EXHIBIT 10.2

 

INTERCREDITOR AGREEMENT

 

This Intercreditor Agreement, dated as of July 9, 2012, is entered into by and
among Bank of America, N.A. as collateral agent for the Revolving Credit Secured
Parties, as hereinafter defined (in such capacity, the “Revolving Credit
Agent”), Wells Fargo Bank, National Association, as collateral agent for the
Indenture Secured Parties, as hereinafter defined, and as trustee under the
Indenture, as hereinafter defined (in such capacities, the “Notes Agent”), and
each collateral agent for any Future Second Lien Claims (as hereinafter defined)
from time to time party hereto, each in its capacity as Second Priority Agent
(as hereinafter defined) and the Loan Parties, as hereinafter defined.

 

W I T N E S S E T H:

 

WHEREAS, The Bon-Ton Department Stores, Inc., a Pennsylvania corporation (the
“Company”), The Elder-Beerman Stores Corp., an Ohio corporation
(“Elder-Beerman”), Carson Pirie Scott II, Inc., a Mississippi corporation (“CPS
II”), Bon-Ton Distribution, Inc., an Illinois corporation (“Distribution”), The
Bon-Ton Stores of Lancaster, Inc. (“Lancaster”) and McRIL, LLC, a Virginia
limited liability company(“McRIL” and, together with the Company, Elder-Beerman,
CPS II, Distribution and Lancaster, the “Borrowers”) have entered into a Second
Amended and Restated Loan and Security Agreement dated as of March 21, 2011 (as
such agreement may be amended, restated, supplemented, renewed or otherwise
modified from time to time, together with any other agreements pursuant to which
any of the indebtedness, commitments, obligations, costs, expenses, fees,
reimbursements, indemnities or other obligations payable or owing thereunder may
be refinanced, restructured, renewed, extended, increased, refunded or replaced,
the “Revolving Credit Agreement”) with the Revolving Credit Agent, the Revolving
Credit Lenders (as hereinafter defined) and the other agents and arrangers from
time to time party thereto, pursuant to which, among other things, the Revolving
Credit Lenders have made loans and provided extensions of credit to the
Borrowers.

 

WHEREAS, the Company (in such capacity, the “Issuer”) (a) and the Notes Agent
have entered into that certain Indenture dated as of even date herewith (as such
agreement may be amended, restated, supplemented, renewed or otherwise modified
from time to time, together with any other agreements pursuant to which any of
the indebtedness, commitments, obligations, costs, expenses, fees,
reimbursements, indemnities or other obligations payable or owing thereunder may
be refinanced, restructured, renewed, extended, increased, refunded or replaced,
the “Indenture”), pursuant to which, among other things, the Issuer has issued
Notes (as hereinafter defined) to the Note Holders (as hereinafter defined) and
(b) may become a party to Second Priority Documents governing Future Second Lien
Claims; and

 

WHEREAS, it is (a) a requirement under the Revolving Credit Agreement and (b) a
requirement under the Indenture that the parties set forth their agreement as to
certain of their respective rights and obligations with respect to certain
assets and properties of the Loan Parties.

 

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

 

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Section 1.                                          Definitions

 

1.1.                            Definitions

 

Unless otherwise defined herein, terms are used herein as defined in the
Revolving Credit Agreement.  In addition, as used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

 

“Agents” shall mean, collectively, the Revolving Credit Agent and the Second
Priority Agents.

 

“Agreement” shall mean this Intercreditor Agreement, as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.

 

“Asserted Indemnification Claim” shall mean any matters or circumstances for
which notice has been furnished to, demand has been made upon, or asserted
against the Revolving Credit Agent or any Revolving Credit Secured Party,
whether in writing or threatened orally, that the Revolving Credit Agent has
determined could reasonably be expected to result in direct or actual damages
and/or expenses to the Revolving Credit Agent or any Revolving Credit Secured
Party and which are subject to indemnification by the Loan Parties pursuant to
the terms of the Revolving Credit Loan Documents.

 

“Bankruptcy Code” shall mean title 11, United States Code, 11 U.S.C §§ 101 et
seq., as now and hereafter in effect, any successors to such statutes and any
other applicable insolvency or other similar law of any jurisdiction including,
without limitation, any law of any jurisdiction permitting a debtor to obtain a
stay or a compromise of the claims of its creditors against it.

 

“Bankruptcy Law” shall mean the Bankruptcy Code, or any similar federal, state
or foreign applicable law for the relief of debtors or any arrangement,
reorganization, insolvency, moratorium, assignment for the benefit of creditors,
any other marshalling of the assets and liabilities of any Loan Party or any
similar law relating to or affecting the enforcement of creditors’ rights
generally.

 

“Borrowers” or “Borrower” shall have the meaning set forth in the recitals
hereto.

 

“Collateral” shall mean all of the assets of any Loan Party, whether real,
personal or mixed, constituting both Revolving Credit Collateral and Second
Priority Collateral, including, without limitation, any property subject to
Liens granted pursuant to Section 5.

 

“Collateral Documents” shall mean, collectively, the Revolving Credit Collateral
Documents and the Second Priority Collateral Documents.

 

“Collateral Enforcement Action” shall mean any exercise of any rights or
remedies with respect to the Collateral (including, without limitation, set-off,
recoupment, enforcement, collection, execution, levy or foreclosure action or
other realization action or proceeding with respect to the Collateral).

 

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“Future Second Lien Claims” shall mean all obligations, liabilities and
indebtedness of every kind, nature and description (other than Indenture Claims)
owing by any Loan Party to the Future Second Lien Secured Parties arising under
the Future Second Lien Documents and which are to be equally and ratably secured
with the Indenture Claims, whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, including principal, interest, charges, fees, costs, indemnities
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of the Future
Second Lien Documents or after the commencement of any Insolvency or Liquidation
Proceeding with respect to any Loan Party (including, without limitation, the
payment of interest, fees, expenses and other amounts which accrue after the
commencement of such Insolvency or Liquidation Proceeding, whether or not such
amounts are allowed or allowable in whole or in part in any such Insolvency or
Liquidation Proceeding), in each case, solely to the extent that (a) such
Indebtedness is permitted under the Revolving Credit Agreement, the Indenture
and each then existing Future Second Lien Document, (b) the applicable Future
Second Priority Agent agrees in writing to be subject to the terms hereof for
all purposes as a Future Second Priority Agent and Second Priority Agent and
(c) the holders of such Indebtedness agree in writing to be subject to the terms
hereof for all purposes as a Future Second Lien Secured Party and Second
Priority Secured Party.

 

“Future Second Lien Collateral Documents” shall mean all security agreements,
pledge agreements, mortgages, guaranties and other documents executed and/or
delivered by the Loan Parties in connection with the Future Second Lien Claims.

 

“Future Second Lien Documents” shall mean, collectively, all agreements or
documents evidencing or governing any Future Second Lien Claims.

 

“Future Second Lien Secured Parties” shall mean, collectively, each Future
Second Priority Agent and each other holder of Future Second Lien Claims secured
by the Future Second Priority Collateral.

 

“Future Second Priority Agent” shall mean each Person acting as a collateral
agent in respect of any Future Second Lien Claims for the benefit of any Future
Second Lien Secured Party.

 

“Future Second Priority Collateral” shall mean all of the assets of the Loan
Parties, whether real, personal or mixed, with respect to which a Lien is
granted or purported to be granted as security for any Future Second Lien Claim.

 

“Future Second Priority Liens” shall mean all Liens in favor of any Future
Second Lien Secured Party securing any Future Second Lien Claim.

 

“Guarantor” means a “Guarantor” under and as defined in the Revolving Credit
Agreement or a “Guarantor” under and as defined in the Second Priority
Documents, as the case may be.

 

“Indenture” shall have the meaning set forth in the recitals to this Agreement.

 

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“Indenture Claims” shall mean all obligations, liabilities and indebtedness of
every kind, nature and description owing by any Loan Party to any of the
Indenture Secured Parties arising under the Notes and the other Indenture
Documents, whether direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or unliquidated, including
principal, interest, charges, fees, costs, indemnities and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of the Notes or the other Indenture
Documents or after the commencement of any Insolvency or Liquidation Proceeding
with respect to any Loan Party (including, without limitation, the payment of
interest, fees, expenses and other amounts which accrue after the commencement
of such Insolvency or Liquidation Proceeding, whether or not such amounts are
allowed or allowable in whole or in part in any such Insolvency or Liquidation
Proceeding).

 

“Indenture Collateral” shall mean all of the assets of the Loan Parties, whether
real, personal or mixed, with respect to which a Lien is granted or purported to
be granted as security for any Indenture Claim.

 

“Indenture Collateral Documents” shall mean the “Security Documents” (as such
term is defined in the Indenture) and all other security agreements, pledge
agreements, mortgages, guaranties and other documents executed and/or delivered
by the Loan Parties in connection with the Indenture Claims.

 

“Indenture Documents” shall mean, collectively, the Indenture, the Notes, the
Indenture Collateral Documents and any other agreements or documents evidencing
or governing any Indenture Claims.

 

“Indenture Liens” shall mean all Liens in favor of the Indenture Secured Parties
securing Indenture Claims.

 

“Indenture Secured Parties” shall mean, collectively, the Notes Agent, all Note
Holders and any other holder of Indenture Claims secured by the Indenture
Collateral.

 

“Insolvency or Liquidation Proceeding” shall mean, collectively, (a) any
voluntary or involuntary case or proceeding under any Bankruptcy Law with
respect to any Loan Party, (b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect to
any Loan Party or with respect to any of their respective assets, (c) any
liquidation, dissolution, reorganization or winding up of any Loan Party,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, and (d) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of any Loan Party.

 

“Issuer” shall have the meaning set forth in the recitals to this Agreement.

 

“Lien” shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and any authorized

 

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filing of, or agreement to give, any financing statement perfecting a security
interest under the Uniform Commercial Code or comparable law of any
jurisdiction).

 

“Loan Parties” shall mean, collectively, the Borrowers, the Issuer and the
Guarantors.

 

“Note Holders” means each holder of the Notes.

 

“Notes” means the “Notes” (as such term is defined in the Indenture) (i) issued
under the Indenture on the date of the Indenture, including any related exchange
notes, in the initial amount of $329,998,000.00 and (ii) any additional notes
issued under the Indenture by the Issuer, to the extent permitted by the
Indenture, the Credit Agreement, any other Revolving Credit Loan Documents and
any Second Priority Document, as applicable.

 

“Notes Agent” shall include, in addition to the Notes Agent referred to in the
preamble hereto, any successors and assigns thereto or any acting Notes Agent,
in each case, as permitted under the Indenture.

 

“pay in full,” “paid in full” or “payment in full” shall mean with respect to
the Revolving Credit Claims, (i) the payment in full in cash of all Revolving
Credit Claims (other than any Asserted Indemnification Claims and contingent
indemnities and cost and reimbursement obligations to the extent no claim has
been made), (ii) with respect to letters of credit outstanding thereunder and
other Revolving Credit Claims, delivery of cash collateral, backstop letters of
credit or other acceptable credit support in respect thereof in compliance with
the Revolving Credit Loan Documents and acceptable to the holder of such
Revolving Credit Claims, (iii) with respect to an Asserted Indemnification
Claim, delivery of cash collateral or other credit support in an amount
reasonably determined by the Revolving Credit Agent and in a manner consistent
with the arrangements for cash collateral and other acceptable credit support
made pursuant to clause (ii) above, and (iv) termination of all commitments of
the Revolving Credit Secured Parties under the Revolving Credit Loan Documents
to extend credit to the Loan Parties.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Post-Petition Financing” shall mean any financing obtained by any Loan Party
during any Insolvency or Liquidation Proceeding or otherwise pursuant to any
Bankruptcy Law, including any such financing obtained by any Loan Party under
Section 364 of the Bankruptcy Code or consisting of any arrangement for use of
cash collateral held in respect of any Revolving Credit Claim under Section 363
of the Bankruptcy Code or any similar provision of any Bankruptcy Law.

 

“Recovery” has the meaning set forth in Section 5.3(c).

 

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“Revolving Credit Agent” shall include, in addition to the Revolving Credit
Agent referred to in the preamble hereto, any successors and assigns thereto or
any acting Revolving Credit Agent as permitted under the Revolving Credit
Agreement.

 

“Revolving Credit Agreement” shall have the meaning set forth in the recitals to
this Agreement.

 

“Revolving Credit Claims” shall mean any and all “Obligations” as defined in the
Revolving Credit Agreement (including, without limitation, principal, interest,
charges, fees, costs, indemnities, expenses, Loans, Letters of Credit and Bank
Product Debt), whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of the Revolving Credit
Agreement or after the commencement of any Insolvency or Liquidation Proceeding
with respect to any Loan Party (including, without limitation, the payment of
interest, fees, expenses and other amounts which accrue after the commencement
of such Insolvency or Liquidation Proceeding, whether or not such amounts are
allowed or allowable in whole or in part in any such Insolvency or Liquidation
Proceeding).

 

“Revolving Credit Collateral” shall mean all of the assets of the Loan Parties,
whether real, personal or mixed, with respect to which a Lien is granted or
purported to be granted as security for any Revolving Credit Claim.

 

“Revolving Credit Collateral Documents” shall mean the “Security Documents” (as
such term is defined in the Revolving Credit Agreement) and all other security
agreements, pledge agreements, mortgages, guaranties and other documents
executed and/or delivered by the Loan Parties and accepted by the Revolving
Credit Agent in connection with the Revolving Credit Claims.

 

“Revolving Credit Lenders” shall mean collectively the “Lenders” and “Issuing
Banks” (as such terms are defined in the Revolving Credit Agreement).

 

“Revolving Credit Liens” shall mean all Liens in favor of the Revolving Credit
Secured Parties securing Revolving Credit Claims.

 

“Revolving Credit Loan Documents” shall mean, collectively, the Revolving Credit
Agreement, the other “Loan Documents” (as such term is defined in the Revolving
Credit Agreement) and any other agreements or documents evidencing Revolving
Credit Claims.

 

“Revolving Credit Secured Parties” shall mean, collectively, the Revolving
Credit Agent, all Revolving Credit Lenders, Affiliates of the Revolving Credit
Lenders and the Revolving Credit Agent which hold any Bank Product Debt, the
other “Secured Parties” (as such term is defined in the Revolving Credit
Agreement) and any other holder of Revolving Credit Claims secured by the
Revolving Credit Collateral.

 

“Second Priority Agents” shall mean, collectively, the (i) Notes Agent and
(ii) each Future Second Priority Agent.

 

“Second Priority Claims” shall mean, collectively, the (i) Indenture Claims and
(ii) Future Second Lien Claims.

 

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“Second Priority Collateral” shall mean, collectively, the (i) Indenture
Collateral and (ii) Future Second Priority Collateral.

 

“Second Priority Collateral Documents” shall mean, collectively, the
(i) Indenture Collateral Documents and (ii) Future Second Lien Collateral
Documents.

 

“Second Priority Designated Agent” shall mean such agent or trustee as is
designated “Second Priority Designated Agent” by Second Priority Secured Parties
holding a majority in principal amount of the Second Priority Claims then
outstanding; it being understood that as of the date of this Agreement, the
Notes Agent shall be so designated as the Second Priority Designated Agent.

 

“Second Priority Documents” shall mean, collectively, the (i) Indenture
Documents and (ii) Future Second Lien Documents.

 

“Second Priority Liens” shall mean, collectively, the (i) Indenture Liens and
(ii) Future Second Priority Liens.

 

“Second Priority Replacement Liens” has the meaning set forth in Section 5.2(a).

 

“Second Priority Secured Parties” shall mean, collectively, the (i) Indenture
Secured Parties and (ii) Future Second Lien Secured Parties.

 

“Secured Parties” shall mean, collectively, the Revolving Credit Secured Parties
and the Second Priority Secured Parties.

 

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code of the
applicable jurisdiction, as amended.

 

1.2.                            Certain Other Terms

 

(a)                                 The terms “herein,” “hereof,” “hereto” and
“hereunder” and similar terms refer to this Agreement as a whole and not to any
particular Article, Section, subsection or clause in this Agreement.

 

(b)                                 References herein to an Annex, Schedule,
Article, Section, subsection or clause, unless specifically stated otherwise,
refer to the appropriate Annex or Schedule to, or Article, Section, subsection
or clause in this Agreement.

 

(c)                                  Where the context requires, provisions
relating to any collateral, when used in relation to any Loan Party, shall refer
to such Loan Party’s collateral or any relevant part thereof.

 

(d)                                 Any reference in this Agreement to a
Revolving Credit Loan Document or any Second Priority Document shall include all
appendices, exhibits and schedules thereto, and, unless specifically stated
otherwise, all amendments, restatements, supplements or other modifications
thereto, and as the same may be in effect at any time such reference becomes
operative.

 

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(e)                                  The term “including” means “including,
without limitation” except when used in the computation of time periods.

 

(f)                                   To the extent the described asset is owned
by a Loan Party, the terms have the meanings given to them in the UCC of the
State of New York, unless otherwise defined herein.

 

(g)                                  References in this Agreement to any statute
shall be to such statute as amended or modified and in effect from time to time.

 

Section 2.                                          Priority of Liens

 

2.1.                            Lien Subordination.  Notwithstanding the date,
manner or order of grant, attachment or perfection of any Revolving Credit Lien
or Second Priority Lien in respect of any Collateral and notwithstanding any
provision of the UCC, any applicable law or any Collateral Document, the
Revolving Credit Agent, on behalf of each Revolving Credit Secured Party, and
each Second Priority Agent, on behalf of each applicable Second Priority Secured
Party, hereby agrees that:

 

(a)                                 the Revolving Credit Liens in respect of the
Collateral, regardless of how acquired, whether by grant, statute, operation of
law, subrogation or otherwise, shall be and shall remain senior and prior to any
Second Priority Lien in respect of the Collateral, and

 

(b)                                 any Second Priority Lien in respect of the
Collateral, regardless of how acquired, whether by grant, statute, operation of
law, subrogation or otherwise, shall be junior and subordinate in all respects
to the Revolving Credit Liens in respect of the Collateral.

 

2.2.                            Prohibition on Contesting Liens.

 

(a)                                 Each Second Priority Agent, on behalf of
each applicable Second Priority Secured Party, agrees that it shall not, and
hereby waives any right to:

 

(i)                                     contest, or support any other Person in
contesting, in any proceeding (including any Insolvency or Liquidation
Proceeding), the priority, validity, perfection or enforceability of any
Revolving Credit Lien on any Collateral; or

 

(ii)                                  to the fullest extent permitted by law,
demand, request, plead or otherwise assert or claim the benefit of any
marshalling, appraisal, valuation or other similar right which it may have under
applicable law or any other similar rights a junior creditor may have under
applicable law in respect of the Collateral or the Revolving Credit Liens on the
Collateral.

 

(b)                                 The Revolving Credit Agent, on behalf of
each Revolving Credit Secured Party, agrees that it shall not, and hereby waives
any right to contest, or support any other Person in contesting, in any
proceeding (including any Insolvency or Liquidation Proceeding), the priority,
validity, perfection or enforceability of any Second Priority Lien on any
Collateral, but nothing in this Section 2.2(b) will impair the rights of any
Revolving

 

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Credit Secured Party to enforce this Agreement, including the priority of the
Liens securing the Revolving Credit Claims or the provisions for exercise of
remedies.

 

2.3.                            Separate Liens.  Each of the parties hereto
acknowledges and agrees that (i) the grants of Liens in respect of the
Collateral pursuant to the Collateral Documents constitute separate and distinct
grants of Liens and (ii) because of, among other things, their differing rights
in the Collateral, the Revolving Credit Claims and the Second Priority Claims in
respect of the Collateral are fundamentally different from each other, and the
Revolving Credit Claims and Second Priority Claims in respect of the Collateral
must be separately classified in any Insolvency or Liquidity Proceeding.  To
further effectuate the intent of the parties as provided in the immediately
preceding sentence, if it is held that, in respect of the Collateral, the
Revolving Credit Claims and the Second Priority Claims constitute only one
secured claim (rather than separate classes of secured claims), then all
distributions from the Collateral shall be made as if there were separate
classes of secured claims against the Loan Parties in respect of the Collateral
(with the effect that, to the extent that the aggregate value of the Collateral
is sufficient (for this purpose ignoring all claims held by the Second Priority
Secured Parties), the Revolving Credit Secured Parties shall be entitled to
receive, in addition to amounts distributed to them in respect of principal,
pre-petition interest and other claims, all amounts owing in respect of
post-petition interest before any distribution is made from the Collateral in
respect of the claims held by the Second Priority Secured Parties with respect
to the Collateral, with the Second Priority Secured Parties hereby acknowledging
and agreeing to turn over to the Revolving Credit Secured Parties amounts
otherwise received or receivable by them from the Collateral to the extent
necessary to effectuate the intent of this sentence, even if such turnover has
the effect of reducing the claim or recovery of the Second Priority Secured
Parties).  The Second Priority Secured Parties will not seek in an Insolvency or
Liquidity Proceeding to be treated as part of the same class of creditors as
Revolving Credit Secured Parties and will not oppose or contest any pleading by
the Revolving Credit Secured Parties seeking separate classification of their
respective secured claims.

 

2.4.                            New Liens.  Subject to the other provisions of
this Section 2 and Section 5, each Loan Party agrees not to grant any Lien on
any of its assets, or permit any of its Subsidiaries to grant a Lien on any of
its assets, in favor of any of the Revolving Credit Agent or any Second Priority
Agent or any Revolving Credit Secured Party or any Second Priority Secured Party
unless, prior to or contemporaneously therewith, it, or such Subsidiary, has
offered to grant a similar Lien on such assets in favor of the other Agent(s) or
the other Secured Parties, as the case may be.  To the extent that the foregoing
provisions are not complied with for any reason, the Revolving Credit Agent and
each Second Priority Agent agrees that any amounts received by or distributed to
any of them pursuant to or as a result of Liens granted in contravention of this
Section 2.4 shall be subject to this Agreement such that proceeds thereof will
be treated as proceeds of Collateral subject to Section 4 hereof.  In the event
that, pursuant to this Section 2.4, (a) the Revolving Credit Agent or any
Revolving Credit Secured Party shall acquire or hold any Lien on any assets of
any Loan Party and the Second Priority Agent(s) and the Second Priority Secured
Parties shall not have a similar Lien on such asset, the Revolving Credit Agent
or such Revolving Credit Secured Party, as the case may be, shall be deemed,
subject to Section 7, to hold such Collateral as agent or as bailee, as the case
may be, for the Second Priority Agent(s) and the Second Priority Secured Parties
for purposes of perfecting the Lien of the Second Priority Agent(s) and the
Second Priority Secured Parties thereon, and (b) a

 

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Second Priority Agent or any Second Priority Secured Party shall acquire or hold
any Lien on any assets of any Loan Party and the Revolving Credit Agent and the
Revolving Credit Secured Parties shall not have a similar Lien on such asset,
the Second Priority Agent(s) or such Second Priority Secured Party, as the case
may be, shall be deemed, subject to Section 7, to hold such Collateral as agent
or as bailee, as the case may be, for the Revolving Credit Agent and the
Revolving Credit Secured Parties for purposes of perfecting the Lien of the
Revolving Credit Agent thereon.

 

Section 3.                                          Exercise of Remedies

 

3.1.                            Remedies.

 

(a)                                 Prior to the payment in full of the
Revolving Credit Claims, whether or not any Insolvency or Liquidation Proceeding
has been commenced by or against any Loan Party, no Second Priority Secured
Party shall (or shall direct any Second Priority Agent to):

 

(i)                                     take any Collateral Enforcement Action
against the Collateral or any proceeds of the Collateral;

 

(ii)                                  object to any Collateral Enforcement
Action brought by the Revolving Credit Agent or any Revolving Credit Secured
Party or any other exercise of any rights and remedies relating to the
Collateral under the Revolving Credit Loan Documents or otherwise; provided that
the respective interests of the Second Priority Secured Parties in such
Collateral attach to the proceeds thereof on the same basis and to the same
extent as such original Collateral, subject to the relative priorities described
in this Agreement;

 

(iii)                               without the prior written consent of the
Revolving Credit Agent, initiate any Insolvency or Liquidation Proceeding; or

 

(iv)                              object to the forbearance by the Revolving
Credit Secured Parties from bringing or pursuing any Collateral Enforcement
Action against the Collateral.

 

(b)                                 Prior to the payment in full of the
Revolving Credit Claims, whether or not an Insolvency or Liquidation Proceeding
has been commenced by or against any Loan Party, the Revolving Credit Agent, on
behalf of the Revolving Credit Secured Parties, shall have the exclusive right
to enforce rights with respect to the Collateral and exercise remedies in
respect thereof, all in such order and in such manner as the Revolving Credit
Agent may determine in the exercise of its sole discretion.  Such exercise and
enforcement shall include, without limitation, the rights of an agent appointed
by the Revolving Credit Agent to sell or otherwise dispose of the Collateral
upon foreclosure, to incur expenses in connection with such sale or disposition,
and to exercise all the rights and remedies of a secured lender under the UCC of
any applicable jurisdiction and of a secured creditor under any Bankruptcy Law. 
Nothing in this Agreement modifies any rights or remedies which any Revolving
Credit Secured Party may have with respect to the Collateral.

 

(c)                                  Each Second Priority Agent, on behalf of
each applicable Second Priority Secured Party, in respect of the Collateral
(i) agrees that it will not take, and that by

 

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each Second Priority Agent’s execution hereof, each Second Priority Secured
Party shall be barred from taking, any action with respect to the Collateral
that would hinder any exercise of remedies undertaken by any Revolving Credit
Secured Party in respect of the Collateral, including any sale, lease, exchange,
transfer or other disposition of the Collateral, whether by any Loan Party or
any Revolving Credit Secured Party, and whether by foreclosure or otherwise, and
(ii) subject to applicable law, hereby waives any and all rights it or (to the
extent within its capacity to so waive) any Second Priority Secured Party may
have as a junior creditor to object to the manner in which any Revolving Credit
Secured Party may seek to enforce or collect the Revolving Credit Claims or the
Revolving Credit Liens granted in the Collateral.

 

3.2.                            Actions Not Subject to Limitation.  Nothing in
this Agreement shall be construed to in any way limit or impair the right of: 
(a) the Second Priority Agents or any Second Priority Secured Party to file a
claim, proof of claim, or statement of interest with respect to the Second
Priority Claims; (b) the Second Priority Agents or any Second Priority Secured
Party to take any action (not adverse to the priority status of the Revolving
Credit Liens on the Collateral securing the Revolving Credit Claims, or the
rights of Revolving Credit Agent to exercise remedies in respect thereof) in
order to create, prove, perfect, preserve or protect (but not enforce) its
Second Priority Lien on the Collateral subject to the other terms of this
Agreement (including, without limitation, sending such notices of the existence
of, or any evidence or confirmation of, the Second Priority Claims or the Liens
of the Second Priority Agents in the Collateral to any court or governmental
agency, or filing or recording any such notice or evidence to the extent
necessary or appropriate to prove or preserve the Liens of the Second Priority
Agents in the Collateral); (c) the Second Priority Agents or any Second Priority
Secured Party to file any necessary or appropriate responsive or defensive
pleadings in opposition to any motion, claim, adversary proceeding or other
pleading made by any Person objecting to or otherwise seeking the disallowance
of the claims or Liens of the Second Priority Secured Parties, including,
without limitation, any claims secured by the Collateral, if any, in each case
not otherwise in contravention of the terms of this Agreement; (d) the Second
Priority Agents or any Second Priority Secured Party to exercise any rights or
remedies available to unsecured creditors or file any pleadings, objections,
motions or agreements which assert rights or interests available to unsecured
creditors of the Loan Parties arising under the Second Priority Documents, any
Insolvency or Liquidation Proceeding or applicable non-bankruptcy law, in each
case, not otherwise prohibited by the terms of this Agreement; or (e) the Second
Priority Agents or any Second Priority Secured Party to vote on any plan of
reorganization, in a manner and to the extent consistent with the provisions of
this Agreement.

 

3.3.                            Access to Books and Records.  In the event that
any Second Priority Secured Party, in the exercise of its respective rights
under the Second Priority Documents, receives possession or control of any books
and records of any Loan Party which contain information identifying or
pertaining to the Collateral and which are not otherwise made available to the
Revolving Credit Agent or any other Revolving Credit Secured Party, such Second
Priority Secured Party receiving possession or control of such books and records
shall use its commercially reasonable efforts to notify the Revolving Credit
Agent that it has received such books and records, and shall, as promptly as
commercially reasonably practicable thereafter, make such books and records
available for inspection and duplication by the Revolving Credit Agent to the
extent requested in writing by the Revolving Credit Agent;

 

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provided that the failure of such Second Priority Secured Party to give such
notice or to grant such access on the terms provided for herein shall not
(i) create a cause of action against such Second Priority Secured Party or
create any claim or right, in each case, on behalf of any third party or
(ii) impact the rights of the Second Priority Secured Party under this
Agreement.

 

3.4.                            Exercise of Remedies of Unsecured Creditors. 
Each Second Priority Secured Party may exercise its rights and remedies
available to unsecured creditors against the Loan Parties in accordance with the
terms of the Second Priority Documents and applicable law, in each case, not
otherwise expressly prohibited by the terms of this Agreement.  In the event any
Second Priority Secured Party becomes a judgment lien creditor in respect of the
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Revolving Credit Liens
on the Collateral on the same basis and to the same extent as the other Second
Priority Liens on the Collateral are subordinated to the Revolving Credit Liens
on the Collateral under this Agreement.

 

Section 4.                                          Application of Payments;
Subrogation

 

4.1.                            Proceeds of Collateral.  Until the payment in
full of the Revolving Credit Claims, proceeds of Collateral realized upon any
Collateral Enforcement Action shall be applied, to the extent required under the
Revolving Credit Loan Documents, to the Revolving Credit Claims in accordance
with the Revolving Credit Loan Documents.  After payment in full of the
Revolving Credit Claims, proceeds of Collateral realized upon any Collateral
Enforcement Action shall be applied, to the extent required under the Second
Priority Documents, to the Second Priority Claims in accordance with the Second
Priority Documents.

 

4.2.                            Turn Over.  Unless and until all Revolving
Credit Claims shall have been paid in full, any receipt by a Second Priority
Secured Party of Collateral or the proceeds thereof, shall be segregated and
held in trust and forthwith paid over to the Revolving Credit Agent for
application in accordance with the Revolving Credit Agreement, in the same form
as received, with any necessary endorsements or as a court of competent
jurisdiction shall otherwise direct.  The Revolving Credit Agent is hereby
authorized to make any such endorsements as agent for such Second Priority
Secured Party.  This authorization is coupled with an interest and is
irrevocable.

 

4.3.                            Subrogation.  Each Second Priority Agent in
respect of any Collateral, on behalf of each applicable Second Priority Secured
Party, hereby agrees not to assert any rights of subrogation it may acquire as a
result of any payment hereunder until the Revolving Credit Claims shall have
been paid in full.  Each Loan Party acknowledges and agrees that the value of
any payments or distributions in cash, property or other assets received by the
Second Priority Agents or the Second Priority Secured Parties that are paid over
to the Revolving Credit Agent or the Revolving Credit Secured Parties pursuant
to this Agreement shall not reduce any of the Second Priority Claims.

 

Section 5.                                          Insolvency or Liquidation
Proceedings

 

5.1.                            Applicability Insolvency or Liquidation
Proceeding.  This Agreement shall be applicable both before and after the filing
of any petition by or against any Loan Party under

 

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the Bankruptcy Code or any other Insolvency or Liquidation Proceeding and all
converted or succeeding cases in respect thereof, and all references herein to
any Loan Party shall be deemed to apply to the trustee for such Loan Party and
such Loan Party as a debtor-in-possession.  The relative rights of the Revolving
Credit Secured Parties and the Second Priority Secured Parties in respect of the
Collateral or proceeds thereof shall continue after the filing of such petition
on the same basis as prior to the date of such filing, subject to any court
order approving the financing of, or use of cash collateral by, any Loan Party. 
This Agreement shall constitute a “subordination agreement” for purposes of
Section 510(a) of the Bankruptcy Code and shall be enforceable in any Insolvency
or Liquidation Proceeding in accordance with its terms.

 

5.2.                            Waivers.  In the event an Insolvency or
Liquidation Proceeding shall be commenced by or against any Loan Party, in
respect of any part of the Collateral or proceeds thereof or any Revolving
Credit Lien which may exist thereon, each of the Second Priority Secured Parties
hereby agrees that such Person shall not, until the payment in full of the
Revolving Credit Claims (irrespective of whether the Revolving Credit Claims are
scheduled to be paid in full as part of an applicable Insolvency or Liquidation
Proceeding):

 

(a)                                 seek any relief from, or modification of,
the automatic stay as provided in §362 of the Bankruptcy Code or (except as
otherwise consented to in writing by the Revolving Credit Agent) seek any form
of adequate protection under any or all of §361, §362, §363 or §364 of the
Bankruptcy Code with respect to the Collateral, except additional or replacement
Liens and super-priority administrative expense claims for diminution in value
(the “Priority Claims”), which additional or replacement Liens and Priority
Claims at all times shall extend to the same assets as the Revolving Credit
Liens but which shall be subordinated to the Revolving Credit Liens, any
carve-out amount from the Collateral, the Liens securing the Post-Petition
Financing, any similar additional or replacement liens and Priority Claims
granted to the Revolving Credit Secured Parties in accordance with, and subject
to, the terms of this Agreement and to any other claims and liens as provided in
Section 5.3(a) below (“Second Priority Replacement Liens”).  Without limiting
the generality of the foregoing, to the extent that the order of the court in
any Insolvency or Liquidation Proceeding approving the Post-Petition Financing
or use of cash collateral by any Loan Party provides that the holders of
Revolving Credit Claims are entitled to receive adequate protection in the form
of payments in the amount of current post-petition interest, incurred fees or
expenses or other cash payments, or otherwise with the consent of the Revolving
Credit Agent, then the Notes Agent and the holders of the Notes shall not be
prohibited from seeking adequate protection payments in cash; provided that
(i) the amount of any such cash payments made in any quarter shall not exceed
the lesser of (x) $100,000 in any such quarter or (y) the amount of fees and
expenses of counsel incurred by the Notes Agent and the holders of the Notes in
such Insolvency or Liquidation Proceeding during such quarter and (ii) the
Revolving Credit Agent may object to any such adequate protection being sought;

 

(b)                                 oppose or object to any “adequate
protection” sought by or granted to any Revolving Secured Parties with respect
to the Collateral;

 

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(c)                                  object to (i) the amount of the Revolving
Credit Claims allowed or permitted to be asserted under any Bankruptcy Law or
(ii) the extent to which the Revolving Credit Claims are deemed secured claims,
including under §506(a) of the Bankruptcy Code;

 

(d)                                 oppose or object to any protection provided
to the Revolving Credit Secured Parties, including any form of adequate
protection under §361, §362, §363 or §364 of the Bankruptcy Code or the payment
of amounts equal to interest, fees, costs, charges or expenses allowed under
§506(b) or §506(c) of the Bankruptcy Code to any Revolving Credit Secured
Parties;

 

(e)                                  object to the treatment of the Revolving
Credit Claims under a chapter 11 plan of reorganization under the Bankruptcy
Code or similar plan or reorganization or arrangement under any other applicable
Insolvency or Liquidation Proceeding, except on the grounds that the present
value of all property received by the Revolving Secured Parties exceeds the
amount of the claims of the Revolving Secured Parties in such Insolvency or
Liquidation Proceeding; or

 

(f)                                   challenge any claim by the Revolving
Credit Agent or Revolving Credit Secured Parties for allowance in any Insolvency
or Liquidation Proceeding of Revolving Credit Claims consisting of post-petition
interest, fees or expenses to the extent of the value of such holders’ Revolving
Credit Liens, without regard to the existence of the Lien of the Notes Agent on
behalf of the Holders of the Notes (or any other Second Priority Claims, if any)
on the Collateral.  If the Revolving Credit Agent or Revolving Credit Secured
Parties receive an allowance in any Insolvency or Liquidation Proceeding of
Revolving Credit Claims consisting of post-petition interest, fees or expenses,
then the Notes Agent or any holder of Indenture Claims (or the holders of any
Future Second Lien Claims, if any) shall be entitled to seek an allowed claim in
any plan of reorganization in any Insolvency or Liquidation Proceeding of
Indenture Claims (or any other Future Second Lien Claims, if any) consisting of
post-petition interest, fees or expenses to the extent of the value of the Lien
of the Notes Agent on behalf of the holders of the Indenture Claims (or any
Future Second Priority Agent on behalf of any holders of any Future Second Lien
Claims, if any) on the Collateral (after taking into account the existence of
the Revolving Credit Liens on the Collateral); provided that the Revolving
Credit Agent may object to any such allowance so sought.

 

5.3.                            Post-Petition Financing.

 

(a)                                 If any Loan Party shall become subject to a
case under the Bankruptcy Code or any similar Bankruptcy Law and if, as a
debtor-in-possession or otherwise, such Loan Party moves for approval of
(i) financing to be provided in good faith by Revolving Credit Agent or any
Revolving Credit Lender or any other Person with the written consent of the
Revolving Credit Agent under Section 364 of the Bankruptcy Code or any similar
Bankruptcy Law or (ii) the use of cash collateral derived from Collateral with
the consent of the Revolving Credit Agent under Section 363 of the Bankruptcy
Code or any similar Bankruptcy Law, each Second Priority Secured Party agrees:
(x) not to object to any use of cash collateral derived from Collateral or any
such financing (nor support any other Person objecting to such use of cash
collateral derived from Collateral or such financing), (y) not to

 

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demand any form of “adequate protection” or any other relief in connection with
such use of cash collateral derived from Collateral or such financing, except as
provided in Section 5.2(a) and (z) that, without any further action by, or
consent of, any Second Priority Agent or Second Priority Secured Party, the
Second Priority Liens on the Collateral may be made subordinate (A) to any
adequate protection liens provided to the Revolving Credit Agent on behalf of
the Revolving Credit Secured Parties, (B) to any carve-out amount from the
Collateral (including all fees accrued and unpaid and thereafter arising)
following the occurrence of any event of default under any such debtor in
possession financing, that has been agreed upon by the Revolving Credit Agent,
and (C) to the Liens on Collateral securing such debtor in possession financing
and all obligations relating thereto so long as Second Priority Designated Agent
receives an Second Priority Replacement Lien on Collateral on the same terms
(but on a basis junior to the Liens of the Revolving Credit Agent securing the
Revolving Credit Claims, the Liens securing such debtor in possession financing,
any carve-out amount from the Collateral and any adequate protection liens
provided to the Revolving Credit Agent on behalf of the Revolving Credit Secured
Parties).  Neither Second Priority Designated Agent nor any other Second
Priority Secured Party (in its capacity as such) may, directly or indirectly,
provide for or propose, or support any Person in providing or proposing,
Post-Petition Financing to the Issuer or any Guarantor.

 

(b)                                 Each Second Priority Agent, on behalf of
itself and the applicable Second Priority Secured Parties, agrees that it and
they shall not oppose, and will consent to, the release of the Second Priority
Liens in connection with any sale or other disposition of any Collateral (and
any post-petition assets subject to adequate protection liens in favor of the
Revolving Credit Agent) under Section 363 of the Bankruptcy Code or pursuant to
any plan of reorganization or similar plan if the Revolving Credit Agent has
consented to such sale or disposition of such assets free and clear of the Liens
(other than with respect to the proceeds of such sale or disposition) of the
holders of Revolving Credit Claims, provided that the proceeds of such sale or
disposition attach to the parties’ respective Liens with the same priority as
set forth in this Agreement and further provided that the Notes Agent and the
holders of the Indenture Claims (and the holders of any Future Second Lien
Claims, if any) may raise any objection to such sale or disposition that could
otherwise be raised by an unsecured creditor of any Loan Party; provided,
however, that such objections are not inconsistent with any other term or
provision of this Agreement and are not based on the status of the Notes Agent
or any holder of Indenture Claims as secured creditors (without limiting the
foregoing, neither the Notes Agent nor any holder of Indenture Claims may raise
any objections based on rights afforded by Sections 363(e) and (f) of the
Bankruptcy Code to secured creditors (or by any comparable provision of any
Bankruptcy Law)) with respect to the Liens granted to the Notes Agent.

 

(c)                                  If any Revolving Credit Secured Party is
required in any Insolvency or Liquidation Proceeding, or otherwise, to turn over
or otherwise pay to the estate of any Borrower or any other Loan Party any
amount paid in respect of any of the Revolving Credit Claims (each, a
“Recovery”), then such Revolving Credit Secured Party shall be entitled to a
reinstatement of Revolving Credit Claims with respect to all such recovered
amounts and the payment in full of the applicable Revolving Credit Claims shall
be deemed not to have occurred for all purposes hereunder.  If this Agreement
shall have been terminated prior to such Recovery, this Agreement shall be
reinstated in full force and effect, and such prior

 

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termination shall not diminish, release, discharge, impair or otherwise affect
the obligations of the parties hereto.

 

(d)                                 Each Second Priority Agent, on behalf of
itself and the applicable Second Priority Secured Parties, agrees that notice
received two Business Days prior to the entry of an order approving
Post-Petition Financing shall be adequate notice for each Second Priority
Secured Party.

 

Section 6.                                          Representations and
Warranties

 

Each party hereto represents and warrants 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, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

 

(c)                                  The execution, delivery and performance by
such party of this Agreement (i) does 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.

 

Section 7.                                          Revolving Credit Agent as
Agent and Bailee for Perfection

 

7.1.                            The Revolving Credit Agent agrees to (i) hold
the Collateral that is in its “possession” or “control” (as defined in the UCC
of the State of New York) (or in the possession or control of its agents or
bailees) as agent or as bailee, as the case may be, and on behalf of and for the
benefit of Second Priority Agents and (ii) be the agent of the Second Priority
Agents with respect to any deposit accounts or securities accounts that are
controlled or held by it or any bailee agreements entered into by it, in each
case, solely for the purpose of perfecting the security interest granted in such
Collateral by possession or control pursuant to the Second Priority Documents,
subject to the terms and conditions of this Section 7 (such bailment being
intended, among other things, to satisfy the requirements of Sections
8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC).

 

7.2.                            Prior to the payment in full of the Revolving
Credit Claims, (i) the Revolving Credit Agent shall be entitled to deal with the
Collateral in its possession or under its control in accordance with the terms
of the Revolving Credit Loan Documents as if the Lien of the Second Priority
Agents under the Second Priority Documents did not exist and (ii) the rights of
the Second Priority Agents in respect of the Collateral and the proceeds thereof
shall at all times be subject to the terms of this Agreement.

 

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7.3.                            The Revolving Credit Agent shall have no
obligation whatsoever to the Second Priority Agents or any Second Priority
Secured Party to ensure that the Collateral in its possession or under its
control is genuine or owned by a Loan Party or to preserve the rights or
benefits of any Person except as expressly set forth in this Section 7.  The
duties or responsibilities of the Revolving Credit Agent under this Section 7
shall be limited solely to holding the Collateral as agent or as bailee, as the
case may be, and controlling deposit accounts and securities accounts as agent,
in each case for the Second Priority Agents for purposes of perfecting the Lien
thereon held by the Second Priority Agents.  The Revolving Credit Agent shall
not have, or be deemed to have, by reason of this Agreement or otherwise a
fiduciary relationship in respect of any Second Priority Secured Party.  Neither
any Revolving Credit Secured Party nor any of its Affiliates or their respective
officers, directors, employees, agents or representatives shall be liable to any
Second Priority Secured Party for any action taken or omitted to be taken by it
under or in connection with this Section 7.

 

7.4.                            Upon the payment in full of the Revolving Credit
Claims, the Revolving Credit Agent shall transfer the possession and control of
the Collateral in its “possession” or “control”, together with any necessary
endorsements and releases or as a court of competent jurisdiction shall
otherwise direct but without recourse or warranty, to the Second Priority
Designated Agent, at the cost and expense of the Loan Parties.

 

7.5.                            Until the payment in full of the Revolving
Credit Claims, the Revolving Credit Agent shall have the exclusive right,
subject to the rights of the Loan Parties under the Revolving Credit Agreement,
to settle and adjust all insurance claims compensating for the loss, damage or
destruction of Collateral (including all business interruption insurance claims)
and all proceeds of any such policy and any such award shall be applied in
accordance with Section 4.  Following the payment in full of the Revolving
Credit Claims, the Second Priority Designated Agent shall have the exclusive
right, subject to the rights of the Loan Parties under the Second Priority
Documents, to settle and adjust all insurance claims in respect of the
Collateral.

 

Section 8.                                          Second Priority Designated
Agent as Agent and Bailee for Perfection

 

8.1.                            Upon the payment in full of the Revolving Credit
Claims, the Second Priority Designated Agent agrees to (i) hold the Collateral
that is in its “possession” or “control” (as defined in the UCC of the State of
New York) (or in the possession or control of its agents or bailees) as agent or
as bailee, as the case may be, and on behalf of and for the benefit of the other
Second Priority Agents and (ii) be the agent of the other Second Priority Agents
with respect to any deposit accounts or securities accounts that are controlled
or held by it or any bailee agreements entered into by it, in each case, solely
for the purpose of perfecting the security interest granted in such Collateral
by possession or control pursuant to the Second Priority Documents, subject to
the terms and conditions of this Section 8 (such bailment being intended, among
other things, to satisfy the requirements of Sections 8-106(d)(3),
8-301(a)(2) and 9-313(c) of the UCC).

 

8.2.                            The Second Priority Designated Agent shall have
no obligation whatsoever to the other Second Priority Agents or any other Second
Priority Secured Party to ensure that the Collateral in its possession or under
its control is genuine or owned by a Loan Party or to preserve the rights or
benefits of any Person except as expressly set forth in this

 

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Section 8.  The duties or responsibilities of the Second Priority Designated
Agent under this Section 8 shall be limited solely to holding the Collateral as
agent or as bailee, as the case may be, and controlling deposit accounts and
securities accounts as agent, in each case for the other Second Priority Agents
for purposes of perfecting the Lien thereon held by the other Second Priority
Agents.  The Second Priority Designated Agent shall not have, or be deemed to
have, by reason of this Agreement or otherwise a fiduciary relationship in
respect of any other Second Priority Secured Party.  Neither the Second Priority
Designated Agent nor any of its Affiliates or their respective officers,
directors, employees, agents or representatives shall be liable to any other
Second Priority Secured Party for any action taken or omitted to be taken by it
under or in connection with this Section 8.

 

8.3.                            In the event that the Person acting as the
Second Priority Designated Agent shall cease to be so designated the Second
Priority Designated Agent pursuant to the definition of such term, the then
Second Priority Designated Agent shall deliver to the successor Second Priority
Designated Agent, to the extent that it is legally permitted to do so, the
remaining Collateral (if any) in its “possession” or “control”, together with
any necessary endorsements (or otherwise allow the successor Second Priority
Designated Agent to obtain control of such Collateral) or as a court of
competent jurisdiction may otherwise direct, and such successor Second Priority
Designated Agent shall perform all duties of the Second Priority Designated
Agent as set forth herein.

 

8.4.                            The Second Priority Designated Agent shall have
the exclusive right, subject to the rights of the Loan Parties under the Second
Priority Documents, to settle and adjust all insurance claims compensating for
the loss, damage or destruction of Collateral (including all business
interruption insurance claims) in accordance with the provisions of the Second
Priority Documents and all proceeds of any such policy and any such award shall
be applied in accordance with Section 4.

 

Section 9.                                          Release of Collateral

 

9.1.                            Each Second Priority Agent shall, at any time
prior to the payment in full of the Revolving Credit Claims, promptly (but in
any event within five (5) Business Days of receipt thereof) upon the written
request of Revolving Credit Agent, execute and deliver, at the Company’s
expense, such instruments (including such customary instruments as are prepared
and provided to it by the Revolving Credit Agent) as are required to release its
Liens on any Collateral, to the extent such Collateral is to be sold or
otherwise disposed of to any Person other than a Loan Party either by (a) the
Revolving Credit Agent or its agents (including, without limitation, in
connection with a Collateral Enforcement Action against the Collateral), or
(b) any Loan Parties pursuant to the terms of the Revolving Credit Agreement or
with the consent of the requisite Revolving Credit Secured Parties, in
accordance with the Revolving Credit Agreement, in each case, whether or not
such transaction is prohibited by the Second Priority Documents, but only to the
extent, such Liens on such Collateral securing Revolving Credit Claims are
released and discharged; provided, however, any failure by any Second Priority
Agent to so timely execute and deliver such terminations, shall in any event,
result in such Liens on such Collateral to be automatically, unconditionally and
simultaneously released on the sixth (6th) Business Day following receipt of
such written request but only to the extent such Liens on such Collateral
securing Revolving Credit Claims are released and discharged.  The release
provisions of this

 

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Section 9.1 are in addition to and not in limitation of any release of each
Second Priority Agent’s Liens pursuant to and as provided in Section 5.3.

 

9.2.                            Until the payment in full of the Revolving
Credit Claims, each Second Priority Agent, at the expense of the Company,
(a) shall promptly execute and deliver to the Revolving Credit Agent or such
Loan Party such termination statements, releases and other documents as
requested in writing (and including such customary instruments prepared and
provided to it by such requesting party) by the Revolving Credit Agent or such
Loan Party (in accordance with Section 9.1) to effectively confirm the releases
expressly provided in this Section 9 and (b) hereby authorizes the Revolving
Credit Agent or such Loan Party, as the case may be, to file such termination
statements, releases and other documents; provided that, in the event that such
Second Priority Agent fails to execute and deliver such termination statements,
releases and other documents, such Second Priority Agent hereby irrevocably
constitutes and appoints the Revolving Credit Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of the Second Priority Agent (and solely in its capacity as such) or in
the Revolving Credit Agent’s own name, to execute and file such termination
statements, releases and other documents as are necessary to release such Second
Priority Agent’s Lien on the Collateral.  The power of attorney granted in this
Section 9.2 is a power coupled with an interest and is irrevocable and, for the
avoidance of doubt, the Revolving Credit Agent shall not have any duty to any
Loan Party or any other Person to exercise such power of attorney.  Each Second
Priority Agent shall have no liability for any actions of the Revolving Credit
Agent pursuant to or in the use of such power of attorney.

 

9.3.                            Subject to Section 4.2, the Second Priority
Agents shall have no responsibility or liability for the application of proceeds
of any such sale or other disposition by the Revolving Credit Agent contemplated
by this Section 9; and prior to and as a condition of its release of its Liens
on any such Collateral (or its execution and delivery of any such instrument of
release) in accordance with this Section 9, the Second Priority Agents shall be
entitled to receive a certificate from the Revolving Credit Agent, on which the
Second Priority Agents shall be entitled to conclusively rely, certifying that
the Revolving Credit Claims have not been paid in full and that any such
requested release of Lien (and the instruments that have been provided to it for
execution and delivery) is in compliance with this Section 9.

 

9.4.                            The provisions of this Section 9 shall not
limit, impair or modify the provisions of Section 5.3(b), but rather are
supplemental to such provisions.

 

Section 10.                                   Acknowledgements

 

10.1.                     Reliance by Revolving Credit Secured Parties.  All
loans and other extensions of credit made or deemed made on and after the date
hereof by the Revolving Credit Secured Parties to the Loan Parties shall be
deemed to have been given and made in reliance upon this Agreement.

 

10.2.                     Independent Analysis. Each Second Priority Secured
Party and each Revolving Credit Secured Party has, independently and without
reliance on the Revolving Credit Agent or any Revolving Credit Secured Party or
any Second Priority Lien Agent or any Second

 

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Priority Lien Secured Party, respectively, and based on documents and
information deemed by it appropriate, made its own credit analysis and decision
to enter into this Agreement, the Second Priority Documents and Revolving Credit
Loan Documents, as applicable, and the transactions contemplated hereby and
thereby and agrees that it will continue to make its own credit decision in
taking or not taking any action under the Second Priority Documents or the
Revolving Credit Loan Documents, as applicable, or this Agreement.

 

10.3.                     No Warranties or Liability.  Each Second Priority
Agent, on behalf of each applicable Second Priority Secured Party, and the
Revolving Credit Agent, on behalf of each Revolving Credit Secured Party,
acknowledges and agrees that:

 

(a)                                 no Revolving Credit Secured Party and no
Second Priority Secured Party has made any express or implied representation or
warranty, including with respect to the execution, validity, legality,
completeness, collectibility or enforceability of any Revolving Credit Loan
Document or any Second Priority Documents, as applicable, in each case other
than pursuant to Section 6 of this Agreement;

 

(b)                                 the Revolving Credit Secured Parties will be
entitled to manage and supervise their respective loans and extensions of credit
to the Loan Parties as they may, in their sole discretion, deem appropriate and
without regard to any rights or interests that any Second Priority Secured Party
may have in the Collateral or otherwise; and

 

(c)                                  no Revolving Credit Secured Party shall
have any duty to any Second Priority Secured Party and no Second Priority
Secured Party shall have any duty to any Revolving Credit Secured Party to act
or refrain from acting in a manner which allows, or results in, the occurrence
or continuance of an event of default or default under any agreements with any
Loan Party (including the Second Priority Documents and the Revolving Credit
Loan Documents), regardless of any knowledge thereof which they may have or be
charged with.

 

10.4.                     No Waiver of Lien Priorities.

 

(a)                                 No right of any Revolving Credit Secured
Party or any Second Priority Secured Party to enforce any provision of this
Agreement shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any Loan Party or by any act or failure to act by
any Revolving Credit Secured Party or by any Second Priority Secured Party, or
by any noncompliance by any Person with the terms, provisions and covenants of
this Agreement, any of the Revolving Credit Loan Documents or any of the Second
Priority Documents, regardless of any knowledge thereof which any Revolving
Secured Party or any Second Priority Secured Party may have or be otherwise
charged with.

 

(b)                                 Without in any way limiting the generality
of the foregoing clause (a), each Revolving Secured Party and each Second
Priority Secured Party, may, at any time and from time to time, without the
consent of, or notice to, any Second Priority Secured Party or any Revolving
Secured Party, respectively, without incurring any liability to any Second
Priority Secured Party or any Revolving Secured Party, respectively, and without
impairing or releasing the lien priorities and other benefits provided in this
Agreement (even if any

 

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right of subrogation or remedy is affected, impaired or extinguished thereby) do
any one or more of the following:

 

(i)            make loans and advances to any Loan Party or issue, guaranty or
obtain letters of credit for account of any Loan Party or otherwise extend
credit to any Loan Party, in any amount and on any terms, whether pursuant to a
commitment or as a discretionary advance and whether or not any default or event
of default or failure of condition is then continuing;

 

(ii)           change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the terms
of any Revolving Credit Claim or any Second Priority Claim, as applicable, any
Lien in respect of the Collateral, any guaranty of any Revolving Credit Claim or
any Second Priority Claim, as applicable, or any liability of any Loan Party
incurred directly or indirectly in respect of any of the foregoing (including
any increase in or extension of the Revolving Credit Claims or any Second
Priority Claim, as applicable, without any restriction as to the amount, tenor
or terms of any such increase or extension) or otherwise amend, renew, exchange,
extend, modify or supplement in any manner the Revolving Credit Claims, any
Liens held by the Revolving Credit Agent or the Revolving Credit Secured
Parties, or any of the Revolving Credit Loan Documents or the Second Priority
Claims, any Liens held by the Second Priority Agents or the Second Priority
Secured Parties, or any of the Second Priority Documents;

 

(iii)          subject to the provisions of this Agreement, sell, exchange,
release, surrender, realize upon, enforce or otherwise deal with in any manner
and in any order any part of the Collateral or any liability of any Loan Party
to the Revolving Credit Agent or any Revolving Credit Secured Party or to the
Second Priority Agents or any Second Priority Secured Party, or any liability
incurred directly or indirectly in respect thereof;

 

(iv)          subject to the provisions of this Agreement, settle or compromise
any Revolving Credit Claim or any Second Priority Claim or any other liability
of any Loan Party or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including the Revolving Credit Claims and the Second
Priority Claims) in any manner or order; or

 

(v)           subject to the provisions of this Agreement, exercise or delay in
or refrain from exercising any right or remedy against any security or any Loan
Party or any other Person, elect any remedy and otherwise deal freely with the
Loan Parties, the Collateral and any security, any guarantor or any liability of
any Loan Party to any Revolving Credit Secured Party, or any liability incurred
directly or indirectly, in respect of the foregoing.

 

(c)           Each Second Priority Agent, on behalf of each applicable Second
Priority Secured Party, hereby waives all claims against each Revolving Credit
Secured Party arising out of any and all actions which any Revolving Credit
Secured Party may take or permit or omit to take with respect to: (i) the
Revolving Credit Loan Documents, (ii) the

 

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collection of the Revolving Credit Claims in a manner not otherwise prohibited
by this Agreement, (iii) the foreclosure upon, or sale, liquidation or other
disposition of, the Collateral in a manner not otherwise prohibited by this
Agreement, (iv) the release of any Lien in respect of the Collateral in a manner
not otherwise prohibited by this Agreement, (v) the maintenance or preservation
of the Collateral, the Revolving Credit Claims or the Revolving Credit Liens or
(vi) the perfection or non-perfection of any Revolving Credit Lien.

 

10.5.       Obligations Unconditional.  All rights, interests, agreements and
obligations hereunder of the Revolving Credit Agent, the Revolving Credit
Secured Parties, the Second Priority Designated Agent and the Second Priority
Secured Parties shall remain in full force and effect regardless of:

 

(a)           any change in the time, manner or place of payment of, or in any
other terms of, all or any of the Revolving Credit Claims or Second Priority
Claims, or any amendment or waiver or other modification, including any increase
in the amount thereof, whether by course of conduct or otherwise, of the terms
of any Revolving Credit Loan Document or any Second Priority Document;

 

(b)           any exchange or release of any Lien on the Collateral or any other
asset, or any amendment, waiver or other modification, whether in writing or by
course of conduct or otherwise, of all or any of the Revolving Credit Claims or
Second Priority Claims or any guarantee thereof;

 

(c)           the commencement of any Insolvency or Liquidation Proceeding in
respect of any Loan Party; or

 

(d)           any other circumstances which otherwise might constitute a defense
available to, or a discharge of, (i) any Loan Party in respect of any Revolving
Credit Claim or any Second Priority Claim or (ii) any Second Priority Secured
Party in respect of this Agreement.

 

10.6.       Consent of Loan Parties.  Each Loan Party hereby consents to the
provisions of this Agreement and the intercreditor arrangements provided for
herein and agrees that the obligations of the Loan Parties under any Revolving
Credit Loan Document, any Second Priority Document or any other Collateral
Document shall not in any way be diminished or otherwise affected by such
provisions or arrangements.  All references to any Loan Party shall include
reference to such Loan Party as a debtor and debtor in possession and any
receiver or trustee for such Loan Party in any Insolvency or Liquidation
Proceeding.  Each Loan Party hereby agrees that, if, pursuant to the provisions
of either the Revolving Credit Loan Documents or the Second Priority Documents,
a Loan Party shall be required to cause any Subsidiary that is not a Loan Party
to become a Loan Party, or if for any reason a Loan Party desires any such
Subsidiary to become a Loan Party, such Subsidiary shall execute and deliver to
the Revolving Credit Agent and each Second Priority Agent an Intercreditor
Supplement in substantially the form of Exhibit A (Intercreditor Agreement
Supplement) attached hereto and shall thereafter for all purposes be a party
hereto and have the same rights, benefits and obligations as a Loan Party hereto
on the date first written above.

 

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10.7.       Restrictions on Payments of Indenture Claims.  Each Second Priority
Secured Party hereby acknowledges the restrictions on the payment of Second
Priority Claims contained in Section 10.2.8 of the Revolving Credit Agreement as
of the date hereof; provided, however, that between the Second Priority Secured
Parties, on the one hand, and the Loan Parties, on the other hand, no such
restrictions will excuse the Loan Parties from their obligations under the
Second Priority Documents, and no Loan Party may raise such restrictions as a
defense to any performance required under the Second Priority Documents.

 

10.8.       Amendments, Consents, Waivers and other Modifications to Revolving
Credit Collateral Documents.

 

(a)  In the event the Revolving Credit Agent or the Revolving Credit Secured
Parties enter into any amendment, waiver or consent in respect of any of the
Revolving Credit Collateral Documents for the purpose of adding to, or deleting
from, or waiving or consenting to any departures from any provisions of any
Revolving Collateral Document or changing in any manner the rights of the
Revolving Credit Agent, the Revolving Credit Secured Parties, or the Loan
Parties thereunder, in each case with respect to the Collateral (collectively, a
“Section 10.8 Revolving Credit Collateral Document Modification”), then such
amendment, waiver or consent shall automatically apply (subject to the first
proviso contained in Section 10.8(c)) in a comparable manner to any comparable
provision of the Second Priority Collateral Documents to the extent and as
provided in the Corresponding Second Priority Collateral Document Modification,
Waiver or Consent (as such term is defined below), without the consent of the
Second Priority Agents or the Second Priority Secured Parties, and without any
action by the Second Priority Agents.

 

(b)  In the event that a Section 10.8 Revolving Credit Collateral Document
Modification is entered into, the Company shall prepare a corresponding
amendment, waiver or consent in respect of the Second Priority Collateral
Documents in order to cause such amendment, waiver or consent to apply in a
comparable manner to any comparable provision of the Second Priority Collateral
Documents in accordance with this Section 10.8, subject to the terms of
Section 10.8(c), and shall promptly provide a copy of such amendment, waiver or
consent in draft form to the Second Priority Agents (sending a copy
simultaneously to the Revolving Credit Agent), together with an accompanying
written notice or correspondence stating that it is a draft Corresponding Second
Priority Collateral Document Modification, Waiver or Consent pursuant to this
Section 10.8.  The Second Priority Agents shall be entitled (but under no duty
or obligation) to request and receive changes or clarifications to the language
of such draft amendment, waiver or consent solely for purposes of clarifying the
terms thereof, their application, or any responsibilities of the Second Priority
Agents thereunder. The Second Priority Agents shall provide any such requested
changes or clarifications to the Company (with a copy to the Revolving Credit
Agent) within seven Business Days of receiving such draft. Such an amendment,
waiver or consent which incorporates such requested changes or clarifications,
or any such draft amendment, waiver or consent to which no such request for
changes or clarifications is made by the Second Priority Agents within such
seven Business Day period (or which both such parties sooner notify the Company
(with a copy to the Revolving Credit Agent) in writing that they have no
requested changes or clarifications), is referred to herein as a “Corresponding
Second Priority Collateral Document Modification, Waiver or Consent.”

 

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(c) Any such Corresponding Second Priority Collateral Document Modification,
Waiver or Consent with respect to the Collateral shall take effect immediately
and automatically upon delivery of the same in final form (incorporating
requested changes or clarifications as described in Section 10.8(b), if
applicable) to the Second Priority Agents, accompanied by an officer’s
certificate of the Company to the Second Priority Agents certifying that such
Corresponding Second Priority Collateral Document Modification, Waiver or
Consent is, in form and content, in compliance with and authorized by this
Section 10.8 and is in effect (an “Effectiveness Certificate”), without the
consent of the Second Priority Agents or the Second Priority Secured Parties,
and without any action by the Second Priority Agents; provided, however, that no
such Corresponding Second Priority Collateral Document Modification, Waiver or
Consent shall be effective to or by its terms purport to (i) remove assets
subject to the Lien of the Second Priority Collateral Documents, (ii) materially
adversely affecting the rights or interests of the Second Priority Secured
Parties in the Collateral and not the Revolving Credit Secured Parties in a like
or similar manner, or (iii) impose duties, obligations, liabilities or
responsibilities on the Second Priority Agents (or any of them), or alter or
modify existing duties, obligations or responsibilities on the part of the
Second Priority Agents (or any of them), or alter, modify, limit, restrict,
remove or otherwise change any immunities, exculpations, indemnities, rights of
compensation or reimbursement, standard of care or other rights or powers of the
Second Priority Agents (or any of them) for its own individual protection or
benefit, in each case of clauses (i), (ii) and (iii) without its prior written
consent; except, in the cases of clauses (i) and(ii), to the extent that a
release of, or adverse effect on the perfection or priority of, such Lien is
permitted by this Agreement (including Sections 5.3 and 10); provided further
that this paragraph is intended solely to set forth provisions by which the
Second Priority Documents shall be automatically affected by amendments, waivers
and consents given by the Revolving Credit Agent and Revolving Credit Secured
Parties under the Revolving Credit Agreement and the Revolving Credit Loan
Documents and is not intended to impose any duty on the Revolving Credit Agent
or Revolving Credit Secured Parties (including, without limitation, any duty to
enter into any such amendment, waiver or consent) or any liability on the
Revolving Credit Agent or Revolving Credit Secured Parties.

 

(d)  Nothing herein shall impose or imply any duty, obligation or power on the
part of the Second Priority Agents to request or require any changes or
modifications to, or to impose or imply any responsibility on their part for the
content of, any Corresponding Second Priority Collateral Document Modification,
Waiver or Consent that they may receive (whether for or on behalf of Noteholders
or otherwise), the terms of this Section 10.8(b) which permit the Second
Priority Agents to request changes or clarifications to a draft Corresponding
Second Priority Collateral Document Modification, Waiver or Consent being solely
for the individual protection and benefit for Second Priority Agents. The Second
Priority Agents may rely exclusively and conclusively upon any Effectiveness
Certificate it may receive without further inquiry.  Notwithstanding anything
herein to the contrary, the Second Priority Agents shall not be under any
obligation to enter into any corresponding Second Priority Collateral Document
Modification, Waiver or Consent that adversely affects its rights or immunities
or increases its duties.

 

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Section 11.            Miscellaneous

 

11.1.       Assignments of Obligations. To the extent provided in the Revolving
Credit Loan Documents or the Second Priority Documents, as applicable, each of
the Revolving Credit Secured Parties and the Second Priority Secured Parties
reserves their respective rights to grant participations in, or otherwise sell,
assign, transfer or negotiate all or any part of, or any interest in, the
Revolving Credit Claims or the Second Priority Claims, as the case may be;
provided that any successor or assignee to any Revolving Credit Claim or Second
Priority Claim agrees to be bound by the terms of this Agreement.

 

11.2.       Conflicts.  Except as expressly provided herein, in the event of any
conflict between the provisions of this Agreement and the provisions of the
Second Priority Documents or the Revolving Credit Loan Documents, the provisions
of this Agreement shall govern as between the Revolving Credit Agent and the
Revolving Credit Secured Parties, on the one hand, and the Second Priority
Agents and the applicable Second Priority Secured Parties on the other hand.

 

11.3.       Continuing Nature.  This Agreement shall continue to be effective
until the payment in full of all Revolving Credit Claims.  This is a continuing
agreement of lien subordination and the Revolving Credit Secured Parties may
continue, at any time and without notice to any Second Priority Secured Party,
to extend credit and other financial accommodations and lend monies constituting
Revolving Credit Claims on the faith hereof.  The terms of this Agreement shall
survive, and shall continue in full force and effect, in any Insolvency or
Liquidation Proceeding.

 

11.4.       Amendments; Waivers.  Subject to Sections 11.14, 11.16 and 11.17
hereof, no amendment, modification or waiver of any provision of this Agreement
shall be deemed to be made unless the same shall be in writing signed by the
Revolving Credit Agent and the Second Priority Designated Agent.  The consent of
any Loan Party shall not be required for amendments, modifications or waivers of
the provisions of this Agreement, except that the Loan Parties’ consent shall be
required for those that affect any obligation or right of any Loan Party
hereunder or that would impose any additional obligations on any Loan Party.  In
the case of a waiver of any provision of this Agreement, such waiver shall be
effective only with respect to the specific instance involved and shall in no
way impair the rights of the parties making such waiver or the obligations of
the other parties in any other respect or at any other time.

 

11.5.       Consent to Jurisdiction; Waiver of Trial by Jury.

 

(a)           Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of New York located in the City of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Agreement, each party hereto hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.  The parties hereto
hereby irrevocably waive, to the fullest extent permitted by law, any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.  Each party
hereto agrees, to the fullest extent

 

25

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permitted by law, 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.

 

(b)           Each party hereto hereby irrevocably consents, to the fullest
extent permitted by law, to the service of any and all legal process, summons,
notices and documents in any suit, action or proceeding brought in the United
States of America arising out of or in connection with this Agreement by the
mailing (by registered or certified mail, postage prepaid) or delivering of a
copy of such process to such party at its address specified in Section 11.6.

 

(c)           Nothing contained in this Section 11.5 shall affect the right of
the Revolving Credit Agent, the Second Priority Agents, any Revolving Credit
Secured Party or any Second Priority Secured Party to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against any party hereto in any other jurisdiction.

 

(d)           EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.

 

11.6.       Notices.  All notices and other communications which are required or
may be given pursuant to the terms of this Agreement shall be in writing and
shall be sufficient and effective in all respects if given in writing or
telecopied, delivered or mailed by registered or certified mail, postage prepaid
to the address or addresses of the applicable party or parties set forth on
Annex A attached hereto or to such other address or addresses as any party
hereto shall have designated by written notice to the other parties hereto. 
Notices shall be deemed given and effective upon the earlier to occur of (i) the
third day following deposit thereof in the U.S. mail or (ii) receipt by the
party to whom such notice is directed.

 

11.7.       Governing Law.  This Agreement has been delivered and accepted at
and shall be deemed to have been made at New York, New York and shall be
interpreted, and the rights and liabilities of the parties bound hereby
determined, in accordance with the laws of the State of New York.

 

11.8.       Specific Performance.  Each of the Revolving Credit Agent and the
Revolving Credit Secured Parties may demand specific performance of this
Agreement. The Second Priority Designated Agent, on behalf of each Second
Priority Secured Party, hereby irrevocably waives any defense based on the
adequacy of a remedy at law and any other defense which might be asserted to bar
the remedy of specific performance in any action which may be brought by
Revolving Credit Agent or any Revolving Credit Secured Party.

 

11.9.       Section Titles.  The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of this Agreement.

 

11.10.     Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and

 

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the same document.  Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are attached to the same document.  Delivery of an executed counterpart of
this Agreement by telecopier, facsimile or other electronic means (including,
via electronic mail in .pdf format) shall be effective as delivery of a manually
executed counterpart thereof

 

11.11.     No Third Party Beneficiaries.  This Agreement shall be binding upon,
and the rights and benefits hereof shall inure to the benefit of, the parties
hereto, the Revolving Credit Secured Parties, the Second Priority Secured
Parties and each of their respective permitted successors and assigns, and,
subject to Sections 11.14 and 11.16, no other Person shall have or be entitled
to assert rights or benefits hereunder.  To the extent applicable, this
Agreement shall be binding upon the Loan Parties and their respective permitted
successors and assigns, and each Loan Party shall cause each of its
Subsidiaries, to the extent such Subsidiary becomes or is required to become a
Loan Party, to comply with the terms of this Agreement.

 

11.12.     No Fiduciary Duty.  The Revolving Credit Agent shall not have by
reason of this Agreement or any other document a fiduciary relationship in
respect of the Second Priority Agents or any Second Priority Secured Party. The
Second Priority Agents shall not have by reason of this Agreement or any other
document a fiduciary relationship in respect of the Revolving Credit Agent or
any Revolving Credit Secured Party.

 

11.13.     Further Assurances.  Each of the Loan Parties and the Second Priority
Agents, on behalf of each applicable Second Priority Secured Party, agrees that
each such Person shall, at the Loan Parties’ expense, take such further action
and execute and deliver to the Revolving Credit Agent such additional documents
and instruments (in recordable form, if requested), as the Revolving Credit
Agent may reasonably request to effectuate the terms of this Agreement.

 

11.14.     Refinancings and Replacements.

 

(a)           The Revolving Credit Claims and the Second Priority Claims may be
refinanced or replaced, in whole or in part, in each case, without notice to, or
the consent (except to the extent a consent is otherwise required to permit the
refinancing or replacement transaction under any Revolving Credit Loan Document
or any Second Priority Document) of any Revolving Credit Secured Party or any
Second Priority Secured Party, all without affecting the Lien priorities
provided for herein or the other provisions hereof; provided, however, that the
holders of any such refinancing or replacement 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 this Agreement) as the Second Priority Agents or the Revolving
Credit Agent, as the case may be, shall reasonably request and in form and
substance reasonably acceptable to the Second Priority Agents or the Revolving
Credit Agent, as the case may be.  In connection with any refinancing or
replacement contemplated by this Section 11.14, this Agreement may be amended at
the request and sole expense of the Loan Parties, and without the consent of
either the Second Priority Agents or the Revolving Credit Agent, (a) to add
parties (or any authorized agent or trustee therefor) providing any such
refinancing or replacement Indebtedness, and (b) to establish that the Liens on
any Collateral securing such

 

27

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refinancing or replacement Indebtedness shall have the same priority as the
Liens on any Collateral securing the Indebtedness being refinanced or replaced,
all on the terms provided for herein immediately prior to such refinancing or
replacement.  For the avoidance of doubt, (i) each of the Revolving Credit
Claims and the Second Priority Claims may be refinanced or replaced by one
facility or multiple facilities, (ii) no facility refinancing or replacing the
Revolving Credit Claims, in whole or in part, shall be required to be a
revolving or asset-based loan facility and may be a facility evidenced or
governed by a credit agreement, loan agreement, note agreement, promissory note,
indenture or any other agreement or instrument; provided that the Revolving
Credit Liens securing such facility shall be subject to the terms of this
Agreement for all purposes (including the lien priorities as set forth herein)
and (iii) no facility refinancing or replacing the Second Priority Claims, in
whole or in part, shall be required to be evidenced by notes or other
instruments and may be a facility evidenced or governed by a credit agreement,
loan agreement, note agreement, promissory note, indenture or any other
agreement or instrument; provided that the Second Priority Liens securing such
facility shall be subject to the terms of this Agreement for all purposes
(including the lien priorities as set forth herein).

 

(b)           In addition, if at any time after the payment in full of the
Revolving Credit Claims, the Loan Parties enter into any replacement of the
Revolving Credit Loan Documents secured by all or a portion of the Collateral on
a first-priority basis which is permitted under the terms of the Second Priority
Documents, then such prior payment in full of the Revolving Credit Claims shall
automatically be deemed not to have occurred for all purposes of this Agreement,
such replacement credit facility, the Indenture and the Second Priority
Documents, and the obligations under the replacement credit facility shall
automatically be treated as Revolving Credit Claims for all purposes of this
Agreement, including for purposes of the Lien priorities set forth therein.

 

11.15.     Certain Terms Concerning the Notes Agent.

 

(a)           The Notes Agent is executing and delivering this Agreement solely
in its capacity as such and pursuant to direction set forth in the Indenture.
The Notes Agent shall have no duties or obligations under this Agreement other
than such duties as may be expressly set forth in this Agreement as duties to be
performed or observed by the Notes Agent.

 

(b)           Notwithstanding any term herein to the contrary, nothing herein
shall (i) obligate the Notes Agent to enforce any obligation, term or condition
applicable to or against any of the other Second Priority Secured Parties or
against any Revolving Credit Secured Parties, (ii) make the Notes Agent liable
or responsible for the actions or omissions of any other Second Priority Secured
Party or Revolving Credit Secured Parties (including, without limitation, with
respect to the application of any proceeds), or for the enforceability or
enforcement of this Agreement against any of the other Second Priority Secured
Parties or against any Revolving Credit Secured Parties.

 

(c)           In entering into this Agreement, or in taking (or forbearing from)
any action under or pursuant to this Agreement, the Notes Agent shall have and
be protected by all of the rights, immunities, indemnities and other protections
granted to it under the

 

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Indenture and the other Second Priority Documents; provided that the foregoing
shall not relieve the Notes Agent of its obligation to comply with the express
terms of this Agreement.

 

11.16.     Joinder Requirements.  The Company and/or any Second Priority Agent,
without the consent of the Revolving Credit Agent, any Revolving Credit Secured
Party, any Second Priority Agent or any Second Priority Secured Party, may
designate additional obligations as Future Second Lien Claims if the incurrence
of such Indebtedness is permitted under each Revolving Credit Loan Document, the
Indenture, all other applicable Second Priority Documents and this Agreement. 
If so permitted, as a condition precedent to the effectiveness of such
designation, the administrative agent or trustee and collateral agent for such
Future Second Lien Claims shall execute and deliver to the Revolving Credit
Agent and each Second Priority Agent, a joinder agreement to this Agreement in
form and substance reasonably satisfactory to the Revolving Credit Agent and the
Second Priority Designated Agent.  Notwithstanding anything to the contrary set
forth in this Section 11,16 or in Section 11.4 hereof, any Second Priority Agent
may, and, at the request of the Company, shall, in each case, without the
consent of any other Second Priority Agent, the Revolving Credit Agent, any
Revolving Credit Secured Party or any Second Priority Secured Party, enter into
a supplemental agreement (which may take the form of an amendment, an amendment
and restatement or a supplement of this Agreement) to facilitate the designation
of such additional Indebtedness as Future Second Lien Claims.  Any such
amendment may, among other things, (i) add other parties holding Future Second
Lien Claims (or any agent or trustee therefor) to the extent such Indebtedness
is not prohibited by the Revolving Credit Loan Documents, the Indenture or any
other Future Second Lien Document, (ii) establish that the Lien on the
Collateral securing such Future Second Lien Claims shall be junior and
subordinate in all respects to all Liens on the Collateral securing any
Revolving Credit Claims and shall share in the benefits of the Collateral
equally and ratably with all Liens on the Collateral securing any Second
Priority Claims, and (iii) provide to the holders of such Future Second Lien
Claims (or any agent or trustee thereof) the comparable rights and benefits
(including any improved rights and benefits that have been consented to by the
Revolving Credit Agent) as are provided to the holders of Second Priority Claims
under the foregoing Agreement prior to the incurrence of such Future Second Lien
Claims.  Any such additional party, each Second Priority Agent and the Revolving
Credit Agent shall be entitled to rely on the determination of officers of the
Company that such modifications do not violate the Revolving Credit Loan
Documents, the Indenture or any other Second Priority Document if such
determination is set forth in an officer’s certificate delivered to such party,
the Revolving Credit Agent and each Second Priority Agent.

 

11.17.     Intercreditor Agreements.  Each party hereto agrees that the Second
Priority Secured Parties (as among themselves) may enter into intercreditor
agreements (or similar arrangements (hereinafter, each a “Second Priority
Intercreditor Agreement”), with the applicable Second Priority Agent governing
solely the rights, benefits and privileges as among the Second Priority Secured
Parties in respect of the Collateral, this Agreement and the other Second
Priority Collateral Documents, as the case may be, including as to application
of proceeds of the Collateral, voting rights, control of the Collateral and
waivers with respect to the Collateral as amongst such Second Priority Agents
and Second Priority Secured Parties, in each case so long as the terms thereof
do not violate or conflict with the provisions of this Agreement or the other
Second Priority Collateral Documents.  In any event, if a respective Second
Priority Intercreditor Agreement exists, the provisions thereof shall not be (or
be construed to be) an

 

29

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amendment, modification or other change to this Agreement or any other Second
Priority Collateral Document, and the provisions of this Agreement and the other
Second Priority Collateral Documents shall remain in full force and effect in
accordance with the terms hereof and thereof (as such provisions may be amended,
modified or otherwise supplemented from time to time in accordance with the
terms thereof, including to give effect to such Second Priority Intercreditor
Agreement (or similar arrangement)).  Notwithstanding the foregoing, (a) the
Revolving Credit Agent and the Revolving Secured Parties 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
delivered by any Second Priority Designated Agent, Second Priority Agent or
Second Priority Secured Party, as applicable, in accordance with the terms of
this Agreement, (b) such applicable Second Priority Designated Agent’s, Second
Priority Agents’ and Second Priority Secured Parties’ obligations under this
Agreement shall remain unchanged, (c) each such applicable Second Priority
Designated Agent, Second Priority Agent and Second Priority Secured Party shall
remain solely responsible to the other parties hereto for the performance of
such respective Person’s obligations under this Agreement and (d) the Revolving
Credit Agent and the Revolving Secured Parties shall continue to deal solely and
directly with such applicable Second Priority Designated Agent, Second Priority
Agent and Second Priority Secured Party in connection with such Person’s rights
and obligations under this Agreement.

 

11.18.     Entire Agreement.  This Agreement, the Second Priority Documents and
the Revolving Credit Loan Documents embody the entire agreement of the Loan
Parties, the Revolving Credit Agent, the other Revolving Credit Secured Parties,
the Second Priority Agents and the other Second Priority Secured Parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings relating to the subject matter hereof and thereof
and any draft agreements, negotiations or discussions involving any Loan Party
and any of the Revolving Credit Agent, the other Revolving Credit Secured
Parties, the Second Priority Agent and the other Second Priority Secured Parties
relating to the subject matter hereof.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

BANK OF AMERICA, N.A., as Revolving Credit Agent

 

 

 

 

 

By:

/s/ Andrew Cerussi

 

 

Name: Andrew Cerussi

 

 

Title: Director

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Notes Agent

 

 

 

 

 

By:

/s/ Richard Prokosch

 

 

Name:

Richard Prokosch

 

 

Title:

Vice President

 

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LOAN PARTIES:

 

THE BON-TON DEPARTMENT STORES, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Keith E. Plowman

 

 

Name:

Keith E. Plowman

 

 

Title:

Executive Vice President,

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

THE BON-TON STORES, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Keith E. Plowman

 

 

Name:

Keith E. Plowman

 

 

Title:

Executive Vice President,

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

THE BON-TON GIFTCO, INC. *

 

THE BON-TON STORES OF LANCASTER, INC. **

 

THE ELDER-BEERMAN STORES CORP.

 

BON-TON DISTRIBUTION, INC.

 

MCRIL, LLC

 

CARSON PIRIE SCOTT II, INC.

 

 

 

 

 

By:

/s/ Keith E. Plowman

 

 

Name:

Keith E. Plowman

 

 

Title:

Executive Vice President,

 

 

 

Chief Financial Officer

 

* 

Title:

President and

 

 

 

Chief Financial Officer

 

** 

Title:

Vice President and

 

 

 

Chief Financial Officer

 

 

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Annex A

 

Addresses for Notices

 

If to Revolving Credit Agent, at

 

Bank of America, N.A.

100 Federal Street

Mail Code:

Boston, MA 02110

Attention: Andrew Cerussi

Telecopier No.:

 

with copies to (which copy shall not constitute notice hereunder):

 

Morgan, Lewis & Bockius LLP

225 Franklin Street

Boston, MA 02110

Attention: Matthew F. Furlong, Esq.

Telecopier No.: 617-341-7740

 

If to Notes Agent, at

 

Wells Fargo Bank, National Association
625 Marquette Avenue, 11th Floor
MAC N9311-110
Minneapolis, Minnesota 55479
Attention: Corporate Trust Services — Administrator for Bon-Ton Department
Stores, Inc.
Telecopier No.: 612-667-9825

 

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EXHIBIT A

 

INTERCREDITOR AGREEMENT SUPPLEMENT

 

This Intercreditor Agreement Supplement, dated as of                   , 20    ,
is delivered pursuant to Section 9.6 of the Intercreditor Agreement referred to
below.  The undersigned hereby agrees that this Intercreditor Agreement
Supplement may be attached to the Intercreditor Agreement, dated as of July 9,
2012 (as amended, restated, modified, renewed, supplemented or extended from
time to time, the “Intercreditor Agreement”).  Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the
Intercreditor Agreement.

 

The undersigned hereby agrees to be added as a party to the Intercreditor
Agreement as a “Loan Party” and to be bound by all of the terms and conditions
of the Intercreditor Agreement in all respects, as if the undersigned were an
original signatory thereto.  The undersigned hereby further agrees that this
Intercreditor Agreement Supplement may be appended to the Intercreditor
Agreement.

 

This Intercreditor Agreement Supplement shall be governed by, and construed in
accordance with, the internal laws of the State New York.

 

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Loan Party:

 

 

 

[NAME OF LOAN PARTY]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

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