Exhibit 10.1
 
 
Bank of America, N.A.
JPMorgan Chase Bank, N.A.
Wells Fargo Retail Finance, LLC
Banc of America Securities LLC
J.P. Morgan Securities Inc.
One Boston Place
One Bryant Park
270 Park Avenue
Boston, MA 02108
New York, NY 10036
New York, NY 10017
 

AMENDED AND RESTATED COMMITMENT LETTER

August 7, 2009

Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011

Attention:   Joseph J. Lombardi, Chief Financial Officer
 Maria Florez, Vice President and Treasurer

$1.0 Billion Senior Secured Credit Facility

Ladies and Gentlemen:

This letter and the Summary of Terms and Conditions (the "Summary of Terms")
attached as Exhibit A hereto (which Summary of Terms is incorporated herein by
reference and referred to collectively with this letter as, the "Commitment
Letter") is being delivered by Bank of America, N.A. ("Bank of America"), Banc
of America Securities LLC ("BAS"), JPMorgan Chase Bank, N.A. ("JPMorgan"), J.P.
Morgan Securities Inc. ("JPMS"), and Wells Fargo Retail Finance, LLC ("WFRF") in
connection with the Transaction (defined below). Bank of America, BAS, JPMorgan,
JPMS, and WFRF are referred to collectively herein as the "Engagement Parties"
and each as an "Engagement Party" and Bank of America, JPMorgan and WFRF are
collectively referred to herein as the "Initial Lenders" and each as an "Initial
Lender". This Commitment Letter amends and restates in its entirety the letter
agreement, dated as of July 22, 2009, by and between you and the Engagement
Parties (such letter, together with the Summary of Terms and Conditions,
attached as Exhibit A thereto, the "Existing Commitment Letter").

You have advised the Engagement Parties that Barnes & Noble, Inc., a Delaware
corporation (the "Company" and a "Borrower"), intends to acquire from the
holders thereof (the "Sellers") all of the equity interests of Barnes & Noble
College Booksellers, Inc. (the "Target"), including the payment of certain
indebtedness of the Target and certain fees and expenses in connection
therewith, all for certain cash consideration and the issuance to the Sellers of
the Seller Notes referred to below (the "Acquisition").

 
You have also advised the Engagement Parties that the Company intends to finance
the Acquisition, refinance the Existing Facility (as defined below) and fund all
costs and expenses related to the Transaction (as hereinafter defined)
(collectively, the "Financing") from the following sources: (a) unsecured seller
notes (collectively, the "Seller Notes") issued by the Company and (b) a
combination of (i) revolving loans funded under a $1.0 billion Senior Secured
Credit Facility (the "Senior Credit Facility"), all as described in the Summary
of Terms, and (ii) cash of the Target. The Senior Credit Facility will also be
available to support the ongoing working capital and other general corporate
purposes of the Company and its subsidiaries after consummation of the
Acquisition. The Acquisition, the Financing, the Senior Credit Facility, the
issuance of the Seller Notes, and all related transactions are hereinafter
collectively referred to as the "Transaction ." The "Existing Facility" is that
certain Credit Agreement dated as of June 17, 2005, as amended (the "Existing
Credit Agreement") by and among the
 

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 2

Company, as borrower, certain of its subsidiaries, as co-borrowers, Bank of
America, as administrative agent, JPMorgan, as syndication agent, and the other
agents and lenders parties thereto.

1. Commitments and Other Agreements. In connection with the Transaction, (a)
Bank of America is pleased to offer to be the sole administrative agent (in such
capacity, the "Administrative Agent") for the Senior Credit Facility and to
offer its commitment to lend up to $200 million of the Senior Credit Facility,
(b) JPMorgan is pleased to offer to be a co-syndication agent (in such capacity,
a "Co- Syndication Agent") for the Senior Credit Facility and to offer its
commitment to lend up to $200 million of the Senior Credit Facility, and (c)
WFRF is pleased to offer to be a co-syndication agent (in such capacity, a
"Co-Syndication Agent" and collectively with the other Co-Syndication Agent, the
"Syndication Agents") for the Senior Credit Facility and to offer its commitment
to lend up to $200 million of the Senior Credit Facility, each of the foregoing
upon and subject to the terms and conditions set forth in this Commitment
Letter. Each of BAS, JPMS and WFRF is pleased to advise you of its willingness,
as a joint lead arranger and a joint book runner (in such capacities, the "Joint
Lead Arrangers" and each a "Joint Lead Arranger") for the Senior Credit
Facility, to use its best efforts to form a syndicate of financial institutions
(including the Initial Lenders) (collectively, the "Lenders") reasonably
acceptable to you for the Senior Credit Facility. No additional agents,
co-agents or arrangers will be appointed without our prior approval.
Notwithstanding any of the foregoing, only BAS and JPMS will receive credit as
Joint Lead Arrangers in the ABL League Tables with respect to the Senior Credit
Facility. You hereby agree that, effective upon your acceptance of this
Commitment Letter and continuing through the earlier of (i) the Closing Date
(defined in paragraph 4 below) and (ii) the Outside Date (as hereinafter
defined), you shall not solicit any other bank investment bank, financial
institution, person or entity to structure, arrange or syndicate any component
of the Senior Credit Facility or any other senior financing similar to or as a
replacement of any component of the Senior Credit Facility.

 
2. Conditions Precedent. The commitments of the Initial Lenders and the
undertakings of the Joint Lead Arrangers to provide the services described
herein are subject to the satisfaction of each of the following conditions
precedent: (a) the accuracy and completeness in all material respects of all
representations that you and your affiliates make to the Engagement Parties and
your compliance in all material respects with the terms of this Commitment
Letter and the amended and restated fee letter, dated as of the date hereof,
between you and each of the Engagement Parties (the "Fee Letter") and (b) the
satisfaction of each of the conditions set forth in the Summary of Terms and the
negotiation, execution and delivery of definitive documentation for the
Financing consistent with the Summary of Terms and otherwise satisfactory to
each Engagement Party.

3. Syndication. The Joint Lead Arrangers commenced syndication efforts promptly
upon the effective date of the Existing Commitment Letter to effect the
Financing. The Company acknowledges that a portion of the commitments of the
Initial Lenders may be allocated to and funded on the Closing Date by other
Lenders joining in the Senior Credit Facility through the syndication process if
commitments are received from the other Lenders in excess of the remaining $400
million of the Senior Credit Facility (the "Minimum Commitments"); provided,
however, that such allocation shall not impair the commitment of each Initial
Lender to fund the full amount of its commitment hereunder if the conditions
thereto are met and such other Lenders fail to fund their allocated portion over
the Minimum Commitments. You agree to continue to actively assist the Joint Lead
Arrangers in obtaining a syndication of the Senior Credit Facility that is
reasonably satisfactory to the Joint Lead Arrangers. Such assistance shall
include (a) your providing and causing your advisors to provide the Engagement
Parties and the other Lenders upon request with all information reasonably
deemed necessary by the Engagement Parties to complete such syndication; (b)
your assistance in the preparation of a confidential offering memorandum (the
"Offering Memorandum") to be used in connection with such syndication; (c) your

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 3

using reasonable efforts to ensure that the syndication efforts of the Joint
Lead Arrangers benefit materially from your existing banking relationships; (d)
the attendance by one or more senior officers of the Company, and your using
reasonable efforts to cause the attendance by one or more senior officers of the
Target, at one or more meetings with prospective Lenders; and (e) otherwise
assisting the Engagement Parties in their syndication efforts.

It is understood and agreed that the Joint Lead Arrangers will manage and
control all aspects of the syndication in consultation with you, including
decisions as to the selection of prospective Lenders, when commitments will be
accepted and the final allocations of the commitments among the Lenders.

4. Borrower Covenants. You hereby represent, warrant and covenant that (a) all
written information, other than the Projections (defined below), in the Offering
Memorandum or which otherwise has been or is hereafter made available to the
Engagement Parties or the Lenders by you or any of your representatives (or on
your or their behalf) in connection with the Transaction (the "Information"),
taken as a whole and to your knowledge to the extent that the Information
relates to the Target and its subsidiaries, is and will be complete and correct
in all material respects and does not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein not materially misleading, and (b) all financial
projections concerning the Target, the Company and its subsidiaries that have
been or are hereafter made available to the Engagement Parties or the Lenders by
you or any of your representatives (the "Projections") have been or will be
prepared in good faith based upon assumptions believed by you to be reasonable
at the time such Projections were made. You agree to furnish us with such
Information and Projections as we may reasonably request and to supplement the
Information and the Projections from time to time until the date of the initial
borrowing under the Senior Credit Facility (the "Closing Date") so that the
representation, warranty and covenant in the preceding sentence is correct on
the Closing Date as if the Information were being furnished, and such
representation, warranty and covenant were being made, on such date. In issuing
this commitment and in arranging and syndicating the Senior Credit Facility, the
Engagement Parties are and will be using and relying on the Information and the
Projections without independent verification thereof.

5. Company Materials. You hereby acknowledge and agree that (a) the Engagement
Parties, on your behalf, will make available the Information and, if necessary,
Projections (collectively, "Company Materials") to the proposed syndicate of
Lenders by posting the Company Materials on IntraLinks or another similar
electronic system (the "Platform") and (b) none of the proposed Lenders will be
"public-side" Lenders (i.e., Lenders that do not wish to receive material
non-public information (within the meaning of United States federal securities
laws, "MNPI") with respect to the Company, the Target, their subsidiaries, their
affiliates or any of their respective securities) (each, a "Public Lender"). You
hereby agree that (x) no Company Materials are to be made available to Public
Lenders, (y) all Company Materials shall be treated as private and may contain
MNPI with respect to the Company, the Target, their subsidiaries, their
affiliates or their respective securities for purposes of United States federal
and state securities laws and (z) the Engagement Parties shall treat all Company
Materials as being suitable only for posting on a portion of the Platform not
designated "Public Investor". You further agree, however, that the definitive
credit documentation will contain provisions concerning Company Materials to be
provided to Public Lenders and the absence of MNPI therefrom. Prior to
distribution of the Offering Memorandum to prospective Lenders, if requested,
you shall provide us with a customary letter authorizing the dissemination
thereof.

6. Expenses. The Company shall reimburse the Engagement Parties from time to
time on demand for reasonable out-of-pocket expenses (including, but not limited
to, reasonable syndication expenses, reasonable due diligence expenses,
reasonable travel expenses, reasonable fees for external

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 4

appraisers and commercial finance examinations, and reasonable fees,
disbursements and charges of their respective counsel), in each instance
incurred in connection with the Transaction and the preparation of this
Commitment Letter and the definitive documentation for the Transaction, whether
or not the Financing or any other aspect of the Transaction is closed.

7. Indemnification. You agree to indemnify and hold harmless each Engagement
Party, each Lender and each of their affiliates and their respective officers,
directors, employees, agents, advisors and other representatives (each, an
"Indemnified Party") from and against (and will reimburse each Indemnified Party
as the same are incurred for) any and all claims, damages, losses, liabilities
and expenses (including, without limitation, the reasonable fees, disbursements
and other charges of counsel) that may be incurred by or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(a) any matters contemplated by the Existing Commitment Letter, this Commitment
Letter or the Fee Letter or (b) the Transaction, including the Senior Credit
Facility or any use made or proposed to be made with the proceeds thereof, in
each case, except to the extent such claim, damage, loss, liability or expense
is found in a final, nonappealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party’s gross negligence, willful
misconduct or bad faith. In the case of an investigation, litigation or
proceeding to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by you, your equity holders or creditors or an Indemnified Party,
whether or not an Indemnified Party is otherwise a party thereto and whether or
not any aspect of the Transaction is consummated. You also agree that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to you or your subsidiaries or affiliates or to
your or their respective equity holders or creditors arising out of, related to
or in connection with any aspect of the Transaction, except to the extent of
direct, as opposed to special, indirect, consequential or punitive, damages
determined in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence,
willful misconduct or bad faith. Without limitation of the immediately preceding
sentence, it is further agreed that each of the Engagement Parties shall only
have liability to you (as opposed to any other person), and that each of the
Engagement Parties shall be liable solely in respect of its own commitment to
the Senior Credit Facility on a several, and not joint, basis with any other
Lender, and that such liability shall only arise to the extent damages have been
caused by a such party’s failure to negotiate in good faith definitive
documentation for the Senior Credit Facility on the terms set forth herein, in
each case, as determined in a final, nonappealable judgment by a court of
competent jurisdiction. Notwithstanding any other provision of this Commitment
Letter, no Indemnified Party shall be liable for any damages arising from the
use by others of information or other materials obtained through electronic
telecommunications or other information transmission systems, except to the
extent any damages resulting therefrom are found in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party’s gross negligence, willful misconduct or bad faith.

8. Confidentiality. This Commitment Letter and the contents hereof and the Fee
Letter and the contents thereof are confidential and, except for disclosure
hereof or thereof on a confidential basis to your officers, directors, and
employees, and to accountants, attorneys and other professional advisors
retained by you in connection with the Transaction or as otherwise required by
applicable laws or regulations or by any subpoena or similar legal process may
not be disclosed in whole or in part to any person or entity without our prior
written consent; provided, however, it is understood and agreed that you may
disclose this Commitment Letter (including the Summary of Terms), but not the
Fee Letter, (i) after your acceptance of this Commitment Letter, in filings with
the Securities and Exchange Commission and other applicable regulatory
authorities and stock exchanges and (ii) to the Target, its officers, directors,

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 5

employees, accountants, attorneys and other professional advisors. The
Engagement Parties shall be permitted to use information related to the
Transaction in connection with marketing, press releases or other transactional
announcements or updates provided to investor or trade publications, provided
that the content of any such press releases/transactional updates shall be
reasonably acceptable to the Company.

9. PATRIOT Act. The Engagement Parties hereby notify you that pursuant to the
requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into
law October 26, 2001) (the "PATRIOT Act"), each of them is required to obtain,
verify and record information that identifies you, which information includes
your name and address and other information that will allow the Engagement
Parties, as applicable, to identify you in accordance with the PATRIOT Act. The
Company agrees to furnish the Engagement Parties, promptly after request
therefor but in any event prior to the Closing Date, all documentation and other
information so requested by the Engagement Parties and required by regulatory
authorities under applicable "know your customer" and anti-money laundering
rules and regulations, including without limitation the PATRIOT Act and the
results of any investigation undertaken in connection therewith shall be
reasonably satisfactory to each of the Engagement Parties.

10. Conflicts of Interest. You acknowledge that the Engagement Parties or their
respective affiliates may be providing financing or other services to parties
whose interests may conflict with yours. Each Engagement Party agrees that it
will not furnish confidential information obtained from you to any of their
other customers and shall only use such information in connection with the
Transaction and that they will treat confidential information relating to you
and your affiliates with the same degree of care as they treat their own
confidential information. Each Engagement Party further advises you that they
will not make available to you confidential information that they have obtained
or may obtain from any other customer. In connection with the services and
transactions contemplated hereby, you agree that the Engagement Parties are each
permitted to access, use and share with any of their bank or non-bank
affiliates, agents, advisors (legal or otherwise) or representatives any
information concerning you or any of your affiliates that is or may come into
the possession of the Engagement Parties, or any of such affiliates, provided
that such bank or non-bank affiliates, agents, advisors or representatives are
informed of the confidential nature of the information and agree to treat such
information as confidential in the same manner as required of the Engagement
Parties under this Commitment Letter.

11. Arm’s Length Transactions. In connection with all aspects of each
transaction contemplated by this Commitment Letter, you acknowledge and agree,
and acknowledge your affiliates’ understanding, that: (i) the Financing and the
Senior Credit Facility and any related arranging or other services described in
this letter is an arm’s-length commercial transaction between you and your
affiliates, on the one hand, and the Engagement Parties, on the other hand, and
you are capable of evaluating and understanding and understand and accept the
terms, risks and conditions of the Financing and the Senior Credit Facility and
such other services; (ii) in connection with the process leading to such
transaction, except as otherwise agreed by the Borrower and any Engagement Party
in writing, each of the Engagement Parties is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary, for you or any
of your affiliates, stockholders, creditors or employees or any other party;
(iii) unless otherwise agreed by the Borrower and any Engagement Party in
writing, no Engagement Party has assumed or will assume an advisory
responsibility in your or your affiliates’ favor with respect to any of the
transactions contemplated hereby or the process leading thereto (irrespective of
whether any Engagement Party has advised or is currently advising you or your
affiliates on other matters); (iv) no Engagement Party has assumed or will
assume an agency responsibility (except as may otherwise be agreed in writing by
the Borrower and any Engagement Party) or fiduciary responsibility in your or
your affiliates’ favor with respect to any of the transactions contemplated
hereby or the process leading thereto (irrespective of whether any Engagement
Party has advised or is currently advising you or your affiliates

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 6

on other matters); (v) no Engagement Party has any obligation to you or your
affiliates with respect to the Transaction except those obligations expressly
set forth in this letter or in any other express writing executed and delivered
by such Engagement Party and the Borrower; (vi) the Engagement Parties and their
respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from yours and your affiliates and the Engagement
Parties have no obligation to disclose any of such interests by virtue of any
advisory, agency or fiduciary relationship; and (vii) the Engagement Parties
have not provided any legal, accounting, regulatory or tax advice with respect
to any aspect of the Transaction and you have consulted your own legal,
accounting, regulatory and tax advisors to the extent you have deemed
appropriate. You hereby waive and release, to the fullest extent permitted by
law, any claims that you may have against any Engagement Party with respect to
any breach or alleged breach of agency (except for any agency responsibilities
otherwise agreed by the Borrower and any Engagement Party in writing) or
fiduciary duty relating to the Transaction.

12. Survival. The provisions of paragraphs 6 through 11 hereof shall remain in
full force and effect regardless of whether any definitive documentation for the
Financing or the other Transactions shall be executed and delivered, and
notwithstanding the termination of this letter or any undertaking hereunder,
provided that upon the execution, delivery and effectiveness of the definitive
documentation for the Senior Credit Facility, the provisions of paragraphs 6
through 9 shall be superseded by the corresponding provisions of such definitive
documentation and shall therefore cease to be of any further force and effect.

13. Execution and Delivery. This Commitment Letter and the Fee Letter may be
executed in counterparts which, taken together, shall constitute an original.
Delivery of an executed counterpart of this Commitment Letter or the Fee Letter
by facsimile or email of a .pdf copy shall be effective as delivery of a
manually executed counterpart thereof.

14. Governing Law. This Commitment Letter and the Fee Letter shall be governed
by, and construed in accordance with, the laws of the State of New York
(including, without limitation, Section 5-1401 of the General Obligations Law of
the State of New York), without regard to conflicts of laws principles. The
Company hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State court or federal court sitting in the County of New York in respect
of any suit, action or proceeding arising out of or relating to the provisions
of this Commitment Letter or the Fee Letter and irrevocably agrees, to the
fullest extent permitted by applicable law, that all claims in respect of any
such suit, action or proceeding may be heard and determined in any such court.
The Company hereby waives, to the fullest extent permitted by applicable law,
any objection that it may now or hereafter have to the laying of venue of any
such suit, action or proceeding brought in any such court, and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum. The Company agrees that service of any process,
summons, notice or document by registered mail addressed to the Company shall be
effective service of process for any suit, action or proceeding brought in any
such court. Each of the Company and each Engagement Party hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Commitment
Letter or the Fee Letter, the transactions contemplated hereby and thereby or
the actions of any Engagement Party in the negotiation, performance or
enforcement hereof. The commitments and undertakings of the Engagement Parties
may be terminated by us, if you fail to perform in any material respect any of
your material obligations under this Commitment Letter or the Fee Letter on a
timely basis.
 
15. Miscellaneous. (a) This Commitment Letter and the Fee Letter embody the
agreement and understanding among the Engagement Parties and you with respect to
the Transaction and supersede

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Barnes & Noble, Inc.
August 7, 2009
Commitment Letter, Page 7

all prior agreements (including, without limitation, the Existing Commitment
Letter) and understandings relating to the matters expressly set forth in the
Commitment Letter and the Fee Letter. However, please note that the terms and
conditions of the undertaking of the Engagement Parties hereunder are not
limited to those set forth herein or in the Summary of Terms. Those matters that
are not covered or made clear herein or in the Summary of Terms are subject to
mutual agreement of the applicable parties.

(b) This Commitment Letter is not assignable by the Company without our prior
written consent and is intended to be solely for the benefit of the Company, the
Engagement Parties and the Indemnified Parties.

(c) This Commitment Letter does not constitute an unconditional commitment to
lend. Such a commitment will exist only upon satisfaction of all conditions
precedent referenced herein, in the Summary of Terms, or in any of the loan
documents.

16. Expiration. This Commitment Letter will expire at 5:00 p.m. New York time on
August 11, 2009 unless you execute this Commitment Letter and return it to us
prior to that time (which may be by facsimile or email transmission).
Thereafter, this undertaking will expire on the earlier of (a) receipt of (i)
written notice from the Company on or prior to August 17, 2009 that it has not
executed and no longer intends to execute the Purchase Agreement and does not
intend to consummate the Acquisition and (ii) all fees, expenses and other
amount due hereunder as of such date and (b) November 15, 2009, as such date may
be extended in writing pursuant to the immediately following sentence (the
"Outside Date"), unless definitive documentation for the Transaction is executed
and delivered prior to such date. The Engagement Parties acknowledge that they
will use reasonable efforts to obtain internal credit approval to extend their
commitments hereunder so that the date in clause (b) of this paragraph may be
modified in writing to correspond to the final deadline for consummation of the
Acquisition set forth in the Purchase Agreement, when executed.

If the foregoing is in accordance with your understanding of our agreement,
please sign three counterparts of this Commitment Letter in the space indicated
below and return one executed original to each of the Initial Lenders.

[SIGNATURE PAGES FOLLOW]

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We look forward to working with you on this transaction and continuing our
mutually beneficial relationship with you.
 
 

Very truly yours,       BANK OF AMERICA, N.A.           By: /s/ Andrew Cerussi  
  Name: Andrew Cerussi     Title: Senior Vice President  

 
 

BANC OF AMERICA SECURITIES LLC           By: /s/ Matt Holbrook     Name: Matt
Holbrook     Title: Vice President  

 
 

JPMORGAN CHASE BANK, N.A.           By: /s/ Kathleen C. Maggi     Name: Kathleen
C. Maggi     Title: Senior Vice President  

 
 

J.P. MORGAN SECURITIES INC.           By: /s/ Mac Fowle     Name: Mac Fowle    
Title: Executive Director  

 
 

WELLS FARGO RETAIL FINANCE, LLC           By: /s/ Cory Loftus     Name: Cory
Loftus     Title: Vice President  

 
ACCEPTED AND AGREED TO
AS OF THE DATE FIRST ABOVE WRITTEN:
 

BARNES & NOBLE, INC.           By: /s/ Joseph J. Lombardi     Name: Joseph J.
Lombardi     Title: Chief Financial Officer  

 
Commitment Letter
Signature Page
 

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SUMMARY OF TERMS AND CONDITIONS
 
Barnes & Noble, Inc. - $1.0 Billion Senior Secured Credit Facility
 
Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the amended and restated commitment letter, dated as of
August 7, 2009 (the "Commitment Letter"), to which this Summary of Terms and
Conditions is attached and of which it is made a part.
 
August 7, 2009

I. 
Parties 
         
Borrowers
Barnes & Noble, Inc., a Delaware corporation ("Company"), the Target, and each
other direct and indirect, wholly-owned, domestic subsidiary of the Company and
the Target (collectively, the "Borrowers"), to be determined based upon due
diligence and a review of an organizational chart of the Company, the Target and
their subsidiaries to be delivered by the Company.
   
Guarantors
Each direct and indirect, wholly-owned, domestic subsidiary of the Company and
the Target that is not a Borrower (the "Guarantors" and together with the
Borrowers, collectively, the "Credit Parties").
       
Administrative Agent
Bank of America, N.A. (in such capacity, the "Administrative Agent"). 
       
Collateral Agent
Bank of America, N.A. (in such capacity, the "Collateral Agent").
       
Syndication Agents 
JPMorgan Chase Bank N.A (in such capacity, a "Co-Syndication Agent") and Wells
Fargo Retail Finance, LLC (in such capacity, a "Co-Syndication Agent").
       
Swing Line Lender
Bank of America, N.A. 
       
LC Issuers
Bank of America, N.A., JPMorgan Chase Bank, N.A. and/or Wells Fargo Retail
Finance, LLC or their respective affiliates acceptable to the Company (it being
understood that Wells Fargo Bank, N.A. is an affiliate acceptable to the
Company) (each, in such capacity, an "LC Issuer").
       
Joint Lead Arrangers and Joint Book Runners 
Banc of America Securities LLC, J.P. Morgan Securities Inc. and Wells Fargo
Retail Finance, LLC (in such capacity, the "Joint Lead Arrangers").

A-1

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II. 
Senior Credit Facility
         
Revolving Credit Facility
Revolving credit facility in favor of the Borrowers in an aggregate principal
amount of up to $1.0 billion (the "Senior Credit Facility").
       
Letters of Credit 
A portion of the Facility not in excess of $100,000,000 in the aggregate will be
available for the issuance of letters of credit (the "Letters of Credit") by the
L/C Issuers. The face amount of any outstanding Letters of Credit will reduce
availability under the Senior Credit Facility on a dollar-for-dollar basis. No
Letter of Credit will have an expiration date after the earlier of (i) one year
after the date of issuance, unless the applicable LC Issuer otherwise agrees
(provided that customary evergreen Letters of Credit shall be permitted), and
(ii) five business days prior to the Stated Maturity Date. Each Lender will
purchase an irrevocable and unconditional participation in each Letter of
Credit.
       
Swing Line Loans 
A portion of the Senior Credit Facility in an amount of up to $75,000,000 will
be available for swing line loans (the "Swing Line Loans") solely in the
discretion of Bank of America, N.A. (in such capacity, the "Swing Line Lender")
on same-day notice. Any such Swing Line Loans will reduce availability under the
Senior Credit Facility on a dollar-for-dollar basis. Each Lender will purchase
an irrevocable and unconditional participation in each Swing Line Loan. Swing
Line Loans shall be settled no less frequently than weekly by the Swing Line
Lender with the other Lenders.
   
Availability 
 Subject to the next paragraph, revolving loans, Swing Line Loans and Letters of
Credit (each a "Credit Extension") under the Senior Credit Facility will be
available on a revolving basis during the period commencing on the date all
conditions to the initial funding are satisfied (the "Closing Date") and ending
on the Stated Maturity Date (unless the Senior Credit Facility is terminated
earlier in accordance with the terms of the definitive documentation therefor).
 
The aggregate outstanding amount of Credit Extensions and, without duplication,
unreimbursed letter of credit drawings under the Senior Credit Facility shall
not exceed at any time the lesser of (A) the aggregate amount of then effective
commitments under the Senior Credit Facility (the "Commitments") and (B) the
then-applicable Borrowing Base (as defined below) as of such date (such lesser
amount, the "Loan Cap").

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For purposes of the Senior Credit Facility, "Excess Availability" shall mean as
of any date of determination (i) the Loan Cap as of such date minus (ii) all
outstanding Credit Extensions and unreimbursed letter of credit drawings as of
such date.
 
The borrowing base (the "Borrowing Base") at any time will be the sum of (a) 85%
of the value of eligible accounts receivable (other than credit card
receivables) of the Borrowers, plus (b) 90% of the value of eligible credit card
receivables of the Borrowers, plus (c) the lesser of (i) 75% of the cost of
eligible inventory of the Borrowers and (ii) 85% of the Net Orderly Liquidation
Value (as defined below) of eligible inventory of the Borrowers, plus (d) the
lesser of (i) 50% of the Fair Market Value (as defined below) of eligible real
estate and (ii) $25 million, minus (e) reserves established by the
Administrative Agent in its reasonable credit judgment.
 
The initial reserves on the Closing Date and the definitions of "eligible
accounts receivables," "eligible credit card receivables," “eligible real
estate," and "eligible inventory" shall be determined by the Engagement Parties,
based upon the results of due diligence, including, without limitation, a
commercial finance examination, real estate appraisals, environmental
assessments and an inventory appraisal. "Net Orderly Liquidation Value" means
the orderly liquidation value (net of costs and expenses incurred in connection
with the liquidation) of inventory as a percentage of the cost of such
inventory, which percentage will be determined by reference to the most-recent
third-party appraisal of such inventory received by, and satisfactory to, the
Administrative Agent. "Fair Market Value" shall mean the fair market value
established pursuant to appraisals of real estate conducted by appraisers and on
assumptions acceptable to the Engagement Parties on the Closing Date and
thereafter as provided in the definitive loan documentation.
 
The Borrowing Base will initially be computed monthly by the Company and a
certificate (the "Borrowing Base Certificate") presenting the Company’s
computation of the Borrowing Base will be delivered to the Administrative Agent
within fifteen (15) calendar days (or such longer period as the Administrative
Agent may agree in its reasonable discretion, but in any event not to exceed an
additional five (5) calendar days) following the end of each month; provided
that during any Trigger Period (as defined below), the Company will compute the
Borrowing Base weekly and deliver a Borrowing Base

 
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Certificate to the Administrative Agent no later than the third business day
following the end of each week (or the fourth business day if agreed by the
Administrative Agent in its reasonable discretion).
 
A "Trigger Event" shall occur on any date when Excess Availability is less than
(a) the greater of (i) 20% of the Loan Cap as of such date and (ii) $135
million, in each case for five consecutive calendar days, or (b) 17% of the Loan
Cap at any time. A "Trigger Period" shall commence on the date of the occurrence
of a Trigger Event and shall continue until the date Excess Availability shall
have been not less than 20% of the Loan Cap or $135 million at any time during
forty-five (45) consecutive calendar days. A Trigger Period may be discontinued
on only three occasions during the term of the Senior Credit Facility,
notwithstanding that Excess Availability may have been not less than 20% of the
Loan Cap and $135 million for forty-five (45) consecutive calendar days.
       
Stated Maturity Date
Fourth (4th) anniversary of the Closing Date.
       
Purpose
The proceeds of the Senior Credit Facility will be used for general corporate
purposes of the Borrowers and their subsidiaries.
       
Increase Option:
Provided there is no event of default then existing or would arise therefrom, on
and after ninety (90) calendar days following the Closing Date, the Company, at
its option, may request that the Senior Credit Facility be increased by an
aggregate amount not to exceed $300 million in minimum increments of $50
million, which increase shall be on the same terms and conditions as then exist
for the Senior Credit Facility. Any or all of the existing Lenders shall
initially have the right of first refusal (but not the obligation) to increase
their respective commitments to satisfy the Company’s requested increase in the
Senior Credit Facility. If the Lenders are unwilling to so increase their
commitments, BAS will use commercially reasonable efforts to obtain one or more
financial institutions that are not then Lenders and who are reasonably
acceptable to the Company, or the Company may seek to obtain one or more
financial institutions that are not Lenders and who are reasonably acceptable to
the Administrative Agent, to become party to the Senior Credit Facility and to
provide a commitment in an amount necessary to satisfy the Company’s requested
increase in the Senior Credit Facility. The Company shall pay the Agent and the
Lenders increasing their commitments or providing new commitments fees

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and other compensation which is customary and appropriate for the exercise of
the Increase Option.
     
 III.
Certain Payment Provisions
         
Fees and Interest Rates
As set forth on Annex A hereto.
       
Optional Prepayments and 
Commitment Reductions 
At the option of the Borrowers, Loans may be prepaid and commitments reduced, in
each case from time to time and without premium or penalty (other than customary
"LIBOR breakage costs") in minimum amounts to be mutually agreed upon.
       
Mandatory Prepayments
Subject to de minimus carve-outs to be agreed, 100% of the net cash proceeds of
any sale or other disposition (including as a result of casualty or condemnation
or from the issuance or sale of equity of a subsidiary) by the Borrowers or any
of their subsidiaries of (i) inventory and receivables (in each case outside the
ordinary course of business and subject to other customary exceptions to be
agreed) and (ii) real estate constituting Collateral, will be applied to prepay
the Loans and other amounts outstanding under the Senior Credit Facility but not
cash collateralization of letters of credit unless an event of default then
exists. No such mandatory prepayments will result in a reduction of commitments
and each shall be made without premium or penalty (other than customary LIBOR
breakage costs).
 
If at any time the aggregate amount of the Credit Extensions and, without
duplication, unreimbursed Letter of Credit drawings exceeds the Loan Cap as at
such date of determination, then the Borrowers will immediately repay
outstanding Loans and Swing Line Loans and unreimbursed letter of credit
drawings and, if necessary thereafter, cash collateralize Letters of Credit in
an aggregate amount equal to such excess.
 
Following the occurrence and during the continuation of an event of default and
at all times during a Trigger Period, all amounts deposited in the Collection
Account (as defined below) will be promptly applied by the Administrative Agent
to repay outstanding Loans and Swing  Line  Loans  and,  without 
duplication, unreimbursed letter of credit drawings, and, if an event of default
exists, to cash collateralize outstanding Letters of Credit.
     
IV. 
Collateral
The obligations of each Credit Party under the Senior Credit Facility and all
bank products, including interest rate hedging agreements, foreign exchange
contracts and

 
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cash management services provided by the Lenders or their respective affiliates
will be secured by a perfected first priority security interest (subject to
exceptions to be mutually agreed upon by the Engagement Parties and the Company
in the definitive documentation) in favor of the Collateral Agent for the
benefit of the secured parties in substantially all of each Credit Party’s
existing and future (a) inventory, accounts, deposit accounts, securities
accounts, and investment property; (b) all material real estate owned by any
Credit Party ("Mortgaged Property"), including all fixtures, rents and
improvements with respect thereto, (c) all documents, commercial tort claims,
books and records, supporting obligations and letters of credit relating to any
of the foregoing and (d) all products and proceeds thereof, substitutions
therefore and accessions thereto; provided, that such security interest shall
not attach to and the Collateral shall not include (i) any of the equity
interests of any direct and indirect foreign subsidiary or joint venture of the
Company, (ii) any of the Credit Parties' intellectual property (other than the
Collateral License defined below), (iii) any furniture and equipment of the
Credit Parties or (iv) any leases, contract rights or general intangibles, the
granting of a security interest in which is prohibited by an enforceable
provision of any contract or law; provided further, that the security interest
in favor of the Collateral Agent may not be perfected or first priority with
respect to those assets as to which the Engagement Parties determine, in their
reasonable discretion, that the costs of obtaining a perfected, first priority
security interest are excessive in relation to the value of the security to be
afforded thereby (all assets to be so secured or intended to be so secured,
collectively, the "Collateral").
 
The Collateral Agent shall have the right to utilize, at no cost or expense, all
other properties and assets of the Borrowers not constituting Collateral
(including, without limitation, furniture, fixtures, equipment, trade names,
trademarks and other intellectual property and licenses thereof) to the extent
necessary or appropriate to sell, lease or otherwise dispose of the Collateral
after default (the "Collateral License").
 
The Credit Parties will implement cash management procedures customary for
facilities of this type and satisfactory to the Collateral Agent, including, but
not limited to, customary lockbox arrangements and blocked account agreements,
which will provide for the Administrative Agent to have control (for the benefit
of the secured parties) of certain deposit and securities

 
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accounts, subject to exceptions to be mutually agreed between the Company and
the Engagement Parties; being understood and agreed that, upon the occurrence
and during the continuance of an event of default and all times during a Trigger
Period, the Borrowers and the Guarantors will cause or direct all cash (subject
exceptions to be mutually agreed between the Company and the Engagement Parties)
to be transferred daily to an account subject to a blocked account agreement or
to an account of the Administrative Agent maintained at Bank of America, N.A.
(the "Collection Account").  All amounts deposited or transferred into a blocked
account during an event of default or a Trigger Period will be swept daily to
the Collection Account, will be subject the Collateral Agent’s sole control and
will be used reduce exposure (without any reduction in commitments) under the
Senior Credit Facility as described in the third paragraph under the caption
"Mandatory Prepayments".
     
V.
Certain Conditions
         
Initial Conditions Precedent 
The following: 
         
(a)  All governmental, shareholder and third party consents and approvals
necessary for the Borrowers consummate the Financing shall have been obtained
accordance with the definitive documentation for the Senior Credit Facility.
         
(b)  The Administrative Agent and Joint Lead Arrangers shall have received
Uniform Commercial Code and other lien searches for the Company and its
subsidiaries and the Target and its subsidiaries, each form and substance and
with results acceptable to the Administrative Agent and the Joint Lead
Arrangers.
         
(c)  The parties shall have executed and delivered the definitive documentation
with respect to the Senior Credit Facility (including, without limitation, (i)
loan agreement, security agreements, pledge agreements and mortgages, (ii) a
Borrowing Base Certificate, and (iii) such other documents and agreements as are
customary for transactions of the type contemplated hereby). The Borrower and
Guarantors shall have executed and delivered and caused to have been executed
and delivered by any applicable third party such control agreements, third-party
lien waivers and other third party agreements as the Engagement Parties may
require.
         
(d)  The Administrative Agent and the Joint Lead Arrangers shall have received
(i) legal opinions counsel to the Borrowers and Guarantors (including local
counsel in each jurisdiction where eligible real

 
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estate is located) reasonably satisfactory in form and substance to the
Administrative Agent and the Joint Lead Arrangers, including, without
limitation, with respect to the enforceability of the definitive documentation,
the perfection of the Collateral Agent’s security interests and the absence of
conflicts with specified material agreements, and (ii) such customary corporate
resolutions, certificates and other corporate documents and certificates as the
Administrative Agent and the Joint Lead Arrangers shall reasonably request,
including, without limitation, a certificate from the chief financial officer of
the Company certifying that the Company and its subsidiaries, on a consolidated
basis after giving effect to the Transaction, are solvent.
 
(e) The Administrative Agent and the Joint Lead Arrangers shall have received
fully executed copies of the Seller Notes (which shall contain subordination
terms including, without limitation, restrictions on payment of principal and
interest and limitations on the ability of the holders of the Seller Notes to
accelerate the obligations, exercise remedies or seek repayment prior to
maturity of the Seller Notes except in accordance with the definitive
documentation for the Senior Credit Facility).
 
(f) The Administrative Agent shall have received an executed copy of the
purchase agreement (including all schedules and exhibits thereto) regarding the
Target and its subsidiaries (the "Purchase Agreement") and all other material
agreements, instruments and documents relating to the Acquisition (such material
agreements, instruments and documents, together with the Purchase Agreement, the
"Acquisition Documents"). The Acquisition Documents (i) shall not have been
altered, amended or otherwise changed or supplemented from the form of the
Acquisition Documents presented to the Administrative Agent on the date hereof
or (ii) any condition therein waived, in each case, in any manner that could
reasonably be expected to have a material adverse effect (in the Lenders'
reasonable determination) on the interests of the Lenders without the prior
written consent of the Lenders; provided, that any increase in the aggregate
amount of the purchase price under the Purchase Agreement over the amount
described by the Company to the Administrative Agent and the Co-Lead Arrangers
on August 6, 2009, shall be deemed to have a material adverse effect on the
interests of the Lenders and shall require the prior written consent of the
Lenders. The Acquisition shall have been consummated substantially concurrently
with the consummation of the Senior Credit Facility on the Closing Date (the

 
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"Closing") in accordance with the terms of the Acquisition Documents and in
compliance with applicable law and regulatory approvals.
 
(g) The Administrative Agent and the Joint Lead Arrangers shall have received
pro forma consolidated projected financial statements as to the Company and its
subsidiaries, giving effect to all elements of the Transaction to be effected on
or before the Closing Date, and forecasts prepared by management of the Company,
consisting of (i) pro forma consolidated balance sheets, income statements, and
cash flow statements (including a projection of availability) on a monthly basis
through December 31, 2010, and (ii) consolidated balance sheets, income
statements, and cash flow statements (including a projection of availability) on
an annual basis thereafter through and including the year in which the Stated
Maturity Date occurs, each of which shall be reasonably satisfactory to the
Engagement Parties.
 
(h) The Administrative Agent and the Joint Lead Arrangers shall have received
the quarterly and monthly financial statements of the Target and its
subsidiaries and for the Company and its subsidiaries for the most recent
quarter and month ending thirty (30) days prior to the Closing Date, each in
form reasonably satisfactory to the Engagement Parties, consisting of balance
sheets, income statements, and cash flow statements.
 
(i) There shall not have occurred since April 30, 2009 any event or condition
that has had or could be reasonably expected, either individually or in the
aggregate, to have a Material Adverse Effect. "Material Adverse Effect" means
(A) a material adverse change in, or a material adverse effect on, the
operations, business, assets, properties or liabilities (actual or contingent),
condition (financial or otherwise) of the Company, the Target and their
subsidiaries, taken as a whole; (B) a material impairment of (x) the rights and
remedies of the Administrative Agent or any Lender under any material loan
document, or (y) the ability of any Credit Party to perform its material
obligations under any material loan document to which it is a party; or (C) a
material adverse effect upon the legality, validity, binding effect or
enforceability against any Credit Party of any material loan document or
material Acquisition Document to which it is a party.
 
(j) All costs, fees expenses (including, without limitation, legal fees and
expenses) and other compensation contemplated by the Commitment Letter
(including the Fee Letter) and this Summary of Terms shall have been paid to the
extent due.

 
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(k)  Evidence of repayment in full and termination of the Existing Credit
Agreement and related loan documents substantially concurrently with the
Closing.
          (l)  Minimum Excess Availability under the Senior Credit Facility at
Closing Date, after giving effect to the initial funding under the Senior Credit
Facility shall be equal to or greater than $400 million.        
On-Going Conditions Precedent
The following: (i) all of the representations and warranties in the loan
documentation shall be true and correct in all material respects, or if such
representation and warranty is subject to a materiality standard or material
adverse effect provision, such representation and warranty shall be true and
correct in all respects, in each case as of the date of such extension of credit
(except in the case of any representation or warranty that applies as of a
specific date or dates, in which case such representation or warranty shall have
been true and correct in all material respects as of such date or dates); (ii)
no event of default under the Senior Credit Facility or incipient default shall
have occurred and be continuing, or would result from such extension of credit;
(iii) the aggregate principal amount of all Credit Extensions and, without
duplication, unreimbursed Letter of Credit draws outstanding on such date, after
giving effect to the applicable borrowing (and application of the proceeds
thereof) or issuance or renewal of a Letter of Credit, shall not exceed the Loan
Cap; and (iv) delivery of applicable request for credit extension in form
acceptable to the Administrative Agent.
     
VI. 
Certain Documentation Matters 
The definitive documentation for the Senior Credit Facility will contain
representations, warranties, covenants and events of default as are customary
for financings of this type and other terms deemed appropriate by Bank of
America and the Joint Lead Arrangers for this transaction in particular,
including, without limitation:
       
Representations and Warranties
(i) legal existence, qualification and power; (ii) due authorization and no
contravention of law, contracts or organizational documents; (iii) governmental
and third party approvals and consents; (iv) enforceability; (v) accuracy and
completeness of specified financial statements and other information and no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a material adverse effect; (vi) no material
litigation (other than certain disclosed litigation), and no adverse change in
the status, or the reasonably anticipated financial effect on the Borrower and
its subsidiaries, of such disclosed

 
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litigation; (vii) no default; (viii) ownership of property (including disclosure
of liens, properties, leases and investments); (ix) insurance matters; (x)
environmental matters; (xi) tax matters; (xii) ERISA compliance; (xiii)
identification of subsidiaries, equity interests and loan parties; (xiv) use of
proceeds and not engaging in business of purchasing/carrying margin stock; (xv)
status under Investment Company Act; (xvi) accuracy of disclosure; (xvii)
compliance with laws; (xviii) intellectual property; (xix) solvency; and (xx) no
casualty.
       
Affirmative Covenants
(i) delivery of (A) monthly consolidated financial statements, including
delivery of monthly Borrowing Base Certificates and customary back-up materials
(or more frequently if required as provided above under "Availability"), (B)
quarterly compliance certificates (whether or not the Fixed Charge Coverage
Ratio is then required to be tested), (C) annual unqualified and audited
consolidated financial  statements, (D) annual consolidated budgets and
forecasts, updated no more than sixty (60) days after the end of each fiscal
year of the Company; and (E) on any Fixed Charge Trigger Date (as defined
below), a compliance certificate as of the most recently ended trailing twelve
month period for which the financial information relevant thereto is available,
and thereafter during any Fixed Charge Trigger Period (as defined below), a
monthly compliance certificate; provided, however, that, with respect to monthly
financial reporting (including financial statements and compliance
certificates), accommodation will be made for additional time in reporting
results for the months of April and May of each year (30 and 15 days,
respectively), provided that no permitted restricted payments, dividend,
distributions or other actions under the definitive documentation which depend
on the calculation of the Fixed Charge Coverage Ratio shall be permitted during
any such extended reporting period unless current monthly financial information
is provided; (ii) delivery of certificates and other information; (iii) delivery
of notices, including notices of any default, material adverse condition, ERISA
event, material change in accounting or financial reporting practices, sale of
equity and events giving rise to any mandatory prepayment (including any
repayment in accordance with cash management provisions); (iv) payment of
obligations; (v) preservation of existence; (vi) maintenance of properties;
(vii) maintenance of insurance; (viii) compliance with laws; (ix) maintenance of
books and records; (x) inspection rights, including, at the Borrowers’ expense,
(A) two updates of field audit and inventory appraisals in any calendar year if
no

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Trigger Event Period has arisen during such calendar year, (B) three updates of
field audit and inventory appraisals in any calendar year if a Trigger Event
Period has arisen during such year and (C) if requested by the Administrative
Agent, one real estate appraisal with respect to each Mortgaged Property in any
calendar year (and up to one additional real estate appraisal in any calendar
year if required by applicable law or regulatory authority); provided that
following the occurrence and during the continuation of an event of default,
such audits and appraisals may be conducted at the Borrowers’ expense as many
times as the Administrative Agent shall consider necessary; (xi) use of
proceeds; (xii) covenant to guarantee obligations, give security; (xiii)
compliance with environmental laws; (xiv) preparation of environmental reports;
(xv) further assurances; (xvi) compliance with terms of leaseholds; (xvii) lien
searches; (xviii) compliance with material contracts; (xix) maintenance of cash
management system acceptable to the Collateral Agent; and (xx) delivery of real
estate support documents (including, without limitation, title policies,
surveys, environmental indemnity agreements, FIRREA related documents, flood
zone certifications and other real estate related documents).
       
Financial Covenants
If, at any time (each such date, a "Fixed Charge Trigger Date"), Excess
Availability is less than the greater of (a) 15% of the Loan Cap and (b) $110
million, then the Company will be required to maintain a minimum Fixed Charge
Coverage Ratio of 1.1 to 1.0, determined based on a compliance certificate as of
the most recently ended trailing twelve month period for which the financial
information relevant thereto is available. Such minimum Fixed Charge Coverage
Ratio shall be maintained from such Fixed Charge Trigger Date until the date
Availability has equaled or exceeded the greater of 15% of the Loan Cap and $110
million at all times for forty- five (45) consecutive calendar days (each, a
"Fixed Charge Trigger Period"). "Fixed Charge Coverage Ratio" means (a) EBITDA
less (i) capital expenditures (other than permitted acquisitions) less (ii) cash
taxes, divided by (b) cash interest plus (i) all mandatory and voluntary
principal payments of debt (other than permitted refinancings and payments and
prepayments of any Seller Note having a stated maturity prior to the Stated
Maturity Date of the Senior Credit Facility so long as such payments or
prepayments are made in accordance with any subordination provisions applicable
thereto and do not result in a default or event of default under the
documentation for the Senior Credit Facility) plus (ii) cash restricted payments
(other than share repurchases

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prior to the Closing Date). "EBITDA" shall have substantially the same meaning
as that contained in the Existing Facility, provided that there shall be
excluded from the calculation thereof (x) the add-back of proceeds from exercise
of equity rights by directors officers and employees and (y) any extraordinary
non-cash gains and, without duplication, non-recurring non-cash gains otherwise
included therein.
     
Negative Covenants
Restrictions on (i) liens; (ii) indebtedness, including guarantees and other
contingent obligations; (iii) investments (including loans and advances) and
acquisitions; (iv) mergers and other fundamental changes; (v) sales and other
dispositions of property or assets; (vi) payments of cash dividends, equity
purchases and other distributions and prepayments of certain indebtedness; (vii)
changes in the nature of business; (viii) transactions with affiliates; (ix)
burdensome agreements; (x) use of proceeds; (xi) amendments of organizational
documents; (xii) changes in accounting policies or reporting practices; and
(xiii) amendment, modification or termination of documents related to the Seller
Notes or any other material debt in a manner (A) that would violate, or
compliance with which could reasonably be expected to result in the violation
of, the definitive documentation for the Senior Credit Facility or (B) otherwise
materially adverse (in the reasonable determination of the Lenders) to the
interests of the Lenders, taken as a whole, in each case with such exceptions as
may be agreed upon in the loan documentation.
          Notwithstanding the foregoing, the definitive documentation shall
permit the following:        
(a) acquisitions or investments if (i) non-hostile and the business of the
target is substantially similar or related to the business of the Company and
its subsidiaries, and (ii) after giving effect to each such acquisition or
investment, Excess Availability is greater than 20% of the Loan Cap on a pro
forma and twelve month projected basis following such acquisition or investment
and that the Fixed Charge Coverage Ratio, after giving effect to each such
acquisition or investment, is equal to or greater than 1.1 to 1.0 on a pro forma
basis and calculated on a trailing twelve months basis;
 
(b) (i) cash dividends of up to $65,000,000 in any fiscal year payable to
holders of common stock of the Company if, after giving effect to such dividend,
Excess Availability is equal to or greater than 25% of the Loan Cap on a pro
forma and twelve month projected basis

 
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following such dividend; and (ii) other cash dividends, distributions,
repurchases of equity interests and prepayments (other than permitted
refinancings) of certain indebtedness if, (A) after giving effect to such
payments, Excess Availability is equal to or greater than 25% of the Loan Cap on
a pro forma and twelve month projected basis following such dividend,
distribution, repurchase or repayment and (B) the Adjusted Fixed Charge Coverage
Ratio is equal to or greater than 1.25 to 1.0 on a pro forma basis and
calculated on a trailing twelve months basis; provided that it is understood and
agreed that any tax distribution payment made by the Company to the Seller
pursuant to the terms of the Purchase Agreement in respect of the income tax
liability of the Seller associated with the ordinary business income of the
Target through the Closing in an aggregate amount not exceeding $50,000,000
shall be deemed not to constitute a dividend or other restricted payment for
purposes of (i) the restricted payment covenant and (ii) any calculation of the
Fixed Charge Coverage Ratio or the Adjusted Fixed Charge Coverage Ratio.
"Adjusted Fixed Charge Coverage Ratio" shall mean the Fixed Charge Coverage
Ratio for such period calculated such that fixed charges included in the
denominator thereof shall exclude (1) any such dividend, distribution or
repurchase the permissibility of which the calculation is being made, together
with, if a repurchase of equity interests, such all related repurchases that
have previously been made as part of a single stock repurchase plan approved by
the board of directors of the Company, if any, and (2) any prepayment of
indebtedness the permissibility of which the calculation is being made and, if
such prepayment is a prepayment of Seller Notes, all other prior prepayments of
Seller Notes;
 
(c) prepayments (other than permitted refinancings) of up to $250,000,000 of
certain indebtedness if, after giving effect to such payments, Excess
Availability is equal to or greater than 50% of the Loan Cap on a pro forma and
twelve month projected basis following such prepayment; and
 
(d) incurrence of additional secured or unsecured indebtedness in an aggregate
amount of up to $750,000,000, on terms acceptable to the Engagement Parties
which shall be set forth in the definitive loan documentation but no more
restrictive, taken as a whole, to the Credit Parties than customary market terms
for the type of indebtedness incurred (including, without limitation, a maturity
at least 180 days after the Stated Maturity Date, intercreditor agreements
acceptable to the

 
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Lenders (the terms of which may not be specified in the definitive loan
documentation) and the absence of any event of default).
       
Events of Default
The following: (i) nonpayment of principal, interest, fees or other amounts;
(ii) failure to perform or observe covenants set forth in the loan documentation
within a specified period of time, where customary and appropriate, after such
failure; (iii) any representation or warranty proving to have been materially
incorrect when made or confirmed; (iv) cross-default to other indebtedness in an
amount to be agreed; (v) bankruptcy and insolvency defaults; (vi) inability to
pay debts; (vii) monetary judgment defaults in an amount to be agreed and
nonmonetary judgment defaults that could reasonably be expected to have a
material adverse effect; (viii) customary ERISA defaults; (ix) actual or
asserted (in writing by any Credit Party) invalidity or impairment of any loan
documentation; (x) obligations under the Senior Credit Facility cease to
constitute senior indebtedness under any subordinated indebtedness or other
subordination provision or such subordination provisions cease to be valid or
enforceable; and (xi) change of control.
       
Voting
Amendments and waivers of the provisions of the loan agreement and other
definitive credit documentation will require the approval of Lenders holding
loans and commitments representing more than 50% of the aggregate amount of the
loans and commitments under the Senior Credit Facility (the "Required Lenders"),
except that (a) the consent of each Lender shall be required with respect to (i)
the waiver of certain conditions precedent to the initial credit extension under
the Senior Credit Facility; (ii) the amendment of the pro rata sharing
provisions, (iii) the amendment of the voting percentages of the Lenders; (iv)
the release of all or substantially all of the collateral securing the Senior
Credit Facility; (v) the release of any material Credit Party (or any material
portion of the value of the guaranties of the Senior Credit Facility) other than
in transactions otherwise permitted under the loan documents; or (vi) any
increase in any of the advance rates under the Borrowing Base; (b) the consent
of Lenders holding loans and commitments representing more than 66T% of the
aggregate amount of loans and commitments under the Senior Credit Facility shall
be required with respect to (i) changes to the Borrowing Base (other than
increases in the advance rates) in a manner that would increase the availability
thereunder, (ii) changes to the eligibility criteria with respect to the

 
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Borrowing Base in a manner that would increase the availability thereunder or
(iii) any other changes that would increase the availability thereunder (other
than with respect to increases in reserves implemented or released by the
Administrative Agent); and (c) the consent of each Lender affected thereby shall
be required with respect to (i) increases or extensions in the commitment of
such Lender, (ii) reductions of principal, interest or fees, and (iii)
extensions of scheduled maturities or times for payment.
       
Assignments
Subject to the consents described below (which consents will not be unreasonably
withheld or delayed), each Lender will be permitted to make assignments to other
financial institutions in respect of the Revolving Credit Facility in a minimum
amount equal to $5 million.
 
The consent of the Borrower will be required unless (i) an event of default has
occurred and is continuing (provided that the Borrower shall be notified of such
assignment in any event) or (ii) the assignment is to a Lender, an affiliate of
a Lender or an Approved Fund (as such term shall be defined in the loan
documentation). The consent of the Administrative Agent, each LC Issuer and the
Swing Line Lender will be required for any assignment to an entity that is not a
Lender, an affiliate of such Lender or an Approved Fund.
 
An assignment fee in the amount of $3,500 will be charged with respect to each
assignment unless waived by the Administrative Agent in its sole discretion.
Each Lender will also have the right, without consent of the Borrowers or the
Administrative Agent, to assign as security all or part of its rights under the
loan documentation to any Federal Reserve Bank.
 
Lenders will be permitted to sell participations with voting rights limited to
significant matters such as changes in amount, rate, maturity date and releases
of all or substantially all of the collateral securing the Senior Credit
Facility, or any material Credit Party (or any material portion of the value of
the guaranties of the Senior Credit Facility) other than in transactions
otherwise permitted under the loan documents.
       
Yield Protection
The Senior Credit Facility documentation will contain customary provisions (i)
protecting the Lenders against increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other requirements of law and from
the imposition of or changes in withholding or other taxes and (ii) indemnifying
the Lenders for actual "LIBOR breakage costs" incurred in connection with, among
other things, any prepayment of

 
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a LIBOR Loan (as defined in Annex A to this Exhibit A) on a day other than the
last day of an interest period with respect thereto.
       
Expenses
The Borrowers will pay all reasonable out-of-pocket expenses of the
Administrative Agent and the Joint Lead Arrangers associated with the
preparation, negotiation, execution, delivery and administration of the
definitive documentation for the Transaction (including the reasonable fees,
disbursements and other charges of counsel, auditors and appraisers, and the
charges for any field exams.
       
Governing Law and Forum
State of New York.
       
Counsel to the Administrative Agent
McGuireWoods, LLP.

 
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Annex A

Interest and Certain Fees

Interest Rate Options
The interest rates per annum applicable to the Senior Credit Facility (other
than Swing Line Loans) will be LIBOR plus the Applicable Margin (as hereinafter
defined) or, at the option of the Company, the Base Rate plus the Applicable
Margin. Each Swing Line Loan shall bear interest at the Base Rate plus the
Applicable Margin for Base Rate loans.
 
"Applicable Margin" shall mean a per annum rate equal to the rates set forth in
the pricing grid attached hereto as Annex B (the "Pricing Grid") based on Excess
Availability.
 
"LIBOR" will be defined in accordance with Administrative Agent’s standard
practices. The Company may select interest periods of one, two or three months
for LIBOR loans.
 
"Base Rate" shall mean the higher of (x) the Bank of America prime rate, (y) the
Federal Funds rate plus 0.50% and (z) the one-month LIBOR rate plus 1.00%.
   
Interest Payment Dates
Interest on LIBOR Loans shall be payable at the end of the selected interest
period, but no less frequently than quarterly. Interest on Base Rate Loans shall
be payable monthly in arrears on the first business day of the following month.
   
Commitment Fees
The Borrowers will pay a commitment fee to the Lenders calculated from the
Closing Date equal to (a) 1.00% per annum on the average daily unused portion of
the Senior Credit Facility if usage of the Senior Credit Facility is less than
33.3%, (ii) 0.750% per annum on the average daily unused portion of the Senior
Credit Facility if usage of the Senior Credit Facility is greater than or equal
to 33.3% but less than 66.6% and (iii) 0.50% per annum on the average daily
unused portion of the Senior Credit Facility if usage of the Senior Credit
Facility is greater than or equal to 66.6%, in each case, payable quarterly in
arrears and upon the Stated Maturity Date. Swing Line Loans will, for purposes
of the commitment fee calculations only, not be deemed to be a utilization of
the Senior Credit Facility.
   
Letter of Credit Fees
Letter of Credit fees shall be payable on the maximum amount available to be
drawn under each Letter of Credit at a rate per annum equal to the Applicable
Margin from time to time applicable to LIBOR loans. Such fees will be (a)
payable quarterly in arrears, commencing on the

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first quarterly payment date to occur after the Closing Date, and (b) shared
proportionately by the Lenders under the Senior Credit Facility. In addition, a
fronting fee shall be payable to the applicable LC Issuer for its own account in
an amount equal to (i) 0.125% of the face amount of each documentary Letters of
Credit, payable upon issuance and (ii) 0.125% per annum on the maximum amount
available to be drawn under each standby Letter of Credit, payable quarterly in
arrears.
   
Default Rate
During the continuance of any event of default under the loan documentation, at
the option of the Administrative Agent or at the request of the Required
Lenders, the Applicable Margin on obligations owing under the loan documentation
shall increase by 2% per annum.
   
Rate and Fee Basis
All interest and per annum fees would be calculated on the basis of actual
number of days elapsed in a year of 360 days (or 365 (or 366 in a leap year)
days, in the case of Base Rate Loans the interest rate payable on which is then
based on the prime rate).

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Annex B
 

 
Pricing Grid
 

   
Applicable Margin 
Level 
Excess Availability 
LIBOR Loans 
Base Rate Loans 
       
I 
< 33.33% of the Loan Cap 
4.25% 
3.25% 
       
II 
≥33.3% of the Loan Cap but 
4.00% 
3.00% 
 
< 66.6% of the Loan Cap 
           
III 
≥66.6%of the Loan Cap 
3.75% 
2.75% 

 
The Applicable Margin shall initially be set at Level II of the Pricing Grid and
shall be adjusted based on Excess Availability after the fourth complete fiscal
quarter ending after the Closing Date. If the Borrowing Base Certificate is not
delivered within the required time periods as set forth in the definitive
documentation, then until the date that is one business day after the date on
which such Borrowing Base Certificate is delivered the highest rate set forth in
each column of each pricing grid shall apply. At all times after maturity or
acceleration of the maturity of the Loans or the occurrence and continuance of
an event of default, the highest rate set forth in each column shall apply
(without limiting the right of the Administrative Agent or the Required Lenders
to impose the Default Rate).
 
If any certificate required to be delivered in the definitive documentation
reflecting the calculation of the Applicable Margin is shown to be inaccurate,
and such inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin for any period (an "Applicable Period") than the Applicable
Margin applied for such Applicable Period, then the highest rate set forth in
each column of each pricing grid shall apply and the Borrowers shall immediately
pay to Administrative Agent the accrued additional interest owing as a result of
such increased Applicable Margin for such Applicable Period.
 
 
B-1
 

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