointly and severally agree to pay, indemnify and hold the Term Loan Agent and its respective officers, directors, employees and agents harmless from and against any liability, cost, expense, loss or damages, including legal fees and expenses, resulting from the negligence, willful misconduct or bad faith of the Revolving Facility Agent or any of its agents, representatives or invitees in its, or their, operation of such facilities. In the event, and only in the event, that in connection with its use of some or all of the premises constituting Term Loan First Lien Collateral, the Revolving Facility Agent requires the services of any employees of Company or any of their subsidiaries, the Revolving Facility Agent shall pay directly to any such employees the appropriate, allocated wages of such employees, if any, during the time periods that the Revolving Facility Agent requires their services.

Notwithstanding the foregoing, the Revolving Facility Secured Parties shall not have any liability to the Term Loan Secured Parties pursuant to this Section as a result of any condition (including any environmental condition, claim or liability) on or with respect to the Term Loan

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First Lien Collateral existing prior to the date of the exercise by the Revolving Facility Secured Parties of their rights under this Section, so long as such liability is not caused by or related to negligence, willful misconduct or bad faith of the Revolving Facility Secured Parties or their agents or representatives. The Revolving Facility Secured Parties shall have no duty or liability to maintain the Term Loan First Lien Collateral in a condition or manner better than that in which it was maintained prior to the use thereof by the Revolving Facility Secured Parties, or for any diminution in the value of the Term Loan First Lien Collateral that results from ordinary wear and tear resulting from the use of the Term Loan First Lien Collateral by the Revolving Facility Secured Parties in the manner and for the time periods specified under this Section 2.09. Without limiting the rights granted in this paragraph, the Revolving Facility Secured Parties shall cooperate with the Term Loan Secured Parties in connection with any efforts made by the Term Loan Secured Parties to sell the Term Loan First Lien Collateral.

Section 2.10. Amendments to Security Documents. (a) Without the prior written consent of the Senior Representative, no Junior Obligations Security Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Junior Obligations Security Agreement, would be prohibited by or inconsistent with any of the terms of this Agreement.

(b) In the event that the Senior Representative enters into any amendment, waiver or consent in respect of any of the Senior Obligations Security Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any Senior Obligations Security Document or changing in any manner the rights of the Senior Representative, the Senior Obligations Secured Parties, the Company or any other Grantor thereunder in each case with respect to or relating to the Senior Obligations Collateral, then such amendment, waiver or consent shall apply automatically to any comparable provision of the comparable Junior Obligations Security Document without the consent of the Junior Representative or any Junior Obligations Secured Party and without any action by the Junior Representative, the Company or any other Grantor; provided, however that, (i) no such amendment, waiver or consent shall have the effect of (A) removing assets subject to the Lien of the Junior Obligations Security Documents, except to the extent that a release of such Lien is permitted or required by Section 2.05 of this Agreement and provided that there is a corresponding release of the Lien securing the Senior Obligations, (B) imposing duties on the Junior Representative without its consent or (C) permitting other Liens on the Collateral not permitted under the terms of the Junior Documents or Section 2.06 hereof and (ii) written notice of such amendment, waiver or consent shall have been given to the Junior Representative within ten (10) Business Days after the effective date of such amendment, waiver or consent.

Section 2.11. Refinancings. The Revolving Facility Obligations and the Term Loan Obligations may be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is required to permit the Refinancing transaction under any Revolving Facility Document or any Term Loan Document) of the Revolving Facility Agent, the Revolving Facility Secured Parties, the Term Loan Agent or the Term Loan Secured Parties, as the case may be, all without affecting the lien priorities provided for herein or the other provisions hereof; provided, however that the holders of such Refinancing indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing to the terms of this Agreement pursuant to such documents or agreements (including amendments or supplements to

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this Agreement) as the Revolving Facility Agent or the Term Loan Agent, as the case may be, shall reasonably request and in form and substance reasonably acceptable to the Revolving Facility Agent or the Term Loan Agent, as the case may be, and any such Refinancing transaction shall be in accordance with the provisions of both the Revolving Facility Documents and the Term Loan Documents.

Section 2.12. Insurance. Unless and until the Revolving Facility Agent shall have delivered written notice to the Term Loan Agent that the Revolving Facility Obligations have been paid in full in cash, as between the Revolving Facility Agent, on the one hand, and the Term Loan Agent, on the other hand, only the Revolving Facility Agent will have the right to adjust or settle any insurance policy or claim covering or constituting Revolving Facility First Lien Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Revolving Facility First Lien Collateral. Unless and until the Term Loan Agent shall have delivered written notice to the Revolving Facility Agent that the Term Loan Obligations have been paid in full in cash, as between the Revolving Facility Agent, on the one hand, and the Term Loan Agent, on the other hand, only the Term Loan Agent will have the right to adjust or settle any insurance policy covering or constituting Term Loan First Lien Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding solely affecting the Term Loan First Lien Collateral. To the extent that an insured loss covers or applies to assets or property, some of which constitute Revolving Facility First Lien Collateral and some of which constitute Term Loan First Lien Collateral, then the Revolving Facility Agent and the Term Loan Agent will work jointly and in good faith to collect, adjust or settle under the relevant insurance policy. The provisions of this section are subject to the rights of the applicable Grantor under the Revolving Facility Documents and Term Loan Documents, as applicable.

Section 2.13. Junior Obligations Secured Parties Rights as Unsecured Creditors. Notwithstanding any other provision of this Agreement, both before and during any Insolvency or Liquidation Proceeding, any of the Junior Obligations Secured Parties may take any and all actions and exercise any and all rights that would otherwise be available to such Junior Obligations Secured Party as a holder of unsecured claims in accordance with applicable law; provided, that the Junior Obligations Secured Parties may not take any of the actions prohibited by Section 2.02, Sections 2.04(a)(i) through (vii), Section 2.06(b) and Section 2.06(d); provided, further, that in the event that any of the Junior Obligations Secured Parties becomes a judgment lien creditor in respect of any Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Junior Obligations, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Senior Secured Obligations) as the other Liens securing the Junior Obligations are subject to this Agreement.

Section 2.14. Post Petition Claims. Neither the Revolving Facility Agent nor any other Revolving Facility Secured Party shall oppose or seek to challenge any claim by the Term Loan Agent or any other Term Loan Secured Party for allowance in any Insolvency or Liquidation Proceeding of Term Loan Obligations consisting of post-petition interest, premiums, fees or expenses. Neither the Term Loan Agent nor any other Term Loan Secured Party shall oppose or seek to challenge any claim by the Revolving Facility Agent or any other Revolving Facility Secured Party for allowance in any Insolvency or Liquidation Proceeding of Revolving Facility Obligations consisting of post-petition interest, premiums, fees or expenses.

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ARTICLE 3

SUB-AGENCY FOR PERFECTION OF CERTAIN SECURITY INTERESTS;

RIGHTS UNDER PERMITS AND LICENSES

Section 3.01. General. The Senior Representative agrees that if it shall at any time hold a Senior Lien on any Junior Obligations Collateral that can be perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of the Senior Representative, the Senior Representative will serve as sub-agent for the Junior Representative and hold such Collateral for the benefit of the Junior Representative for the sole purpose of perfecting the Junior Lien of the Junior Representative and the other Junior Obligations Secured Parties on such Collateral. It is agreed that the obligations of the Senior Representative and the rights of the Junior Representative and the other Junior Obligations Secured Parties in connection with any such sub-agency arrangement will be in all respects subject to the provisions of Article 2 of this Agreement. The Senior Representative will be deemed to make no representation as to the adequacy of the steps taken by it to perfect the Junior Lien on any such Collateral and shall have no responsibility to the Junior Representative or any other Junior Obligations Secured Party for such perfection, it being understood that the sole purpose of this Article 3 is to enable the Junior Obligations Secured Parties to obtain a perfected Junior Lien in such Collateral to the extent, if any, that such perfection results from the possession or control of such Collateral or any such account by the Senior Representative, in each case to the extent such perfection is required by the terms of the applicable Junior Obligation Security Documents. Subject to Section 2.08, at such time as the Senior Obligations secured by the Senior Lien of the Senior Representative and the other Senior Obligations Secured Parties shall have been Paid in Full, the Senior Representative shall take all such actions in its power as shall reasonably be requested by the Junior Representative to transfer possession or control of such Collateral or any such account to the Junior Representative.

Section 3.02. Depositary Accounts. Grantors, in accordance with and to the extent required under the Revolving Facility Credit Agreement, may maintain blocked account agreements relating to certain depositary accounts (the “Depositary Accounts”) with various depositary banks (the “Depositary Banks”) in which collections from Inventory and Accounts are deposited. To the extent that the Revolving Facility Agent has, at any time, control of any such Depositary Account or the cash and other assets contained therein, the Revolving Facility Agent will act as gratuitous bailee for the Term Loan Agent for the purpose of perfecting the Liens of the Term Loan Secured Parties in all such Depositary Accounts and the cash and other assets therein as provided in Section 3.01 (but will have no duty, responsibility or obligation to the Term Loan Secured Parties except as set forth in the last sentence of this Section). Subject to the terms of the Term Loan Security Document, after the occurrence of the Revolving Facility First Lien Collateral Transition Date, to the extent that the Revolving Facility Agent has, at such time, control of any Depositary Account or the cash and other assets contained therein, the Revolving Facility Agent shall, at the request of the Term Loan Agent, cooperate with the Company and the Term Loan Agent (at the expense of the Company) in permitting such control to be transferred to the Term Loan Agent (or for other arrangements with respect to each such Depositary Account satisfactory to the Term Loan Agent to be made), in each case to the extent such control is required by the terms of the Term Loan Security Documents.

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Section 3.03. Rights under Permits and Licenses. The Term Loan Agent agrees that if the Revolving Facility Agent shall require rights available under any permit or license controlled by the Term Loan Agent (as certified to the Term Loan Agent by the Revolving Facility Agent, upon which the Term Loan Agent may rely) in order to realize on any Revolving Facility First Lien Collateral, the Term Loan Agent shall take all such actions as shall be available to it, consistent with applicable law and reasonably requested by the Revolving Facility Agent, to make such rights available to the Revolving Facility Agent. The Revolving Facility Agent agrees that if the Term Loan Agent shall require rights available under any permit or license controlled by the Revolving Facility Agent (as certified to the Revolving Facility Agent by the Term Loan Agent, upon which the Revolving Facility Agent may rely) in order to realize on any Term Loan First Lien Collateral, the Revolving Facility Agent shall take all such actions as shall be available to it, consistent with applicable law and reasonably requested by the Term Loan Agent, to make such rights available to the Term Loan Agent.

ARTICLE 4

EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS

Whenever a Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any Senior Obligations or Junior Obligations, or the existence of any Lien securing any such obligations, or the Collateral subject to any such Lien, it may request that such information be furnished to it in writing by the other Representative and shall be entitled to make such determination on the basis of the information so furnished; provided, however, that if a Representative shall fail or refuse reasonably promptly to provide the requested information, the requesting Representative shall be entitled to make any such determination by such commercially reasonable method as it may, in the exercise its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to the Company or any of its subsidiaries, any Secured Party or any other person as a result of such determination.

ARTICLE 5

CONSENT OF GRANTORS

Each Grantor hereby consents to the provisions of this Agreement and the intercreditor arrangements provided for herein and agrees that except as otherwise provided in any Revolving Facility Document or Term Facility Document, the obligations of the Grantors under the Security Documents will in no way be diminished or otherwise affected by such provisions or arrangements.

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES

Section 6.01. Representations and Warranties of Each Representative.

Each Representative represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms.

(c) The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any governmental authority and (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such party or any order of any governmental authority or any indenture, agreement or other instrument binding upon such party.

(d) In the case of the Term Loan Agent, it represents and warrants to the other parties hereto that it is authorized under the Term Loan Credit Agreement to enter into this Agreement.

(e) In the case of the Revolving Facility Agent, it represents and warrants to the other parties hereto that it is authorized under the Revolving Facility Credit Agreement to enter into this Agreement.

ARTICLE 7

PURCHASE OPTION

Section 7.01. Purchase Option.

(a) Upon the occurrence of an Revolving Facility Event of Default and the acceleration of any portion of the Revolving Facility Obligations, any one or more Term Loan Lenders (including any group thereof) holding in the aggregate at least a majority in principal amount of the Term Loan Obligations then outstanding (acting in their individual capacity or through one or more affiliates) shall have the right, but not the obligation, to purchase (each Term Loan Lender having a ratable right to purchase) from Revolving Facility Lender all (but not less than all) of the right, title, and interest of Revolving Facility Lender in and to the Revolving Facility Obligations and the Revolving Facility Documents, in accordance with the procedures set forth in this Section 7.01. For purposes of this Section 7.01, Letters of Credit outstanding under the Revolving Facility Credit Agreement will be deemed to have a principal amount equal to 105% of the maximum potential liability of Revolving Facility Lender in respect thereof under the Revolving Facility Credit Agreement.

(i) Revolving Facility Agent agrees that it will notify Term Loan Agent of the occurrence of an Revolving Facility Event of Default and the acceleration of any portion of the Revolving Facility Obligations within three (3) Business Days of the date of such acceleration (such notice, a “Revolving Facility Acceleration Notice”). Such notice shall prominently include the title “Revolving Facility Acceleration Notice”.

(ii) Term Loan Agent agrees that, within three (3) Business Days of receipt by Term Loan Agent of such Revolving Facility Acceleration Notice, it will notify the Term Loan Lenders of such Revolving Facility Acceleration Notice. Within ten (10) Business Days of the

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date of the notice by Term Loan Agent of such Revolving Facility Acceleration Notice to any Term Loan Lender (or, if no notice or Revolving Facility Acceleration Notice shall have been given to such Term Loan Lender, within ten (10) Business Days of the date such Term Loan Lender obtains actual knowledge of such Revolving Facility Event of Default and acceleration of any portion of the Revolving Facility Obligations), such Term Loan Lender (or any group of Term Loan Lenders including such Term Loan Lenders) holding in the aggregate at least a majority in principal amount of the Term Loan Obligations then outstanding (acting in its or their individual capacity or through one or more affiliates) may (but shall not be obligated to) send to Term Loan Agent, a written firm offer to purchase (a “Purchase Election”) all (but not less than all) of the right, title, and interest of Revolving Facility Lenders in and to the Revolving Facility Obligations and the Revolving Facility Documents. Promptly upon receipt of any such Purchase Election, Term Loan Agent will notify the Revolving Facility Agent of such Purchase Election (a “Purchase Notice”), which Purchase Notice shall specify a date for purchase not less than two (2) and no more than fifteen (15) Business Days from the date of delivery thereof. The Purchase Notice, if given, shall be irrevocable.

(iii) To the extent that the aggregate amount of Revolving Facility Obligations in respect of which Purchase Elections are received exceeds the aggregate amount of Revolving Facility Obligations then outstanding, each Term Loan Lender submitting a Purchase Election in accordance with the foregoing shall be allocated by the Term Loan Agent the right to purchase such right, title and interest of Revolving Facility Lenders in and to the Revolving Facility Obligations and the Revolving Facility Documents, (x) first, with a principal amount of Revolving Facility Obligations then outstanding (based on the aggregate principal amount of Term Loan Obligations then held by such Term Loan Lenders) and (y) second, to the extent any principal amount of such Revolving Facility Obligation remains unallocated, according to the foregoing, with a principal amount of Revolving Facility Obligations equal to such Term Loan Lender’s ratable share of such unallocated principal amount of Revolving Facility Obligations in respect of which such Term Loan Lender has submitted such Purchase Election.

(b) On the date specified in the Purchase Notice (which shall not be less than two (2) or more than fifteen (15) Business Days after the delivery of the Purchase Notice to Revolving Facility Agent), Revolving Facility Lenders shall sell to the purchasing persons or Term Loan Lenders and such purchasing persons or Term Loan Lenders shall purchase from Revolving Facility Lenders, the Revolving Facility Obligations.

(c) On the date of such purchase and sale, purchasing persons or Term Loan Lenders, as applicable, shall (i) pay to Revolving Facility Agent, for the benefit of Revolving Facility Lenders, as the purchase price therefor the full amount of all the Revolving Facility Obligations (other than Revolving Facility Obligations cash collateralized in accordance with clause (c)(ii) below) then outstanding and unpaid, and (ii) furnish cash collateral to Revolving Facility Agent in such amounts as Revolving Facility Agent determines is reasonably necessary to secure Revolving Facility Agent and Revolving Facility Lenders in connection with (A) any issued and outstanding Letters of Credit (but not in any event in an amount greater than 105% of the aggregate undrawn amount of such Letters of Credit) and (B) Bank Product Obligations (but not in any event in an amount greater than the Reserves for the Bank Product), and (iii) agree to reimburse Revolving Facility Agent and Revolving Facility Lenders for all expenses to the extent reimbursement thereof is earned or due and payable, in each case, in accordance with the

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Revolving Facility Documents (excluding any prepayment premium). Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of Revolving Facility Agent as Revolving Facility Agent may designate in writing to Term Loan Agent for such purpose. Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by purchasing Term Loan Lenders to the bank account designated by Revolving Facility Agent are received in such bank account prior to 2:00 p.m., New York City time, and interest shall be calculated to and including such Business Day if the amounts so paid by purchasing Term Loan Lenders to the bank account designated by Revolving Facility Agent are received in such bank account later than 2:00 p.m., New York City time.

(d) Such purchase shall be expressly made without representation or warranty of any kind by Revolving Facility Agent and Revolving Facility Lenders as to the Revolving Facility Obligations so purchased or otherwise and without recourse to Revolving Facility Agent or any Revolving Facility Lender, except that each Revolving Facility Lender shall represent and warrant: (i) that the amount quoted by such Revolving Facility Lender as its portion of the purchase price represents the amount shown as owing with respect to the claims transferred as reflected on its books and records, (ii) it owns, or has the right to transfer to such purchasing persons or Term Loan Lenders, as applicable, the rights being transferred, and (iii) such transfer will be free and clear of Liens.

(e) In the event that any one or more of Term Loan Lenders or such other persons designate by Term Loan Agent, exercises and consummates the purchase option set forth in this Section 7.01, (i) Revolving Facility Agent shall have the right, but not the obligation, to immediately resign under the Revolving Facility Credit Agreement, and (ii) such purchasing persons or Term Loan Lenders, as applicable, shall have the right, but not the obligation, to require Revolving Facility Agent to immediately resign under the Revolving Facility Credit Agreement.

(f) Commencing on the date immediately following the Revolving Facility Agent’s receipt of any Purchase Notice, the Revolving Facility Agent and the Revolving Facility Lenders shall not complete or take any Enforcement Action, as long as the purchase and sale of the Revolving Facility Obligations provided for in this Section 7.01 shall have closed within fifteen (15) Business Days of the Revolving Facility Agent’s receipt of the Purchase Notice and the Revolving Facility Agent shall have received payment in full as provided for in this Section 7.01 within such fifteen (15) Business Day period unless the Revolving Facility Agent, in its reasonable discretion, shall determine that the failure to take any Enforcement Action or the delay in taking any Enforcement Action with respect to the Revolving Facility First Lien Collateral would materially and adversely prejudice the Revolving Facility Lenders.

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ARTICLE 8

MISCELLANEOUS

Section 8.01. Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Revolving Facility Agent, to it at:

Wells Fargo Bank, National Association

c/o Peter Foley

Wells Fargo Retail Finance

One Boston Place, 19^th Floor

Boston, MA 02108

Telephone No.: 617-854-7283

Telecopy No.: 855-461-3726

(b) if to the Term Loan Agent, to it at:

Michelle Latzoni

c/o Goldman, Sachs & Co.

30 Hudson Street, 5th Floor

Jersey City, NJ 07302

Telephone No.: (212) 902-8517

Telecopy No.: (212) 357-4597

(c) if to the Company, to it at:

Five Below, Inc.

1818 Market Street, Suite 1900

Philadelphia, PA 19103

Attention: Kenneth R. Bull

Chief Financial Officer

Telephone No.: (215) 207-2604

Telecopy No.: (215) 546-1695

(d) if to any other Grantor, to it in care of the Company as provided in clause (c) above.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto (and for this purpose a notice to the Company shall be deemed to be a notice to each Grantor). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 7.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 7.01. As agreed to in writing among the Company and the Representatives from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

Section 8.02. Waivers; Amendment. (a) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of

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steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

(b) Except as expressly provided for herein, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by each Representative and the Company.

(c) The Revolving Facility Agent and the Term Loan Agent may, without the consent of any other Revolving Facility Secured Parties or Term Loan Secured Parties, in their discretion determine that a supplemental agreement (which may take the form of an amendment and restatement of this Agreement) is necessary or appropriate to facilitate (i) having additional indebtedness or other obligations of Grantors to any of the Secured Parties become Revolving Facility Obligations or Term Facility Obligations, as the case may be, under this Agreement or (ii) to effectuate the subordination of Liens securing any Permitted Second Priority Refinancing Debt (or any Refinancing Indebtedness (as defined in the Term Loan Credit Agreement) thereof) to the Liens on the Term Loan First Lien Collateral securing the Revolving Facility Obligations and the Term Lien Obligations and to the Liens on the Revolving Facility First Lien Collateral securing the Term Facility Obligations and the Revolving Facility Obligations (the indebtedness or other obligations described in clauses (i) and (ii), “Additional Debt”), which supplemental agreement shall, except in the case of Permitted Second Priority Refinancing Debt or any Refinancing Indebtedness (as defined in the Term Loan Credit Agreement) thereof specify whether such Additional Debt constitutes Revolving Facility Obligations or Term Facility Obligations; provided, that, (A) such Additional Debt is permitted to be incurred under both the Revolving Facility Credit Agreement and the Term Loan Credit Agreement then existing in accordance with the terms thereof and (B) any such supplemental agreement (including any amendment, restatement, modification or supplement thereto) shall be on terms and conditions satisfactory to each of the Revolving Facility Agent and the Term Loan Agent, in its discretion.

Section 8.03. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as the other Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement.

Section 8.04. Certain Provisions. The Company and each of the Representatives agrees that the Term Loan Credit Agreement, the Revolving Facility Credit Agreement and the Security Documents shall contain the applicable provisions set forth on Annex I hereto (or provisions substantially similar thereto).

Section 8.05. Survival Agreement. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement.

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Section 8.06. Counterparts. This Agreement may be executed in counterparts (and by different parties on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 8.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 8.08. Governing Law; Jurisdiction Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 8.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY

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HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 8.10. Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 8.11. Conflicts. In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any of the other Security Documents, the provisions of this Agreement shall control.

Section 8.12. Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Revolving Facility Secured Parties, on the one hand, and the Term Loan Secured Parties, on the other hand. None of the Company, any other Grantor or any other creditor thereof shall have any rights or obligations hereunder, except as expressly provided in this Agreement, and none of the Company, or any other Grantor may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of the Company or any other Grantor, which are absolute and unconditional, to pay the Obligations as and when the same shall become due and payable in accordance with their terms.

Section 8.13. Certain Terms Concerning Revolving Facility Agent and Term Loan Agent. Neither the Revolving Facility Agent nor the Term Loan Agent shall have any liability or responsibility for the actions or omissions of any other Secured Party, or for any other Secured Party’s compliance with (or failure to comply with) the terms of this Agreement. Neither the Revolving Facility Agent nor the Term Loan Agent shall have individual liability to any Person if it shall mistakenly pay over or distribute to any Secured Party (or Company) any amounts in violation of the terms of this Agreement, so long as the Revolving Facility Agent or the Term Loan Agent, as the case may be, is acting in good faith.

Section 8.14. Further Assurances. Each of the Revolving Facility Agent, on behalf of itself and the Revolving Facility Secured Parties, and the Term Loan Agent, on behalf of itself and the Term Loan Secured Parties, agrees that it shall take such further actions and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as the Revolving Facility Agent or the Term Loan Agent, as applicable, may reasonably request to effectuate this Agreement, including but not limited to the re-filing of liens to determine priority under this Agreement. Without limiting the generality of the foregoing, each of the Revolving Facility Agent, on behalf of itself and the Revolving Facility Secured Parties, and the Term Loan Agent, on behalf of itself and the Term Loan Secured Parties, agrees upon request by the Revolving Facility Agent or the Term Loan Agent, as applicable, to cooperate in good faith (and to direct its counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Revolving Facility First Lien Collateral or the Term Loan First

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Lien Collateral, as applicable, and the steps taken to perfect their respective Liens thereon, the intended priority thereof and the identity of the representative parties obligated under the Revolving Facility Documents and the Term Loan Documents.

[SIGNATURE PAGE FOLLOWS]

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

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Revolving Facility Agent
By:	/s/ Matthew N. Williams
	Name:	Matthew N. Williams
	Title:	Managing Director
GOLDMAN SACHS BANK USA, as Term Loan Agent
By:	/s/ Robert Ehudin
	Name:	Robert Ehudin
	Title:	Authorized Signatory
FIVE BELOW, INC., on behalf of itself and its Subsidiaries from time to time party hereto
By:	/s/ Kenneth R. Bull
	Name:	Kenneth R. Bull
	Title:	Chief Financial Officer,
		Treasurer, and Secretary

ANNEX I

Provision for the Revolving Facility Credit Agreement and the Term Loan Credit Agreement

Reference is made to the Intercreditor Agreement. Each Lender hereunder (a) consents to the subordination of Liens provided for in the Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes and instructs the [Revolving Facility Agent] [Term Loan Agent] to enter into the Intercreditor Agreement as [Revolving Facility Agent] [Term Loan Agent] and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders under the Credit Agreement to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

Provision for Revolving Facility Security Documents and the Term Loan Security Documents

Reference is made to the Intercreditor Agreement. Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Obligations Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

EX-10.32

(to be effective upon

completion of this offering)

Exhibit 10.32

FIVE BELOW, INC.

COMPENSATION POLICY FOR NON-EMPLOYEE DIRECTORS

(Effective [    ], 2012)

1. ANNUAL CASH AND STOCK COMPENSATION

• Eligible Directors: Each member of the Company’s Board of Directors (the “Board”) who is not an employee of the Company (a “Non-Employee Director”) and who is not affiliated with Advent International Corporation or LLR Partners Inc.

• Annual Cash Retainer. Commencing with the fiscal quarter in which the Company’s initial public offering (the “IPO”) closes, each eligible director shall receive $40,000 paid quarterly in arrears.

• Additional Annual Retainers for Chairs of Committees who are Eligible Directors: $15,000 for the Audit Committee and the Compensation Committee and $10,000 for the Nominating and Corporate Governance Committee, in each case paid quarterly in arrears together with the annual retainer for all eligible directors.

• Stock in lieu of Retainers: Prior to the end of the fiscal quarter with respect to which such cash retainer relates, an eligible director may elect, in lieu of the cash retainer, to receive fully vested shares of the Company’s common stock (“Shares”) having a Fair Market Value (as such term is defined under the Five Below, Inc. Amended and Restated Equity Incentive Plan (the “Plan”)) equal to the amount of the foregone retainer for such period. Any such elected Shares will be delivered on or about the last day of the fiscal quarter with respect to which the foregone cash retainer relates. Any fractional Shares will be paid in cash.

• Annual Equity Award. Commencing on the date on which the Company’s IPO closes and then annually at each subsequent annual meeting of shareholders, each eligible director will receive a restricted stock award for Shares having a Fair Market Value equal to $60,000 issued under the Plan and subject to an award agreement (an “Award Agreement”). Subject to such director’s continued service with the Company, each award shall vest in full at the next annual meeting of shareholders. Such vesting may be accelerated upon certain events as provided in an Award Agreement.

2. EXPENSE REIMBURSEMENT - Each Non-Employee Director will be reimbursed for reasonable out-of-pocket travel expenses incurred in connection with attendance at Board and committee meetings and other Board related activities in accordance with the Company’s plans or policies as in effect from time to time¹.

3. AMENDMENT AND TERMINATION - This Policy may be amended or terminated by the Board at any time.

¹  To the extent that any such reimbursements constitute compensation, (i) such amount shall be reimbursed no later than December 31 of the year following the year in which the expense was incurred, (ii) such amount shall not affect the amount of compensatory expense reimbursements in any subsequent year, and (iii) the right to such reimbursement shall not be subject to liquidation or exchange for any other benefit.

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EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Five Below, Inc.:

We consent to the use of our report dated April 17, 2012, except as to note 10, which is as of May 23, 2012, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ KPMG LLP

Philadelphia, Pennsylvania

May 23, 2012