Exhibit 10.1
 
THE BON-TON DEPARTMENT STORES, INC.,
and
THE ELDER-BEERMAN STORES CORP.,
as Borrowers
SECOND LIEN LOAN AND SECURITY AGREEMENT
Dated as of November 18, 2009
$75,000,000
EACH OF THE OTHER OBLIGORS PARTY HERETO,
THE FINANCIAL INSTITUTIONS PARTY HERETO FROM TIME TO TIME,
as Lenders
and
SANKATY ADVISORS, LLC,
as Agent
BANC OF AMERICA SECURITIES LLC,
as Lead Arranger and Bookrunner
GB MERCHANT PARTNERS, LLC,
as Collateral Agent
GA CAPITAL, LLC,
as Documentation Agent
and
BANK OF AMERICA, N.A.,
as Co-Documentation Agent
 

 

 

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TABLE OF CONTENTS

              Page  
 
       
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
    1  
1.1. Definitions
    1  
1.2. Accounting Terms
    29  
1.3. Certain Matters of Construction
    29  
1.4. [Reserved]
    29  
1.5. Certifications
    30  
1.6. Times of Day
    30  
SECTION 2. TERM LOAN FACILITY
    30  
2.1. Commitment
    30  
2.1.1. Term Loans
    30  
2.1.2. Notes
    30  
2.1.3. Use of Proceeds
    30  
2.1.4. OID
    30  
2.1.5. [Reserved]
    30  
SECTION 3. INTEREST, FEES AND CHARGES
    30  
3.1. Interest
    30  
3.1.1. Rates and Payment of Interest
    30  
3.1.2. Application of Adjusted LIBOR to Outstanding Term Loans
    31  
3.1.3. Interest Periods
    31  
3.1.4. Interest Rate Not Ascertainable
    32  
3.2. Reserved
    32  
3.3. Computation of Interest, Fees, Yield Protection
    32  
3.4. Reimbursement Obligations
    32  
3.5. Illegality
    32  
3.6. Increased Costs
    33  
3.7. Capital Adequacy
    34  
3.8. Mitigation
    34  
3.9. Funding Losses
    34  
3.10. Maximum Interest
    34  
SECTION 4. LOAN ADMINISTRATION
    35  
4.1. Funding Term Loans
    35  
4.1.1. [Reserved]
    35  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
4.1.2. Fundings by Lenders
    35  
4.1.3. [Reserved]
    35  
4.1.4. Notices
    35  
4.2. Defaulting Lender
    35  
4.3. Number and Amount of LIBOR Term Loans; Determination of Rate
    36  
4.4. Borrower Agent
    36  
4.5. One Obligation
    36  
4.6. Effect of Termination
    36  
SECTION 5. PAYMENTS
    36  
5.1. General Payment Provisions
    36  
5.2. Repayment of Term Loans
    37  
5.2.1. Termination Date; Repayment in General
    37  
5.2.2. Mandatory Prepayments
    37  
5.2.3. Voluntary Prepayments
    37  
5.2.4. Prepayment Premium
    38  
5.3. Payment of Other Obligations
    38  
5.4. Marshaling; Payments Set Aside
    38  
5.5. Allocation of Payments
    38  
5.5.1. Pre- and Post-Default Allocation of Payments
    38  
5.5.2. [Reserved]
    38  
5.5.3. Erroneous Application
    39  
5.6. Application of Payments
    39  
5.7. Loan Account; Account Stated
    39  
5.7.1. Loan Account
    39  
5.7.2. Entries Binding
    39  
5.8. Taxes
    39  
5.9. Withholding Tax Exemption
    40  
5.10. Nature and Extent of Each Borrower’s Liability
    40  
5.10.1. Joint and Several Liability
    40  
5.10.2. Waivers
    41  
5.10.3. Extent of Liability; Contribution
    41  
5.10.4. Joint Enterprise
    42  
5.10.5. Subordination
    42  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
SECTION 6. CONDITIONS PRECEDENT
    42  
6.1. Conditions Precedent to Term Loans
    42  
6.2. [Reserved]
    45  
6.3. Limited Waiver of Conditions Precedent
    45  
SECTION 7. COLLATERAL
    45  
7.1. Grant of Security Interest
    45  
7.2. Lien on Deposit Accounts
    46  
7.2.1. Deposit Accounts
    46  
7.2.2. [Reserved]
    47  
7.3. Real Estate Collateral
    47  
7.4. Other Collateral
    47  
7.4.1. Commercial Tort Claims
    47  
7.4.2. Certain After-Acquired Collateral
    47  
7.5. No Assumption of Liability
    48  
7.6. Further Assurances
    48  
7.7. Foreign Subsidiary Stock
    48  
SECTION 8. COLLATERAL ADMINISTRATION
    48  
8.1. Borrowing Base Certificates
    48  
8.2. Administration of Accounts and Credit Card Receivables
    48  
8.2.1. Credit Card Notifications; Records
    48  
8.2.2. Account Verification
    49  
8.2.3. Maintenance of Dominion Accounts
    49  
8.2.4. Proceeds of Collateral
    49  
8.3. Administration of Inventory
    49  
8.3.1. Records and Reports of Inventory
    49  
8.3.2. Returns of Inventory
    49  
8.3.3. Acquisition, Sale and Maintenance
    50  
8.4. Administration of Equipment
    50  
8.4.1. Records and Schedules of Equipment
    50  
8.4.2. Dispositions of Equipment
    50  
8.4.3. Condition of Equipment
    50  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
8.5. Administration of Deposit Accounts
    50  
8.6. General Provisions
    51  
8.6.1. Location of Collateral
    51  
8.6.2. Insurance of Collateral; Condemnation Proceeds
    51  
8.6.3. Protection of Collateral
    52  
8.6.4. Defense of Title to Collateral
    52  
8.7. Power of Attorney
    52  
SECTION 9. REPRESENTATIONS AND WARRANTIES
    53  
9.1. General Representations and Warranties
    53  
9.1.1. Organization and Qualification
    53  
9.1.2. Power and Authority
    53  
9.1.3. Enforceability
    53  
9.1.4. Capital Structure
    53  
9.1.5. Corporate Names; Locations
    53  
9.1.6. Title to Properties; Priority of Liens
    54  
9.1.7. Security Documents
    54  
9.1.8. Financial Statements
    54  
9.1.9. Surety Obligations
    54  
9.1.10. Taxes
    54  
9.1.11. Brokers
    54  
9.1.12. Intellectual Property
    54  
9.1.13. Governmental Approvals
    55  
9.1.14. Compliance with Laws
    55  
9.1.15. Compliance with Environmental Laws
    55  
9.1.16. Burdensome Contracts
    55  
9.1.17. Litigation
    55  
9.1.18. Insurance
    55  
9.1.19. No Defaults
    55  
9.1.20. ERISA
    55  
9.1.21. Trade Relations
    56  
9.1.22. Labor Relations
    56  
9.1.23. Not a Regulated Entity
    56  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
9.1.24. Margin Stock
    56  
9.1.25. Plan Assets
    56  
9.1.26. Complete Disclosure
    56  
9.1.27. Anti-Terrorism
    56  
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
    57  
10.1. Affirmative Covenants
    57  
10.1.1. Inspections; Appraisals
    57  
10.1.2. Financial and Other Information
    57  
10.1.3. Notices
    60  
10.1.4. Storage Agreements
    61  
10.1.5. Compliance with Laws; Organic Documents; Material Contracts
    61  
10.1.6. Taxes
    61  
10.1.7. Insurance
    61  
10.1.8. Licenses
    61  
10.1.9. Future Subsidiaries
    61  
10.1.10. Lien Waivers
    62  
10.1.11. Preservation of Existence
    62  
10.1.12. Maintenance of Properties
    62  
10.1.13. Books and Records
    62  
10.1.14. Operation and Maintenance Plan
    62  
10.2. Negative Covenants
    62  
10.2.1. Permitted Debt
    62  
10.2.2. Permitted Liens
    64  
10.2.3. Cash Accumulation
    66  
10.2.4. Distributions; Upstream Payments
    66  
10.2.5. Restricted Investments
    67  
10.2.6. Disposition of Assets
    67  
10.2.7. Loans
    67  
10.2.8. Restrictions on Payment of Certain Debt
    67  
10.2.9. Fundamental Changes
    67  
10.2.10. Subsidiaries
    68  
10.2.11. Organic Documents
    68  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
10.2.12. Tax Consolidation
    68  
10.2.13. Accounting Changes
    68  
10.2.14. Restrictive Agreements
    68  
10.2.15. Hedging Agreements
    68  
10.2.16. Conduct of Business
    68  
10.2.17. Affiliate Transactions
    68  
10.2.18. Plans
    69  
10.2.19. Amendments to Certain Material Contracts
    69  
10.2.20. No Speculative Transactions
    69  
10.2.21. Passive Company Status
    69  
10.2.22. General Partner
    69  
10.2.23. Sale-Leaseback Transactions
    69  
10.2.24. Debt under Senior Note Debt Documents
    69  
10.2.25. Use of Proceeds
    70  
10.2.26. Amendments to First Lien Debt Documents
    70  
10.2.27. Acquisition of Debt
    70  
10.2.28. No Inconsistent Agreements
    70  
10.2.29. Stay, Extension and Usury Laws
    70  
10.3. Financial Covenants
    71  
10.3.1. Excess Availability
    71  
10.3.2. Capital Expenditures
    71  
SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
    71  
11.1. Events of Default
    71  
11.2. Remedies upon Default
    73  
11.3. License
    73  
11.4. Setoff
    74  
11.5. Remedies Cumulative; No Waiver
    74  
11.5.1. Cumulative Rights
    74  
11.5.2. Waivers
    74  
SECTION 12. AGENT
    74  
12.1. Appointment, Authority and Duties of Agent
    74  
12.1.1. Appointment and Authority
    74  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
12.1.2. Duties
    75  
12.1.3. Agent Professionals
    75  
12.1.4. Instructions of Required Lenders
    75  
12.1.5. Collateral Agent
    75  
12.1.6. No Fiduciary Relationship
    75  
12.2. Agreements Regarding Collateral and Field Examination Reports
    75  
12.2.1. Lien Releases; Care of Collateral
    75  
12.2.2. Possession of Collateral
    76  
12.2.3. Reports
    76  
12.3. Reliance By Agent
    76  
12.4. Action Upon Default
    76  
12.5. Ratable Sharing
    76  
12.6. Indemnification of Agent Indemnitees
    77  
12.6.1. INDEMNIFICATION
    77  
12.6.2. Proceedings
    77  
12.7. Limitation on Responsibilities of Agent
    77  
12.8. Successor Agent
    78  
12.8.1. Resignation; Successor Agent
    78  
12.8.2. Separate Collateral Agent
    78  
12.9. Due Diligence and Non-Reliance
    78  
12.10. Replacement of Certain Lenders
    79  
12.11. Remittance of Payments and Collections
    79  
12.11.1. Remittances Generally
    79  
12.11.2. Failure to Pay
    79  
12.11.3. Recovery of Payments
    79  
12.12. Agent in its Individual Capacity
    80  
12.13. Agent Titles
    80  
12.14. No Third Party Beneficiaries
    80  
12.15. [Reserved]
    80  
12.16. Intercreditor Agreement
    80  
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
    80  
13.1. Successors and Assigns
    80  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
13.2. Assignments
    80  
13.2.1. Assignments by Lenders
    80  
13.2.2. Register
    81  
13.2.3. Certain Pledges
    81  
13.2.4. Electronic Execution of Assignments
    81  
13.3. Participations
    82  
13.3.1. Participations
    82  
13.3.2. Limitations upon Participant Rights
    82  
13.4. Tax Treatment
    82  
13.5. Representation of Lenders
    82  
SECTION 14. MISCELLANEOUS
    83  
14.1. Consents, Amendments and Waivers
    83  
14.1.1. Amendment
    83  
14.1.2. Limitations
    83  
14.1.3. Payment for Consents
    83  
14.1.4. Defaulting Lender Limited Rights
    83  
14.1.5. Amendment to First Lien Debt Documents
    84  
14.2. Indemnity
    84  
14.3. Notices and Communications
    85  
14.3.1. Notice Address
    85  
14.3.2. Electronic Communications; Voice Mail
    85  
14.3.3. Non-Conforming Communications
    85  
14.4. Performance of Borrowers’ Obligations
    85  
14.5. Credit Inquiries
    86  
14.6. Severability
    86  
14.7. Cumulative Effect; Conflict of Terms
    86  
14.8. Counterparts; Facsimile Signatures
    86  
14.9. Entire Agreement
    86  
14.10. Obligations of Lenders
    86  
14.11. Confidentiality
    86  
14.12. GOVERNING LAW
    87  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
14.13. Consent to Forum
    87  
14.13.1. Forum
    87  
14.14. Waivers by Borrowers
    87  
14.15. Patriot Act Notice
    88  
14.16. Survival of Representations and Warranties
    88  
14.17. No Advisory or Fiduciary Responsibility
    88  
14.18. Intercreditor Agreement Prevails
    88  

 

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LIST OF EXHIBITS AND SCHEDULES

     
Exhibit A Term Note
   
Exhibit B Form of Borrowing Base Certificate
   
Exhibit C Assignment and Assumption Agreement
   
Exhibit D Compliance Certificate
   
Exhibit E Credit Card Notification
   
Exhibit F Guaranty
   

             
Schedule 1.1(a)
  Commitments of Lenders        
Schedule 1.1(b)
  Restricted Investments Existing on the Closing Date        
Schedule 1.1(c)
  [Reserved]        
Schedule 2.3.2
  [Reserved]        
Schedule 7.1(c)
  Commercial Tort Claims        
Schedule 7.2.1
  Secondary Operating Deposit Accounts        
Schedule 7.3
  Mortgaged Real Estate        
Schedule 8.2.1
  Existing Credit Card Arrangements        
Schedule 8.5
  Deposit Accounts        
Schedule 8.5(a)
  Excluded Deposit and Disbursement Accounts        
Schedule 8.5(b)
  Excluded Trust Accounts        
Schedule 8.6.1
  Chief Executive Offices and other Business Locations        
Schedule 9.1.4
  Names and Capital Structure        
Schedule 9.1.5
  Former Corporate Names and Trade Names        
Schedule 9.1.12
  Intellectual Property        
Schedule 9.1.15
  Environmental Matters        
Schedule 9.1.16
  Restrictive Agreements        
Schedule 9.1.17
  Litigation        
Schedule 9.1.22
  Labor Contracts        
Schedule 10.2.1
  Existing Debt        
Schedule 10.2.2
  Existing Liens        
Schedule 10.2.2(c)
  Existing Tax Liens        
Schedule 10.2.17
  Existing Affiliate Transactions        

 

 

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SECOND LIEN LOAN AND SECURITY AGREEMENT
THIS SECOND LIEN LOAN AND SECURITY AGREEMENT (this “Loan Agreement” or
“Agreement”) is dated as of November 18, 2009, among THE BON-TON DEPARTMENT
STORES, INC. (“Bon-Ton”), a Pennsylvania corporation and THE ELDER-BEERMAN
STORES CORP., an Ohio corporation (“Elder-Beerman” and together with Bon-Ton,
collectively, the “Borrowers”), Borrowers”), each of the other Obligors party
hereto, the financial institutions party to this Loan Agreement from time to
time as lenders (collectively, “Lenders”), and SANKATY ADVISORS, LLC, a Delaware
limited liability company (“Sankaty”), as administrative agent for the Lenders
(“Agent”), with GB MERCHANT PARTNERS, LLC, a Delaware limited liability company
(“GB Merchant Partners”), as collateral agent for the Lenders (“Collateral
Agent”) and GA CAPITAL, LLC, a Delaware limited liability company (“GA
Capital”), as documentation agent for the Lenders (“Documentation Agent”).
R E C I T A L S:
Borrowers have requested that Lenders make available a credit facility, to be
used by Borrowers to finance their mutual and collective business enterprise.
Lenders are willing to provide such credit facility on the terms and conditions
set forth in this Loan Agreement.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1. Definitions. As used herein, the following terms have the meanings set
forth below:
Account — as defined in the UCC, including all rights to payment for goods sold
or leased, or for services rendered.
Account Control Agreements — each deposit account control agreement and other
bank account control agreement required pursuant to Section 7.2.1 or
Section 8.5, in each case, in form and substance reasonably satisfactory to
First Lien Agent (and, following the Bank Loan Termination Date, Agent).
Account Debtor — a Person who is obligated under an Account, Chattel Paper or
General Intangible.
Adjusted LIBOR — for any Interest Period, with respect to the LIBOR Term Loan,
the per annum rate of interest (rounded upward, if necessary, to the nearest
1/16th of 1%) equal to the highest of (a) the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters
(or other commercially available source providing quotations of BBA LIBOR as
designated by Agent from time to time) at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period, for Dollar
deposits (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, (b) the rate determined in accordance with
clause (a) of this sentence calculated based on an Interest Period of three
months and (c) 3.00%. If such rate is not available at such time for any reason,
then “Adjusted LIBOR” for such Interest Period shall be the rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%) equal to the highest
of (a) the rate determined by Agent to be the rate at which deposits in Dollars
for delivery on the first day of such Interest Period in same day funds in the
approximate amount of the LIBOR Loan being made, continued or converted by Bank
of America and with a term equivalent to such Interest Period would be offered
by Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period), (b) the rate
determined in accordance with clause (a) of this sentence calculated based on an
Interest Period of three months and (c) 3.00%.

 

 

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Affiliate — with respect to any Person, another Person (a) who directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such first Person; (b) who beneficially owns 10% or
more of the voting securities or any class of Equity Interests of such first
Person; (c) at least 10% of whose voting securities or any class of Equity
Interests is beneficially owned, directly or indirectly, by such first Person;
or (d) who is an officer, director, partner or managing member of such first
Person. “Control” means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through ownership of Equity Interests, by contract or otherwise.
Agent — as defined in the Preamble.
Agent Indemnitees — Agent and its Related Parties.
Agent Parties — as defined in Section 10.1.2.
Agent Professionals — attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.
Allocable Amount — as defined in Section 5.10.3.
Anti-Terrorism Laws — any laws relating to terrorism or money laundering,
including the Patriot Act.
Applicable Law — all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.
Applicable Margin — means 12.75%.
Approved Fund — any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Asset Disposition — a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including a disposition of Property in
connection with a sale-leaseback transaction or synthetic lease; provided,
however, that in no event shall a termination of a lease be deemed to be an
Asset Disposition.
Assignee Group — two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
Assignment and Assumption Agreement — an assignment and assumption agreement
between a Lender and Eligible Assignee, substantially in the form of Exhibit C.
Available Basket Amount — means, on any date of determination, an amount equal
to the result of (i) net cash proceeds actually received by an Obligor from the
issuance of any Equity Interests (or capital contributions in respect of Equity
Interests held in an Obligor) after the Closing Date (“net equity issuance
proceeds”), minus (ii) such net equity issuance proceeds which have been
utilized by the Obligors and their Subsidiaries to make Investments.

 

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Bank of America — Bank of America, N.A., a national banking association, and its
successors and permitted assigns.
Bank Product Debt — as defined in the First Lien Loan Agreement.
Bankruptcy Code — Title 11 of the United States Code, as amended and in effect.
Bank Loan Termination Date — as defined in the Intercreditor Agreement.
Base Rate — for any day, a fluctuating rate per annum equal to the highest of
(a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate,” (c) the Adjusted LIBOR (without giving effect to clause (c) of
such definition) for a one-month Interest Period in effect for such day (or if
such day is not a Business Day, the immediately preceding Business Day) and
(d) 3.00%. Any change in the Base Rate due to a change in any of the foregoing
shall take effect at the opening of business on the day specified in the public
announcement of such change. In the event the Base Rate is changed from time to
time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
Base Rate Term Loan — a Term Loan to the extent the interest rate is calculated
by reference to the Base Rate plus the Applicable Margin.
Board of Directors — (a) with respect to a corporation, the board of directors
of the corporation or, except in the context of the definitions of “Change of
Control” and “Continuing Directors,” a duly authorized committee thereof;
(b) with respect to a partnership, the Board of Directors of the general partner
of the partnership or, if the partnership has more than one general partner, the
managing general partner of the partnership; and (c) with respect to any other
Person, the board or committee of such Person serving a similar function.
Board of Governors — the Board of Governors of the Federal Reserve System.
Bon-Ton — as defined in the Preamble.
Borrowed Money — with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor, (ii) is
evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments, (iii) accrues interest or is a type upon which interest charges are
customarily paid (excluding trade payables owing in the Ordinary Course of
Business), or (iv) was issued or assumed as full or partial payment for
Property; (b) Capital Leases; (c) reimbursement obligations with respect to
letters of credit; and (d) guaranties of any Debt of the foregoing types owing
by another Person.
Borrower Account — a special account established by Borrowers, at Bank of
America or another bank reasonably acceptable to First Lien Agent (and,
following the Bank Loan Termination Date, Agent), subject to a control agreement
in favor of First Lien Agent, for the benefit of the First Lien Lenders (and,
following the Bank Loan Termination Date, Lenders), in form and substance
reasonably satisfactory to First Lien Agent (and, following the Bank Loan
Termination Date, Agent).
Borrower Agent — as defined in Section 4.4.
Borrowing Base Certificate — as defined in the First Lien Loan Agreement, in the
form of Exhibit B hereto.

 

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Business Day — any day (a) excluding Saturday, Sunday and any other day on which
banks are permitted to be closed under the laws of the State of New York and
(b) when used with reference to a LIBOR Term Loan, also excluding any day on
which banks do not conduct dealings in Dollar deposits on the London interbank
market.
Capital Adequacy Regulation — any law, rule, regulation, guideline, request or
directive of any central bank or other Governmental Authority, whether or not
having the force of law, regarding capital adequacy of a bank or any Person
controlling a bank.
Capital Expenditures — all liabilities incurred, expenditures made or payments
due (whether or not made) by Parent or any Subsidiary for the acquisition of any
fixed assets, or any improvements, replacements, substitutions or additions
thereto, in each case that are required to be capitalized for financial
reporting purposes in accordance with GAAP.
Capital Lease — any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Capital Stock — (a) in the case of a corporation, corporate stock; (b) in the
case of an association or other business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
Cash Equivalents — (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States
government, maturing within 12 months of the date of acquisition;
(b) certificates of deposit, time deposits and bankers’ acceptances maturing
within 12 months of the date of acquisition, and overnight bank deposits, in
each case which are issued by a commercial bank organized under the laws of the
United States or any state or district thereof, rated A-1 (or better) by S&P or
P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a
Lender or a First Lien Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of
the types described in clauses (a) and (b) entered into with any bank meeting
the qualifications specified in clause (b); (d) commercial paper rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of
the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in the types of
investments referred to above, has net assets of at least $500,000,000 and has
the highest rating obtainable from either Moody’s or S&P.
CERCLA — the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).
Change of Control — means the occurrence of any of the following: (a) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the properties or assets of the Parent and the other
Obligors, taken as a whole, to any “person” (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934); (b) the adoption by
the shareholders of Parent of a plan relating to the liquidation or dissolution
of the Parent; (c) the Parent (by way of a report or any other filing pursuant
to Section 13(d) of the Securities Exchange Act of 1934, proxy, vote, written
notice or otherwise) becomes aware of the acquisition by any “person” or “group”
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities
Exchange Act of 1934, or any successor provision), including any group acting
for the purpose of acquiring, holding or

 

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disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Securities Exchange Act of 1934, or any successor provision), other than the
Permitted Holders, in a single transaction or in a series of related
transactions, by way of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, or any successor provision) of 50% or more of
the total voting power of the Voting Stock of the Parent; (d) the first day on
which a majority of the members of the Board of Directors of the Parent are not
Continuing Directors; (e) the Parent consolidates with, or merges with or into,
any Person, or any Person consolidates with, or merges with or into, the Parent,
in any such event pursuant to a transaction in which any of the outstanding
Voting Stock of the Parent or such other Person is converted into or exchanged
for cash, securities or other property, other than any such transaction where
(A) the Voting Stock of the Parent outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the voting power of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance) and (B) immediately after such transaction, no “person” or “group” (as
such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934) other than a Permitted Holder becomes, directly or indirectly, the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, or any successor provision) of 50% or more of the voting power of
the Voting Stock of the surviving or transferee Person or (f) the failure of
(x) Bon-Ton to be a wholly-owned direct Subsidiary of the Parent or (y) the
failure of any other Borrower to be a wholly-owned indirect Subsidiary of the
Parent.
Chattel Paper — as defined in the UCC.
Claims — as defined in Section 14.2.
Closing Date — as defined in Section 6.1.
Collateral — all Property described in Section 7.1, all Property described in
any Security Documents as security for any Obligations, and all other Property
that now or hereafter secures (or is intended to secure) any Obligations.
Collateral Agent — as defined in the Preamble.
Commercial Tort Claim — as defined in the UCC.
Commitment — for any Lender, the aggregate principal amount of such Lender’s
Term Loan Commitment. “Commitments” means the aggregate principal amount of all
Term Loan Commitments.
Compliance Certificate — a certificate, substantially in the form of Exhibit D
hereto, by which Borrowers certify compliance with Section 10.3.
Consolidated EBITDA — for any period prior to the Restatement Date, as defined
in the First Lien Loan Agreement as in effect on the date hereof, and for any
period on or after the Restatement Date, for the Parent and its Subsidiaries on
a consolidated basis, an amount equal to Consolidated Net Income for such period
plus (a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Fixed Charges for such period, (ii) the provision
for Federal, state, local and foreign income taxes of the Parent and its
Subsidiaries for such period, (iii) depreciation and amortization expense,
(iv) all cash proceeds of business interruption insurance received by the
Obligors to the extent not included in Consolidated Net Income, (v) non-cash
losses in respect to obligations under Hedging Agreements, (vi) cost

 

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savings in connection with any Permitted Acquisition to the extent (A) actually
realized, (B) projected or anticipated and permitted or required under
Regulation S-K under the Securities Laws or Regulation S-X under the Securities
Laws or (C) reasonably expected to be realized (and, in the case of clause (c),
reasonably approved by the Agent as such) within the next four (4) Fiscal
Quarters after such Permitted Acquisition is effected; provided that all such
cost savings shall be set forth in an officer’s certificate from a Senior
Officer of the Borrowers in reasonable detail describing and quantifying such
cost savings, (vii) non-cash impairment charges, asset write-offs or charges due
to the disposal of long-lived assets under GAAP to the extent such impairment
charge, asset write-off or charge reduced Consolidated Net Income, (viii) the
cumulative non-cash effect of accounting changes to the extent such changes
result in a reduction of Consolidated Net Income, (ix) any non-cash losses,
expenses or charges reducing Consolidated Net Income, excluding any non-cash
charge that, in the ordinary course of business, results in an accrual of a
reserve for cash charges in any future period, (x) expenses reducing
Consolidated Net Income incurred to the extent reimbursed in cash by
indemnification provisions in any agreement in connection with any Permitted
Acquisition and such reimbursed amount was not included within the calculation
of Consolidated Net Income, (xi) non-cash losses recognized and expenses
incurred in connection with the effect of currency and exchange rate
fluctuations on intercompany balances and other balance sheet items, and (xii)
other non-recurring or unusual expenses of the Obligors and their Subsidiaries
which are allowed in accordance with GAAP to be classified as non-recurring or
unusual expenses to the extent reducing such Consolidated Net Income; provided
that such expenses shall not exceed $20,000,000 in any period of four
consecutive fiscal quarters and minus (b) the following to the extent included
in calculating such Consolidated Net Income: (i) Federal, state, local and
foreign income tax credits of the Parent and its Subsidiaries for such period,
(ii) all non-cash items increasing Consolidated Net Income for such period,
(iii) amounts paid in cash in respect of non-cash charges which were added back
to Consolidated EBITDA in a prior period and (iv) other non-recurring or unusual
income of the Obligors and their Subsidiaries which are allowed in accordance
with GAAP to be classified as non-recurring or unusual income to the extent
increasing such Consolidated Net Income and in excess of $20,000,000 in any
period of four consecutive fiscal quarters.
Consolidated Fixed Charges — for any period, for the Parent and its Subsidiaries
on a consolidated basis, the sum of cash payments made or required to be made on
a pro forma basis for (a) all scheduled permanent principal payments, interest,
premium payments, debt discount, fees (excluding any fees incurred in connection
with the closing of the First Lien Debt Documents or the Loan Documents),
charges and related expenses of the Parent and its Subsidiaries in connection
with Borrowed Money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case determined in accordance with
GAAP and (b) the portion of rent expense of the Parent and its Subsidiaries with
respect to such period under Capital Leases determined in accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio — as of any date of determination, the
ratio of (a) the result of (i) Consolidated EBITDA for the four prior fiscal
quarter period ending on such date, minus (ii) Capital Expenditures (net of
landlord or vendor contributions for Capital Expenditures) for such period (but
not less than zero), minus (iii) cash Federal, state, local or foreign income
taxes (net of tax refunds in cash) of the Parent and its Subsidiaries paid for
such period (but not less than zero), to (b) Consolidated Fixed Charges for such
period.
Consolidated Net Income — for any period, for the Parent and its Subsidiaries on
a consolidated basis, the net income of the Parent and its Subsidiaries
(excluding extraordinary gains and extraordinary losses, in each case determined
in accordance with GAAP) for that period.

 

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Contingent Obligation — any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof; provided that
“Contingent Obligation” shall not include any product warranties given in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be the stated or determinable amount of the primary obligation (or, if
less, the maximum amount for which such Person may be liable under the
instrument evidencing the Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto.
Continuing Directors — as of any date of determination, those members of the
Board of Directors of the Parent, each of whom: (1) was a member of such Board
of Directors on the Closing Date; or (2) was nominated for election or elected
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
Convertible Note Debt — unsecured Debt of Bon-Ton and any other Obligor which
may be convertible, exercisable or exchangeable for or into Capital Stock of
Bon-Ton or any other Obligor (other than Disqualified Stock).
Convertible Note Debt Documents — all agreements, instruments and documents from
time to time executed in favor of all or any of the holders of the Convertible
Note Debt.
Copyright Security Agreements — each memorandum of grant of security interest in
copyrights or other copyright security agreement pursuant to which an Obligor
grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s
interests in copyrights, as security for the Obligations.
Credit Card Issuer — collectively (x) MasterCard International, Inc., Visa,
U.S.A., Inc., Visa International and American Express, World Financial Network
National Bank and Discover and (y) HSBC, as issuer of the Borrowers’ private
label credit card program and any replacement thereof that is reasonably
acceptable to First Lien Agent (and, following the Bank Loan Termination Date,
Agent).
Credit Card Notification — as defined in Section 6.1(p).
Credit Card Processor — any Person that acts as a credit card clearinghouse or
processor with respect to any sales transactions involving credit card purchases
by customers using credit cards issued by any Credit Card Issuer.
Credit Card Receivables — collectively, all present and future rights of
Obligors to payment from (a) any Credit Card Issuer or Credit Card Processor
arising from sales of goods or rendition of services to customers who have
purchased such goods or services using a credit or debit card and (b) any Credit
Card Issuer or Credit Card Processor in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or a
debit card, including, but not limited to, all amounts at any time due or to
become due from any Credit Card Issuer or Credit Card Processor under the Credit
Card Notifications or otherwise.

 

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CWA — the Clean Water Act (33 U.S.C. §§ 1251 et seq.).
Debt — as applied to any Person, without duplication, whether or not included as
indebtedness or liabilities in accordance with GAAP (a) all obligations of such
Person for borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments; (b) all direct
or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments; (c) net obligations of such Person under
any Hedging Agreement; (d) all obligations of such Person to pay the deferred
purchase price of property or services (other than trade accounts payable in the
ordinary course of business); (e) indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; (f) Capital Leases and synthetic lease
obligations; (g) all obligations of such Person in respect of Disqualified
Stock; and (h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Debt of any Person shall include the Debt of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Debt is expressly made non-recourse to
such Person.
Default — an event or condition that, with the lapse of time or giving of
notice, would constitute an Event of Default.
Default Rate — for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.
Defaulting Lender — any Lender that (a) has failed to pay over to any Agent or
any other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due unless the subject of a good faith dispute or
unless such failure has been cured or (b) has been deemed insolvent or become
the subject of an Insolvency Proceeding.
Deposit Account — as defined in the UCC.
Disqualified Institution — a business competitor of the Borrowers and their
Subsidiaries identified by the Borrower Agent in its reasonable discretion and
in writing to the Agent from time to time, and their known Affiliates.
Disqualified Stock — any Capital Stock that, by its terms (or by the terms of
any security into which it is convertible, or for which it is exchangeable, in
each case at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is six months after the
Termination Date. Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Parent to repurchase such Capital Stock upon the occurrence
of a change of control or an asset sale shall not constitute Disqualified Stock
if the terms of such Capital Stock provide that the Parent may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 10.2.4. The term “Disqualified Stock” shall
also include any options, warrants or other rights that are convertible into
Disqualified Stock or that are redeemable at the option of the holder, or
required to be redeemed, prior to the date that is six months after the
Termination Date.

 

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Distribution — any declaration or payment of a distribution, interest or
dividend on any Equity Interest (other than payment-in-kind); any distribution,
advance or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest.
Distribution Center — as defined in the First Lien Loan Agreement.
Document — as defined in the UCC.
Documentation Agent — as defined in Preamble.
Dollars — lawful money of the United States.
Dominion Account — each special account established by Borrowers at Bank of
America or another bank reasonably acceptable to First Lien Agent (and,
following the Bank Loan Termination Date, Agent), over which First Lien Agent
(and, following the Bank Loan Termination Date, Agent) has exclusive control
(subject to the Intercreditor Agreement) for withdrawal purposes.
Eligible Assignee — a Person that is (a) a Lender, U.S.-based Affiliate of a
Lender or Approved Fund; (b) any other financial institution approved by Agent
(such approval not to be unreasonably withheld or delayed) and, so long as no
Event of Default has occurred and is continuing, Borrower Agent (which approval
by Borrower Agent shall not be unreasonably withheld or delayed, and shall be
deemed given if no objection is made within two Business Days after notice of
the proposed assignment), that is organized under the laws of the United States
or any state or district thereof, has total assets in excess of $500,000,000,
extends asset-based lending facilities in its ordinary course of business and
whose becoming an assignee would not constitute a prohibited transaction under
Section 4975 of ERISA or any other Applicable Law; and (c) during any Event of
Default, any Person; provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include (i) any Obligor or any Affiliate or Subsidiary of
any Obligor and (ii) on and after the Restatement Date, any Disqualified
Institution who is identified by the Borrower Agent as such prior to an
assignment.
Enforcement Action — any rightful action to enforce any Obligations or Loan
Documents or to realize upon any Collateral (whether by judicial action,
self-help, notification of Account Debtors, exercise of setoff or recoupment, or
otherwise).
Environmental Agreement — each agreement of Obligors with respect to any Real
Estate subject to a Mortgage, pursuant to which Obligors agree to indemnify and
hold harmless Agent and Lenders from liability under any Environmental Laws,
except for liability caused by any actions of Agent or the Lenders which are in
violation of the Environmental Laws.
Environmental Laws — all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies), relating to public health (but
excluding occupational safety and health, to the extent regulated by OSHA) or
the protection or pollution of the environment, including CERCLA, RCRA and CWA.
Environmental Notice — a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

 

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Environmental Release — a release as defined in CERCLA or under any other
Environmental Law.
Equipment — as defined in the UCC, including all machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory), and all parts, accessories and special
tools therefor, and accessions thereto and, in any event, including all such
Person’s machinery and equipment, including processing equipment, conveyors,
machine tools, data processing and computer equipment including embedded
software and peripheral equipment and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
Equity Interest — the interest of any (a) shareholder in a corporation, (b)
partner in a partnership (whether general, limited, limited liability or joint
venture), (c) member in a limited liability company, or (d) other Person having
any other form of equity security or ownership interest.
ERISA — the Employee Retirement Income Security Act of 1974.
Event of Default — as defined in Section 11.
Excess Availability — determined as of any date, the amount of Tranche A Excess
Availability plus the amount of Tranche A-1 Excess Availability.
Excess Availability Trigger Event — prior to the Bank Loan Termination Date, the
first date on which Excess Availability for five (5) consecutive days is less
than the greater of (i) $77,000,000 or (ii) 15% of the lesser of (x) the Tranche
A Revolver Commitments, plus the Tranche A-1 Revolver Commitments or (y) the
Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base.
Excess Availability Trigger Period — any period (a) commencing upon the
occurrence of a Excess Availability Trigger Event and (b) ending on the date
that Excess Availability for a period of ninety (90) consecutive calendar days
exceeds the greater of (i) $77,000,000 or (ii) 15% of the lesser of (x) the
Tranche A Revolver Commitments, plus the Tranche A-1 Revolver Commitments or
(y) the Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base.
Excluded Tax — Tax on the net income or gross receipts of a Lender or any
franchise or capital stock tax.
Extraordinary Expenses — all reasonable and documented out-of-pocket costs,
expenses or advances that Agent, Collateral Agent or Documentation Agent may
incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents or

 

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Obligations, including any lender liability or other Claims; (c) the exercise,
protection or enforcement of any rights or remedies of Agent in, or the
monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any
taxes, charges or Liens with respect to any Collateral; (e) any Enforcement
Action; or (f) negotiation and documentation of any modification, waiver,
workout, restructuring or forbearance with respect to any Loan Documents or
Obligations. Such costs, expenses and advances include transfer fees, taxes,
storage fees, insurance costs, permit fees, utility reservation and standby
fees, legal fees, financial advisor fees, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees, environmental
study fees, wages and salaries paid to employees of any Obligor or independent
contractors in liquidating any Collateral, and travel expenses.
Federal Funds Rate — for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as reasonably determined by the Agent.
First Lien Affiliate — with respect to any First Lien Lender or First Lien
Agent, another Person who directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with such
First Lien Lender or the First Lien Agent, as the case may be.
First Lien Agent — the agent under the First Lien Debt Documents, and its
successors and permitted assigns in such capacity.
First Lien Debt — Priority Bank Debt (as defined in the Intercreditor
Agreement).
First Lien Lenders — the lenders under the First Lien Debt Documents, and their
successors and permitted assigns.
First Lien Loan Agreement — the Loan and Security Agreement, dated as of March
6, 2006, by and among the Borrowers, the Guarantors, the First Lien Agent, the
First Lien Lenders and each other party thereto, as amended by that certain
Amendment No. 1 to Loan and Security Agreement dated as of November 20, 2007, as
further amended by that certain Amendment No. 2 to Loan and Security Agreement
dated as of November 18, 2009, as it may be further amended, restated,
supplemented, modified, renewed, replaced or Refinanced in whole or in part from
time to time and any other agreement extending the maturity of, consolidating,
otherwise renewing, replacing or Refinancing all or any portion of the Debt
under the First Lien Debt Documents or all or any portion of the amounts owed
under any other agreement that itself is the First Lien Loan Agreement hereunder
and whether by the same or any other agent, lender or group of lenders and
whether or not increasing the amount of Debt under the First Lien Debt Documents
that may be incurred thereunder, in each case in a manner not inconsistent with
the Intercreditor Agreement.
First Lien Debt Documents — collectively, the First Lien Loan Agreement and each
of the other documents (including, without limitation, all guaranties and
security documents), agreements, instruments, filings and certificates from time
to time executed in favor of the First Lien Agent and/or the First Lien Lenders,
as any of the same may be amended, restated, supplemented, modified, renewed,
replaced or Refinanced in whole or in part from time to time, in each case in a
manner not inconsistent with the Intercreditor Agreement.

 

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First Lien Refinancing — means no later than January 6, 2011, either (i) the
maturity date of the First Lien Loan Agreement is extended to a date no earlier
than three and one-half (3.5) years from the Restatement Date or (ii) the First
Lien Loan Agreement is Refinanced in full, in a manner not inconsistent with the
Intercreditor Agreement or on terms and conditions reasonably satisfactory to
all Lenders.
Fiscal Quarter — each successive period of thirteen weeks, commencing on the
first day of a Fiscal Year.
Fiscal Total Stores — in respect of any Fiscal Year, an amount of Stores equal
to the sum of (x) the aggregate number of Stores open on the first Business Day
of such Fiscal Year, plus (y) the aggregate number of Stores acquired or opened
during such Fiscal Year.
Fiscal Year — the fiscal year of Parent and Subsidiaries, for accounting and tax
purposes, which is the 52 or 53 week period ending on the Saturday nearer
January 31 of each calendar year (e.g., a reference to fiscal 2004 is a
reference to the fiscal year ended January 29, 2005).
Fixtures — as such term is defined in the UCC, now owned or hereafter acquired
by any Obligor located at a parcel of Real Estate subject to a Mortgage.
FLSA — the Fair Labor Standards Act of 1938, as amended.
Force Majeure — an event or force beyond the reasonable control of the Obligors,
including, without limitation, acts of God, acts of public enemy, terrorism,
wars, riots and civil disturbances, explosions, epidemics, natural disasters,
fires, vandalism, strikes, lock-outs or other labor difficulties, embargoes,
shortages or unavailability of materials, supplies, labor, equipment or systems,
or fuel or energy shortage.
Foreign Lender — any Lender that is organized under the laws of a jurisdiction
other than the laws of the United States, or any state or district thereof.
Foreign Plan — any employee benefit plan or arrangement maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States, or any employee benefit plan or arrangement mandated by a
government other than the United States for employees of any Obligor or
Subsidiary.
Foreign Subsidiary — a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Internal Revenue Code, such that a guaranty by such
Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to
secure the Obligations would result in tax liability to the Obligors.
Full Payment — with respect to any Obligations, the full and indefeasible cash
payment thereof (other than contingent indemnification Obligations with respect
to which no claim has been asserted in writing), including any interest, fees
and other charges accruing during an Insolvency Proceeding (whether or not
allowed in the proceeding).
Fund — any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its activities.
GAAP — generally accepted accounting principles in the United States in effect
from time to time.

 

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General Intangibles — as defined in the UCC, including choses in action, causes
of action, company or other business records, inventions, blueprints, designs,
patents, patent applications, trademarks, trademark applications, trade names,
trade secrets, service marks, goodwill, brand names, copyrights, registrations,
licenses, franchises, customer lists, permits, tax refund claims, computer
programs, operational manuals, internet addresses and domain names, insurance
refunds and premium rebates, all rights to indemnification, contract rights and
all other intangible Property of any kind.
Goods — as defined in the UCC.
Governmental Approvals — all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.
Governmental Authority — any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for or
pertaining to any government or court, in each case whether associated with the
United States, a state, district or territory thereof, or a foreign entity or
government.
Guarantor Payment — as defined in Section 5.10.3.
Guarantors — each of (a) the Parent, (b) the Bon-Ton Giftco, Inc., (c) The
Bon-Ton Stores of Lancaster, Inc., (d) The Bon-Ton Trade, LLC, (e) Carson Pirie
Scott II, Inc., (f) Bon-Ton Distribution, Inc., (g) McRIL, LLC, and each other
Person who guarantees payment or performance of any Obligations.
Guaranty — each guaranty agreement executed by a Guarantor in favor of Agent,
substantially in the form of Exhibit F hereto.
Hedging Agreement — an agreement relating to any swap, cap, floor, collar,
option, forward, cross right or obligation, or combination thereof or similar
transaction, with respect to interest rate, foreign exchange, currency,
commodity, credit or equity risk.
Indemnitees — Agent Indemnitees and Lender Indemnitees.
Initial Lenders — means each of (i) the Initial Sankaty Lenders until such time
as the Initial Sankaty Lenders, collectively, beneficially own (which shall for
the purposes of this definition include voting and economic interests) less than
70% of the amount of the Term Loans initially held by such Initial Sankaty
Lenders (without giving effect to any prepayments) either as provided on
Schedule 1.1(a) as of the Closing Date or as acquired by way of assignment
within 5 Business Days after the Closing Date, (ii) the Initial GB Merchant
Partners Lenders until such time as the Initial GB Merchant Partners Lenders,
collectively, beneficially own (which shall for the purposes of this definition
include voting and economic interests) less than 70% of the amount of the Term
Loans initially held by such Initial GB Merchant Partners Lenders (without
giving effect to any prepayments) either as provided on Schedule 1.1(a) as of
the Closing Date or as acquired by way of assignment within 5 Business Days
after the Closing Date and (iii) the Initial Stone Tower Lenders until such time
as the Initial Stone Tower Lenders, collectively, beneficially own (which shall
for the purposes of this definition include voting and economic interests) less
than 70% of the amount of the Term Loans initially held by such Initial Stone
Tower Lenders (without giving effect to any prepayments) either as provided on
Schedule 1.1(a) as of the Closing Date or as acquired by way of assignment
within 5 Business Days after the Closing Date.

 

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Initial GB Merchant Partners Lenders — means 1903 Onshore Funding, LLC and its
Affiliates which control, are controlled by, or are under common control with
1903 Onshore Funding, LLC.
Initial Sankaty Lenders — means Sankaty Credit Opportunities II, L.P., Sankaty
Credit Opportunities III, L.P., Sankaty Credit Opportunities IV, L.P., Sankaty
Credit Opportunities (Offshore Master) IV, L.P. and their respective Affiliates
which control, are controlled by, or are under common control with any of the
foregoing.
Initial Stone Tower Lenders — means Stone Tower Credit Funding I Ltd. and its
Affiliates which control, are controlled by, or are under common control with
Stone Tower Credit Funding I Ltd. (which includes, without limitation, for the
avoidance of doubt, Stone Tower Debt Advisors, LLC).
Insolvency Proceeding — any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for the benefit of creditors.
Instrument — as defined in the UCC.
Intellectual Property — all intellectual and similar Property of a Person,
including inventions, designs, patents, patent applications, copyrights,
trademarks, service marks, trade names, trade secrets, confidential or
proprietary information, customer lists, know-how, software and databases; all
embodiments or fixations thereof and all related documentation, registrations
and franchises; all books and records describing or used in connection with the
foregoing; and all licenses or other rights to use any of the foregoing.
Intellectual Property Claim — any claim or assertion (whether in writing, by
suit or otherwise) that the Parent or any Subsidiary’s ownership, use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property violates another Person’s Intellectual Property.
Intercreditor Agreement — the intercreditor agreement by and among Agent, the
First Lien Agent, each of the Borrowers and the Guarantors, dated as of
November 18, 2009, as it may be amended, restated, supplemented or otherwise
modified from time to time.
Interest Period — as defined in Section 3.1.3.
Inventory — as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in such Person’s
business (but excluding Equipment).

 

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Investment — any (a) acquisition of all or substantially all assets of, or any
line of business or division of, a Person; (b) acquisition of record or
beneficial ownership of any Equity Interests of a Person; (c) any advance or
capital contribution to, guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor guarantees Debt
of such other Person, or (d) other investment in a Person. For purposes of the
Loan Documents, on or after the Restatement Date the outstanding amount of any
Investment made by any Person at any time shall be calculated as the excess of
the initial amount of such Investment made by such Person (including the fair
market value of all property transferred by such Person as part of such
Investment) over all returns of principal or capital thereof received in cash on
or prior to such time by such Person (including all cash dividends, cash
distributions and cash repayments of Debt received by such Person).
Investment Property — as defined in the UCC.
IRC — means the Internal Revenue Code of 1986, as amended, and any successor
thereto.
Landlord Lien State — (i) the states of Washington, Virginia, Pennsylvania and
(ii) such other state(s) or jurisdictions in which a landlord’s claim for rent
or other obligations has priority over the Lien of Agent in any of the
Collateral.
Large Inventory Location — any distribution center (including each Distribution
Center), warehouse, cross-docking station or storage facility at which Inventory
is located.
Lender Indemnitees — Lenders and their officers, directors, employees,
Affiliates, agents, advisors and attorneys.
Lenders — as defined in the preamble to this Loan Agreement, including any other
Person who hereafter becomes a “Lender” pursuant to an Assignment and Assumption
Agreement.
Letter-of-Credit Right — as defined in the UCC.
LIBOR Term Loan — a Term Loan to the extent the interest rate is calculated by a
reference to Adjusted LIBOR plus the Applicable Margin.
License — any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.
Licensor — any Person from whom an Obligor obtains the right to use any
Intellectual Property.
Lien — any Person’s interest in Property securing an obligation owed to, or a
claim by, such Person, whether such interest is based on common law, statute or
contract, including liens, security interests, pledges, hypothecations,
statutory trusts, reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property.
Lien Waiver — an agreement, in form and substance reasonably satisfactory to
First Lien Agent (or, following the Bank Loan Termination Date, Agent), by which
(a) for any material Collateral located on leased premises, the lessor waives or
subordinates any Lien it may have on the Collateral, and agrees to permit First
Lien Agent (and, following the Bank Loan Termination Date, Agent) to enter upon
the premises and remove the Collateral or to use the premises to store or
dispose of the Collateral; (b) for any Collateral held by a warehouseman,
processor, shipper, customs broker or freight forwarder, such Person waives or
subordinates any Lien it may have on the Collateral, agrees to hold any
Documents in its possession relating to the Collateral as agent for First Lien
Agent (and, following the Bank Loan Termination Date, Agent), and agrees to
deliver the Collateral to First Lien Agent (and, following the Bank Loan
Termination Date, Agent) upon request; (c) for any Collateral held by a
repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or
subordinates any Lien it may have on the Collateral, and agrees to deliver the
Collateral to First Lien Agent (and, following the Bank Loan Termination Date,
Agent) upon request; and (d) for any Collateral subject to a Licensor’s
Intellectual Property rights, the Licensor grants to First Lien Agent (and,
following the Bank Loan Termination Date, Agent) the right, vis-à-vis such
Licensor, to enforce Liens of Agent and First Lien Agent with respect to the
Collateral, including the right to dispose of it with the benefit of the
Intellectual Property, whether or not a default exists under any applicable
License.

 

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Loan Account — the loan account established by each Lender on its books pursuant
to Section 5.7.
Loan Agreement — as defined in the Preamble.
Loan Documents — this Loan Agreement, Other Agreements and Security Documents.
Loan Year — each calendar year commencing on the Closing Date and on each
anniversary of the Closing Date.
Margin Stock — as defined in Regulation U of the Board of Governors.
Master Lease Agreement — collectively, (i) Master Lease dated as of March 6,
2006 between Bonstores Realty One, LLC, a Delaware limited liability company, as
landlord, and Bon-Ton, as successor by merger to Herberger’s Department Stores,
LLC, a Minnesota limited liability company, as tenant, as it may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the Loan Documents, (ii) Master Lease dated as of March 6, 2006 between
Bonstores Realty One, LLC, a Delaware limited liability company, as landlord,
and Carson Pirie Scott II, Inc., formerly known as McRae’s, Inc., a Mississippi
corporation, as tenant, as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the Loan Documents,
(iii) Master Lease dated as of March 6, 2006 between Bonstores Realty One, LLC,
a Delaware limited liability company, as landlord, and McRIL, LLC, a Virginia
limited liability company, as tenant, as it may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the Loan
Documents, (iv) Master Lease dated as of March 6, 2006 between Bonstores Realty
One, LLC, a Delaware limited liability company, as landlord, and Bon-Ton, as
successor by merger to Parisian, Inc., an Alabama corporation, as tenant, as it
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the Loan Documents, (v) Master Lease dated as of March 6,
2006 currently between Bonstores Realty One, LLC, a Delaware limited liability
company, as landlord, and Bon-Ton Distribution, Inc., formerly known as Saks
Distribution Centers, Inc., an Illinois corporation, as tenant, as it may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the Loan Documents, (vi) Master Lease dated as of March 6, 2006
between Bonstores Realty One, LLC, a Delaware limited liability company, as
landlord, and The Elder-Beerman Stores, Corp., an Ohio corporation, as tenant,
as it may be amended, restated, supplemented or otherwise modified from time to
time in accordance with the Loan Documents, (vii) Master Lease dated as of
March 6, 2006 between Bonstores Realty Two, LLC, a Delaware limited liability
company, as landlord, and Carson Pirie Scott II, Inc., formerly known as
McRae’s, Inc., a Mississippi corporation, as tenant, as it may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the Loan Documents, (viii) Master Lease dated as of March 6, 2006 between
Bonstores Realty Two, LLC, a Delaware limited liability company, as landlord,
and McRIL, LLC, a Virginia limited liability company, as tenant, as it may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the Loan Documents, (ix) Master Lease dated as of March 6, 2006
between Bonstores Realty Two, LLC, a Delaware limited liability company, as
landlord, and Bon-Ton, as successor by merger to Parisian, Inc., an Alabama
corporation, as tenant, as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the Loan Documents and
(x) such other leases and subleases as may be entered into between an SPE and an
Obligor from time to time.

 

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Material Adverse Effect — the effect of any event or circumstance occurring
after January 31, 2009 (except for general economic or political conditions or
conditions generally applicable to the department store industry, or terrorist
events or wars) that, taken as a whole, has or could be reasonably expected to
have a material adverse effect on: (a) the business, operations, liabilities
(actual or contingent), Properties, or financial condition of the Obligors and
their Subsidiaries considered as a whole, or the value of the Collateral, taken
as a whole, the enforceability of any Loan Documents, or on the validity or
priority of Agent’s Liens on any Collateral; (b) the ability of the Obligors
taken as a whole to perform any obligations under the Loan Documents, including
repayment of any Obligations; or (c) the rights or remedies of Agent or any
Lender to enforce or collect the Obligations or to realize upon the Collateral.
Material Contract — any agreement or arrangement to which Parent or a Subsidiary
is party (other than the Loan Documents) (a) that is deemed to be a material
contract under the Securities Exchange Act of 1934, (b) for which breach,
termination, nonperformance or failure to renew could reasonably be expected to
have a Material Adverse Effect, or (c) that relates to the Mortgage Loan Debt,
the Senior Note Debt, the Debt under the First Lien Debt Documents, the
Convertible Note Debt or other Debt in an aggregate principal amount of
$5,750,000 or more.
Moody’s — Moody’s Investors Service, Inc., and its successors.
Mortgage — each mortgage, deed of trust or deed to secure debt pursuant to which
an Obligor grants to Agent, for the benefit of Secured Parties, Liens upon the
Real Estate owned by such Obligor, as security for the Obligations.
Mortgage Loan Debt — (a) the Debt of SPEs in an aggregate principal amount not
to exceed $260,000,000, represented by the Mortgage Loan Debt Documents, (b) the
Debt evidenced by each guaranty of a Master Lease Agreement, executed by the
Parent in favor of the Mortgage Loan Lender, as in effect on the date hereof and
as may be further amended, restated, supplemented or otherwise modified from
time to time in accordance with the Loan Documents and (c) the Debt evidenced by
each Exceptions to Non-Recourse Guaranty, entered into on the March 6, 2006, by
the Parent in favor of the Mortgage Loan Lender, as in effect on the date hereof
and as may be further amended, restated, supplemented or otherwise modified from
time to time in accordance with the Loan Documents.
Mortgage Loan Debt Documents — the (a) Loan Agreement (the “Bonstores One
Agreement”), dated as of March 6, 2006, as amended on May 4, 2006, and as it may
be further amended, restated, supplemented or otherwise modified from time to
time in accordance with the Loan Documents, between Bonstores Realty One, LLC
and the Mortgage Loan Lender, (b) the Loan Agreement (the “Bonstores Two
Agreement”), dated as of March 6, 2006, as amended on May 4, 2006, and as it may
be further amended, restated, supplemented or otherwise modified from time to
time in accordance with the Loan Documents, between Bonstores Realty Two, LLC
and the Mortgage Loan Lender, (c) each of the Loan Documents (as defined in the
Bonstores One Agreement), (d) each of the Loan Documents (as defined in the
Bonstores Two Agreement), (e) each Master Lease Agreement and (f) each guaranty
of a Master Lease Agreement by the Parent in favor of the Mortgage Loan Lender.
Mortgage Loan Lender — Bank of America, in its capacity as indenture trustee
under the Mortgage Loan Debt Documents.

 

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Multiemployer Plan — any employee benefit plan or arrangement described in
Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor
or Subsidiary.
Net Proceeds — with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by Parent or a Subsidiary
in cash from such disposition, net of (a) reasonable and customary costs and
expenses actually incurred in connection therewith, including legal fees and
sales commissions; (b) amounts applied to repayment of Debt secured by a
Permitted Lien; (c) taxes due as a result of, or in connection with, such Asset
Disposition; and (d) reserves for indemnities, until such reserves are no longer
needed.
Notes — each Term Note or other promissory note executed by a Borrower to
evidence any Obligations.
Notice of Conversion/Continuation — a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Term
Loans as LIBOR Term Loans, in form reasonably satisfactory to Agent.
Obligations — all (a) principal of and premium, if any, on the Term Loans, (b)
interest, expenses, fees and other sums payable by Obligors under Loan
Documents, (c) obligations of Obligors under any indemnity for Claims,
(d) Extraordinary Expenses and (e) other Debts, obligations and liabilities of
any kind owing by Obligors pursuant to the Loan Documents, whether now existing
or hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.
Obligor — each Borrower, Guarantor, or other Person that is liable for payment
of any Obligations or that has granted a Lien in favor of Agent on its assets to
secure any Obligations.
OFAC — has the meaning specified in Section 9.1.27.
OID — has the meaning specified in Section 2.1.4.
Ordinary Course of Business — the ordinary course of business of Parent or any
Subsidiary, consistent with past practices and undertaken in good faith.
Organic Documents — with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, shareholders agreement,
partnership agreement, certificate of partnership, certificate of formation,
voting trust agreement, or similar agreement or instrument governing the
formation or operation of such Person.
OSHA — the Occupational Safety and Hazard Act of 1970, as amended.
Other Agreement — each Note, Guaranty, Lien Waiver, Real Estate Related
Document, Compliance Certificate, the Intercreditor Agreement, the Perfection
Certificate, the Post-Closing Agreement, financial statement or report delivered
hereunder, or other document, instrument or agreement (other than this Loan
Agreement or a Security Document) now or hereafter delivered by an Obligor or
other Person to Agent or a Lender in connection with any transactions relating
hereto.
Parent — The Bon-Ton Stores, Inc., a Pennsylvania corporation and parent company
of Bon-Ton.

 

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Participant — as defined in Section 13.3.1.
Passive Company — collectively, The Bon-Ton Properties- Eastview G.P., Inc., The
Bon-Ton Properties- Marketplace G.P., Inc., The Bon-Ton Properties- Greece Ridge
G.P., Inc., The Bon-Ton Properties- Eastview L.P., The Bon-Ton Properties-
Marketplace L.P., and The Bon-Ton Properties- Greece Ridge L.P.
Patriot Act — the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).
Payment Intangible — as defined in the UCC.
Payment Item — each check, draft or other item of payment payable to an Obligor,
including those constituting proceeds of any Collateral.
Perfection Certificate — that certain Perfection Certificate dated as of the
date hereof, and delivered by the Obligors to Agent.
Permitted Acquisition — any acquisition by any Obligor, whether by purchase,
merger or otherwise, of all or substantially all of the assets of, the Equity
Interests of, or a business line or unit or a division of, any Person; provided
that:
(i) immediately prior to, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing or would result therefrom;
(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Governmental Approvals;
(iii) such acquisition shall be consensual and shall have been approved by the
Board of Directors of such Person;
(iv) in the case of the acquisition of Equity Interests, the issuer of such
Equity Interests shall become a Subsidiary of the applicable Obligor immediately
after consummation of the applicable transaction, and such Obligor shall have
taken, or caused to be taken, as of the date such Person becomes a Subsidiary of
such Obligor, the actions set forth in Section 10.1.9;
(v) Prior to the Bank Loan Termination Date, Excess Availability on the date of
the making of such acquisition on a pro forma basis after giving effect to such
acquisition, and projected Excess Availability on a pro forma basis for the
upcoming twelve month period (after giving effect to such acquisition) is, in
each case, greater than or equal to 17% of the lesser of (A) the Tranche A
Revolver Commitments, plus the Tranche A-1 Revolver Commitments or (B) the
Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base;
(vi) Prior to the Bank Loan Termination Date, except if such acquisition is made
within 180 days of an equity issuance and solely with the cash proceeds in an
aggregate amount not to exceed the Available Basket Amount then in effect, as of
the monthly fiscal period most recently then ended, the Consolidated Fixed
Charge Coverage Ratio (on a pro forma trailing 12 fiscal month basis, giving
effect to the making of such acquisition, and any Debt under the First Lien Debt
Documents incurred in connection therewith, determined as though such
acquisition and such Debt under the First Lien Debt Documents had been incurred
on the first day of the twelve (12) fiscal month period ended prior to such
acquisition) is not less than 0.85 to 1.00;

 

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(vii) any Person or assets or division as acquired in accordance herewith shall
be in same business or lines of business in which the Borrowers and/or their
Subsidiaries are engaged as of the Closing Date or a line of business reasonably
related or incidental thereto; and
(viii) the Borrower Agent shall have delivered to Agent not less than then
(10) days prior to the consummation of such acquisition a certificate, in form
and substance reasonably satisfactory to Agent, from a Senior Officer of the
Borrower Agent certifying that the conditions set forth in clauses (i) through
(vii) above are satisfied (which certificate shall attach supporting
projections, information and calculations with respect to the requirements set
forth in clause (v) and (vi) above (all based on projections of the financial
performance of the Obligors believed to be fair and reasonable at the time
made)).
Permitted Asset Disposition — as long as no Default or Event of Default exists
or would result therefrom, and, if so required pursuant to Section 5.2, all Net
Proceeds are remitted to Agent (in accordance with Section 5.2 and the
Intercreditor Agreement) for application to the Obligations pursuant to
Section 5.5, an Asset Disposition that is (a) a sale of Inventory or Equipment
in the Ordinary Course of Business; (b) a disposition of Equipment so long as
(x) the Equipment subject to such disposition has a fair market value or book
value (whichever is more) of $575,000 or less and (y) all Equipment disposed of
pursuant to this clause (b) in the aggregate during any fiscal year of the
Parent has a fair market or book value (whichever is more) of $3,500,000 or
less, (c) a disposition of Equipment or Inventory that is obsolete,
unmerchantable or otherwise unsalable in the Ordinary Course of Business,
(d) the licensing of Intellectual Property to third Persons on reasonable and
customary terms in the ordinary course of business consistent with past
practice; provided that such licensing does not materially interfere with the
business of the Parent or any other Obligor, (e) the sale or other disposition
of Cash Equivalents, (f) dispositions of accounts receivable (other than Credit
Card Receivables) in connection with the compromise, settlement or collection
thereof in the Ordinary Course of Business or in bankruptcy or similar
proceedings (it being understood that customary chargebacks and offsets,
discounts, allowances and credits by Credit Card Processors made in the ordinary
course of business shall not constitute a disposition of a Credit Card
Receivable for the purposes of this clause (f)), (g) any Permitted Distribution,
(h) any Investment which is not a Restricted Investment, (i) the unwinding of
any Hedging Agreements, (j) subleases entered into in the ordinary course of
business of any Obligor, (k) the disposition of any Real Estate which, pursuant
to Section 7.3, is not required to be subject to a Mortgage hereunder, (l) the
disposition of any Real Estate which is required to be subject to a Mortgage
hereunder, so long as (x) no Default or Event of Default has occurred and is
continuing or would result therefrom and (y) the Obligors receive, at the
consummation of such Asset Disposition, gross proceeds, in cash, from such sale
in an amount not less than 70% of the appraised value of such Real Estate, as
set forth in the most recent appraisal provided to the First Lien Agent (and,
following the Bank Loan Termination Date, Agent), (m) the disposition by
Borrower Agent of 100% of the membership interests in Bonstores Realty One, LLC
to Bonstores Holdings One, LLC, (n) the disposition by Borrower Agent of 100% of
the membership interests in Bonstores Realty Two, LLC to Bonstores Holdings Two,
LLC, (o) a Permitted Store Closure, (p) a sale or other disposition of any
property in connection with any transaction covered by, but not prohibited by,
Section 10.2.23, (q) a disposition of assets acquired in a Permitted Acquisition
so long as (i) such disposition is consummated within 180 days after the
consummation of such Permitted Acquisition and (ii) such assets do not
constitute Inventory or Accounts; and (r) a transfer of condemned property as a
result of the exercise of “eminent domain” or other similar policies to the
respective Governmental Authority or agency that has condemned the same (whether
by deed in lieu of condemnation or otherwise), and transfers of properties that
have been subject to a casualty to the respective insurer of such property as
part of an insurance settlement; provided that clauses (o) through (r) shall
only apply after the Restatement Date.

 

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Permitted Business — any business conducted or proposed to be conducted by the
Parent and the other Obligors on the Closing Date and other businesses
reasonably related or ancillary thereto.
Permitted Contingent Obligations — Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal
or performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder; (f) arising under the Loan
Documents; or (g) in an aggregate amount of $1,150,000 or less at any time.
Permitted Distribution — prior to the Restatement Date, as defined in the First
Lien Loan Agreement as in effect on the date hereof, and on and after the
Restatement Date, (a) a dividend by the Parent or redemption or repurchase of
equity securities of the Parent so long as (i) no Default or Event of Default
shall have occurred and be continuing or would result after giving effect to any
such Distribution, (ii) prior to the Bank Loan Termination Date, Excess
Availability on the date of the making of such Distribution on a pro forma basis
after giving effect to such Distribution, and projected Excess Availability on a
pro forma basis for the upcoming twelve month period (after giving effect to
such Distribution) is, in each case, greater than or equal to 21% of the lesser
of (A) the Tranche A Revolver Commitments, plus the Tranche A-1 Revolver
Commitments or (B) the Tranche A Borrowing Base, plus the Tranche A-1 Borrowing
Base, (iii) prior to the Bank Loan Termination Date, as of the monthly fiscal
period most recently then ended, the Consolidated Fixed Charge Coverage Ratio
(on a pro forma trailing 12 fiscal month basis, giving effect to the making of
such Distribution, and Debt under the First Lien Debt Documents incurred in
connection therewith, determined as though such Distribution and Debt under the
First Lien Debt Documents had been incurred occurred on the first day of the
twelve (12) fiscal month period ended prior to such Distribution) is not less
than 1.10 to 1.00 and (iv) the Borrowers shall have provided the Agent with a
certificate not less than ten (10) days prior to the making of such Permitted
Distribution executed by a Senior Officer, evidencing compliance, after giving
effect to such Distribution, with the requirements set forth in clauses
(i) through (iii) above (which certificate shall attach supporting projections,
information and calculations with respect to the requirements set forth in
clauses (ii) and (iii) above (all based on projections of the financial
performance of the Obligors believed to be fair and reasonable at the time
made)), (b) dividends by the Parent or redemptions or repurchases of equity
securities of the Parent in an aggregate amount not to exceed (x) $5,750,000 in
any fiscal year of the Parent or (y) $23,000,000 during the term of this Loan
Agreement, (c) the purchase, repurchase, redemption, acquisition or retirement
for value of any capital stock of the Parent upon the exercise of warrants,
options or similar rights if such capital stock constitutes all or a portion of
the exercise price or is surrendered in connection with satisfying any federal
or state income tax obligation incurred in connection with such exercise;
provided that no cash payment in respect of such purchase, repurchase,
redemption, acquisition, retirement or exercise shall be made by any Obligor,
(d) so long as no Default has occurred and is continuing or would result
therefrom, payments to Parent to permit Parent, and which are used by Parent, to
redeem equity interests of Parent held by any current or former employee,
officer, director or consultant of Parent (or any other Obligor) or their
respective estates, spouses, former spouses or family members pursuant to the
terms of any employee equity subscription agreement, stock option agreement or
similar agreement entered into in the ordinary course of business; provided that
the aggregate price paid for all such repurchased, redeemed, acquired or retired
equity interests in any fiscal year will not exceed $3,450,000, (e) a repurchase
of capital stock deemed to occur upon the cashless exercise of stock options and
warrants, and (f) distributions to Parent to enable Parent to pay, and which are
used by Parent to pay, customary and reasonable costs and expenses of an
offering of securities of Parent so long as the Parent reimburses the applicable
Obligor promptly upon the consummation of such offering.

 

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Permitted Holders — (1) Tim Grumbacher and his immediate family members (as
defined by the National Association of Security Dealers Automatic Quotation
system listing requirements) or the spouses and former spouses (including widows
and widowers), heirs or lineal descendants of any of the foregoing; (2) an
estate, trust (including a revocable trust, declaration of trust or a voting
trust), guardianship, other legal representative relationship or custodianship
for the primary benefit of one or more individuals described in clause (1) above
or controlled by one or more individuals described in clause (1) above; (3) a
corporation, partnership, limited liability company, foundation, charitable
organization or other entity if a majority of the voting power and, if
applicable, a majority of the value of the equity ownership of such corporation,
partnership, limited liability company, foundation, charitable organization or
other entity is directly or indirectly owned by or for the primary benefit of
one or more individuals or entities described in clauses (1) or (2) above; (4) a
corporation, partnership, limited liability company, foundation, charitable
organization or other entity controlled directly or indirectly by one or more
individuals or entities described in clauses (1), (2) or (3) above; and (5) any
“person” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, or any successor provision) acting on behalf of
the Parent as underwriter pursuant to an offering that is temporarily holding
securities in connection with such offering.
Permitted Lien — as defined in Section 10.2.2.
Permitted Purchase Money Debt — Purchase Money Debt of Parent and Subsidiaries
that is unsecured or secured only by a Purchase Money Lien, as long as the
aggregate principal amount does not exceed $28,750,000 at any time.
Permitted Store Closures — the closure or liquidation of a Store by the
Borrowers or any Subsidiary; provided that (a) neither the Borrowers nor any of
their Subsidiaries shall close or liquidate, as of any date of determination, in
any Fiscal Year (x) Stores representing more than 10% of the Fiscal Total Stores
for such Fiscal Year (this clause (x) determined by the result of (i) the sum of
(A) the number of Stores closed or liquidated during such Fiscal Year, plus
(B) the number of Stores that Borrowers or its Subsidiaries intend to close on
or about such date of determination during such Fiscal Year, divided by
(ii) Fiscal Total Stores for such Fiscal Year) and (y) Stores representing more
than 25% of the Total Stores (this clause (y) determined by the result of
(i) the sum of (A) the number of Stores closed or liquidated since the Closing
Date plus (B) the number of Stores that the Borrowers or its Subsidiaries intend
to close on or about such date of determination, divided by (ii) Total Stores)
and (b) if the number of Stores that the Borrowers or their Subsidiaries intend
to close or liquidate on any date of determination in a Fiscal Year when
aggregated with the number of Stores closed or liquidated by the Borrowers or
their Subsidiaries prior to such date within the same Fiscal Year exceed twenty
(20) Stores, then all such Stores that are being closed or liquidated on such
date plus any Stores closed or liquidated on any date thereafter in the same
Fiscal Year shall be closed or liquidated by a liquidator or under the
supervision of a consultant (such liquidator or consultant shall be reasonably
acceptable to the Agent) and pursuant to liquidation or consulting arrangements
reasonably acceptable to Agent. For purposes of this defined term and any other
defined term included herein, Store relocations shall be ignored.
Person — any individual, corporation, limited liability company, partnership,
joint venture, joint stock company, land trust, business trust, unincorporated
organization, Governmental Authority or other entity.

 

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Plan — an employee pension benefit plan that is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and that is either (a) maintained by Parent or Subsidiary for
employees or (b) maintained pursuant to a collective bargaining agreement, or
other arrangement under which more than one employer makes contributions and to
which Parent or Subsidiary is making or accruing an obligation to make
contributions or has within the preceding five years made or accrued such
contributions.
Pledge Agreement — each pledge agreement pursuant to which an Obligor pledges to
Agent, for the benefit of Secured Parties, such Obligor’s equity interests, as
security for the Obligations.
Post-Closing Agreement — means that certain letter agreement dated as of the
Closing Date among Agent and the Obligors setting forth any applicable
conditions reasonably required by Lenders to be fulfilled by Obligors, as
applicable, subsequent to the Closing Date in time periods as set forth therein,
as amended, restated, supplemented or otherwise modified from time to time.
Priority Lien Agent — as defined in the Intercreditor Agreement.
Pro Rata — (a) with respect to any Lender, a percentage (expressed as a decimal,
rounded to the ninth decimal place) determined by dividing the outstanding
principal amount of such Lender’s Term Loan by the aggregate outstanding
principal amount of all Term Loans.
Properly Contested — with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not reasonably be expected to have a Material Adverse
Effect, nor result in forfeiture or sale of any assets of the Obligor; (e) no
Lien is imposed on assets of the Obligor, unless bonded and stayed to the
reasonable satisfaction of Agent; and (f) if the obligation results from entry
of a judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.
Property — any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.
Purchase Money Debt — (a) Debt (other than the Obligations) for payment of any
of the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within 10 days before or after acquisition of any fixed assets, for the
purpose of financing any of the purchase price thereof; (c) Capital Leases and
(d) any renewals, extensions or refinancings (but not increases) thereof.
Purchase Money Lien — a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt, and any proceeds thereof, and
constituting a Capital Lease, a purchase money security interest under the UCC
or a purchase money mortgage.
RCRA — the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
Real Estate — all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

 

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Refinance — in respect of any Debt, to refinance, extend, renew, defease,
supplement, replace or repay such Debt, or to issue other Debt in exchange or
replacement for such Debt, in whole or in part, whether with the same or
different lenders, arrangers or agents, “Refinanced” and “Refinancing” shall
have correlative meanings.
Refinancing Conditions — the following conditions for Refinancing Debt: (a) it
is in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced, plus the amount of any premiums
required to be paid thereon, accrued interest and reasonable fees and expenses
associated therewith; (b) it has a final maturity no sooner than, a weighted
average life no less than, and an interest rate on market terms for the type of
Debt being refinanced, extended, or renewed; (c) it is subordinated to the
Obligations at least to the same extent as the Debt being extended, renewed or
refinanced; (d) the representations, covenants and defaults applicable to it are
on market terms for the type of Debt being extended, renewed or refinanced;
(e) no additional Lien is granted to secure it (other than to secure the
additional Debt permitted to be incurred pursuant to clause (a) of this
definition); provided that with respect to any extension, renewal or refinancing
of the Senior Note Debt, Liens may be granted to the holders thereof so long as
such Liens are permitted under Section 10.2.2(s); (f) no additional Person is
obligated on such Debt; provided that with respect to any extension, renewal or
refinancing of the Senior Note Debt, any Obligor may be obligated in respect
thereof; and (g) upon giving effect to it, no Default or Event of Default
exists.
Refinancing Debt — Borrowed Money that is the result of an extension,
replacement, renewal or refinancing of Debt permitted under Section 10.2.1 (b),
(c), (d), (e), (i), (p), (u) or (v).
Register — as defined in Section 13.2.2.
Reimbursement Date — as defined in Section 2.3.2.
Related Parties — with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents, trustees, attorneys and
advisors of such Person and of such Person’s Affiliates.
Related Real Estate Documents — with respect to any Real Estate subject to a
Mortgage, the following, in form and substance reasonably satisfactory to Agent
and received by Agent for review at least 15 days prior to the effective date of
the Mortgage (or such shorter length of time acceptable to Agent in its
reasonable discretion): (a) a mortgagee title policy (or binder therefor)
covering Agent’s interest under the Mortgage, in a form and amount and by an
insurer reasonably acceptable to Agent (provided that (i) any insurer, and
(ii) any title or survey exception (and any endorsement or affirmative insurance
with respect thereto), and any other matter relating to the form and substance
of a title policy, previously deemed satisfactory by the First Lien Agent with
respect to its first lien shall also be deemed so acceptable to Agent and the
Required Lenders), which must be fully paid on such effective date; (b) such
assignments of leases, rents, estoppel letters, attornment agreements, consents,
waivers and releases as Agent may require with respect to other Persons having
an interest in the Real Estate; (c) a current, as-built survey of the Real
Estate, containing a metes-and-bounds property description and flood plain
certification, and certified by a licensed surveyor reasonably acceptable to
Agent (provided that any such survey (and any exceptions thereon) and any other
matter relating to the form and substance of a survey, previously deemed
satisfactory by the First Lien Agent with respect to its first lien shall also
be deemed so acceptable to Agent and the Required Lenders); (d) flood insurance
in an amount, with endorsements and by an insurer reasonably acceptable to
Agent, if the Real Estate is within a flood plain; (e) a current appraisal of
the Real Estate, prepared by an appraiser reasonably acceptable to Agent, and in
form and substance reasonably satisfactory to Required Lenders

 

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(and provided that any stated fair market value for the applicable Real Estate
in any appraisal dated within the last year shall be deemed satisfactory); (f) a
Phase I (and to the extent appropriate, Phase II) environmental assessment
report, prepared by an environmental consulting firm reasonably satisfactory to
Agent, and accompanied by such reports, certificates, studies or data as Agent
may reasonably require, which shall all be in form and substance reasonably
satisfactory to Agent; and (g) an Environmental Agreement and such other
documents, instruments or agreements as Agent may reasonably require with
respect to any environmental risks regarding the Real Estate. If, prior to the
Bank Loan Termination Date, any Related Real Estate Document delivered pursuant
to part (b), (d), (e), (f), or (g) above is satisfactory to or approved by the
First Lien Agent as to form and substance and/or the applicable third party that
prepared the policy, report or appraisal or issued the policy, it shall be
deemed so satisfactory or approved to Agent and the Required Lenders.
Notwithstanding anything herein to the contrary, if any Related Real Estate
Document is waived by First Lien Agent, it shall be deemed waived by Agent and
the Required Lenders.
Report — as defined in Section 12.2.3.
Reportable Event — any event set forth in Section 4043(b) of ERISA.
Required Lenders — Lenders (subject to Section 4.2) having an aggregate
outstanding principal amount of Term Loans in excess of 50% of the aggregate
principal amount of all outstanding Term Loans; provided that the portion of the
Term Loans held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders; provided, further that
in no event shall any Obligor, or Affiliate of an Obligor, be a “Lender” for
purposes of this definition or otherwise.
Restatement Date — means the first date on which the First Lien Loan Agreement
is amended and restated in the form of the Proposed Restated Revolving Credit
Agreement (as defined in the Intercreditor Agreement) including any changes
thereto which would otherwise be permitted by the Intercreditor Agreement.
Restricted Investment — any Investment by Parent or a Subsidiary, other than (a)
(i) Investments in Subsidiaries to the extent existing on the Closing Date and
(ii) Investments in any Borrower or Guarantor; (b) Cash Equivalents that are
subject to Agent’s Lien and Priority Lien Agent’s control, pursuant to
documentation in form and substance reasonably satisfactory to Agent; (c) loans
and advances permitted under Section 10.2.7, (d) investments held by the
Obligors comprised of notes payable, or stock or other securities issued by
Account Debtors to any Obligor pursuant to negotiated agreements with respect to
settlement of such Account Debtor’s Accounts in the ordinary course of business
consistent with past practice, (e) any Investment made as a result of the
receipt of non-cash consideration from an Permitted Asset Disposition,
(f) Investments evidenced by Hedging Agreements which are otherwise permitted to
be entered into pursuant to Section 10.2.15, (g) stock, obligations or
securities received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in
each case in the ordinary course of business or received in satisfaction of
judgment, (h) advances to customers or suppliers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable,
prepaid expenses or deposits on the balance sheet of any Obligor and
endorsements for collection or deposit arising in the ordinary course of
business, (i) commission, payroll, travel and similar advances to officers and
employees of any Obligor so long as such advances are otherwise permitted under
Section 10.2.7, (j) Investments consisting of the licensing or contribution of
Intellectual Property in the ordinary course of business, (k) Permitted
Acquisitions, (l) Investments described on Schedule 1.1(b) and modifications and
replacements thereof so long as the amount of such Investment does not increase,
(m) Investments resulting from deposits referred to herein in

 

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Sections 10.2.2(e), (m) and (p), and other deposits made in the ordinary course
of business securing obligations or performance under real estate or personal
property leases, (n) other Investments (not constituting the acquisition of all
or substantially all of the assets of, or the Equity Interests of, or a business
line or unit or a division of, any Person) made within 180 days of an equity
issuance and made solely with the cash proceeds of such equity issuance in an
aggregate amount not to exceed the Available Basket Amount then in effect so
long as (i) no Default or Event of Default shall have occurred and be continuing
immediately prior to making such Investment and after giving effect thereto and
(ii) prior to the Bank Loan Termination Date, Excess Availability on the date of
the making of such Investment on a pro forma basis after giving effect to such
Investment, and projected Excess Availability on a pro forma basis for the
upcoming twelve month period (after giving effect to such Investment) is, in
each case, greater than or equal to 17% of the lesser of (A) the Tranche A
Revolver Commitments, plus the Tranche A-1 Revolver Commitments or (B) the
Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base and
(o) Investments in any Subsidiary that is not an Obligor in an amount not to
exceed $1,150,000 at any time outstanding; provided that clauses (k), (m),
(n) and (o) shall only apply on and after the Restatement Date.
Restrictive Agreement — an agreement (other than a Loan Document) that
conditions or restricts the right of any Borrower, Subsidiary or other Obligor
to incur or repay Borrowed Money, to grant Liens on any assets, to declare or
make Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.
S&P — Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
Sarbanes-Oxley — the Sarbanes-Oxley Act of 2002, as amended and in effect.
Securities Laws — the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the Public Company Accounting Oversight Board, as each of the foregoing may
be amended and in effect on any applicable date hereunder.
Secured Parties — Agent, Collateral Agent, Documentation Agent and Lenders.
Security Documents — this Loan Agreement, Pledge Agreements, Mortgages,
Trademark Security Agreements, the Copyright Security Agreements, the Account
Control Agreements and all other documents, instruments and agreements now or
hereafter securing (or given with the intent to secure) any Obligations.
Senior Note Debt — the unsecured Debt of Bon-Ton in an aggregate principal
amount not to exceed $510,000,000, represented by the Senior Note Debt
Documents.
Senior Note Debt Documents — the Senior Note Indenture, the 10.25% senior notes
issued by the Parent in connection therewith, and all other instruments and
documents from time to time executed in favor of all or any of the holders of
the Senior Note Debt, as any of the same may be amended, restated, supplemented,
modified, renewed, replaced or Refinanced in whole or in part from time to time,
in each case in a manner not inconsistent with the Loan Documents.
Senior Note Indenture — the Senior Note Indenture, dated as of March 6, 2006, by
and among Bon-Ton and The Bank of New York, as trustee, as it may be amended,
restated, supplemented, modified, renewed, replaced or Refinanced in whole or in
part from time to time and any other agreement extending the maturity of,
consolidating, otherwise renewing, replacing or Refinancing all or any portion
of the Debt under the Senior Note Debt Documents or all or any portion of the
amounts owed under any other agreement that itself is the Senior Note Indenture
hereunder and whether by the same or any other agent, lender or group of lenders
and whether or not increasing the amount of Debt under the Senior Note Debt
Documents that may be incurred thereunder, in each case in a manner not
inconsistent with the Loan Documents.

 

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Senior Officer — the chairman of the board, president, chief executive officer,
treasurer, member manager or chief financial officer of a Borrower or, if the
context requires, an Obligor.
Software — as defined in the UCC.
Solvent — as to any Person, such Person (a) owns Property whose Fair Salable
Value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present Fair Salable Value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured;
(c) is able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32) of the
Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any Loan
Documents, or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates. “Fair Salable Value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase. For
the purposes of this definition, any right of contribution of such Person
existing by law, contract or otherwise shall be deemed an asset of such Person.
SPE — collectively, Bonstores Realty One, LLC, a Delaware limited liability
company (“BROLLC”); Bonstores Holdings One, LLC, a Delaware limited liability
company and the sole member of BROLLC; Bonstores Realty Two, LLC, a Delaware
limited liability company (“BRTLLC”); and Bonstores Holdings Two, LLC, a
Delaware limited liability company and the sole member of BRTLLC, each a special
purpose entity and a borrower of the Mortgage Loan Debt.
Store — any retail department store operated by the Parent or any of its
Subsidiaries.
Subsidiary — any entity at least 50% of whose voting securities or Equity
Interests is owned by any Obligor or any combination of Obligors (including
indirect ownership by an Obligor through other entities in which such Obligor
directly or indirectly owns 50% of the voting securities or Equity Interests).
Supporting Obligation — as defined in the UCC.
Taxes — any taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature, including income, receipts,
excise, property, sales, use, transfer, license, payroll, withholding, social
security, franchise, intangibles, stamp or recording taxes imposed by any
Governmental Authority, and all interest, penalties and similar liabilities
relating thereto.
Termination Date — (a) March 6, 2011 if a First Lien Refinancing has not
occurred or (b) November 18, 2013 if a First Lien Refinancing has occurred.
Term Loan — a loan made pursuant to Section 2.1.1 and “Term Loans” shall mean
each such loan.

 

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Term Loan Commitment — for any Lender, its obligation to make Term Loans up to
the maximum principal amount shown on Schedule 1.1(a), or as specified hereafter
in the most recent Assignment and Assumption Agreement to which it is a party.
“Term Loan Commitments means the aggregate amount of such commitments of all
Lenders. On the Closing Date, the Term Loan Commitments are $75,000,000.
Term Note — a promissory note to be executed by Borrowers in favor of a Lender
substantially in the form of Exhibit A, which shall be in the amount of such
Lender’s Term Loan Commitment and shall evidence the Term Loans made by such
Lender.
Total Stores — as to any date of determination, an amount equal to the sum of
(x) the aggregate number of Stores open on the Closing Date plus (y) the
aggregate number of Stores acquired or opened through such date of
determination.
Trademark Security Agreements — each trademark collateral security and pledge
agreement or other trademark security agreement pursuant to which an Obligor
grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s
interests in trademarks, as security for the Obligations.
Tranche A Borrowing Base — as defined in the First Lien Loan Agreement on the
date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A Excess Availability — as defined in the First Lien Loan Agreement on
the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A Real Estate Amount — as defined in the First Lien Loan Agreement on
the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A Revolver Commitments — as defined in the First Lien Loan Agreement on
the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A-1 Borrowing Base — as defined in the First Lien Loan Agreement on the
date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A-1 Excess Availability — as defined in the First Lien Loan Agreement on
the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A-1 Real Estate Amount — as defined in the First Lien Loan Agreement on
the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Tranche A-1 Revolver Commitments — as defined in the First Lien Loan Agreement
on the date hereof, together with any amendments permitted by the Intercreditor
Agreement.
Transferee — any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.
Trigger Event — any date on which (a) an Event of Default occurs or (b) an
Excess Availability Trigger Event occurs.
Trigger Event Period — any period (a) commencing upon the occurrence of a
Trigger Event and (ii) ending on a Trigger Event Termination Date.

 

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Trigger Event Termination Date — any date during a Trigger Event Period on which
(a) with respect to a Trigger Event resulting from the occurrence of an Event of
Default, all Events of Default have been waived or remedied in accordance with
the terms of the Loan Documents or (b) with respect to an Excess Availability
Trigger Event, Excess Availability for a period of ninety (90) consecutive
calendar days exceeds the greater of (i) $77,000,000 or (ii) 15% of the lesser
of (x) the Tranche A Revolver Commitments, plus the Tranche A-1 Revolver
Commitments or (y) the Tranche A Borrowing Base, plus the Tranche A-1 Borrowing
Base; provided, however, that in no event shall a Trigger Event Termination Date
be deemed to have occurred (and a Trigger Event Period may not end) more than
two (2) times during any period of twelve (12) consecutive months.
UCC — the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.
Upstream Payment — a Distribution by a Subsidiary or any Obligor to any Obligor.
Voting Stock — of any Person as of any date means the capital stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Parent delivered to Agent before the Closing Date and
using the same inventory valuation method as used in such financial statements,
except for any change required or permitted by GAAP if Parent and Borrowers’
certified public accountants concur in such change, the change is disclosed to
Agent, and Section 10.3 is amended in a manner that preserves the original
intent thereof in light of such change in GAAP.
1.3. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Loan Agreement as a whole and
not to any particular section, paragraph or subdivision. Any pronoun used shall
be deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section means, unless the context otherwise requires, a section of this Loan
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) time of day
means time of day at Agent’s notice address under Section 14.3.1; or
(g) discretion of Agent or any Lender means the sole and absolute discretion of
such Person. Fundings of Term Loans and payments of Obligations shall be in
Dollars and, unless the context otherwise requires, all determinations
(including financial covenants) made from time to time under the Loan Documents
shall be made in light of the circumstances existing at such time. Borrowers
shall have the burden of establishing any alleged negligence, misconduct or lack
of good faith by Agent or any Lender under any Loan Documents. No provision of
any Loan Documents shall be construed against any party by reason of such party
having, or being deemed to have, drafted the provision. Whenever the phrase “to
the best of Borrowers’ knowledge” or words of similar import are used in any
Loan Documents, it means actual knowledge of a Senior Officer.
1.4. [Reserved].

 

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1.5. Certifications. All certifications and other statements made by any
officer, director or employee of an Obligor pursuant to any Loan Document are
and will be made on the behalf of such Obligor and not in such officer’s,
director’s or employee’s individual capacity.
1.6. Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Eastern time (daylight or standard, as applicable).

     
SECTION 2.
  TERM LOAN FACILITY

2.1. Commitment.
2.1.1. Term Loans. Each Lender agrees, severally on a Pro Rata basis up to its
Term Loan Commitment, on the terms set forth herein, to make a Term Loan to
Borrowers on the Closing Date in the Term Loan Commitment amounts (and in each
case subject to the OID) as provided on Schedule 1.1.(a). The Term Loans may be
repaid as provided herein, but may not be reborrowed.
2.1.2. Notes. The Term Loans made by each Lender and interest accruing thereon
shall be evidenced by the records of Agent and such Lender. At the request of
any Lender, Borrowers shall deliver a Term Note to such Lender.
2.1.3. Use of Proceeds. The proceeds of Term Loans shall be used by Borrowers
solely (a) to satisfy existing Debt and other obligations under the First Lien
Loan Agreement and the related documents; (b) to pay fees and transaction
expenses associated with the closing of this credit facility; and (c) for
working capital and other lawful corporate purposes of the Obligors and their
Subsidiaries, which purposes shall include, without limitation, the making of
loans to Affiliates of the Borrowers, capital expenditures, acquisitions and
distributions, so long as each of the foregoing does not violate the terms of
this Loan Agreement.
2.1.4. OID. Borrowers and the Lenders hereby agree (i) that the Term Loans are
debt for federal income tax purposes, (ii) that the Term Loans made by each
Lender constitute a single debt instrument for purposes of Section 1271 through
1275 of the IRC and the Treasury Regulations thereunder (pursuant to Treasury
Regulations Section 1.1275-2(c)), that such debt instrument is issued with
original issue discount (“OID”), and that such debt instrument is described in
Treasury Regulations 1.1272-1(c)(2) and therefore is governed by the rules set
out in Treasury Regulations Section 1.1272-1(c), including
Section 1.1272-1(c)(5), and is not governed by the rules set out in Treasury
Regulations Section 1.1275-4, (iii) that any calculation by the Borrowers
regarding the amount of OID for any accrual period on the Term Loans shall be
subject to review and approval of the Agent (not to be unreasonably withheld or
delayed), and (iv) to adhere to this Agreement for federal income tax purposes
and not to take any action or file any tax return, report or declaration
inconsistent herewith (including with respect to the amount of OID on the Term
Loans as determined in accordance with the preceding clause (iii)). The
inclusion of this Section 2.1.4 is not an admission by any Lender that it is
subject to United States taxation.
2.1.5. [Reserved].
SECTION 3. INTEREST, FEES AND CHARGES
3.1. Interest.
3.1.1. Rates and Payment of Interest.
(a) The Obligations shall bear interest (i) if a Base Rate Term Loan, at the
Base Rate in effect from time to time, plus the Applicable Margin for Base Rate
Term Loans; (ii) if a LIBOR Term Loan, at Adjusted LIBOR for the applicable
Interest Period, plus the Applicable Margin for LIBOR Term Loans. Interest shall
accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by Borrowers. If a Loan is repaid on the same day made, one
day’s interest shall accrue.

 

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(b) During any Event of Default, at the election of the Agent or the Required
Lenders, Obligations shall bear interest at the Default Rate. Each Borrower
acknowledges that the cost, expense and risk to Agent and each Lender due to an
Event of Default are difficult to ascertain and that the Default Rate is a fair
and reasonable estimate to compensate Agent and Lenders for such added cost,
expense and risk.
(c) Interest accrued on the Term Loans shall be due and payable in arrears,
(i) with respect to each Base Rate Term Loan, on the first day of each Fiscal
Quarter, (ii) with respect to each LIBOR Term Loan, on the last day of its
Interest Period; provided that if any Interest Period for a LIBOR Term Loan
exceeds three months, interest accrued on such LIBOR Term Loan shall also be due
and payable on the respective dates that fall every three months after the
beginning of such Interest Period, and (iii) on any date of prepayment, with
respect to the principal amount of Term Loans being prepaid. Interest accrued on
any other Obligations shall be due and payable as provided in the Loan Documents
and, if no payment date is specified, shall be due and payable on demand.
Notwithstanding the foregoing, interest accrued at the Default Rate shall be due
and payable on demand.
3.1.2. Application of Adjusted LIBOR to Outstanding Term Loans.
(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Term Loan
to, or to continue any LIBOR Term Loan at the end of its Interest Period as, a
LIBOR Term Loan. Borrowers may on any Business Day, subject to delivery of a
Notice of Conversion/Continuation, elect to convert any portion of the LIBOR
Term Loans to a Base Rate Term Loan. During any Default or Event of Default,
Agent may (and shall at the direction of Required Lenders) declare that no Term
Loan may be converted or continued as a LIBOR Term Loan.
(b) Whenever Borrowers desire to convert or continue Term Loans as LIBOR Term
Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no
later than 11:00 a.m. at least three Business Days before the end of the then
current Interest Period. Promptly after receiving any such notice, Agent shall
notify each Lender, as applicable, thereof. Each Notice of
Conversion/Continuation shall be irrevocable, and shall provide that the
aggregate principal amount of Term Loans to be converted or continued, and the
duration of the Interest Period (which shall be deemed to be one month if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Term Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected an Interest Period
of one month.
3.1.3. Interest Periods. In connection with the making (on the Closing Date),
conversion or continuation of any LIBOR Term Loans, Borrowers shall select an
interest period (“Interest Period”) to apply, which interest period shall be
one, two, three or six months; provided, however, that:
(a) the Interest Period shall commence on the date the Loan is made or continued
as, or converted into, a LIBOR Term Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;
(b) if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month; and if any Interest Period would
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and
(c) no Interest Period shall extend beyond the Termination Date.

 

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3.1.4. Interest Rate Not Ascertainable. If Agent shall determine that on any
date for determining Adjusted LIBOR, due to any circumstance affecting the
London interbank market, adequate and fair means do not exist for ascertaining
such rate on the basis provided herein, then Agent shall immediately notify
Borrowers of such determination. Until Agent notifies Borrowers that such
circumstance no longer exists the Term Loans shall bear interest at the Base
Rate then in effect, plus the Applicable Margin for Base Rate Term Loans.
3.2. Reserved.
3.3. Computation of Interest, Fees, Yield Protection. All computations of
interest for Base Rate Term Loans shall be made on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed. All other computation of
interest, as well as fees and other charges calculated on a per annum basis,
shall be computed for the actual days elapsed, based on a year of 360 days. Each
determination by Agent of any interest, fees or interest rate hereunder shall be
final, conclusive and binding for all purposes, absent error. All fees shall be
fully earned when due and shall not be subject to rebate or refund, nor subject
to proration except as specifically provided herein. All fees payable under
Section 3.2 are compensation for services and are not, and shall not be deemed
to be, interest or any other charge for the use, forbearance or detention of
money. A certificate as to amounts payable by Borrowers under Section 3.4, 3.6,
3.7, 3.9 or 5.8, submitted to Borrowers by Agent or the affected Lender, as
applicable, shall be final, conclusive and binding for all purposes, absent
error.
3.4. Reimbursement Obligations. Borrowers shall reimburse Agent for all
Extraordinary Expenses. Borrowers shall also reimburse Agent for all reasonable
and documented legal fees of one outside counsel, one local counsel in each
relevant jurisdiction (as determined by the Agent in its reasonable discretion),
one special or regulatory counsel in respect of each matter (as reasonably
required by the Agent) and conflict of interest counsel (as determined by the
Agent in its reasonable discretion), accounting, appraisal, consulting and other
reasonable and documented fees, out-of-pocket costs and expenses incurred by it
in connection with (a) syndication, negotiation and preparation of any Loan
Documents, including any amendment or other modification thereof; (b)
administration of and actions relating to any Collateral, Loan Documents, and
transactions contemplated thereby, including any actions taken to perfect or
maintain priority of Agent’s Liens on any Collateral, to maintain any insurance
required hereunder or to verify Collateral; and (c) subject to the limits of
Section 10.1.1(b), each inspection, audit or appraisal with respect to any
Obligor or Collateral, whether prepared by Agent’s personnel or a third party.
Borrowers shall also reimburse Lenders for all costs and expenses incurred by
them (but limited to legal fees of one outside counsel for all Lenders, one
local counsel in each relevant jurisdiction (as determined by the Lenders in
their reasonable discretion), one special or regulatory counsel in respect of
each matter (as reasonably required by the Lenders) and conflict of interest
counsel (as determined by the any Lender in its reasonable discretion)) during
an Event of Default in connection with the enforcement or preservation of any
rights under this Loan Agreement or any of the other Loan Documents. All amounts
reimbursable by Borrowers under this Section 3.4 shall constitute Obligations
secured by the Collateral and shall be payable within ten Business Days after
presentation by Agent to Borrowers of a reasonably detailed itemization of such
amounts.
3.5. Illegality. Notwithstanding anything to the contrary herein, if (a) any
change in any law or interpretation thereof, made after the date hereof, by any
Governmental Authority makes it unlawful for a Lender to make or maintain a
LIBOR Term Loan or (b) a Lender determines that the making or continuance of a
LIBOR Term Loan has become impracticable as a result of a circumstance that
adversely affects the London interbank market or the position of such Lender in
such market, then such Lender shall give notice thereof to Agent and Borrowers
and may (i) declare that LIBOR Term Loans will not thereafter be made by such
Lender, whereupon any request for a LIBOR Term Loan from such Lender shall be
deemed to be a request for a Base Rate Term Loan unless such Lender’s
declaration has been withdrawn (and it shall be withdrawn promptly upon
cessation of the circumstances described in clause (a) or (b) above); and/or
(ii) require that all outstanding LIBOR Term Loans made by such Lender be
converted to Base Rate Term Loans immediately, in which event all outstanding
LIBOR Term Loans of such Lender shall be immediately converted to Base Rate Term
Loans.

 

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3.6. Increased Costs. If, by reason of (a) the introduction of or any change in
any law or interpretation thereof, in each case made after the date hereof, or
(b) the compliance with any guideline or request from any Governmental Authority
or other Person exercising control over banks or financial institutions
generally (whether or not having the force of law), promulgated after the date
hereof:
(i) a Lender shall be subject to any Tax with respect to any LIBOR Term Loan, or
a change shall result in the basis of taxation of any payment to a Lender with
respect to its LIBOR Term Loans or its obligation to make LIBOR Term Loans
(except for Excluded Taxes); or
(ii) any reserve (including any imposed by the Board of Governors), special
deposits or similar requirement against assets of, deposits with or for the
account of, or credit extended by, a Lender shall be imposed or deemed
applicable, or any other condition affecting a Lender’s LIBOR Term Loans or
obligation to make LIBOR Term Loans shall be imposed on such Lender or the
London interbank market;
and as a result there shall be a material increase in the cost to such Lender of
agreeing to make or making, funding or maintaining LIBOR Term Loans (except to
the extent already included in determination of Adjusted LIBOR), or there shall
be a reduction in the amount receivable by such Lender, then the Lender shall
promptly notify Borrowers and Agent of such event, and Borrowers shall, within
five days following demand therefor, pay such Lender the amount of such
increased costs or reduced amounts; provided, however, that such Lender shall
repay to Borrowers any amounts paid by Borrowers to such Lender under this
Section 3.6 at any time such Lender shall determine that such change or
compliance was not applicable to, or required by, such Lender.
If a Lender determines that, because of circumstances described above or any
other circumstances arising hereafter affecting such Lender, the London
interbank market or the Lender’s position in such market, Adjusted LIBOR or its
Applicable Margin, as applicable, will not adequately and fairly reflect the
cost to such Lender of funding or maintaining LIBOR Term Loans, then (A) the
Lender shall promptly notify Borrowers and Agent of such event; (B) such
Lender’s obligation to make or maintain LIBOR Term Loans shall be immediately
suspended, until each condition giving rise to such suspension no longer exists;
and (C) such Lender shall make a Base Rate Term Loan as part of any requested
conversion to LIBOR Term Loans as a result of delivery of a Notice of
Conversion/Continuation, which Base Rate Term Loan shall, for all purposes, be
considered part of such request.
Within fifteen (15) days after receipt by Borrower Agent of written notice
and/or demand from any Lender (an “Affected Lender”) (i) stating that, pursuant
to Section 3.5, that such Lender can no longer make LIBOR Term Loans or
(ii) demanding payment of additional amounts or increased costs pursuant to
Section 3.6, Borrower Agent may, at its option, notify Agent and such Affected
Lender of its intention to replace the Affected Lender. So long as no Default or
Event of Default shall have occurred and be continuing, Borrower Agent may
obtain, at Borrowers’ expense, a replacement Lender (“Replacement Lender”) for
the Affected Lender, which Replacement Lender must be an Eligible Assignee. If
Borrowers obtain a Replacement Lender within ninety (90) days following notice
of their intention to do so, the Affected Lender must sell and assign its Term
Loans to such Replacement Lender for an amount equal to the principal balance of
all Term Loans held by the Affected Lender and all accrued interest and fees
with respect thereto through the date of such sale; provided that Borrowers
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Loan Agreement through
the date of such sale and assignment. Notwithstanding the foregoing, Borrowers
shall not have the right to obtain a Replacement Lender if the Affected Lender
(i) in the case of a notice under Section 3.5, rescinds its notice that it can
no longer fund LIBOR Term Loans or (ii) in the case of a demand under
Section 3.6, rescinds its demand for increased costs or additional amounts,
within fifteen (15) days following its receipt of Borrower Agent’s notice of
intention to replace such Affected Lender. Furthermore, if Borrower Agent gives
a notice of intention to replace and do not so replace such Affected Lender
within ninety (90) days thereafter, Borrowers’ rights under this paragraph as to
such noticed replacement shall terminate.

 

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3.7. Capital Adequacy. If a Lender determines that any introduction of or any
change in a Capital Adequacy Regulation, any change in the interpretation or
administration of a Capital Adequacy Regulation by a Governmental Authority
charged with interpretation or administration thereof, or any compliance by such
Lender or any Person controlling such Lender with a Capital Adequacy Regulation,
in each case made after the date hereof, increases the amount of capital
required or expected to be maintained by such Lender or Person (taking into
consideration its capital adequacy policies and desired return on capital) as a
consequence of such Lender’s Term Loans or other obligations under the Loan
Documents, then Borrowers shall, within five days following demand therefor, pay
such Lender an amount sufficient to compensate for such increase. A Lender’s
demand for payment shall set forth the nature of the occurrence giving rise to
such compensation and a calculation of the amount to be paid. In determining
such amount, the Lender may use any reasonable averaging and attribution method.
3.8. Mitigation. Each Lender agrees that, upon becoming aware that it is subject
to Section 3.5, 3.6, 3.7 or 5.8, it will take reasonable measures to reduce
Borrowers’ obligations under such Sections, including funding its Term Loans
through another office, as long as use of such measures would not adversely
affect the Lender’s Term Loans, business or interests, and would not be
inconsistent with any applicable legal or regulatory restriction.
3.9. Funding Losses. If for any reason (other than default by a Lender) (a) any
conversion to or continuation of, a LIBOR Term Loan does not occur on the date
specified therefor in a Notice of Conversion/Continuation (whether or not
withdrawn), (b) any repayment or conversion of a LIBOR Term Loan occurs on a day
other than the end of its Interest Period, or (c) Borrowers fail to repay a
LIBOR Term Loan when required hereunder, then Borrowers shall pay to Agent its
customary administrative charge and to each Lender all losses and expenses that
it sustains as a consequence thereof, including any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds, but excluding any loss of profits in connection therewith.
Lenders shall not be required to purchase Dollar deposits in the London
interbank market or any other offshore Dollar market to fund any LIBOR Term
Loan, but the provisions hereof shall be deemed to apply as if each Lender had
purchased such deposits to fund its LIBOR Term Loans.
3.10. Maximum Interest. In no event shall interest, charges or other amounts
that are contracted for, charged or received by Agent and Lenders pursuant to
any Loan Documents and that are deemed interest under Applicable Law
(“interest”) exceed the highest rate permissible under Applicable Law (“maximum
rate”). If, in any month, any interest rate, absent the foregoing limitation,
would have exceeded the maximum rate, then the interest rate for that month
shall be the maximum rate and, if in a future month, that interest rate would
otherwise be less than the maximum rate, then the rate shall remain at the
maximum rate until the amount of interest actually paid equals the amount of
interest which would have accrued if it had not been limited by the maximum
rate. If, upon payment in full, in cash, of the Obligations, the total amount of
interest actually paid under the Loan Documents is less than the total amount of
interest that would, but for this Section 3.10, have accrued under the Loan
Documents, then Borrowers shall, to the extent permitted by Applicable Law, pay
to Agent, for the account of Lenders, (a) the lesser of (i) the amount of
interest that would have been charged if the maximum rate had been in effect at
all times, or (ii) the amount of interest that would have accrued had the
interest rate otherwise set forth in the Loan Documents been in effect, minus
(b) the amount of interest actually paid under the Loan Documents. If a court of
competent jurisdiction determines that Agent or any Lender has received interest
in excess of the maximum amount allowed under Applicable Law, such excess shall
be deemed received on account of, and shall automatically be applied to reduce,
Obligations other than interest (regardless of any erroneous application thereof
by Agent or any Lender), and upon payment in full, in cash of the Obligations,
any balance shall be refunded to Borrowers. In determining whether any excess
interest has been charged or received by Agent or any Lender, all interest at
any time charged or received from Borrowers in connection with the Loan
Documents shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations.

 

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SECTION 4. LOAN ADMINISTRATION
4.1. Funding Term Loans.
4.1.1. [Reserved].
(a) [Reserved].
4.1.2. Fundings by Lenders. Each Lender shall timely honor its Term Loan
Commitment by funding its Pro Rata share of the Term Loan. Each Lender shall
fund to Agent such Lender’s Pro Rata share of the Term Loan to the account
specified by Agent in immediately available funds on the Closing Date. Subject
to its receipt of such amounts from Lenders, Agent shall disburse the proceeds
of the Term Loan as directed by Borrower Agent. If a Lender’s share of the Term
Loan is not in fact received by Agent, then Borrowers agree to repay to Agent on
demand the amount of such share, together with interest thereon from the date
disbursed until repaid, at the rate applicable to such Borrowing. If any Lender
makes available to the Agent funds for any Term Loan to be made by such Lender
as provided in this Loan Agreement, and such funds are not made available to the
Borrowers by the Agent because the conditions to the credit extension set forth
in Section 6 are not satisfied or waived in accordance with the terms hereof,
the Agent shall return such funds (in like funds as received from such Lender)
to such Lender, without interest.
4.1.3. [Reserved].
4.1.4. Notices. Each Borrower authorizes Agent and Lenders to extend, convert or
continue Term Loans, effect selections of interest rates, and transfer funds to
or on behalf of Borrowers based on telephonic or other e-mailed, electronic or
internet-based instructions in form, in each case, acceptable to the Agent and
the Borrowers. Borrowers shall confirm each such request by prompt delivery to
Agent of a Notice of Conversion/Continuation, if applicable, but if it differs
in any material respect from the action taken by Agent or Lenders, the records
of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any
liability for any loss suffered by a Borrower as a result of Agent or any Lender
acting upon its understanding of telephonic or other e-mailed, electronic or
internet-based instructions in form, in each case, reasonably acceptable to the
Agent and the Borrowers, from a person believed in good faith by Agent or any
Lender to be a person authorized to give such instructions on a Borrower’s
behalf.
4.2. Defaulting Lender. If a Lender is a Defaulting Lender, Agent may (but shall
not be required to), in its discretion, retain payments that would otherwise be
made to such Defaulting Lender hereunder, apply the payments to such Lender’s
defaulted obligations or readvance the funds to Borrowers in accordance with
this Loan Agreement. The failure of any Lender to fund a Loan shall not relieve
any other Lender of its obligations hereunder, and no Lender shall be
responsible for default by another Lender. Lenders and Agent agree (which
agreement is solely among them, and not for the benefit of or enforceable by any
Borrower) that, solely for purposes of determining a Defaulting Lender’s right
to vote on matters relating to the Loan Documents and to share in payments, fees
and Collateral proceeds thereunder, a defaulting Lender shall not be deemed to
be a “Lender” until all its defaulted obligations have been cured.

 

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4.3. Number and Amount of LIBOR Term Loans; Determination of Rate. No more than
three LIBOR Term Loans, in the aggregate, may be outstanding at any time, and
each aggregate LIBOR Term Loan when continued or converted shall be in a minimum
amount of $5,000,000, or an increment of $1,000,000 in excess thereof.
4.4. Borrower Agent. Each Borrower hereby designates Bon-Ton (“Borrower Agent”)
as its representative and agent for all purposes under the Loan Documents,
including designation of interest rates, delivery or receipt of communications
with Agent or any Lender, preparation and delivery of financial reports, receipt
and payment of Obligations, requests for waivers, amendments or other
accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with Agent or any Lender.
Borrower Agent hereby accepts such appointment. Agent and Lenders shall be
entitled to rely upon, and shall be fully protected in relying upon, any notice
or communication delivered by Borrower Agent on behalf of any Borrower. Agent
and Lenders may give any notice or communication with a Borrower hereunder to
Borrower Agent on behalf of such Borrower. Agent shall have the right, in its
discretion, to deal exclusively with Borrower Agent for any or all purposes
under the Loan Documents. Each Borrower agrees that any notice, election,
communication, representation, agreement or undertaking made on its behalf by
Borrower Agent shall be binding upon and enforceable against it.
4.5. One Obligation. The Term Loans and other Obligations shall constitute one
general obligation of Borrowers and (unless otherwise expressly provided in any
Loan Document) shall be secured by Agent’s Lien upon all Collateral; provided,
however, that Agent and each Lender shall be deemed to be a creditor of, and the
holder of a separate claim against, each Borrower to the extent of any
Obligations jointly or severally owed by such Borrower.
4.6. Effect of Termination. All undertakings of Borrowers contained in the Loan
Documents shall survive any termination, and Agent shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents until the
occurrence of payment in full, in cash of all accrued and unpaid principal,
interest and fees, and any other Obligations then due and owing, the payment of
any appropriate collateral deposits in connection with other Obligations and the
occurrence of the Termination Date. Notwithstanding such payment in full, in
cash, of all accrued and unpaid principal, interest and fees, and any other
Obligations then due and owing, the payment of any appropriate collateral
deposits in connection with other Obligations and the occurrence of the
Termination Date, Agent shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Agent may incur as a result of
the dishonor or return of Payment Items applied to Obligations, Agent receives a
written agreement, executed by Borrowers and any Person whose advances are used
in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders
from any such damages. The provisions of Sections 3.4, 3.6, 3.7, 3.9, 5.4, 5.8,
12, and 14.2, and the obligation of each Obligor and Lender with respect to each
indemnity given by it in any Loan Document, shall survive Full Payment of the
Obligations and any release relating to this credit facility.
SECTION 5. PAYMENTS
5.1. General Payment Provisions. All payments of Obligations shall be made in
Dollars, without condition, deduction, offset, counterclaim or defense of any
kind, free of (and without deduction for) any Taxes, and in immediately
available funds, not later than 2:00 p.m. on the due date. Any payment after
such time shall be deemed made on the next Business Day. Borrowers may, at the
time of payment, specify to Agent the Obligations to which such payment is to be
applied, but Agent shall in all events retain the right to apply such payment in
such manner as Agent, subject to the provisions hereof, may determine to be
appropriate. If any payment under the Loan Documents shall be stated to be due
on a day other than a Business Day, the due date shall be extended to the next
Business Day and such extension of time shall be included in any computation of
interest and fees. Any payment of a LIBOR Term Loan prior to the end of its
Interest Period shall be accompanied by all amounts due under

 

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Section 3.9. Unless the Agent shall have received notice from the Borrower Agent
prior to the time at which any payment is due to the Agent for the account of
the Lenders hereunder that the Borrowers will not make such payment, the Agent
may assume that the Borrowers have made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
the amount due. In such event, if the Borrowers have not in fact made such
payment, then each of the Lenders severally agrees to repay to the Agent
forthwith on demand the amount so distributed to such Lender in immediately
available funds with interest thereon, for each day from and including the date
such amount is distributed to it but excluding the date of payment to the Agent,
at the greater of the Federal Funds Rate and a rate determined by the Agent in
accordance with banking industry rules on interbank compensation.
5.2. Repayment of Term Loans.
5.2.1. Termination Date; Repayment in General. The Term Loans shall be due and
payable in full on the Termination Date, unless payment is sooner required
hereunder. The Term Loans may be prepaid in accordance with Section 5.2.4 and
Section 5.5.
5.2.2. Mandatory Prepayments.
(a) On and after the Restatement Date, net of any amounts used to pay down and
reduce Debt (whether or not accompanied by any commitment reduction) under the
First Lien Debt Documents, to the extent permitted by Section 10.2.8 of the
First Lien Loan Agreement, the Term Loans shall be prepaid as soon as
practicable but no later than three (3) Business Days after (or at such later
time as provided in Section 10.2.8 of the First Lien Loan Agreement) the
consummation of any Asset Disposition (other than any Asset Disposition by any
SPE or Passive Company) (x) specified in clauses (l) through (r) of the
definition of “Permitted Asset Disposition” or (y) occurring after the
commencement and during the continuation of a Trigger Event Period (or if a
Trigger Event would occur after giving effect to any such Asset Disposition), in
each case, in an amount equal to 100% of the Net Proceeds of such Asset
Disposition, with such Net Proceeds to be applied to the Obligations in
accordance with Section 5.5 and subject to the premium referenced in
Section 5.2.4. The Term Loans shall also be prepaid in accordance with
Section 8.6.
(b) Certain Other Mandatory Repayments of the Loans. On and after the
Restatement Date, net of any amounts used to pay down and reduce Debt (whether
or not accompanied by any commitment reduction) under the First Lien Debt
Documents under Section 5.2.1 of the First Lien Debt Documents, as soon as
practicable but no later than three (3) Business Days after (i) a store closing,
going-out-of-business or similar sale by all of the Obligors of all or
substantially all of their retail operations or Inventory, (ii) a foreclosure by
Agent of its Liens on a material portion of the Collateral or (iii) a
disposition of a material portion of the Collateral by Agent as a result of the
cessation of retail operations at all or substantially all Stores, excluding
Force Majeure or Ordinary Course of Business temporary closures, the Borrowers
agree and acknowledge that the Net Proceeds therefrom shall be applied, to the
extent permitted by Section 10.2.8 of the First Lien Loan Agreement, to
Obligations in accordance with Section 5.5.
(c) Each prepayment made pursuant to this Section 5.2.2 shall be (a) accompanied
by the payment of accrued interest to the date of such payment on the amount
prepaid, and (b) accompanied by the premium provided in Section 5.2.4.
5.2.3. Voluntary Prepayments. Prior to the first anniversary of the Closing
Date, Borrowers may not prepay the principal of the Term Loan. On or after the
first anniversary of the Closing Date, Borrowers may, upon at least five
(5) Business Days prior written notice to Agent, prepay the principal of the
Term Loan, in whole or in part subject to Section 5.2.4. Each prepayment made
pursuant to this Section 5.2.3 shall be (a) accompanied by the payment of
accrued interest to the date of such payment on the amount prepaid,
(b) accompanied by the premium provided in Section 5.2.4, and (c) in an amount
which is not less than $1,000,000 (or the remaining balance if less than
$1,000,000).

 

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5.2.4. Prepayment Premium. Any prepayments (a) made pursuant to Section 5.2.2
hereof (whether before or after acceleration), if made prior to the first year
anniversary of the Closing Date, shall be accompanied by a make whole premium
equal to the greater of (x) all remaining interest that would have otherwise
accrued through the first anniversary of the Closing Date on such amount being
prepaid and (y) five percent (5.00%) of such amount being prepaid and (b) made
pursuant to Section 5.2.2 or Section 5.2.3 hereof (whether before or after
acceleration) shall be accompanied by an additional premium equal to (x) five
percent (5.00%) of the principal amount so prepaid, with respect to prepayments
made on or after the first anniversary of the Closing Date but prior to the
second anniversary of the Closing Date, (y) three percent (3.00%) of the
principal amount so prepaid, with respect to prepayments made on or after the
second anniversary of the Closing Date but prior to the third anniversary of the
Closing Date. On or after the third anniversary of the Closing Date, no premiums
or penalties shall be payable pursuant to this Section 5.2.4 in connection with
any prepayments of the Term Loans other than LIBOR breakage costs as required
under the terms of this Loan Agreement.
5.3. Payment of Other Obligations. Obligations other than Term Loans, including
Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan
Documents or, if no payment date is specified, on demand.
5.4. Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any Obligor makes a payment to Agent or Lenders, or if Agent or
any Lender receives payment from the proceeds of Collateral, exercise of setoff
or otherwise, and such payment is subsequently invalidated or required to be
repaid to a trustee, receiver or any other Person, then the Obligations
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been received and any enforcement or setoff had not occurred.
5.5. Allocation of Payments.
5.5.1. Pre- and Post-Default Allocation of Payments. Notwithstanding anything
herein to the contrary but subject to the Intercreditor Agreement, at all times
whether or not an Event of Default has occurred and is continuing, all payments,
whether arising from payments by Obligors, realization on Collateral, setoff or
otherwise, shall be allocated as follows:
(a) first, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;
(b) second, to all Obligations constituting fees owing to Lenders in their
capacity as Lenders;
(c) third, to all Obligations constituting interest then owing on Term Loans;
and
(d) fourth, to all other Obligations owing to Lenders in their capacity as
Lenders.
Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a Pro Rata basis among the
Obligations in the category. The allocations set forth in this Section 5.5.1 are
solely to determine the rights and priorities of Agent and Lenders as among
themselves, and may be changed by agreement among them without the consent of
any Obligor.
5.5.2. [Reserved].

 

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5.5.3. Erroneous Application. Agent shall not be liable for any application of
amounts made by it in error (unless it has been determined in a final,
non-appealable judgment by a court of competent jurisdiction that such error was
a result of the gross negligence or willful misconduct of Agent) and if any such
application is subsequently determined to have been made in error, the sole
recourse of any Lender or other Person to which such amount should have been
made in error (unless it has been determined in a final, non-appealable judgment
by a court of competent jurisdiction that such error was a result of the gross
negligence or willful misconduct of Agent) shall be to recover the amount from
the Person that actually received it (and, if such amount was received by any
Lender, such Lender hereby agrees to return it).
5.6. Application of Payments. On each Business Day occurring prior to the
commencement of a Trigger Event Period if prior to the Bank Loan Termination
Date, the available ledger balance in the main Dominion Account on each Business
Day (to the extent practicable and consistent with past practices) shall be
transferred, by the Borrowers, to the Borrower Account on the next Business Day
(to the extent practicable and consistent with past practices). On each Business
Day after the commencement and during the continuation of a Trigger Event Period
if prior to the Bank Loan Termination Date, the available balance in the
Dominion Accounts on such Business Day shall be transferred, by the First Lien
Agent (or, following the Bank Loan Termination Date, Agent), to a Borrower
Account at Bank of America (or, following the Bank Loan Termination Date, such
other applicable institution reasonably acceptable to Agent) and, subject to the
Intercreditor Agreement, shall be applied to the Obligations on the next
Business Day. Each Obligor irrevocably waives the right at all times after the
commencement and during the continuation of a Trigger Event Period to direct the
application of any payments or Collateral proceeds, and agrees that, subject to
the Intercreditor Agreement, First Lien Agent (and, following the Bank Loan
Termination Date, Agent) (subject to Section 5.5.1) shall have the continuing,
exclusive right to apply and reapply same against the Obligations, in such
manner as First Lien Agent (and, subject to the Intercreditor Agreement) deems
advisable, notwithstanding any entry by Agent in its records. If, as a result of
First Lien Agent’s (or Agent’s, as applicable) receipt of Payment Items or
proceeds of Collateral, a credit balance exists, the balance shall not accrue
interest in favor of Obligors and shall be made available to Borrowers as long
as no Default or Event of Default exists.
5.7. Loan Account; Account Stated.
5.7.1. Loan Account. Agent shall maintain in accordance with its usual and
customary practices an account or accounts (“Loan Account”) evidencing the Debt
of Borrowers resulting from each Term Loan. Any failure of Agent to record
anything in the Loan Account, or any error in doing so, shall not limit or
otherwise affect the obligation of Borrowers to pay any amount owing hereunder.
Agent may maintain a single Loan Account in the name of Borrower Agent, and each
Borrower confirms that such arrangement shall have no effect on the joint and
several character of its liability for the Obligations.
5.7.2. Entries Binding. Entries made in the Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent demonstrable error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.
5.8. Taxes. If any Taxes (except Excluded Taxes) shall be payable by any party
due to the execution, delivery, issuance or recording of any Loan Documents, or
the creation or repayment of any Obligations, Borrowers shall pay (and shall
promptly reimburse Agent and Lenders for their payment of) all such Taxes,
including any interest and penalties thereon, and will indemnify and hold
harmless Indemnitees against all liability in connection therewith. If Borrowers
shall be required by Applicable Law to withhold or deduct any Taxes (except
Excluded Taxes) with respect to any sum payable under any Loan Documents,
(a) the sum payable to Agent or such Lender shall be increased as may be
necessary so that, after making all required withholding or deductions, Agent or
such Lender (as the case may be) receives an amount equal to the sum it would
have received had no such withholding or deductions been made; (b) Borrowers
shall make such withholding or deductions; and (c) Borrowers shall pay the full
amount withheld or deducted to the relevant taxing or other authority in
accordance with Applicable Law.

 

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5.9. Withholding Tax Exemption. At least five Business Days prior to the first
date for payment of interest or fees hereunder to a Foreign Lender, the Foreign
Lender shall deliver to Borrowers and Agent two duly completed copies of IRS
Form W-8BEN or W-8ECI (or any subsequent replacement or substitute form
therefor), certifying that such Lender can receive payment of Obligations
without deduction or withholding of any United States federal income taxes. Each
Foreign Lender shall deliver to Borrowers and Agent two additional copies of
such form before the preceding form expires or becomes obsolete or after the
occurrence of any event requiring a change in the form, as well as any
amendments, extensions or renewals thereof as may be reasonably requested by
Borrowers or Agent, in each case, certifying that the Foreign Lender can receive
payment of Obligations without deduction or withholding of any such taxes unless
any change in treaty or law has occurred that renders such forms inapplicable or
prevents the Foreign Lender from certifying that it can receive payments without
deduction or withholding of such taxes. During any period that a Foreign Lender
does not or is unable to establish that it can receive payments without
deduction or withholding of such taxes, other than by reason of any change in
treaty or law that occurs after it becomes a Lender, Agent may withhold taxes
from payments to such Foreign Lender at the applicable statutory and treaty
rates, and Borrowers shall not be required to pay any additional amounts under
Section 5.8 or this Section 5.9 as a result of such withholding. Each Lender or
Agent that is organized under the laws of the United States, or any state or
district thereof shall provide to the Borrowers (and in the case of a Lender, to
the Agent) two duly executed copies of IRS Form W-9. In the event that any
Lender or Agent does not comply with the requirements of this Section 5.9,
Borrowers may withhold taxes from payments to such Lender or Agent as required
by applicable law. In the event of the resignation or removal of the Agent
pursuant to Section 12.8 hereunder, the successor Agent shall be subject to the
provisions of this Section 5.9 in the same manner as a its predecessor Agent,
and shall be required to provide the appropriate IRS Form W-8BEN or W-8ECI to
the Borrowers as required in this Section 5.9. In the event that the successor
Agent does not comply with the requirements of this Section 5.9, Borrowers may
withhold taxes from payments to such successor Agent as required by applicable
law.
5.10. Nature and Extent of Each Borrower’s Liability.
5.10.1. Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent and
Lenders the prompt payment and performance of, all Obligations and all
agreements under the Loan Documents. Each Borrower agrees that its guaranty of
obligations hereunder constitute a continuing guaranty of payment and
performance and not of collection, that such obligations shall not be discharged
until Full Payment of the Obligations and that such obligations are absolute and
unconditional, irrespective of (a) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to
which any Obligor is or may become a party or liable; (b) the absence of any
action to enforce this Loan Agreement (including this Section 5.10.1) or any
other Loan Document, or any waiver, consent or indulgence of any kind by Agent
or any Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty for the Obligations or any action, or the absence of any action, by
Agent or any Lender in respect thereof (including the release of any security or
guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any
Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of
the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise;
(g) the disallowance of any claims of Agent or any Lender against any Obligor
for the repayment of any Obligations under Section 502 of the Bankruptcy Code or
otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.

 

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5.10.2. Waivers.
(a) Each Borrower expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel Agent
or Lenders to marshal assets or to proceed against any Obligor, other Person or
security for the payment or performance of any Obligations before, or as a
condition to, proceeding against such Borrower. It is agreed among each
Borrower, Agent and Lenders that the provisions of this Section 5.10.2 are of
the essence of the transaction contemplated by the Loan Documents and that, but
for such provisions, Agent and Lenders would decline to make Term Loans.
Notwithstanding anything to the contrary in any Loan Document, and except as set
forth in Section 5.10.3, each Borrower expressly waives all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off, as well as all defenses available to a surety, guarantor or
accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant
to this Section 5.10.2 is necessary to the conduct and promotion of its
business, and can be expected to benefit such business.
(b) Agent and Lenders may, in their discretion, pursue such rights and remedies
as they deem appropriate, including realization upon Collateral or any Real
Estate by judicial foreclosure or non-judicial sale or enforcement, without
affecting any rights and remedies under this Section 5.10. If, in the exercise
of any rights or remedies, Agent or any Lender shall forfeit any of its rights
or remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or otherwise, each Borrower consents to such action by
Agent or such Lender and waives any claim based upon such action, even if the
action may result in loss of any rights of subrogation that any Borrower might
otherwise have had but for such action. Any election of remedies that results in
denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Borrower shall not impair any other Borrower’s obligation
to pay the full amount of the Obligations. Each Borrower waives all rights and
defenses arising out of an election of remedies, such as nonjudicial foreclosure
with respect to any security for the Obligations, even though that election of
remedies destroys such Borrower’s rights of subrogation against any other
Person. If Agent bids at any foreclosure or trustee’s sale or at any private
sale, Agent may bid all or a portion of the Obligations and the amount of such
bid need not be paid by Agent but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent or any other Person
is the successful bidder, shall be conclusively deemed to be the fair market
value of the Collateral, and the difference between such bid amount and the
remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 5.10, notwithstanding
that any present or future law or court decision may have the effect of reducing
the amount of any deficiency claim to which Agent or any Lender might otherwise
be entitled but for such bidding at any such sale.
5.10.3. Extent of Liability; Contribution.
(a) Notwithstanding anything herein to the contrary, each Borrower’s liability
under this Section 5.10 shall be limited to the greater of (i) all amounts for
which such Borrower is primarily liable and (ii) such Borrower’s Allocable
Amount.
(b) If any Borrower makes a payment under this Section 5.10 of any Obligations
(other than amounts for which such Borrower is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Borrower’s
Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment. The “Allocable Amount” for any
Borrower shall be the maximum amount that could then be recovered from such
Borrower under this Section 5.10 without rendering such payment voidable or
avoidable under Section 548 of the Bankruptcy Code or under any applicable state
fraudulent transfer or conveyance act, or similar statute or common law.

 

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(c) Nothing contained in this Section 5.10 shall limit the liability of any
Borrower to pay Term Loans made directly or indirectly to that Borrower
(including Term Loans advanced to any other Borrower and then re-loaned or
otherwise transferred to, or for the benefit of, such Borrower), and all accrued
interest, fees, expenses and other related Obligations with respect thereto, for
which such Borrower shall be primarily liable for all purposes hereunder.
5.10.4. Joint Enterprise. Each Borrower has requested that Agent and Lenders
make this credit facility available to Borrowers on a combined basis, in order
to finance Borrowers’ business most efficiently and economically. Borrowers’
business is a mutual and collective enterprise, and Borrowers believe that
consolidation of their credit facility will enhance the borrowing power of each
Borrower and ease the administration of their relationship with Lenders, all to
the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent’s
and Lenders’ willingness to extend credit to Borrowers and to administer the
Collateral on a combined basis, as set forth herein, is done solely as an
accommodation to Borrowers and at Borrowers’ request.
5.10.5. Subordination. Each Borrower hereby subordinates any claims, including
any right of payment, subrogation, contribution and indemnity, that it may have
at any time against any other Obligor, howsoever arising, to the Full Payment of
all Obligations.
SECTION 6. CONDITIONS PRECEDENT
6.1. Conditions Precedent to Term Loans. Lenders shall not be required to fund
any requested Term Loan, until the date (“Closing Date”) that each of the
following conditions has been satisfied:
(a) Notes shall have been executed by Borrowers and delivered to each Lender
that requests issuance of a Note. Each of this Loan Agreement and the other Loan
Document shall have been duly executed and delivered to Agent by each of the
signatories thereto, and each shall be in form and substance reasonably
satisfactory to the Agent and each of the Lenders, and each Obligor shall be in
compliance with all terms thereof.
(b) Agent and the Lenders shall be satisfied that the Security Documents shall
be effective to create in favor of the Agent a legal, valid and enforceable
first priority (subject only to the Liens securing the Debt under the First Lien
Debt Documents and any other Permitted Liens entitled to priority under
Applicable Law) perfected security interest in and Lien upon the Collateral and
shall have received (i) evidence that all filings, recordings, deliveries of
instruments and other actions necessary or desirable in the commercially
reasonable opinion of Agent to protect and preserve such security interests
shall have been duly effected, (ii) UCC and Lien searches (and the equivalent
thereof in all applicable foreign jurisdictions) and other evidence reasonably
satisfactory to Agent that such Liens are the only Liens upon the Collateral,
except Permitted Liens and Liens to be discharged on or prior to the Closing
Date, (iii) evidence that the payment (or evidence of provision for payment) of
all filing and recording fees and taxes due and payable in respect thereof has
been made in form and substance reasonably satisfactory to Agent and each of the
Lenders, and (iv) a completed and fully executed perfection certificate in form
and substance reasonably satisfactory to Agent;
(c) [Reserved].
(d) [Reserved].

 

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(e) Agent shall have received a certificate, in form and substance reasonably
satisfactory to it and each of the Lenders, from the chief financial officer of
each Borrower (with such certification to be in such Person’s capacity as chief
financial officer of such Borrower and not in such Person’s individual capacity)
certifying that:
(i) after giving effect to the Term Loans and transactions hereunder, (A)
(x) Parent and its Subsidiaries, on a consolidated basis, are Solvent and
(y) each Borrower, individually, is Solvent; (B) no Default or Event of Default
exists; (C) the representations and warranties set forth in Section 9 are true
and correct in all material respects; and (D) each Borrower has complied in all
material respects with all agreements and conditions to be satisfied by it under
the Loan Documents;
(ii) there is no action, suit, investigation or proceeding pending or, to the
knowledge of Parent or its Subsidiaries, threatened in writing in any court or
before any arbitrator or governmental authority that could reasonably be
expected to have a Material Adverse Effect;
(iii) all Term Loans made by the Lenders to the Borrowers hereunder are and
shall remain in full compliance with the Federal Reserve’s margin regulations;
and
(iv) no law or regulation to which any Borrower is subject is applicable to the
transactions contemplated hereby which could reasonably be expected to have a
Material Adverse Effect on any Obligor or a Material Adverse Effect on the
transactions contemplated hereby.
(f) Agent shall have received a certificate of a duly authorized officer of each
Obligor (with such certification to be in such Person’s capacity as an officer
of such Obligor and not in such Person’s individual capacity), certifying
(i) that attached copies of such Obligor’s Organic Documents are true and
complete, and in full force and effect, without amendment except as shown,
(ii) that an attached copy of resolutions authorizing execution and delivery of
the Loan Documents is true and complete, and that such resolutions are in full
force and effect, were duly adopted, have not been amended, modified or revoked,
and constitute all resolutions adopted with respect to this credit facility, and
(iii) to the title, name and signature of each Person authorized to sign the
Loan Documents.
(g) Agent shall have received a written opinion of Paul, Weiss, Rifkind, Wharton
& Garrison LLP, as well as any relevant local counsel to Obligors or Agent, in
form and substance reasonably satisfactory to Agent and each of the Lenders.
(h) Agent shall have received copies of the charter documents of each Obligor,
certified as appropriate by the Secretary of State or another official of such
Obligor’s jurisdiction of organization. Agent shall have received good standing
or subsistence certificates, as applicable, for each Obligor, issued by the
Secretary of State or other appropriate official of such Obligor’s jurisdiction
of organization and each jurisdiction where such Obligor’s conduct of business
or ownership of Property necessitates qualification.
(i) Agent shall (i) have received copies of policies of insurance, (ii) be
reasonably satisfied with the amount, types and terms and conditions of all
insurance maintained by the Obligors and their Subsidiaries, and (iii) have
received certificates of insurance with endorsements naming Agent, for the
benefit of the Secured Parties, as loss payee or additional insured, as
applicable, with respect to each insurance policy required to be maintained with
respect to the Collateral and otherwise in form and substance reasonably
satisfactory to Agent and each of the Lenders.
(j) [Reserved].
(k) Borrowers shall have paid all reasonable and documented fees and
out-of-pocket expenses to be paid to Agent and Lenders on the Closing Date
(including, without limitation, all reasonable and documented fees,
out-of-pocket charges and disbursements of one outside counsel, one local
counsel in each relevant jurisdiction (as determined by the Agent in its
reasonable discretion), one special or regulatory counsel in respect of each
matter (as reasonably required by the Agent) and conflict of interest counsel
(as determined by the Agent in its reasonable discretion), accounting,
appraisal, consulting and other reasonable and documented fees, out-of-pocket to
the extent invoiced prior to or on the Closing Date.

 

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(l) Agent shall have received copies of the First Lien Debt Documents,
including, but not limited to an amendment to the First Lien Loan Agreement
permitting this Loan Agreement and all certificates, opinions and other material
documents delivered thereunder, certified by a Senior Officer as complete and
correct (with such certification to be in such Person’s capacity a Senior
Officer of an Obligor and not in such Person’s individual capacity), and the
Agent shall be satisfied with the terms and conditions and provisions thereof.
(m) Agent and the Lenders shall have agreed to satisfactory intercreditor
arrangements with the First Lien Agent and Agent shall have received a fully
executed Intercreditor Agreement in full force and effect.
(n) Agent shall have received all inventory and asset appraisals, commercial
finance audits, field audits and such other reports, audits and other
information or certifications as it may reasonably request with respect to the
Collateral.
(o) Agent shall have received a flow of funds, in form and substance reasonably
satisfactory to it.
(p) [Reserved].
(q) Agent shall have received evidence indicating that Excess Availability as of
the Closing Date, after giving effect to the transactions contemplated hereby,
is not less than $210,000,000.
(r) [Reserved].
(s) Agent shall have received such other certificates, documents, agreements and
information in respect of any Obligor as Agent may reasonably request.
(t) No Default or Event of Default shall exist at the time of, or result from,
such funding.
(u) The representations and warranties of each Obligor in the Loan Documents
shall be true and correct on the date of, and upon giving effect to, such
funding (except for representations and warranties that expressly relate to an
earlier date and except for changes therein which do not cause a violation of
this Loan Agreement).
(v) No Default or Event of Default (as each is defined in the First Lien Loan
Agreement) shall exist at the time of, or shall result from, the transactions
contemplated hereunder.
(w) No event shall have occurred or circumstance exist that has or could
reasonably be expected to have a Material Adverse Effect.
For purposes of determining compliance with the conditions specified in this
Section 6.1, each Lender that has signed this Loan Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Agent shall have received
written notice from such Lender prior to the proposed Closing Date specifying
its objection thereto.

 

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6.2. [Reserved].
6.3. Limited Waiver of Conditions Precedent. If Agent or Lenders fund any Term
Loans or grant any other accommodation when any conditions precedent are not
satisfied (regardless of whether the lack of satisfaction was known or unknown
at the time), it shall not operate as a waiver of any Default or Event of
Default due to such failure of conditions or otherwise.
SECTION 7. COLLATERAL
7.1. Grant of Security Interest. To secure the prompt payment and performance of
all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all of the following
personal and fixture property, assets and rights of such Obligor of every kind
and nature, whether now owned or hereafter acquired or arising, and wherever
located:
(a) all Accounts and all Credit Card Receivables;
(b) all Chattel Paper, including electronic chattel paper;
(c) all Commercial Tort Claims, described on Schedule 7.1(c), as shall be
amended from time to time in accordance with Section 7.4.1;
(d) all Deposit Accounts;
(e) all Documents;
(f) subject to the proviso to Section 7.1(m), all General Intangibles, including
Payment Intangibles, Software and Intellectual Property; provided, however, that
the grant of security interest shall not include any intent-to-use application
for a trademark that may be deemed invalidated, canceled or abandoned due to the
grant and/or enforcement of such security interest unless and until such time
that the grant and/or enforcement of the security interest will not affect the
status or validity of such trademark;
(g) all Goods, including Inventory, Equipment and Fixtures, excluding (i) any
motor vehicles and (ii) any Equipment subject to Purchase Money Liens securing
Permitted Purchase Money Debt so long as the documents evidencing such Permitted
Purchase Money Debt expressly prohibit a second priority Lien (or third priority
Lien if the Debt under the First Lien Debt Documents is still outstanding) on
such Equipment;
(h) all Instruments;
(i) all Investment Property;
(j) all Letter-of-Credit Rights;
(k) all Supporting Obligations;
(l) all monies, whether or not in the possession or under the control of Agent,
a Lender, or a bailee or Affiliate of Agent or a Lender;
(m) all equity interests in any Subsidiary of such Obligor; provided that such
grant of security interest shall not extend to the partnership interests in any
of The Bon-Ton Properties-Eastview L.P., The Bon-Ton Properties- Marketplace
L.P., or The Bon-Ton Properties- Greece Ridge L.P. to the extent that the grant
of such security interest would constitute or result in a breach or termination
pursuant to the terms of, or a default under, any lease, loan document,
partnership agreement or other organizational document of such limited
partnership, so long as such restrictive provision is enforceable under
Applicable Law;

 

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(n) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral; and
(o) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth
herein, (A) solely with respect to assets other than Inventory, Accounts, and
other assets of the types that are not included in the Tranche A Borrowing Base
or the Tranche A-1 Borrowing Base, this Loan Agreement shall not constitute a
grant of a security interest in, and “Collateral” shall not include any property
to the extent that a grant of security interest therein (x) is prohibited by any
requirements of law or (y) is prohibited by or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under any contract, license, agreement, instrument or other document evidencing
or giving rise to such property or any applicable shareholder or similar
agreement, in the case of clause (x) and (y), solely to the extent such
prohibition or breach or default or requirement for consent is in effect and is
enforceable under Applicable Law, and (B) this Loan Agreement shall not
constitute a grant of security interest in, and “Collateral” shall not include,
any equity interest in Bon-Ton or any SPE.
7.2. Lien on Deposit Accounts.
7.2.1. Deposit Accounts. To further secure the prompt payment and performance of
all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all of such Obligor’s
right, title and interest in and to each Deposit Account of such Obligor (except
for those referred to in clauses (a) through (d) of Section 8.5) and any
deposits or other sums at any time credited to any such Deposit Account,
including any sums in any blocked or lockbox accounts or in any accounts into
which such sums are swept. Prior to the commencement of a Trigger Event Period,
each Obligor shall direct each bank or other depository to deliver to the
Borrower Account, on each Business Day (to the extent practicable and consistent
with past practices), all available balances in each Deposit Account maintained
by such Obligor with such depository (except for (a) those Deposit Accounts
referred to in clauses (a) through (d) of Section 8.5 and (b) those Deposit
Accounts exclusively used as secondary operating accounts and described on
Schedule 7.2.1 (as may be updated with the reasonable approval of the First Lien
Agent (and, following the Bank Loan Termination Date, Agent) with respect to
such secondary operating accounts so long as the average account balances in
such accounts described in this clause (b) are in amounts consistent with the
Ordinary Course of Business of the Obligors); provided, however, that the
Obligors may maintain an aggregate account balance in local Deposit Accounts not
to exceed $5,750 for each Store supported by such local Deposit Account for
petty cash and Store expense reimbursement purposes). At all times after the
commencement and during the continuation of a Trigger Event Period, the First
Lien Agent (and, following the Bank Loan Termination Date, Agent) shall direct
each bank or other depository to deliver to a Borrower Account at Bank of
America on each Business Day, for application (subject to the Intercreditor
Agreement and Section 5.5) to the Obligations then outstanding, all available
balances in each Deposit Account maintained by any Obligor with such depository
except for those Deposit Accounts referred to in clauses (a) through (d) of
Section 8.5 hereof. Each Obligor irrevocably appoints, at all times after the
commencement and during the continuation of a Trigger Event Period, First Lien
Agent (and, following the Bank Loan Termination Date, Agent) as such Obligor’s
attorney in fact to collect such balances to the extent any such delivery is not
so made. Each Obligor waives the right at all times after the commencement and
during the continuation of a Trigger Event Period to direct the application of
any payments or Collateral proceeds, and agrees that First Lien Agent (and,
following the Bank Loan Termination Date, Agent) shall have the continuing,
exclusive right to apply and reapply, in each case subject to the Intercreditor
Agreement and Section 5.5, the same against the Obligations, in such manner as
First Lien Agent (and, following the Bank Loan Termination Date, Agent) deems
advisable, notwithstanding any entry by Agent in its records. If, as a result of
First Lien Agent’s (or Agent’s, as applicable) receipt of Payment Items or
proceeds of Collateral, a credit balance exists, the balance shall not accrue
interest in favor of Obligors and shall be made available to Borrowers as long
as no Default or Event of Default exists.

 

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7.2.2. [Reserved].
7.3. Real Estate Collateral. The Obligations shall be secured by Mortgages upon
(x) all Real Estate owned by Obligors described on Schedule 7.3 and (y) all
leasehold interests in Real Estate described on Schedule 7.3. The Mortgages
shall be duly recorded, at Borrowers’ expense, in each office where such
recording is required to constitute a fully perfected Lien on the Real Estate
covered thereby. If any Obligor acquires any fee ownership in any Real Estate
after the Closing Date (unless such Real Estate is encumbered by Permitted
Purchase Money Debt, the terms of which expressly prohibit a Lien on such Real
Estate junior in priority to the applicable Purchase Money Lien and to the Debt
under the First Lien Debt Documents) having a value in excess of $5,750,000 (or
lesser amount only if a Mortgage covering such Real Estate is delivered to First
Lien Agent), such Obligor shall, within 60 days, execute, deliver and record a
Mortgage sufficient to create a first priority perfected Lien, subject to the
Lien securing the Debt under the First Lien Debt Documents (or, where such Real
Estate is subject to Permitted Purchase Money Debt and the documents evidencing
such Debt permit Agent to hold a lien on such Real Estate junior in priority to
the applicable Purchase Money Lien and to the Debt under the First Lien Debt
Documents, a Lien so junior in priority) in favor of Agent on such Real Estate,
and shall deliver all Related Real Estate Documents. The Agent shall amend
Schedule 7.3 to reflect thereon any Real Estate that becomes subject to the
requirements set forth in the preceding sentence after the Closing Date.
7.4. Other Collateral.
7.4.1. Commercial Tort Claims. Obligors shall promptly notify Agent in writing
if Parent or any Subsidiary has a Commercial Tort Claim (other than, as long as
no Event of Default exists, a Commercial Tort Claim for less than $115,000 prior
to the Restatement Date or $1,150,000 on and after the Restatement Date) and,
upon Agent’s request, shall promptly execute such documents and take such
actions as Agent deems appropriate (including amending Schedule 7.1(c)) to
confer upon Agent (for the benefit of Secured Parties) a duly perfected, first
priority (subject to the Lien securing the Debt under the First Lien Debt
Documents and to other Permitted Liens entitled to priority under Applicable
Law) Lien upon such claim.
7.4.2. Certain After-Acquired Collateral. Obligors shall promptly (or, in the
case of Intellectual Property, within 20 Business Days after the first day of
each Fiscal Quarter) notify Agent in writing if, after the Closing Date, Parent
or any Subsidiary obtains any interest in any Collateral consisting of Deposit
Accounts, Chattel Paper, Documents, Instruments, Intellectual Property that is
registered or subject to a pending application for registration, Investment
Property or Letter-of-Credit Rights which has not yet been perfected and, upon
Agent’s reasonable request, shall, subject to the Intercreditor Agreement,
promptly execute such documents and take such actions as Agent deems reasonably
appropriate (including amending Schedule 7.1(c)) to effect Agent’s duly
perfected, first priority (subject to the Lien securing the Debt under the First
Lien Debt Documents and to other Permitted Liens entitled to priority under
Applicable Law) Lien upon such Collateral, including obtaining any appropriate
possession, control agreement or Lien Waiver to the extent required by
Section 10.1.10, subject to the Intercreditor Agreement. If any Collateral is in
the possession of a third party, at First Lien Agent’s (and, following the Bank
Loan Termination Date, Agent’s) request, Obligors shall use commercially
reasonable efforts to obtain an acknowledgment that such third party holds the
Collateral for the benefit of First Lien Agent (and, following the Bank Loan
Termination Date, Agent). Notwithstanding the foregoing, if any additional
notifications are required to be delivered to First Lien Agent under
Section 7.4.2 of the First Lien Loan Agreement, such notification shall be
required hereunder.

 

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7.5. No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of the Obligors relating to any
Collateral.
7.6. Further Assurances. Promptly upon request, Obligors shall deliver such
instruments, assignments, title certificates, or other documents or agreements,
and shall take such actions, as Agent reasonably deems appropriate under
Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise
to give effect to the intent of this Loan Agreement. Each Obligor authorizes
Agent to file any financing statement that indicates the Collateral as “all
assets” or “all personal property” of such Obligor, or words to similar effect,
and ratifies any action taken by Agent before the Closing Date to effect or
perfect its Lien on any Collateral.
7.7. Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral shall
include only 65% of the voting securities of any first tier Foreign Subsidiary.
SECTION 8. COLLATERAL ADMINISTRATION
8.1. Borrowing Base Certificates. The Borrowers shall deliver to the Agent and
the Collateral Agent (and Agent shall promptly deliver same to Lenders) (i) at
all times prior to the commencement of a Trigger Event Period, not later than
the twelfth (12th) Business Day after the immediately preceding fiscal month
end, and at such other times as First Lien Agent may reasonably request, a
Borrowing Base Certificate prepared as of the close of business of the previous
month or such other date so requested by the First Lien Agent and (ii) at all
times (x) after the commencement and during the continuation of a Trigger Event
Period or (y) during the periods from and including the fiscal month of October
of any fiscal year through and including the Friday of the second fiscal week of
January of such fiscal year, not later than the last Business Day of each week,
and at such other times as First Lien Agent may request, a Borrowing Base
Certificate prepared as of the close of business of the previous week or such
other date so requested by the First Lien Agent, with such weekly Borrowing Base
Certificates (other than those coinciding with a month end) updated for
purchases and sales of Inventory (as defined in the First Lien Loan Agreement)
from the prior week in a manner consistent with the past practices of the
Obligors and reasonably approved by the First Lien Agent. All calculations of
Tranche A Excess Availability, Tranche A-1 Excess Availability and Excess
Availability in any Borrowing Base Certificate shall originally be made by
Borrowers and certified by a Senior Officer (with such certification to be in
such Person’s capacity as a Senior Officer of an Obligor and not in such
Person’s individual capacity).
8.2. Administration of Accounts and Credit Card Receivables.
8.2.1. Credit Card Notifications; Records. Schedule 8.2.1 sets forth, as of the
Closing Date, all arrangements to which any Obligor is a party with respect to
the payment to any Obligor of the proceeds of credit card charges for sales by
such Obligor. Following the Bank Loan Termination Date, the Obligors shall
deliver to Agent Credit Card Notifications instructing each of their Credit Card
Issuers or Credit Card Processors to transfer all amounts owing by such
processor or issuer to an Obligor directly to the Borrower Account or a Dominion
Account, with such Credit Card Notifications to be executed by each relevant
Obligor and accompanied by evidence that such Credit Card Notifications have
been received by such Credit Card Issuers or Credit Card Processors. Following
the Bank Loan Termination Date, the Obligors shall exercise commercially
reasonable efforts to obtain acknowledgments to such Credit Card Notifications
from each of the Credit Card Issuers and Credit Card Processors. Each Obligor
shall keep accurate and complete records of its Credit Card Receivables, and
shall submit to Agent Credit Card Receivables reports, including all additions
and reductions (cash and non-cash) with respect to Credit Card Receivables of
the Obligors in each case accompanied by such supporting detail and
documentation as shall be reasonably requested by First Lien Agent (or,
following the Bank Loan Termination Date, Agent), in form reasonably
satisfactory to First Lien Agent (or, following the Bank Loan Termination Date,
Agent), on such periodic basis as First Lien Agent (or, following the Bank Loan
Termination Date, Agent) may request.

 

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8.2.2. Account Verification. Following the Bank Loan Termination Date, whether
or not a Default or Event of Default exists, Agent shall have the right at any
time, in the name of Agent, any designee of Agent or any Obligor to verify the
validity, amount or any other matter relating to any Accounts of Obligors by
mail, telephone or otherwise. Obligors shall cooperate fully with Agent in an
effort to facilitate and promptly conclude any such verification process.
8.2.3. Maintenance of Dominion Accounts. Subject to the Intercreditor Agreement,
Obligors shall maintain Dominion Accounts pursuant to lockbox or other
arrangements reasonably acceptable to First Lien Agent (and, following the Bank
Loan Termination Date, Agent). Obligors shall obtain an agreement (in form and
substance reasonably satisfactory to First Lien Agent (and, following the Bank
Loan Termination Date, Agent)) from each lockbox servicer and Dominion Account
bank, establishing First Lien Agent’s (and, following the Bank Loan Termination
Date, Agent’s) control over and Lien in the lockboxes or Dominion Accounts,
requiring immediate deposit of all remittances received in the lockbox to a
Dominion Account and, if such Dominion Account is not maintained with Bank of
America, directing, in accordance with Section 5.6, the account bank to transfer
at the end of each Business Day available funds in the Dominion Accounts to the
Borrower Account consistent with past practice, and waiving offset rights of
such servicer or bank against any funds in the lockboxes or Dominion Accounts,
except offset rights for customary administrative charges. Neither Agent nor
Lenders assume any responsibility to Obligors for any lockbox arrangement or
Dominion Accounts, including any claim of accord and satisfaction or release
with respect to any Payment Items accepted by any bank.
8.2.4. Proceeds of Collateral. Obligors shall request in writing and otherwise
take all reasonable steps to ensure that all payments on Accounts or otherwise
relating to Collateral are made directly to a Dominion Account (or a lockbox
relating to a Dominion Account). If any Obligor or Subsidiary receives cash or
Payment Items with respect to any Collateral, it shall hold same in trust for
Priority Lien Agent subject to the Intercreditor Agreement, and promptly (not
later than the next Business Day) deposit same into a Dominion Account.
8.3. Administration of Inventory.
8.3.1. Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions, and shall submit to Agent inventory reports in form submitted to
First Lien Agent (or, following the Bank Loan Termination Date, Agent). Each
Obligor shall conduct a physical inventory at least once per calendar year (and
on a more frequent basis if requested by First Lien Agent (or, following the
Bank Loan Termination Date, Agent) when an Event of Default exists) and periodic
cycle counts consistent with historical practices, and shall provide to Agent a
report based on each such inventory and count promptly upon completion thereof,
together with such supporting information as First Lien Agent (and, following
the Bank Loan Termination Date, Agent) may request. First Lien Agent (and,
following the Bank Loan Termination date, Agent) may participate in and observe
each inventory or physical count.
8.3.2. Returns of Inventory. No Obligor shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary Course of Business and (b) no Event of
Default exists or would result therefrom.

 

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8.3.3. Acquisition, Sale and Maintenance. No Obligor shall sell any Inventory on
consignment or approval. Obligors shall use, store and maintain all Inventory
with reasonable care and caution, in accordance with applicable standards of any
insurance and in conformity with all Applicable Law, and shall make current rent
payments (within applicable grace periods provided for in leases) at all
locations where any Collateral is located.
8.4. Administration of Equipment.
8.4.1. Records and Schedules of Equipment. Each Obligor shall keep accurate and
complete records of its Equipment, including kind, quality, quantity, cost,
acquisitions and dispositions thereof, and shall submit to Agent, on such
periodic basis as First Lien Agent (or, following the Bank Loan Termination
Date, Agent) may request, a current schedule thereof, in form reasonably
satisfactory to Priority Lien Agent. Promptly upon request, Obligors shall
deliver to First Lien Agent (or, following the Bank Loan Termination Date,
Agent) evidence of their ownership or interests in any Equipment.
8.4.2. Dispositions of Equipment. No Obligor shall sell, lease or otherwise
dispose of any Equipment, without the prior written consent of Agent, other than
(a) a Permitted Asset Disposition; and (b) replacement of Equipment that is
worn, damaged or obsolete with Equipment of like function and value, if the
replacement Equipment is acquired substantially contemporaneously with such
disposition and is free of Liens (other than Permitted Liens).
8.4.3. Condition of Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements and repairs have been made so that the
value and operating efficiency of the Equipment is preserved at all times,
reasonable wear and tear excepted. Except where failure to do so would not
reasonably be expected to result in a Material Adverse Effect, each Obligor
shall ensure that the Equipment is mechanically and structurally sound, and
capable of performing the functions for which it was designed, in accordance
with the manufacturer’s published and recommended specifications.
8.5. Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit
Accounts maintained by Obligors as of the Closing Date (or, after any update to
such Schedule 8.5 in accordance with the last sentence of this Section 8.5, as
of the date of such amendment). Each Obligor shall take all actions necessary to
establish First Lien Agent’s (and, following the Bank Loan Termination Date,
Agent’s) control (pursuant to an Account Control Agreement) of each Deposit
Account other than:
(a) each Deposit Account exclusively used for payroll, payroll taxes or employee
benefits set forth on Schedule 8.5(a) or any replacement account exclusively
used for payroll, payroll taxes or employee benefits;
(b) each disbursement account of the Obligors as set forth on Schedule 8.5(a) or
any replacement disbursement account that is reasonably acceptable to First Lien
Agent (and, following the Bank Loan Termination Date, Agent);
(c) each trust account listed on Schedule 8.5(b) maintained at U.S. Bank, N.A.
(or any replacement account thereof) so long as the average account balance in
the accounts described in this clause (c) is in an amount consistent with the
ordinary course of business and past practices of the Obligors and, in any
event, does not exceed (x) at any time other than during a Trigger Event Period,
$11,500,000 in the aggregate or (y) after the commencement and during the
continuation of a Trigger Event Period, $2,300,000 in the aggregate; and

 

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(d) each Deposit Account, other than those described in clauses (a) through
(d) above, containing not more than $86,000 at any time; provided that the
aggregate amount contained in all such accounts under this clause (d) shall not
exceed $863,000 at any time; provided, however, that not later than ten
(10) Business Days after the commencement of the first Trigger Event Period to
occur after the Closing Date, the Obligors shall either (i) take all actions
necessary to establish the First Lien Agent’s (and, following the Bank Loan
Termination Date, Agent’s) control of each such Deposit Account referred to in
this clause (d) or (ii) close the Deposit Accounts referred in this clause
(d) and transfer all balances and all related deposit activity to a deposit
account over which the First Lien Agent’s (and, following the Bank Loan
Termination Date, Agent’s) control has already been established.
Each Obligor shall be the sole account holder of each Deposit Account and shall
not allow any other Person (other than First Lien Agent (and, following the Bank
Loan Termination Date, Agent)) to have control over a Deposit Account. Each
Obligor shall promptly notify Agent of any opening or closing of a Deposit
Account and, at the request of Agent, will amend Schedule 8.5 (and
Schedule 8.5(a) or Schedule 8.5(b), if applicable) to reflect the same.
8.6. General Provisions.
8.6.1. Location of Collateral. All tangible items of Collateral, other than (i)
tangible inventory having an aggregate value of no more than $575,000, and
(ii) Inventory in transit, shall at all times be kept by Obligors at the
business locations set forth in Schedule 8.6.1, except that Obligors may
(a) make sales or other dispositions of Collateral in accordance with
Section 10.2.6; and (b) move Collateral to another location in the United
States, so long as, if such Collateral has an aggregate value of more than
$575,000 the Borrower Agent has provided Agent with 30 Business Days prior
written notice thereof.
8.6.2. Insurance of Collateral; Condemnation Proceeds.
(a) Each Obligor shall maintain insurance with respect to the Collateral,
covering casualty, hazard, public liability, theft, malicious mischief, and such
other risks, in such amounts, with such endorsements, and with such insurers as
are reasonably satisfactory to Agent. On and after the Restatement Date, prior
to the Bank Loan Termination Date, all proceeds under each policy shall be
payable to First Lien Agent, and following the Bank Loan Termination Date (or
prior to the Bank Loan Termination Date if receipt of such proceeds is waived,
forgiven or postponed by more than 10 Business Days by the First Lien Agent or
First Lien Lenders), all proceeds under each policy shall be payable to Agent
for the benefit of the Lenders; provided the foregoing shall in no way limit or
impair the Agents rights as an additional insured under such policies. From time
to time upon request, Obligors shall deliver to Agent the originals or certified
copies of its insurance policies and updated flood plain searches. Unless Agent
shall agree otherwise, each policy shall include reasonably satisfactory
endorsements (i) showing Agent as loss payee or additional insured, as
appropriate; (ii) requiring 30 days prior written notice to Agent in the event
of cancellation of the policy for any reason whatsoever; and (iii) specifying
that the interest of Agent shall not be impaired or invalidated by any act or
neglect of any Obligor or the owner of the Property, nor by the occupation of
the premises for purposes more hazardous than are permitted by the policy. If
any Obligor fails to provide and pay for such insurance, First Lien Agent (and,
following the Bank Loan Termination Date, Agent) may, at its option, but shall
not be required to, procure the insurance and charge Obligors therefor. Each
Obligor agrees to deliver to Agent, promptly as rendered, copies of all reports
made to insurance companies. Subject to the Intercreditor Agreement, while no
Event of Default exists, Obligors may settle, adjust or compromise any insurance
claim, as long as the proceeds are delivered to First Lien Agent (and, following
the Bank Loan Termination Date, Agent). Subject to the Intercreditor Agreement,
if an Event of Default exists, only First Lien Agent (and, following the Bank
Loan Termination Date, Agent) shall be authorized to settle, adjust and
compromise such claims.

 

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(b) On and after the Restatement Date, prior to the Bank Loan Termination Date,
any proceeds of insurance (other than proceeds from workers’ compensation or D&O
insurance) and any awards arising from condemnation of any Collateral shall be
paid to First Lien Agent to pay First Lien Debt, and following the Bank Loan
Termination Date (or prior to the Bank Loan Termination Date if receipt of such
proceeds is waived, forgiven or postponed by more than 10 Business Days by the
First Lien Agent or First Lien Lenders), any such proceeds and awards shall be
paid to Agent for the benefit of the Lenders to be applied, to the extent
permitted by Section 10.2.8 of the First Lien Loan Agreement in accordance with
Section 5.5.
(c) If requested by Obligors in writing within 30 days after Agent’s receipt of
any insurance proceeds or condemnation awards relating to any loss or
destruction of Equipment or Real Estate, Obligors may use such proceeds or
awards to repair or replace such Equipment or Real Estate as long as (i) no
Default or Event of Default exists; (ii) such repair or replacement is promptly
undertaken and concluded, in accordance with plans reasonably satisfactory to
Agent; (iii) replacement buildings are constructed on the sites of the original
casualties (or in close proximity thereto) and are of comparable size, quality
and utility to the destroyed buildings; (iv) the repaired or replaced Property
is free of Liens, other than Permitted Liens; (v) Obligors comply with
disbursement procedures for such repair or replacement as First Lien Agent (and,
following the Bank Loan Termination Date, Agent) may reasonably require; and
(vi) the aggregate amount of such proceeds or awards from any single casualty or
condemnation does not exceed $2,000,000 prior to the Restatement Date or
$5,750,000 on and after the Restatement Date. On and after the Restatement Date,
following the Bank Loan Termination Date (or prior to the Bank Loan Termination
Date if receipt of such proceeds is waived, forgiven or postponed by more than
10 Business Days by the First Lien Agent or First Lien Lenders), any such
proceeds or awards not applied to repair or replace such Equipment or Real
Estate in accordance with this Section 8.6.2(c) shall be applied, to the extent
permitted by Section 10.2.8 of the First Lien Loan Agreement, by the Agent, to
the Obligations in accordance with Section 5.5.
8.6.3. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes (other than Excluded Taxes) payable with respect to any Collateral
(including any sale thereof), and all other payments required to be made by
Agent to any Person to realize upon any Collateral, shall be borne and paid by
Obligors. Agent shall not be liable or responsible in any way for the
safekeeping of any Collateral, for any loss or damage thereto (except for
reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency or other Person whatsoever, but
the same shall be at Obligors’ sole risk.
8.6.4. Defense of Title to Collateral. Each Obligor shall at all times defend
its title to Collateral and Agent’s Liens therein against all Persons, claims
and demands whatsoever, except Permitted Liens.
8.7. Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) or, until the Bank Loan Termination
Date, First Lien Agent as such Obligor’s true and lawful attorney (and
agent-in-fact) for the purposes provided in this Section 8.7. First Lien Agent
or First Lien Agent’s designee (or, following the Bank Loan Termination Date,
Agent or Agent’s designee), may, during the continuation of an Event of Default,
without notice and in either its or an Obligor’s name, but at the cost and
expense of Obligors:
(a) Endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into First Lien Agent’s
(and, following the Bank Loan Termination Date, Agent’s) possession or control;
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(b) (i) Notify any Account Debtors of the assignment of their Accounts, demand
and enforce payment of Accounts, by legal proceedings or otherwise, and
generally exercise any rights and remedies with respect to Accounts;
(ii) settle, adjust, modify, compromise, discharge or release any Accounts or
other Collateral, or any legal proceedings brought to collect Accounts or
Collateral; (iii) sell or assign any Accounts and other Collateral upon such
terms, for such amounts and at such times as First Lien Agent (and, following
the Bank Loan Termination Date, Agent) deems advisable; (iv) take control, in
any manner, of any proceeds of Collateral; (v) prepare, file and sign an
Obligor’s name to a proof of claim or other document in a bankruptcy of an
Account Debtor, or to any notice, assignment or satisfaction of Lien or similar
document; (vi) receive, open and dispose of mail addressed to an Obligor, and
notify postal authorities to change the address for delivery thereof to such
address as First Lien Agent (and, following the Bank Loan Termination Date,
Agent) may designate; (vii) endorse any Chattel Paper, Document, Instrument,
invoice, freight bill, bill of lading, or similar document or agreement relating
to any Accounts, Inventory or other Collateral; (viii) use an Obligor’s
stationery and sign its name to verifications of Accounts and notices to Account
Debtors; (ix) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to any
Collateral; (x) make and adjust claims under policies of insurance; (xi) take
any action as may be necessary or appropriate to obtain payment under any letter
of credit or banker’s acceptance for which an Obligor is a beneficiary; and
(xii) take all other actions as First Lien Agent (and, following the Bank Loan
Termination Date, Agent) deems reasonably appropriate to fulfill any Obligor’s
obligations under the Loan Documents.
SECTION 9. REPRESENTATIONS AND WARRANTIES
9.1. General Representations and Warranties. To induce Agent and Lenders to
enter into this Loan Agreement and to make available the Term Loans, each
Obligor represents and warrants that:
9.1.1. Organization and Qualification. Each Obligor and Subsidiary is duly
organized, validly existing and in good standing or subsisting, as applicable
under the laws of the jurisdiction of its organization. Each Obligor and
Subsidiary is duly qualified, authorized to do business and in good standing as
a foreign corporation in each jurisdiction where failure to be so qualified
could reasonably be expected to have a Material Adverse Effect.
9.1.2. Power and Authority. Each Obligor is duly authorized to execute, deliver
and perform its Loan Documents. The execution, delivery and performance of the
Loan Documents by each Obligor have been duly authorized by all necessary
action, and do not (a) require any consent or approval of any holders of Equity
Interests of any Obligor, other than those already obtained; (b) contravene the
Organic Documents of any Obligor; (c) violate or cause a material default under
any Applicable Law or Material Contract; or (d) result in or require the
imposition of any Lien (other than Permitted Liens and Liens granted hereunder)
on any Property of any Obligor.
9.1.3. Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Obligor party thereto, enforceable against each Obligor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles.
9.1.4. Capital Structure. Schedule 9.1.4 shows as of the date hereof, for each
Obligor and Subsidiary (other than the Parent), its name, its jurisdiction of
organization, its duly authorized and validly issued Equity Interests, the
holders of its Equity Interests, and all agreements binding on such holders with
respect to their Equity Interests. Each Obligor has good title to its Equity
Interests in its Subsidiaries, subject only to Agent’s and First Lien Agent’s
Lien, and all such Equity Interests are duly issued, fully paid and
non-assessable. There are no outstanding options to purchase, warrants,
subscription rights, agreements to issue or sell, convertible interests, phantom
rights or powers of attorney relating to any Equity Interests of any Obligor
(other than the Parent) or Subsidiary.
9.1.5. Corporate Names; Locations. During the five years preceding the Closing
Date, except as shown on Schedule 9.1.5, no Obligor or Subsidiary has been known
as or used any corporate, fictitious or trade names, has been the surviving
corporation of a merger or combination, or has acquired any substantial part of
the assets of any Person. The chief executive offices and other places of
business of Obligors and Subsidiaries as of the date hereof are shown on
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9.1.6. Title to Properties; Priority of Liens. Each Obligor and Subsidiary has
good and marketable title to (or valid leasehold interests in) all of its Real
Estate, and good title to all of its personal Property, including all Property
reflected in any financial statements delivered to Agent or Lenders, in each
case free of Liens except Liens securing the Debt under the First Lien Debt
Documents and any other Permitted Liens. Each Obligor and Subsidiary has paid
and discharged all lawful claims that, if unpaid, could become a Lien on its
Properties, other than Permitted Liens. All Liens of Agent in the Collateral are
duly perfected, first priority (subject to the Liens securing the Debt under the
First Lien Debt Documents and any other Permitted Liens entitled to priority
under Applicable Law) Liens.
9.1.7. Security Documents. The Security Documents are effective to create in
favor of the Agent a legal, valid, perfected and enforceable first priority
(subject to the Liens securing the Debt under the First Lien Debt Documents and
any other Permitted Liens entitled to priority under Applicable Law) security
interest in and Lien upon the Collateral.
9.1.8. Financial Statements. The consolidated and, if applicable, combined
balance sheets, and related statements of income, cash flow and shareholder’s
equity, of Obligors and Subsidiaries that have been and are hereafter delivered
to Agent and Lenders, pursuant to Section 6.1(n) or otherwise, are prepared in
accordance with GAAP, and fairly present the financial positions and results of
operations of Obligors and Subsidiaries at the dates and for the periods
indicated, subject, in the case of interim statements, to normal year-end
adjustments. All projections delivered from time to time to Agent and Lenders
have been prepared in good faith, based on reasonable assumptions in light of
the circumstances at such time. Since January 31, 2009 there have been no
changes in the financial condition of any Obligor or Subsidiary that, alone or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect. Both before and after giving effect to the Term Loans to be made on the
Closing Date and the payment of transaction costs in connection with the
foregoing, Parent and its Subsidiaries, on a consolidated basis, are Solvent and
each Borrower, individually, is Solvent.
9.1.9. Surety Obligations. No Obligor or Subsidiary is obligated as surety or
indemnitor under any bond or other contract that assures payment or performance
of any obligation of any Person, except as is not prohibited hereunder.
9.1.10. Taxes. Each Obligor and Subsidiary has filed all material federal, state
and local tax returns and other reports that it is required by law to file, and
has paid, or made provision for the payment of, all Taxes upon it, its income
and its Properties that are due and payable, except to the extent being Properly
Contested. The provision for Taxes on the books of each Obligor and Subsidiary
is adequate for all years not closed by applicable statutes, and for its current
Fiscal Year.
9.1.11. Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the
Loan Documents.
9.1.12. Intellectual Property. Each Obligor and Subsidiary owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without conflict with any rights of others. There is no pending or, to
any Obligor’s knowledge, threatened material Intellectual Property Claim with
respect to any Obligor, any Subsidiary or any of their Property (including any
Intellectual Property). All Intellectual Property registered with the U.S.
Patent and Trademark Office which is owned by any Obligor or Subsidiary is shown
on Schedule 9.1.12.

 

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9.1.13. Governmental Approvals. Each Obligor and Subsidiary has, is in
compliance with, and is in good standing with respect to, all material
Governmental Approvals necessary to conduct its business and to own, lease and
operate its Properties. All necessary material import, export or other licenses,
permits or certificates for the import or handling of any goods or other
Collateral have been procured and are in effect, and Obligors and Subsidiaries
have complied with all foreign and domestic laws with respect to the shipment
and importation of any goods or Collateral, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.
9.1.14. Compliance with Laws. Each Obligor and Subsidiary has duly complied, and
its Properties and business operations are in compliance, in all material
respects with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Obligor or
Subsidiary under any Applicable Law.
9.1.15. Compliance with Environmental Laws. Since the Closing Date, except as
disclosed on Schedule 9.1.15 or as could not reasonably be expected to have a
Material Adverse Effect, (a) no Obligor’s or Subsidiary’s past or present
operations, Real Estate or other Properties are subject to any federal, state or
local investigation to determine whether any remedial action is needed to
address any environmental pollution, hazardous material or environmental
clean-up, (b) no Obligor or Subsidiary has received any Environmental Notice,
(c) no Obligor or Subsidiary has any material contingent liability with respect
to any Environmental Release, environmental pollution or hazardous material on
any Real Estate now or previously owned, leased or operated by it, and (d) the
representations and warranties contained in the Environmental Agreement are true
and correct in all material respects on the Closing Date.
9.1.16. Burdensome Contracts. No Obligor or Subsidiary is a party or subject to
any contract, agreement or charter restriction that could reasonably be expected
to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject
to any material Restrictive Agreement, except as shown on Schedule 9.1.16, none
of which prohibit the execution or delivery of any Loan Documents by an Obligor
nor the performance by an Obligor of any obligations thereunder.
9.1.17. Litigation. Except as shown on Schedule 9.1.17, there are no proceedings
or investigations pending or, to any Obligor’s knowledge, threatened in writing
against any Obligor or Subsidiary, or any of their businesses, operations,
Properties or conditions, that (a) relate to any Loan Documents or transactions
contemplated thereby; (b) as of the Closing Date, could reasonably be expected
to result in damages or penalties in excess of $10,000,000 (net of insurance
proceeds which Borrowers reasonably believe will cover such claim or claims), or
(c) could reasonably be expected to have a Material Adverse Effect if determined
adversely to any Obligor or Subsidiary. No Obligor or Subsidiary is in default
with respect to any order, injunction or judgment of any Governmental Authority.
9.1.18. Insurance. The properties of the Obligor and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Obligor, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Obligor or the applicable Subsidiary
operates.
9.1.19. No Defaults. No Default or Event of Default has occurred and is
continuing. No Obligor or Subsidiary is in default, and no event or circumstance
has occurred or exists that with the passage of time or giving of notice would
constitute a default, under any Material Contract or in the payment of any
Borrowed Money. There is no basis upon which any party (other than an Obligor or
Subsidiary) could terminate a Material Contract prior to its scheduled
termination date.
9.1.20. ERISA. No Obligor or Subsidiary has any Multiemployer Plan or Foreign
Plan.

 

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9.1.21. Trade Relations. There exists no actual or threatened termination,
limitation or modification of any business relationship between any Obligor or
Subsidiary and any customer or supplier, or any group of customers or suppliers,
who individually or in the aggregate are material to the business of such
Obligor or Subsidiary. There exists no condition or circumstance that could
reasonably be expected to impair the ability of any Obligor or Subsidiary to
conduct its business at any time hereafter in substantially the same manner as
conducted on the Closing Date.
9.1.22. Labor Relations. Except as described on Schedule 9.1.22, no Obligor or
Subsidiary is party to or bound by any (a) management agreement, (b) consulting
agreement where the aggregate obligations of such Obligor or Subsidiary
thereunder are in excess of $115,000 or (c) collective bargaining agreement.
There are no material grievances, disputes or controversies with any union or
other organization of any Obligor’s or Subsidiary’s employees, or, to any
Obligor’s knowledge, any asserted or threatened strikes, work stoppages or
demands for collective bargaining.
9.1.23. Not a Regulated Entity. No Obligor is (a) required to be registered as
an “investment company” within the meaning of the Investment Company Act of
1940, as amended; or (b) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.
9.1.24. Margin Stock. No Obligor or Subsidiary is engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock. No Term Loan proceeds will be used
by Obligors to purchase or carry, or to reduce or refinance any Debt incurred to
purchase or carry, any Margin Stock or for any related purpose governed by
Regulations T, U or X of the Board of Governors.
9.1.25. Plan Assets. No Obligor is an entity deemed to hold “plan assets” within
the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined
in Section 3(3) of ERISA) that is subject to Title I of ERISA or any “plan”
(within the meaning of Section 4975 of the Internal Revenue Code), and neither
the execution of this Loan Agreement nor the funding of any Term Loans gives
rise to a prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code.
9.1.26. Complete Disclosure. No Loan Document contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make the
statements contained therein not materially misleading in light of the
circumstances under which they were delivered.
9.1.27. Anti-Terrorism. No Obligor appears on any list of “Specially Designated
Nationals” or other list of known or suspected terrorists that has been
generated by the Office of Foreign Assets Control of the United States
Department of Treasury (“OFAC”), nor is any Obligor a citizen or resident of any
country that is subject to embargo or trade sanctions enforced by OFAC, or
otherwise is a Person (i) whose property or interest in property is blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) who engages in any dealings or transactions prohibited by
Section 2 of such executive order, or, to its knowledge, is otherwise associated
with any such person in any manner violative of Section 2, or (iii) subject to
the limitations or prohibitions under any other OFAC regulation or executive
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SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
10.1. Affirmative Covenants. For so long as any Obligations are outstanding,
each Obligor shall, and shall cause each Subsidiary to:
10.1.1. Inspections; Appraisals. (a) Permit First Lien Agent (and, after the
occurrence and during the continuance of an Event of Default, Agent) from time
to time subject (except when a Default or Event of Default exists) to reasonable
notice and normal business hours, to visit and inspect the Properties of any
Obligor, inspect, audit and make extracts from any Obligor’s books and records,
and discuss with its officers, employees, agents, advisors and independent
accountants such Obligor’s business, financial condition, assets, prospects and
results of operations. Neither Agent nor any Lender shall have any duty to any
Obligor to make any inspection, nor to share any results of any inspection,
appraisal or report with any Obligor. To the extent any appraisal or other
information is shared by Agent or a Lender with any Obligor, such Obligor
acknowledges that it was prepared by Agent and Lenders for their purposes and
Obligors shall not be entitled to rely upon it. The Agent shall provide the
Collateral Agent with all final Collateral appraisals and audit reports promptly
after the Agent’s receipt thereof. Notwithstanding anything contrary in this
Section 10.1.1(a), so long as no Event of Default is continuing, Agent shall
have no right to conduct, any visit, appraisal, inspection, assessment or audit.
(b) Reimburse Agent for all reasonable and documented out-of-pocket charges,
costs and expenses of Agent in connection with (i) examinations of any Obligor’s
books and records or any other financial or Collateral matters as Agent deems
appropriate, (x) other than those times described in clause (y), following the
Bank Loan Termination Date, up to twice per Loan Year or (y) at all times during
a continuation of an Excess Availability Trigger Period and for a period of
twelve (12) calendar months following the end of any such Excess Availability
Trigger Period, up to three times per Loan Year; (ii) appraisals of Inventory
(x) other than those times described in clause (y), following the Bank Loan
Termination Date, up to twice per Loan Year or (y) at all times during a
continuation of an Excess Availability Trigger Period and for a period of twelve
(12) calendar months following the end of any such Excess Availability Trigger
Period, up to three times per Loan Year; (iii) appraisals of Eligible Real
Estate (as defined in the First Lien Loan Agreement), in form and detail
reasonably satisfactory to First Lien Agent (or, following the Bank Loan
Termination Date, Agent), (x) at all times other than those described in clause
(y), following the Bank Loan Termination Date, once per Loan Year if so
requested by First Lien Agent (or, following the Bank Loan Termination Date,
Agent) or (y) at all times during a continuation of an Excess Availability
Trigger Period and for a period of twelve (12) calendar months following the end
of any such Excess Availability Trigger Period, twice per Loan Year if so
requested by Agent; and (iv) following the Bank Loan Termination Date,
environmental assessment reports as Agent deems appropriate in its reasonable
discretion, with respect to the Eligible Real Estate (as defined in the First
Lien Loan Agreement) of the Obligors; provided, however, that (x) during an
Event of Default, the Agent may conduct any examinations and appraisals in its
reasonable discretion without regard to any such limits and (y) if any
examination or appraisal is initiated during an Event of Default, all reasonable
and documented out-of-pocket charges, costs and expenses therefor shall be
reimbursed by Obligors without regard to such limits. Obligors shall pay Agent’s
then standard charges for each day that an employee of Agent or its Affiliates
is engaged in any examination activities in connection with the foregoing, and
shall pay the standard charges of Agent’s internal appraisal group. Subject to
the following sentence, this Section shall not be construed to limit Agent’s
right to conduct examinations or to obtain appraisals at any time in its
discretion, nor to use third parties for such purposes. For the avoidance of
doubt, this Section 10.1.1(b) is subject to the limitations referenced in
Section 10.1.1(a).
10.1.2. Financial and Other Information. Keep adequate records and books of
account with respect to its business activities, in which proper entries are
made in accordance with GAAP reflecting all financial transactions; and furnish
to Agent and Lenders:
(a) within 90 days after the close of each Fiscal Year, balance sheets as of the
end of such Fiscal Year and the related statements of income, cash flow and
shareholders’ equity for such Fiscal Year, on a consolidated basis for Obligors
and Subsidiaries, which consolidated statements shall all be in reasonable
detail and prepared in accordance with GAAP, audited and accompanied by (i) a
certification (without qualification as to scope or “going concern” (or similar)
qualification) by a firm of independent certified public accountants of
recognized standing selected by Borrowers and reasonably acceptable to Agent
(with the Agent hereby acknowledging and agreeing that each of
PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte & Touche are
acceptable), which certification shall be prepared in accordance with GAAP and
applicable Securities Laws and (ii) an attestation report of such certified
public accountants as to the Obligors’ internal controls pursuant to Section 404
of Sarbanes-Oxley, and shall set forth in comparative form corresponding figures
for the preceding Fiscal Year and other information reasonably acceptable to
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(b) within 45 days after the end of each fiscal quarter (but within 60 days
after the last fiscal quarter of each Fiscal Year), unaudited balance sheets as
of the end of such fiscal quarter and the related statements of income and cash
flow for such fiscal quarter and for the portion of the Fiscal Year then
elapsed, on a (i) consolidated basis for Obligors and Subsidiaries and (ii)
combined basis for Obligors and Subsidiaries other than the SPEs and Passive
Companies, setting forth in comparative form corresponding figures for the
preceding Fiscal Year as well as the applicable projections for such period
delivered under Section 10.1.2(f) and certified by the Borrower Agent pursuant
to a certificate signed on behalf of Borrower Agent by a Senior Officer of the
Borrower Agent (with such certification to be in such Person’s capacity as a
Senior Officer of such Obligor and not in such Person’s individual capacity) as
prepared in accordance with GAAP and fairly presenting the financial position
and results of operations for such quarterly period, subject to normal year-end
adjustments and the absence of footnotes;
(c) within 30 days after the end of each month (but within 60 days after the
last month in a Fiscal Year), unaudited balance sheets as of the end of such
month and the related statements of income and cash flow for such month and for
the portion of the Fiscal Year then elapsed, on a consolidated basis for Parent
and Subsidiaries, setting forth in comparative form corresponding figures for
the preceding Fiscal Year as well as the applicable projections for such period
delivered under Section 10.1.2(f) and certified by a Senior Officer (with such
certification to be in such Person’s capacity as a Senior Officer of such
Obligor and not in such Person’s individual capacity) of Borrower Agent as
prepared in accordance with GAAP and fairly presenting the financial position
and results of operations for such month and period, subject to normal year-end
adjustments and the absence of footnotes;
(d) concurrently with delivery of financial statements under clauses (a) and
(b) above, or more frequently if requested by Agent while an Event of Default
exists, a Compliance Certificate executed by a Senior Officer of Borrower Agent
(with such certification to be in such Person’s capacity as a Senior Officer of
Borrower Agent and not in such Person’s individual capacity);
(e) concurrently with delivery of financial statements under clause (a) above,
and otherwise promptly after the request by Agent, copies of any detailed audit
reports or management letters submitted to the board of directors (or the audit
committee of the board of directors) of any Obligor by independent accountants
in connection with the accounts or books of any Obligor or any Subsidiary, or
any audit of any of them;
(f) not later than 45 days after the beginning of the then current Fiscal Year,
projections of Obligors’ consolidated balance sheets, results of operations,
cash flow and Availability for the current Fiscal Year and the next two Fiscal
Years, year by year, and for the current Fiscal Year, month by month;
(g) at Agent’s request, a listing of the Obligors’ consolidated trade payables,
specifying the trade creditor and balance due, and a detailed trade payable
aging;
(h) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that any Obligor has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Obligor files with
the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements
made available by an Obligor to the public concerning material changes to or
developments in the business of such Obligor, if and to the extent such
information is not available on the SEC’s or the Parent’s website;

 

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(i) promptly after the sending or filing thereof, copies of any annual report to
be filed in connection with each Plan or Foreign Plan;
(j) promptly upon the consummation of the transactions relating to the
Restatement Date or the Convertible Note Debt or any Refinancing Debt, copies
certified by a Senior Officer as complete and correct copies (with such
certification to be in such Person’s capacity a Senior Officer of an Obligor and
not in such Person’s individual capacity) of the documents for the transactions
relating to the Restatement Date or of the Convertible Note Debt Documents or
the documents relating to the Refinancing Debt, as the case may be;
(k) promptly (x) upon delivery thereof, copies of all documents and materials of
a material financial nature provided to any other creditor of any Obligor or any
Subsidiary and (y) upon receipt thereof, copies of all material notices or
information or material non-ordinary course correspondence received from, or on
behalf of, any other creditor of any Obligor or any Subsidiary (including,
without limitation, any default or similar notices);
(l) promptly upon request therefor, all information pertaining to the Obligors
and their Subsidiaries reasonably requested by any Lender in order for such
Lender to comply with the provisions of the Patriot Act; and
(m) within (i) 15 days after the end of each Fiscal Quarter, a detailed summary
of all Hedging Agreements, and (ii) 45 days after the end of each Fiscal
Quarter, a detailed summary of Bank Products (as defined in the First Lien Loan
Agreement) and any other bank products that constitute Obligations obtained by
the Obligors then outstanding (assuming such agreements were terminated on the
date of each summary) which shall include, but not be limited to, the amount,
interest rate, counterparty institution, and mark to market exposure for each
such product.
(n) such other reports and information (financial or otherwise) as Agent may
request from time to time in connection with any Collateral or any Obligor’s or
Subsidiary’s financial condition or business.
Documents required to be delivered pursuant to Section 10.1.2(a) or
Section 10.1.2(b) (to the extent any such documents are included in materials
otherwise filed with the Securities and Exchange Commission) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the applicable Borrower posts such documents, or provides
a link thereto on such Borrower’s website on the internet at the website address
indicated in writing to Agent and Lenders by the Borrower Agent; or (ii) on
which such documents are posted on the Borrowers’ behalf on an internet or
intranet website, if any, to which each Lender and Agent have access (whether a
commercial, third-party website or whether sponsored by Agent); provided that:
(i) such Borrower shall deliver paper copies of such documents to Agent or any
Lender that requests such Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by Agent or such Lender and
(ii) such Borrower shall notify Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrowers shall
be required to provide paper copies of the Compliance Certificates to Agent and
the Lenders. Except for such Compliance Certificates, Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrowers with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.

 

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The Obligors hereby acknowledge that (a) Agent will make available to the
Lenders materials and/or information provided by or on behalf of the Obligors
hereunder (collectively, “Borrower Materials”) and (b) certain of the Lenders
may be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Obligors or their securities) (each,
a “Public Lender”). The Obligors hereby agree that (w) all Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Obligors shall be deemed to have authorized the
Agent and the Lenders to treat such Borrower Materials as not containing any
material non-public information with respect to the Obligors or their securities
for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute Information, they
shall be treated as set forth in Section 14.11); (y) all Borrower Materials
marked “PUBLIC” are permitted to be made available to the Public Lenders; and
(z) Agent and Lenders shall be entitled to treat any Borrower Materials that are
not marked “PUBLIC” as being suitable for Public Lenders.
THE AGENT PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS.
In no event shall the Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to any Borrower, any Lender or any other
Person for losses, claims, damages, liabilities or expenses of any kind (whether
in tort, contract or otherwise) arising out of the Borrowers’ or the Agent’s
transmission of Borrower Materials through the internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent or such
Related Party; provided, however, that in no event shall the Agent or any of its
Related Parties have any liability to any Borrower, any Lender or any other
Person for indirect, special, incidental, consequential or punitive damages (as
opposed to direct or actual damages).
10.1.3. Notices. Notify Agent and Lenders in writing promptly (but in any event,
with respect to clauses (k) and (l) below, within five (5) Business Days) after
any Senior Officer of the Parent or the Borrower Agent obtaining knowledge
thereof, of any of the following that affects an Obligor: (a) the threat (in
writing) or commencement of any proceeding or investigation, whether or not
covered by insurance, reasonably likely to result in a Material Adverse Effect;
(b) any material pending or threatened (in writing) labor dispute, strike or
walkout, or the expiration of any material labor contract; (c) any material
default under or termination of a Material Contract; (d) the existence of any
Default or Event of Default; (e) any judgment in an amount exceeding $5,750,000;
(f) the assertion of any Intellectual Property Claim, if an adverse resolution
is reasonably likely to result in a Material Adverse Effect; (g) any violation
or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws), if an adverse resolution is reasonably likely to result in
a Material Adverse Effect; (h) any material Environmental Release by an Obligor
or on any Property owned, leased or occupied by an Obligor; or receipt of any
material Environmental Notice; (i) the discharge of or any withdrawal or
resignation by Obligors’ independent accountants; (j) any opening of a new
office, place of business or Distribution Center where Collateral with a fair
market value of $2,300,000 or more will be located, at least 30 days prior to
such opening, (k) any “default” or “event of default” under any First Lien Debt
Documents, Mortgage Loan Debt Documents, Senior Note Debt Documents or
Convertible Note Debt Documents, as the case may be, or (l) any waiver, consent,
amendment, or permanent prepayment or permanent commitment reduction (and the
amount thereof), pursuant to the First Lien Debt Documents, Mortgage Loan Debt
Documents, Senior Note Debt Documents or Convertible Note Debt Documents, as the
case may be).

 

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10.1.4. Storage Agreements. Upon request, provide Agent with copies of all
existing agreements, and promptly after execution thereof provide Agent upon
request with copies of all future agreements, between an Obligor and any
warehouseman, processor, shipper, bailee, customs broker or other Person (other
than store landlords) that owns any premises at which any Collateral having an
aggregate value of more than $575,000 may be kept or that otherwise may possess
or handle any Collateral.
10.1.5. Compliance with Laws; Organic Documents; Material Contracts. Comply
(a) with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA,
Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and
maintain all Governmental Approvals necessary to the ownership of its Properties
or conduct of its business, unless failure to comply or maintain could not
reasonably be expected to have a Material Adverse Effect, (b) with all Organic
Documents unless failure to comply therewith would not (x) be reasonably
expected to have a Material Adverse Effect and (y) be reasonably expected to
have a materially adverse effect on the Agent or any Lender and (c) with all of
its Material Contracts except in each case where the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, if any material Environmental Release
occurs at or on any Properties of any Obligor or Subsidiary, it shall act
promptly and diligently to investigate and report to Agent and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.
10.1.6. Taxes. Pay and discharge (a) prior to the Restatement Date, all Taxes,
and (b) on and after the Restatement Date, all material Taxes, in each case
prior to the date on which they become delinquent or penalties attach, unless
such Taxes are being Properly Contested.
10.1.7. Insurance. In addition to the insurance required hereunder with respect
to Collateral, maintain insurance with insurers reasonably satisfactory to First
Lien Agent (and, following the Bank Loan Termination Date, Agent), with respect
to the Properties, business and business interruption of Obligors and
Subsidiaries of such type (including product liability, workers’ compensation,
larceny, embezzlement, or other criminal misappropriation insurance), in each
case, in such amounts, and with such coverages and deductibles as are customary
for companies similarly situated.
10.1.8. Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material
Property of Obligors and Subsidiaries in full force and effect, if the failure
to maintain such License is reasonably likely to result in a Material Adverse
Effect.
10.1.9. Future Subsidiaries. Promptly notify Agent upon any Person becoming a
Subsidiary and on the date such Person becomes a Subsidiary, unless such Person
is a Foreign Subsidiary, SPE or Passive Company, cause it to guaranty the
Obligations by executing a Guaranty in favor of the Agent, and to execute and
deliver such documents, instruments and agreements and to take such other
actions as Agent shall reasonably require to evidence and perfect a first
priority (subject only to Liens securing Debt under the First Lien Debt
Documents and any other Permitted Liens entitled to priority under Applicable
Law) Lien in favor of Agent (for the benefit of Secured Parties) on all assets
of such Person constituting Collateral (provided that perfection of any such
Lien shall be required to the same extent required by this Loan Agreement on the
Closing Date), including delivery of such legal opinions, in form and substance
reasonably satisfactory to Agent, as it shall deem appropriate.

 

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10.1.10. Lien Waivers. (A) Prior to the Bank Loan Termination Date, shall
deliver Lien Waivers for each of the Obligor’s leased locations that constitute
a Large Inventory Location and for each of the Obligor’s leased locations in a
Landlord Lien State; provided that notwithstanding anything to the contrary
contained in this Loan Agreement (including any of the components of the defined
term “Lien Waiver”) or any other Loan Document, the covenant contained in this
Section 10.1.10 shall be deemed satisfied if any Obligor or any Subsidiary of
any Obligor mails to the lessor, warehouseman, processor, shipper, customs
broker, freight forwarder, repairman, mechanic, bailee, or Licensor, as
applicable, a Lien Waiver substantially in the form reasonably acceptable to the
First Lien Agent, whether or not such Persons agree to countersign such Lien
Waiver; provided further that none of the Obligors shall be required to expend
any money, or perform any other obligation other than administrative and
ministerial tasks such as coordinating signatures to the extent such form of
Lien Waiver is acceptable in substantially the form delivered by the Obligors to
the landlord or such other form that is approved by the First Lien Agent and the
obligation to mail such Lien Waiver, as explicitly set forth in this
Section 10.1.10, and (B) following the Bank Loan Termination Date, use
commercially reasonable efforts to deliver Lien Waivers for each of the
Obligor’s leased locations that constitutes a Large Inventory Location and for
each of the Obligor’s leased locations in a Landlord Lien State.
10.1.11. Preservation of Existence. Preserve, renew and maintain in full force
and effect its legal existence and good standing under the laws of the
jurisdiction of its organization except in a transaction permitted by
Section 10.2.6 or Section 10.2.9.
10.1.12. Maintenance of Properties. Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
10.1.13. Books and Records. Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all material financial transactions and matters
involving the assets and business of such Obligors or such Subsidiary, as the
case may be.
10.1.14. Operation and Maintenance Plan. If recommended by any environmental
report furnished to the First Lien Agent (or, following the Bank Loan
Termination Date, Agent) and if required by applicable Environmental Law with
respect to any individual parcel of Real Estate, the Obligors shall establish
and comply with an operations and maintenance program with respect to such
individual parcel of Real Estate, in form and substance reasonably acceptable to
First Lien Agent (or, following the Bank Loan Termination Date, Agent), prepared
by an environmental consultant reasonably acceptable to First Lien Agent (or,
following the Bank Loan Termination Date, Agent). Without limiting the
generality of the preceding sentence, First Lien Agent (or, following the Bank
Loan Termination Date, Agent) may require (a) periodic notices or reports
regarding matters addressed by the operation and maintenance program to First
Lien Agent (or, following the Bank Loan Termination Date, Agent) in form,
substance and at such intervals as First Lien Agent (or, following the Bank Loan
Termination Date, Agent) may reasonably require, (b) and amendment to such
operations and maintenance program reasonably required to address changing
circumstances or applicable laws, (c) access to such parcel of Real Estate,
subject to Section 10.1.1, to review and assess the environmental condition of
such parcel and Obligors’ compliance with such operations and maintenance
program, and (d) variation of the operations and maintenance program reasonably
required in response to the reports provided by any such consultants, as
required by applicable Environmental Law.
10.2. Negative Covenants. For so long as any Obligations are outstanding, each
Obligor shall not, and shall cause each Subsidiary not to:
10.2.1. Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except:
(a) the Obligations;
(b) the Mortgage Loan Debt;

 

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(c) the Senior Note Debt;
(d) Permitted Purchase Money Debt;
(e) Borrowed Money (other than the Obligations, Mortgage Loan Debt, the Senior
Note Debt and Permitted Purchase Money Debt), but only to the extent outstanding
on the Closing Date, not satisfied with proceeds of the Term Loans and set forth
on Schedule 10.2.1;
(f) Bank Product Debt; provided that with respect to such Bank Product Debt in
respect of Hedging Agreements, such Obligor is otherwise permitted to enter into
such Hedging Agreement pursuant to Section 10.2.15;
(g) Permitted Contingent Obligations;
(h) Refinancing Debt as long as each Refinancing Condition is satisfied;
(i) Debt that is not included in any of the preceding clauses of this
Section 10.2.1, is not secured by a Lien and the principal amount thereof does
not exceed, in the aggregate at any time (x) $5,750,000 minus (y) the then
outstanding principal amount of Permitted Purchase Money Debt in excess of
$23,000,000;
(j) the guarantee by any Obligor of Debt of another Obligor so long as such Debt
was otherwise permitted to be incurred under this Section 10.2.1;
(k) Debt under the First Lien Debt Documents;
(l) the incurrence by any Obligor of Debt arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of any other Obligor pursuant to such agreements, in any case
incurred in connection with the disposition of any business, assets or capital
stock of any Obligor (other than guarantees of Debt incurred by any Person
acquiring all or any portion of such business, assets or capital stock of such
Obligor for the purpose of financing such acquisition), so long as the principal
amount does not exceed the gross proceeds actually received by any Obligor in
connection with such disposition;
(m) the incurrence by any Obligor of Debt arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business, provided,
however, that such Debt is extinguished within five Business Days of its
Incurrence;
(n) Debt in respect of loans permitted to be made pursuant to Section 10.2.7;
(o) an unsecured guarantee by any Obligor of the obligations of any other
Obligor, as tenant, under any Master Lease Agreement;
(p) Convertible Note Debt in an aggregate principal amount not to exceed
$115,000,000; provided that (i) (I) if the Convertible Note Debt is incurred by
Parent and not incurred or guaranteed by any other Obligor, the final maturity
of such Debt shall not occur prior to June 30, 2013 and (II) if the Convertible
Note Debt is incurred or guaranteed by any Obligor other than Parent, the final
maturity of such Debt shall not occur prior to May 18, 2014, (ii) (I) if the
Convertible Note Debt is incurred by Parent and not incurred or guaranteed by
any other Obligor, there shall be no scheduled amortization or mandatory
prepayments or mandatory repayments of such Debt prior to June 30, 2013 and
(II) if the Convertible Note Debt is incurred or guaranteed by any Obligor other
than Parent, there shall be no scheduled amortization or mandatory prepayments
or mandatory repayments of such Debt prior to May 18, 2014, (iii) 100% of the
net proceeds from the issuance of such Debt is applied to the repayment of the
Debt under the First Lien Debt Documents, (iv) both before and after giving
effect to the Convertible Debt Documents, no Default or Event of Default shall
exist, and (v) prior to the consummation of any Convertible Note Debt
transaction, Agent shall have received an officer’s certificate (in form and
substance reasonably satisfactory to Agent) from a Senior Officer of the
Borrowers certifying that the conditions set forth in this clause (p) are
satisfied;

 

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(q) unsecured Debt owed to sellers constituting consideration for Permitted
Acquisitions on terms and conditions reasonably acceptable to Agent;
(r) unsecured Debt consisting of earn-out obligations in connection with any
Permitted Acquisition;
(s) Debt of a Person or Debt attaching to assets of a Person that, in either
case, becomes a Subsidiary of a Borrower after the date hereof as the result of
a Permitted Acquisition, provided that such Debt existed at the time such Person
became a Subsidiary or at the time such assets were acquired and, in each case,
was not created in anticipation thereof;
(t) Debt in respect of deferred compensation incurred in the ordinary course of
business;
(u) Debt incurred in connection with any sale or disposition of any property in
connection with any transaction covered by, but not prohibited by,
Section 10.2.23; and
(v) Debt owing to any insurance company in connection with the financing of any
insurance premiums permitted by such insurance company in the ordinary course of
business;
provided, however, that clauses (p) through (v) above shall only apply on and
after the Restatement Date.
10.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its
Property, except the following (collectively, “Permitted Liens”):
(a) Liens in favor of Agent;
(b) Purchase Money Liens securing Permitted Purchase Money Debt (provided that
such Liens shall not, for the avoidance of doubt, secure the Debt permitted
pursuant to Sections 10.2.1(p) and (r));
(c) (i) Liens for Taxes not yet due or being Properly Contested, (ii) Liens for
Taxes that are set forth in Schedule 10.2.2(c); provided that such Taxes (and
the Liens in respect thereof) are satisfied or are being Properly Contested no
later than the date that is 90 days after the Closing Date and (iii) other Liens
for Taxes in an aggregate amount not to exceed $575,000; provided that such
Taxes (and the Liens in respect thereof) are satisfied or are being Properly
Contested no later than the date that is 90 days after a Senior Officer of a
Borrower becomes aware of such Liens;
(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising
in the Ordinary Course of Business, but only if (i) payment of the obligations
secured thereby is not yet due or is being Properly Contested, and (ii) such
Liens do not materially impair the value or use of the Property or materially
impair operation of the business of any Obligor or Subsidiary;
(e) Liens incurred or deposits made in the Ordinary Course of Business to secure
the performance of tenders, bids, leases, contracts (except those relating to
Borrowed Money), statutory obligations and other similar obligations, or arising
as a result of progress payments under government contracts, as long as such
Liens are at all times junior to Agent’s Liens;

 

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(f) Liens arising by virtue of a judgment or judicial order against any Obligor
or Subsidiary, or any Property of an Obligor or Subsidiary not giving rise to an
Event of Default;
(g) easements, rights-of-way, restrictions, covenants or other agreements of
record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business;
(h) normal and customary rights of setoff upon deposits in favor of depository
institutions, and Liens of a collecting bank on Payment Items in the course of
collection;
(i) (x) Liens securing Debt under the First Lien Debt Documents including,
without limitation, any Bank Product Debt; provided that such Liens are subject
to, and have the priority set forth in, the Intercreditor Agreement in all
respects and (y) Liens on the assets of any SPE securing the Mortgage Loan Debt
and the Refinancing Debt of Mortgage Loan Debt;
(j) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with any Obligor; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with such Obligor;
(k) Liens on property existing at the time of acquisition thereof by any
Obligor; provided that such Liens were in existence prior to the contemplation
of such acquisition and do not extend to (i) any Accounts or Inventory or
(ii) any property other than the property so acquired by such Obligor;
(l) Liens incurred or deposits made in the ordinary course of business in
connection with worker’s compensation, unemployment insurance or other social
security obligations;
(m) Liens, deposits or pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of Debt), leases, or other
similar obligations arising in the ordinary course of business;
(n) survey exceptions, encumbrances, easements or reservations of, or rights of
others for, rights of way, zoning or other restrictions as to the use of
properties, and defects in title which, in the case of any of the foregoing,
were not incurred or created to secure the payment of Debt, and which in the
aggregate do no materially adversely affect the value of such properties or
materially impair the use for the purposes of which such properties are held by
any Obligor;
(o) judgment and attachment Liens not giving rise to an Event of Default and
notices of lis pendens and associated rights related to litigation being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made;
(p) Liens, deposits or pledges to secure public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds or
obligations; and Liens, deposits or pledges in lieu of such bonds or
obligations, or to secure such bonds or obligations, or to secure letters of
credit in lieu of or supporting the payment of such bonds or obligations;
(q) any interest or title of a lessor, licensor or sublicensor in the property
subject to any lease, license or sublicense, including any interest of a
Licensor in any License;
(r) Liens arising from UCC financing statements regarding operating leases or
consignments;

 

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(s) Liens securing Refinancing Debt of the Senior Note Debt; provided that any
such Liens are (i) limited to the collateral securing the Obligations and do not
extend to any other assets of the Parent and its Subsidiaries and (ii) expressly
subordinated to the Liens securing the Obligations and subject to an
intercreditor agreement, in form and substance and on terms and conditions,
reasonably acceptable to Agent and the Collateral Agents, and such intercreditor
agreement is in full force and effect;
(t) Liens for assessments and governmental charges not yet delinquent or being
contested in good faith and for which adequate reserves have been established to
the extent required by GAAP;
(u) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
Properly Contested;
(v) deposits in the ordinary course of business to secure liability to insurance
carriers;
(w) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the ordinary course of business;
(x) Liens (i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodity brokerage amounts incurred in the
ordinary course of business and (iii) in favor of banking institutions arising
as a matter of law encumbering deposits (including the right of set-off) and
which are within the general parameters customary in the banking industry;
(y) existing Liens shown on Schedule 10.2.2 and Liens securing Refinancing Debt
in respect thereof; and
(z) on and after the Restatement Date, the licensing of Intellectual Property to
third Persons on reasonable and customary terms in the ordinary course of
business consistent with past practice; provided that such licensing does not
(i) materially interfere with the business of the Parent or any other Obligor or
(ii) interfere with the Agent’s liens or security interests or the Agent’s right
to dispose of any Collateral subject to such Intellectual Property.
10.2.3. Cash Accumulation. After the Restatement Date, permit, for a period
exceeding five (5) consecutive Business Days, cash or Cash Equivalents in an
aggregate amount in excess of $75,000,000 (other than (a) cash and Cash
Equivalents reasonably necessary for the Obligors and their Subsidiaries to
satisfy the current liabilities incurred by them in the ordinary course of their
business and without acceleration of the satisfaction of such current
liabilities and (b) so long as no Trigger Event Period exists, proceeds from the
issuance of Equity Interests of the Obligors for a period of 180 days after the
receipt by the Obligors thereof) to accumulate and be maintained in the Deposit
Accounts and investment accounts of the Obligors; provided, however, that the
Obligors’ obligations under this Section 10.2.3 shall be suspended if and for so
long as there are no Loans (as defined in the First Lien Loan Agreement)
outstanding.
10.2.4. Distributions; Upstream Payments. Declare or make any Distributions,
except (i) Upstream Payments or (ii) Permitted Distributions; or create or
suffer to exist any encumbrance or restriction on the ability of a Subsidiary to
make any Upstream Payment, except for restrictions (a) under the Loan Documents
and First Lien Debt Documents, (b) under Applicable Law, (c) in effect on the
Closing Date as shown on Schedule 9.1.16 and (d) as set forth in documents
evidencing Refinancing Debt with respect to the documents described on
Schedule 9.1.16.

 

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10.2.5. Restricted Investments. Make any Restricted Investment.
10.2.6. Disposition of Assets. Make any Asset Disposition (other than any Asset
Disposition by any SPE or Passive Company), except a Permitted Asset
Disposition, a disposition of Equipment under Section 8.4.2, or a transfer of
Property by any Obligor to another Obligor.
10.2.7. Loans. Make any loans or other extensions of credit to any Person,
except (a) advances to an officer or employee of any Obligor for salary, travel
expenses, relocation expenses, commissions and similar items in the Ordinary
Course of Business; (b) prepaid expenses and extensions of trade credit made in
the Ordinary Course of Business; (c) deposits with financial institutions
permitted hereunder; (d) loans or other extensions of credit from Obligor to
Obligor so long as (x) each Borrower is Solvent and (y) Parent and its
Subsidiaries, on a consolidated basis, are Solvent, in each case, at the time of
any such loan; (e) loans or other extensions of credit by any Obligor to any
Subsidiary that is not an Obligor in an amount not to exceed $1,150,000 at any
time outstanding; and (f) loans or other extensions of credit by any Subsidiary
that is not an Obligor to any Obligor; provided, clauses (d) through (f) shall
only apply on and after the Restatement Date.
10.2.8. Restrictions on Payment of Certain Debt. Make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to (i) any Debt that is not permitted to be made by
Section 10.2.8 of the First Lien Loan Agreement prior to the Restatement Date or
(ii) the Senior Note Debt, the Mortgage Loan Debt, the Convertible Note Debt and
Refinancing Debt of any of the Senior Note Debt and the Mortgage Loan Debt and
the Convertible Note Debt (in each case whether before or after the Restatement
Date) other than under this clause (ii) (a) payments of interest, fees and
expenses due in the ordinary course, (b) regularly scheduled principal payments
with respect to the Mortgage Loan Debt and Refinancing Debt of the Mortgage Loan
Debt, (c) payments (whether voluntary or mandatory, or a prepayment, redemption,
retirement, defeasance or acquisition) of the Senior Note Debt, the Mortgage
Loan Debt and the Convertible Note Debt derived solely from Refinancing Debt
which meets the Refinancing Condition, (d) other payments (whether voluntary or
mandatory, or a prepayment, redemption, retirement, defeasance or acquisition)
of Senior Note Debt, the Mortgage Loan Debt and the Convertible Note Debt and
Refinancing Debt of the Senior Note Debt, the Convertible Note Debt and the
Mortgage Loan Debt, so long as (i) no Default or Event of Default shall have
occurred and be continuing or would result after giving effect to any such
payment, (ii) at any time prior to the Bank Loan Termination Date, Excess
Availability on the date of the making of such payment on a pro forma basis
after giving effect to such payment, and projected Excess Availability on a pro
forma basis for the upcoming twelve month period (after giving effect to such
payment) is, in each case, greater than or equal to 21% of the lesser of (x) the
Tranche A Revolver Commitments plus the Tranche A-1 Revolver Commitments or
(y) the Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base, (iii) at
any time prior to the Bank Loan Termination Date, as of the monthly fiscal
period most recently then ended, the Consolidated Fixed Charge Coverage Ratio
(on a pro forma trailing 12 fiscal month basis, giving effect to the making of
such payment, and any Debt under the First Lien Debt Documents incurred in
connection therewith, determined as though such payment and Debt under the First
Lien Debt Documents had been incurred on the first day of the twelve (12) fiscal
month period ended prior to such payment) is not less than 0.90 to 1.00, and
(iv) the Borrowers shall have provided the Agent with a certificate not less
than then (10) days prior to the making of such payment executed by a Senior
Officer, evidencing compliance, on a pro forma basis, after giving effect to
such payment, with the requirements set forth in clauses (d)(ii) and (d)(iii)
above).
10.2.9. Fundamental Changes. (a) Merge, combine or consolidate with any Person,
or liquidate, wind up its affairs or dissolve itself, in each case whether in a
single transaction or in a series of related transactions, except (i) for
mergers or consolidations of (x) an Obligor with another Obligor or (y) a
Subsidiary that is not an Obligor with any other Subsidiary that is not an
Obligor, (ii) for liquidation or dissolution of any non-Obligor Subsidiary of
the Borrowers, so as long as (x) the net assets of such Subsidiaries remaining
after payments to creditors are distributed to an Obligor and (y) in any event,
100% of the Capital Stock or other equity securities held by such dissolving
Subsidiary are transferred to an Obligor, (iii) for liquidation or dissolution
of any Obligor (other than any Borrower) on terms and conditions reasonably
acceptable to Agent or (iv) to affect the transactions otherwise permitted
pursuant to Section 10.2.5; or (b) without fifteen (15) days prior written
notice to the Agent, change its name or conduct business under any fictitious
name, change its tax, charter or other organizational identification number, or
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10.2.10. Subsidiaries. Form or acquire any Subsidiary after the Closing Date,
except in accordance with Sections 10.1.9 and 10.2.5; or permit any existing
Subsidiary to issue any additional Equity Interests except (a) director’s
qualifying shares and (b) Equity Interests issued to an Obligor.
10.2.11. Organic Documents. Amend, modify or otherwise change, in a manner which
would be materially adverse to any Lender, any of its Organic Documents as in
effect on the Closing Date.
10.2.12. Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Obligors and Subsidiaries.
10.2.13. Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.
10.2.14. Restrictive Agreements. Other than any conditions or restrictions in
respect to Distributions by the Parent, become a party to any Restrictive
Agreement, except (a) a Restrictive Agreement as in effect on the Closing Date
and shown on Schedule 9.1.16; (b) a Restrictive Agreement relating to secured
Debt permitted hereunder, if such restrictions apply only to the collateral for
such Debt; (c) customary provisions in leases and other contracts restricting
assignment thereof; (d) Restrictive Agreements contained in documents evidencing
Refinancing Debt of the Senior Note Debt; (e) Restrictive Agreements contained
in documents evidencing Refinancing Debt of the Debt under the First Lien Debt
Documents; (f) Restrictive Agreements contained in documents evidencing the
Convertible Note Debt or Refinancing Debt of the Convertible Note Debt, in each
case that are no more restrictive than the Restrictive Agreements contained in
the documents evidencing the Debt under the First Lien Debt Documents; and
(g) customary restrictions entered into in the ordinary course of business in
asset sale agreements, sale-leaseback agreements, stock sale agreements and
other similar agreements limiting the transfer of the assets subject thereto
pending the consummation of the sale provided therein; provided that clauses
(e), (f) and (g) shall not apply prior to the Restatement Date.
10.2.15. Hedging Agreements. Enter into any Hedging Agreement, except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.
10.2.16. Conduct of Business. Engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Obligors taken
as a whole.
10.2.17. Affiliate Transactions. Enter into or be party to any transaction with
an Affiliate, except (a) transactions contemplated by the Loan Documents;
(b) payment of reasonable compensation to officers and employees for services
actually rendered, and loans and advances permitted by Section 10.2.7;
(c) payment of customary directors’ fees and indemnities; (d) transactions
solely among Obligors; (e) transactions with Affiliates that were entered into
prior to the Closing Date, as shown on Schedule 10.2.17 or as thereafter amended
or replaced in any manner, that, taken as a whole, is not more adverse to the
interests of the Lenders in any material respect than such agreement as it was
in effect on the date hereof; (f) transactions contemplated by the Mortgage Loan
Debt Documents and (g) transactions with Affiliates in the Ordinary Course of
Business, upon fair and reasonable terms fully disclosed to Agent and no less
favorable than would be obtained in a comparable arm’s-length transaction with a
non-Affiliate.

 

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10.2.18. Plans. Become party to any Multiemployer Plan or Foreign Plan.
10.2.19. Amendments to Certain Material Contracts. Except in connection with any
Refinancing Debt permitted hereunder, change, waive or amend any agreement or
arrangement to which Parent or a Subsidiary is party that relates to any
Mortgage Loan Debt Document, the Convertible Note Debt Document or any Senior
Note Debt Document if such change, waiver or amendment (i) increases the
principal balance of such Debt, or increases any required payment of principal
or interest; (ii) accelerates the date on which any installment of principal or
any interest is due, or adds any additional redemption, put or prepayment
provisions; (iii) shortens the final maturity date or otherwise accelerates
amortization; (iv) increases the interest rate; (v) increases or adds any fees
or charges; (vi) modifies any covenant in a manner or adds any representation,
covenant or default that is more onerous or restrictive in any material respect
for any Obligor or Subsidiary, or that is otherwise materially adverse to any
Obligor, any Subsidiary or Lenders; or (vii) could reasonably be considered to
be materially adverse to the Lenders.
10.2.20. No Speculative Transactions. Engage in any transaction involving
commodity options, futures contracts or similar transactions, except solely to
hedge against fluctuations in the prices of commodities owned or purchased by it
and the values of foreign currencies receivable or payable by it and interest
swaps, caps or collars.
10.2.21. Passive Company Status. Where such Obligor or such Subsidiary is a
Passive Company, engage in any trade or business or incur any Debt or guaranteed
Debt except for the trade or business in which it is engaged on the Closing
Date.
10.2.22. General Partner. Be or become the general partner of any partnership
other than (a) a Passive Company and (b) any Subsidiary with nominal assets;
provided that notwithstanding anything to the contrary contained herein, at no
time may any assets (other than assets with a fair market value of nominal
amount) of any Obligor be transferred to any such Subsidiary described in this
clause (b).
10.2.23. Sale-Leaseback Transactions. Engage in any sale-leaseback, synthetic
lease or similar transaction (a) prior to the Restatement Date unless permitted
by Section 10.2.23 of the First Lien Loan Agreement as in effect on the date
hereof and (b) on and after the Restatement Date, involving any of its assets
other than (x) any such transaction entered into by any SPE or Passive Company
where such transaction involves only the assets of such SPE or Passive Company
and (y) such transactions involving assets of the Obligors with a fair market
value of not more than $90,000,000 in the aggregate; provided that, in the case
of clause (y), (a) the terms and conditions of any such transaction shall be
reasonably acceptable to Agent; (b) the Net Proceeds received from such sale are
not less than 70% of the most recent appraised value of such assets; and
(c) simultaneously with the consummation of any such transaction the Obligors
shall (i) deliver to First Lien Agent (or, following the Bank Loan Termination
Date, Agent) a Lien Waiver (or, prior to the Bank Loan Termination Date, First
Lien Agent shall take an appropriate Rent and Charges Reserve (as defined in the
First Lien Loan Agreement)), (ii) adjust the Tranche A Borrowing Base and the
Tranche A-1 Borrowing Base to reflect the sale of Eligible Real Estate (as
defined in the First Lien Loan Agreement) included therein, if any, and
(iii) apply proceeds from such transaction to the prepayment of the Term Loans
to the extent required by Section 5.2.
10.2.24. Debt under Senior Note Debt Documents. Incur any Indebtedness (as
defined in the Senior Note Indenture), other than (i) the Obligations, (ii) the
Mortgage Loan Debt and any Refinancing Debt of the Mortgage Loan Debt, (iii) the
Debt under the First Lien Debt Documents and any Refinancing Debt of the Debt
under the First Lien Debt Documents and (iv) the Convertible Note Debt, that at
the time of the incurrence thereof, or at any time thereafter, is Indebtedness
(as defined in the Senior Note Indenture) permitted to be incurred under the
Senior Note Indenture as a result of such Indebtedness (as defined in the Senior
Note Indenture) being permitted under Section 4.09(b)(1) of the Senior Note
Indenture.

 

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10.2.25. Use of Proceeds. The proceeds of Term Loans shall not be used by
Borrowers, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.
10.2.26. Amendments to First Lien Debt Documents. Agree to any modification to
or amendment of, or consent to or obtain any waiver or forbearance with respect
to any First Lien Debt Document except as permitted by the Intercreditor
Agreement. Notwithstanding anything contained in this Loan Agreement to the
contrary, any amendment to, or amendment and restatement of, any First Lien Debt
Document, in the form of the Proposed Restated Revolving Credit Documents (as
defined in the Intercreditor Agreement), including any changes thereto which are
permitted by the terms of the Intercreditor Agreement shall not be prohibited by
this Section 10.2.26 or otherwise under this Loan Agreement or any other Loan
Document, execution and delivery thereof by any Obligor shall not require the
consent or approval of Agent or any Lender.
10.2.27. Acquisition of Debt. Purchase, redeem, prepay, tender for or otherwise
acquire, directly or indirectly, any of the outstanding Term Loans or First Lien
Debt except (I) upon the repurchase, redemption, tender or other acquisition of
the Term Loans in full, (II) any prepayment of the Term Loans in accordance with
the terms of this Loan Agreement, (III) any Refinancing, repurchase, redemption,
tender or other acquisition of the First Lien Debt not prohibited by the terms
of the Intercreditor Agreement or (IV) any voluntary or mandatory prepayment of
the First Lien Debt not prohibited by this Loan Agreement. Obligors will
promptly cancel all Term Loans or First Lien Debt acquired by it or any of its
Subsidiaries or Affiliates which control, are controlled by, or are under common
control with such Obligors pursuant to any purchase, redemption, prepayment or
tender for the Term Loans or First Lien Debt pursuant to any provision of this
Loan Agreement or otherwise and no Term Loans or First Lien Debt may be issued
in substitution or exchange for any such Term Loans or First Lien Debt. For the
avoidance of doubt, this Section 10.2.27 is not intended and shall not prevent
Obligors from making (a) regularly scheduled payments of principal and interest
pursuant to the First Lien Loan Agreement, or (b) any prepayments of Term Loans
or Debt under the First Lien Loan Agreement not otherwise prohibited by this
Loan Agreement.
10.2.28. No Inconsistent Agreements. Except for entering into the Obligations
under (a) the Intercreditor Agreement and (b) the First Lien Loan Agreement with
respect to prepayments of principal, enter into any contractual obligation or
enter into any amendment or other modification to any currently existing
contractual obligation, which by its terms restricts or prohibits the ability of
the Borrowers to pay the principal of or interest on the Term Loans or prohibits
the ability of the Obligors to fully satisfy all of the Obligations.
10.2.29. Stay, Extension and Usury Laws. Insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law wherever enacted (to the extent that it may lawfully do
so), now or at any time hereafter in force, that may affect the covenants or the
performance of its obligations under the Term Loans, this Loan Agreement or the
other Loan Documents, and each Obligor hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
Lenders, but shall suffer and permit the execution of every such power as though
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10.3. Financial Covenants. For so long as any Obligations are outstanding,
Borrowers shall:
10.3.1. Excess Availability. Only for so long as the First Lien Debt Documents
remain in effect, maintain Excess Availability, at all times, of at least
$75,000,000; provided that following the Restatement Date, at any time the
Commitments (as defined in the First Lien Loan Agreement) are greater than
$700,000,000 as a result of an increase in the Commitments (as defined in the
First Lien Loan Agreement) under Section 2.4.1 of the First Lien Loan Agreement,
such amount shall be increased by an amount equal to the result of (a)
$5,000,000 multiplied by (b) the quotient of (i) the result of (x) the aggregate
Commitments (as defined in the First Lien Loan Agreement) at such time minus (y)
$700,000,000 divided by (ii) $100,000,000.
10.3.2. Capital Expenditures. At any time prior to the Restatement Date, not
make Capital Expenditures (other than Capital Expenditures made with insurance
proceeds) in excess of (a) $150,000,000 plus (b) $150,000,000 minus the amount
of Capital Expenditures (other than Capital Expenditures made with insurance
proceeds) actually made in the Fiscal Year most recently then ended, in the
aggregate during any Fiscal Year.
SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
11.1. Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary
or involuntary, by operation of law or otherwise:
(a) Any Borrower fails to pay (i) any principal of the Term Loans when due
(whether at stated maturity, on demand, upon acceleration or otherwise) or
(ii) any interest on the Term Loans or any fee or any other amount (other than
an amount payable under clause (i) of this Section) payable under this Loan
Agreement or any other Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of one
(1) Business Day;
(b) (i) Any information contained in any Compliance Certificate or Borrowing
Base Certificate was untrue or incorrect in any material respect when made or
(ii) any representation or warranty made or delivered to Agent or any Lender by
any Obligor herein, in connection with any Loan Document or transaction
contemplated thereby, or in any written statement, report, financial statement
or certificate (other than a Borrowing Base Certificate is untrue, incorrect or
misleading in any material respect when given or confirmed;
(c) Any Obligor breaches or fails to perform any covenant contained in (i)
Section 7.2 (other than inadvertent breaches of such covenant) of this Loan
Agreement, (ii) Sections 8.1, 8.2.3, 10.1.1, 10.1.2(a), 10.1.2(b), 10.1.2(c),
10.1.2(d), 10.1.2(e), 10.1.2(f), 10.1.3(k), 10.1.3(l), 10.2 or 10.3 of this Loan
Agreement or (iii) any provision contained in the Intercreditor Agreement;
(d) Any Obligor breaches or fails to perform any other covenant contained in any
Loan Documents, and such breach or failure is not cured within 30 days after a
Senior Officer of such Obligor has knowledge thereof or receives written notice
thereof from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period;
(e) Any Guarantor repudiates, revokes or attempts to revoke its Guaranty; any
Obligor denies or contests the validity or enforceability of any Loan Documents
or Obligations, or the perfection or priority of any Lien granted to Agent; or
any Loan Document ceases to be in full force or effect for any reason (other
than a waiver or release by Agent and Lenders);
(f) Any (x) breach or default of an Obligor or any Subsidiary of an Obligor
occurs under any document, instrument or agreement to which it is a party or by
which it or any of its Properties is bound, relating to any Debt (other than the
Obligations and Debt under the First Lien Debt Documents) in excess of
$5,750,000, if the maturity of or any payment with respect to such Debt may be
accelerated or demanded due to such breach or (y) Debt (other than the
Obligations and Debt under the First Lien Debt Documents) in excess of
$5,750,000 of any Obligor or any Subsidiary of any Obligor is required to be
repaid, repurchased, redeemed or defeased;

 

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(g) Prior to the Restatement Date, any Event of Default under Section 11.1(g) of
the First Lien Loan Agreement, and on and after the Restatement Date, any
judgment or order for the payment of money is entered against an Obligor in an
amount that exceeds, individually or cumulatively with all unsatisfied judgments
or orders against all Obligors, $5,750,000 (other than amounts covered by
insurance for which the insurer thereof has not challenged such coverage),
unless a stay of enforcement of such judgment or order is in effect, by reason
of a pending appeal or otherwise;
(h) (i) Any Obligor becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any Obligor and is not released, vacated or
fully bonded within 60 days after its issue or levy (or prior to the Restatement
Date, 45 days after its issue or levy);
(i) Any loss, theft, damage or destruction occurs with respect to any Collateral
if the amount not covered by insurance exceeds $5,750,000;
(j) Prior to the Restatement Date, any Event of Default under Section 11.2(j) of
the First Lien Loan Agreement, and on and after the Restatement Date, any
Obligor is enjoined, restrained or in any way prevented by any Governmental
Authority from conducting any material part of its business; any Obligor suffers
the loss, revocation or termination of any material license, permit, lease or
agreement necessary to its business and such loss, revocation or termination
could reasonably be expected to result in a Material Adverse Effect; there is a
cessation of any material part of an Obligor’s business for a material period of
time not covered by business interruption insurance; any material Collateral or
Property of an Obligor is taken or impaired through condemnation and such taking
or impairment could reasonably be expected to result in a Material Adverse
Effect; any Obligor agrees to or commences any liquidation, dissolution or
winding up of its affairs; or any Obligor ceases to be Solvent;
(k) Any Insolvency Proceeding is commenced by any Obligor; an Insolvency
Proceeding is commenced against any Obligor and: such Obligor consents to the
institution of the proceeding against it, the petition commencing the proceeding
is not timely controverted by such Obligor, such petition is not dismissed or
stayed within 60 days (or prior to the Restatement Date, 45 days) after its
filing, or an order for relief is entered in the proceeding; a trustee
(including an interim trustee) is appointed to take possession of any
substantial Property of or to operate any of the business of any Obligor; or any
Obligor makes an offer of settlement, extension or composition to its unsecured
creditors generally;
(l) A Reportable Event occurs that constitutes grounds for termination by the
Pension Benefit Guaranty Corporation of any Multiemployer Plan or appointment of
a trustee for any Multiemployer Plan; any Multiemployer Plan is terminated or
any such trustee is requested or appointed; any Obligor is in “default” (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from any withdrawal therefrom; or any event similar
to the foregoing occurs or exists with respect to a Foreign Plan, in each case,
where the liability associated with the foregoing is reasonably expected to be
in excess of $5,750,000;
(m) Any Obligor is criminally indicted or convicted for (i) a felony committed
in the conduct of such Obligor’s business, or (ii) any state or federal law
(including the Controlled Substances Act, Money Laundering Control Act of 1986
and Illegal Exportation of War Materials Act) that could lead to forfeiture of
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(n) A Change of Control occurs;
(o) Any Default or Event of Default under Section 11.1(a) of the First Lien Loan
Agreement as in effect on the date hereof;
(p) the occurrence of any intentional Overadvance Loan (as defined in the First
Lien Loan Agreement on the date hereof, together with any amendments permitted
by the Intercreditor Agreement) made at the request of the Borrowers at a time
when the making of such Loan would result in an Overadvance Loan; provided, for
the avoidance of doubt, that this clause (p) shall not apply to Inadvertent
Overadvances (as defined in the Intercreditor Agreement); or
(q) First Lien Agent or First Lien Lenders accelerate any portion of the Debt
under the First Lien Debt Documents.
11.2. Remedies upon Default. If an Event of Default described in Section 11.1(k)
occurs with respect to any Obligor, then to the extent permitted by Applicable
Law, all Obligations shall become automatically due and payable without any
action by Agent or notice of any kind. In addition, or if any other Event of
Default exists, Agent may in its discretion (and shall upon written direction of
Required Lenders) do any one or more of the following from time to time:
(a) declare any Obligations immediately due and payable, whereupon they shall be
due and payable without diligence, presentment, demand, protest or notice of any
kind, all of which are hereby waived by Obligors to the fullest extent permitted
by law;
(b) [Reserved];
(c) [Reserved]; and
(d) subject to the Intercreditor Agreement, exercise any other rights or
remedies afforded under any agreement, by law, at equity or otherwise, including
the rights and remedies of a secured party under the UCC. Such rights and
remedies include the rights to (i) take possession of any Collateral;
(ii) require Obligors to assemble Collateral, at Borrowers’ expense, and make it
available to Agent at a place designated by Agent; (iii) enter any premises
where Collateral is located and store Collateral on such premises until sold
(and if the premises are owned or leased by an Obligor, Obligors agree not to
charge for such storage); and (iv) sell or otherwise dispose of any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale, with such notice as may be required by Applicable
Law, in lots or in bulk, at such locations, all as Agent, in its discretion,
deems advisable. Each Obligor agrees that 10 days notice of any proposed sale or
other disposition of Collateral by Agent shall be reasonable. Subject to the
Intercreditor Agreement, Agent shall have the right to conduct such sales on any
Obligor’s premises, without charge, and such sales may be adjourned from time to
time in accordance with Applicable Law. Subject to the Intercreditor Agreement,
Agent shall have the right to sell, lease or otherwise dispose of any Collateral
for cash, credit or any combination thereof, and Agent may purchase any
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of the purchase price, may set off the amount of such price
against the Obligations.
11.3. License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any or all Intellectual Property (subject, in the
case of trademarks owned by any Obligor, to sufficient rights to quality control
and inspection in favor of such Obligor to avoid the risk of invalidation of
said trademarks), computer hardware and software, trade secrets, brochures,
customer lists, promotional and advertising materials, labels, packaging
materials and other Property owned by any Obligor, in advertising for sale,
marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral in each case
after the occurrence, and during the continuance, of an Event of Default.

 

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11.4. Setoff. To the extent permitted by the Intercreditor Agreement, Agent,
Lenders and their Affiliates are each authorized by Obligors at any time during
an Event of Default, without notice to Obligors or any other Person, to set off
and to appropriate and apply any deposits (general or special), funds, claims,
obligations, liabilities or other Debt at any time held or owing by Agent, any
Lender or any such Affiliate to or for the account of any Obligor against any
Obligations, whether or not demand for payment of such Obligation has been made,
any Obligations have been declared due and payable, are then due, or are
contingent or unmatured, or the Collateral or any guaranty or other security for
the Obligations is adequate.
11.5. Remedies Cumulative; No Waiver.
11.5.1. Cumulative Rights. All covenants, conditions, provisions, warranties,
guaranties, indemnities and other undertakings of Borrowers contained in the
Loan Documents are cumulative and not in derogation or substitution of each
other. In particular, the rights and remedies of Agent and Lenders are
cumulative, may be exercised at any time and from time to time, concurrently or
in any order, and shall not be exclusive of any other rights or remedies that
Agent and Lenders may have, whether under any agreement, by law, at equity or
otherwise.
11.5.2. Waivers. The failure or delay of any party hereto to require strict
performance by any other party thereto with any terms of the Loan Documents, or
to exercise any rights or remedies with respect to Collateral or otherwise,
shall not operate as a waiver thereof nor as establishment of a course of
dealing. All rights and remedies shall continue in full force and effect until
the payment in full, in cash of all Obligations (other than contingent
indemnification obligations) and the occurrence of the Termination Date. No
modification of any terms of any Loan Documents (including any waiver thereof)
shall be effective, unless such modification is specifically provided in a
writing directed to Borrowers and executed by Borrowers and Agent or the
requisite Lenders, and such modification shall be applicable only to the matter
specified. No waiver of any Default or Event of Default shall constitute a
waiver of any other Default or Event of Default that may exist at such time,
unless expressly stated. If Agent or any Lender accepts performance by any
Obligor under any Loan Documents in a manner other than that specified therein,
or during any Default or Event of Default, or if Agent or any Lender shall delay
or exercise any right or remedy under any Loan Documents, such acceptance, delay
or exercise shall not operate to waive any Default or Event of Default nor to
preclude exercise of any other right or remedy. It is expressly acknowledged by
Obligors that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.
SECTION 12. AGENT
12.1. Appointment, Authority and Duties of Agent.
12.1.1. Appointment and Authority. Each Lender appoints and designates Sankaty
as Agent hereunder. Agent may, and each Lender authorizes Agent to, enter into
all Loan Documents to which Agent is intended to be a party and accept all
Security Documents, for Agent’s benefit and the Pro Rata benefit of Lenders.
Each Lender agrees that any action taken by Agent or Required Lenders, in
accordance with the provisions of the Loan Documents, and the exercise by Agent
or Required Lenders of any rights or remedies set forth therein, together with
all other powers reasonably incidental thereto, shall be authorized and binding
upon all Lenders. Without limiting the generality of the foregoing, Agent shall
have the sole and exclusive authority to (a) act as the disbursing and
collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document from any Obligor or other Person; (c) act
as collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e)
exercise all rights and remedies given to Agent with respect to any Collateral
under the Loan Documents, Applicable Law or otherwise. The duties of Agent shall
be ministerial and administrative in nature, and Agent shall not have a
fiduciary relationship with any Lender, Secured Party, Participant or other
Person, by reason of any Loan Document or any transaction relating thereto.

 

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12.1.2. Duties. Agent shall not have any duties except those expressly set forth
in the Loan Documents, nor be required to initiate or conduct any Enforcement
Action except to the extent directed to do so by Required Lenders while an Event
of Default exists. The conferral upon Agent of any right shall not imply a duty
on Agent’s part to exercise such right, unless instructed to do so by Required
Lenders in accordance with this Loan Agreement.
12.1.3. Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.
12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder
of any other party, unless required by Applicable Law. Agent may request
instructions from Required Lenders with respect to any act (including the
failure to act) in connection with any Loan Documents, and may seek assurances
to its satisfaction from Lenders of their indemnification obligations under
Section 12.6 against all Claims that could be incurred by Agent in connection
with any act. Agent shall be entitled to refrain from any act until it has
received such instructions or assurances, and Agent shall not incur liability to
any Person by reason of so refraining. Instructions of Required Lenders shall be
binding upon all Lenders, and no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
in accordance with the instructions of Required Lenders. Notwithstanding the
foregoing, instructions by and consent of all Lenders shall be required in the
circumstances described in Section 14.1.1, and in no event shall, and in no
event shall Required Lenders, without the prior written consent of each Lender,
direct Agent to accelerate and demand payment of Term Loans held by one Lender
without accelerating and demanding payment of all other Term Loans. In no event
shall Agent be required to take any action that, in its opinion, is contrary to
Applicable Law or any Loan Documents or could subject any Agent Indemnitee to
personal liability.
12.1.5. Collateral Agent. Each Lender appoints and designates GB Merchant
Partners as a Collateral Agent hereunder.
12.1.6. No Fiduciary Relationship. The relationship between Agent and each of
the Lenders is that of an independent contractor. The use of the term “Agent” is
for convenience only and is used to describe, as a form of convention, the
independent contractual relationship between Agent and each of the Lenders.
Nothing contained in this Loan Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship between
Agent and any of the Lenders.
12.2. Agreements Regarding Collateral and Field Examination Reports.
12.2.1. Lien Releases; Care of Collateral. Lenders authorize Agent to release
any Lien with respect to any Collateral (a) the occurrence of both payment, in
full, in cash of the Obligations (other than unmatured Contingent Obligations)
and the occurrence of the Termination Date, (b) that is the subject of an Asset
Disposition which Borrowers certify in writing to Agent is a Permitted Asset
Disposition (and Agent may rely conclusively on any such certificate without
further inquiry), (c) that does not constitute a material part of the
Collateral, or (d) with the written consent of all Lenders. Agent shall have no
obligation whatsoever to any Lenders to assure that any Collateral exists or is
owned by an Obligor, or is cared for, protected, insured or encumbered, nor to
assure that Agent’s Liens have been properly created, perfected or enforced, or
are entitled to any particular priority, nor to exercise any duty of care with
respect to any Collateral.

 

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12.2.2. Possession of Collateral. Agent and Lenders appoint each other Lender as
agent for the purpose of perfecting Liens (for the benefit of Secured Parties)
in any Collateral that, under the UCC or other Applicable Law, can be perfected
by possession. If any Lender obtains possession of any such Collateral, it shall
notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral
to Agent or otherwise deal with such Collateral in accordance with Agent’s
instructions.
12.2.3. Reports. Agent shall promptly, upon receipt thereof, forward to each
Lender copies of the results of any field audit or other examination or any
appraisal prepared by or on behalf of Agent with respect to any Obligor or
Collateral (“Report”). Each Lender agrees (a) that Agent makes no representation
or warranty as to the accuracy or completeness of any Report, and shall not be
liable for any information contained in or omitted from any Report; (b) that the
Reports are not intended to be comprehensive audits or examinations, and that
Agent or any other Person performing any audit or examination will inspect only
specific information regarding Obligations or the Collateral and will rely
significantly upon Obligors’ books and records as well as upon representations
of Obligors’ officers and employees; and (c) to keep all Reports confidential
and strictly for such Lender’s internal use, and not to distribute any Report
(or the contents thereof) to any Person (except to such Lender’s Participants,
attorneys and accountants) or use any Report in any manner other than
administration of the Term Loans and other Obligations. Each Lender agrees to
indemnify and hold harmless Agent and any other Person preparing a Report from
any action such Lender may take as a result of or any conclusion it may draw
from any Report, as well as any Claims arising in connection with any third
parties that obtain all or any part of a Report through such Lender.
12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals.
12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default unless it has received written notice from a Lender
or Borrower specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default or Event of Default, it shall promptly notify Agent and
the other Lenders thereof in writing. Each Lender agrees that, except as
otherwise provided in any Loan Documents or with the written consent of Agent
and Required Lenders, it will not take any Enforcement Action, accelerate its
Obligations, or exercise any right that it might otherwise have under Applicable
Law to credit bid at foreclosure sales, UCC sales or other similar dispositions
of Collateral. Notwithstanding the foregoing, however, a Lender may take action
to preserve or enforce its rights against an Obligor where a deadline or
limitation period is applicable that would, absent such action, bar enforcement
of Obligations held by such Lender, including the filing of proofs of claim in
an Insolvency Proceeding.
12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction of
any Obligation, whether through set-off or otherwise, in excess of its share of
such Obligation, determined on a Pro Rata basis or in accordance with
Section 5.5, as applicable, such Lender shall forthwith purchase from Agent and
the other Lenders such participations in the affected Obligation as are
necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 5.5, as applicable.
If any of such payment or reduction is thereafter recovered from the purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.

 

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12.6. Indemnification of Agent Indemnitees.
12.6.1. INDEMNIFICATION. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE
INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA
BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT
INDEMNITEE; PROVIDED THAT NO LENDER SHALL HAVE ANY OBLIGATION TO INDEMNIFY OR
HOLD HARMLESS THE AGENT INDEMNITEES FOR ANY CLAIM THAT IS DETERMINED IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY AGENT INDEMNITEE. If Agent is sued
by any receiver, trustee in bankruptcy, debtor-in-possession or other Person for
any alleged preference from an Obligor or fraudulent transfer, then any monies
paid by Agent in settlement or satisfaction of such proceeding, together with
all interest, costs and expenses (including attorneys’ fees) incurred in the
defense of same, shall be promptly reimbursed to Agent by Lenders to the extent
of each Lender’s Pro Rata share.
12.6.2. Proceedings. Without limiting the generality of the foregoing, if at any
time (whether prior to or after the Termination Date) any proceeding is brought
against any Agent Indemnitees by an Obligor, or any Person claiming through an
Obligor, to recover damages for any act taken or omitted by Agent in connection
with any Obligations, Collateral, Loan Documents or matters relating thereto, or
otherwise to obtain any other relief of any kind on account of any transaction
relating to any Loan Documents, each Lender agrees to indemnify and hold
harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees
such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required
to pay under any judgment or other order entered in such proceeding or by reason
of any settlement, including all interest, costs and expenses (including
attorneys’ fees) incurred in defending same; provided that no Lender shall be
liable for payment of any such amount to the extent that is determined in a
final, non-appealable judgment by a court of competent jurisdiction that such
judgment, order or settlement resulted from any Agent Indemnitees’ gross
negligence or willful misconduct. In Agent’s discretion, Agent may reserve for
any such proceeding, and may satisfy any judgment, order or settlement, from
proceeds of Collateral prior to making any distributions of Collateral proceeds
to Lenders provided that it has not been determined in a final, non-appealable
judgment by a court of competent jurisdiction that such judgment, order or
settlement resulted from any Agent Indemnitees’ gross negligence or willful
misconduct.
12.7. Limitation on Responsibilities of Agent. Agent shall not be liable to
Lenders for any action taken or omitted to be taken under the Loan Documents,
except for losses directly and solely caused by Agent’s gross negligence or
willful misconduct. Agent does not assume any responsibility for any failure or
delay in performance or any breach by any Obligor or Lender of any obligations
under the Loan Documents. Agent does not make to Lenders any express or implied
warranty, representation or guarantee with respect to any Obligations,
Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible
to Lenders for any recitals, statements, information, representations or
warranties contained in any Loan Documents; the execution, validity,
genuineness, effectiveness or enforceability of any Loan Documents; the
genuineness, enforceability, collectability, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectability of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account
Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain
or inquire into the existence of any Default or Event of Default, the observance
or performance by any Obligor of any terms of the Loan Documents, or the
satisfaction of any conditions precedent contained in any Loan Documents.

 

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12.8. Successor Agent.
12.8.1. Resignation; Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
at least 30 days written notice thereof to Lenders and Borrowers. Upon receipt
of such notice, Required Lenders shall have the right to appoint a successor
Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a
commercial bank that is organized under the laws of the United States or any
state or district thereof, has a combined capital surplus of at least
$500,000,000 and (provided no Default or Event of Default exists) is reasonably
acceptable to Borrowers. If no successor agent is appointed prior to the
effective date of the resignation of Agent, then Agent may appoint a successor
agent from among Lenders. Upon acceptance by a successor Agent of an appointment
to serve as Agent hereunder, such successor Agent shall thereupon succeed to and
become vested with all the powers and duties of the retiring Agent without
further act, and the retiring Agent shall be discharged from its duties and
obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s
resignation, the provisions of this Section 12 shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while
Agent. Any successor by merger or acquisition of the stock or assets of Bank of
America shall continue to be Agent hereunder without further act on the part of
the parties hereto, unless such successor resigns as provided above.
12.8.2. Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business in any jurisdiction. If Agent
believes that it may be limited in the exercise of any rights or remedies under
the Loan Documents due to any Applicable Law, Agent may appoint an additional
Person who is not so limited, as a separate collateral agent or co-collateral
agent. If Agent so appoints a collateral agent or co-collateral agent, each
right and remedy intended to be available to Agent under the Loan Documents
shall also be vested in such separate agent. Every covenant and obligation
necessary to the exercise thereof by such agent shall run to and be enforceable
by it as well as Agent. Lenders shall execute and deliver such documents as
Agent deems appropriate to vest any rights or remedies in such agent. If any
collateral agent or co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such agent,
to the extent permitted by Applicable Law, shall vest in and be exercised by
Agent until appointment of a new agent.
12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that
it has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Loan Agreement and to fund Term Loans hereunder. Each Lender
has made such inquiries concerning the Loan Documents, the Collateral and each
Obligor as such Lender feels necessary. Each Lender further acknowledges and
agrees that the other Lenders and Agent have made no representations or
warranties concerning any Obligor, any Collateral or the legality, validity,
sufficiency or enforceability of any Loan Documents or Obligations. Each Lender
will, independently and without reliance upon the other Lenders or Agent, and
based upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit decisions
in making Term Loans, and in taking or refraining from any action under any Loan
Documents. Except for notices, reports and other information expressly requested
by a Lender, Agent shall have no duty or responsibility to provide any Lender
with any notices, reports or certificates furnished to Agent by any Obligor or
any credit or other information concerning the affairs, financial condition,
business or Properties of any Obligor (or any of its Affiliates) which may come
into possession of Agent or any of Agent’s Affiliates.

 

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12.10. Replacement of Certain Lenders. In the event that (a) any Lender is a
Defaulting Lender, (b) if a Borrower is required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 5.8 or 5.9, or (c) any Lender fails to give its consent to any
amendment, waiver or action for which consent of all Lenders or all affected
Lenders was required and Required Lenders have consented thereto, then, in
addition to any other rights and remedies that any Person may have, then the
Borrower Agent may, at its sole expense and effort, upon notice to such Lender
and the Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 13.2), all of its interests, rights and obligations under
this Loan Agreement and the related Loan Documents to an Eligible Assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:
(a) the Borrowers shall have paid to the Agent any applicable assignment fee
specified in Section 13.2 (unless such fee has been waived by Agent);
(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Term Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.9) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.6 or payments required to be made pursuant to Section 5.8 or
5.9, such assignment will result in a reduction in such compensation or payments
thereafter; and
(d) such assignment does not conflict with applicable laws.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.
12.11. Remittance of Payments and Collections.
12.11.1. Remittances Generally. All payments by any Lender to Agent shall be
made by the time and on the day set forth in this Loan Agreement, in immediately
available funds. If no time for payment is specified or if payment is due on
demand by Agent and request for payment is made by Agent by 11:00 a.m. on a
Business Day, payment shall be made by Lender not later than 2:00 p.m. on such
day, and if request is made after 11:00 a.m., then payment shall be made by
11:00 a.m. on the next Business Day. Payment by Agent to any Lender shall be
made by wire transfer, in the type of funds received by Agent. Any such payment
shall be subject to Agent’s right of offset for any amounts due from such Lender
under the Loan Documents.
12.11.2. Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest from the due
date until paid at the rate determined by Agent as customary in the banking
industry for interbank compensation. In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent.
12.11.3. Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
each Lender that received it. If Agent determines at any time that an amount
received under any Loan Document must be returned to an Obligor or paid to any
other Person pursuant to Applicable Law or otherwise, then, notwithstanding any
other term of any Loan Document, Agent shall not be required to distribute such
amount to any Lender. If any amounts received and applied by Agent to any
Obligations are later required to be returned by Agent pursuant to Applicable
Law, Lenders shall pay to Agent, on demand, such Lender’s Pro Rata share of the
amounts required to be returned.

 

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12.12. Agent in its Individual Capacity. As a Lender, Sankaty shall have the
same rights and remedies under the other Loan Documents as any other Lender, and
the terms “Lenders,” and “Required Lenders” or any similar term shall include
Sankaty in its capacity as a Lender.
12.13. Agent Titles. Each Lender, other than Sankaty and GB Merchant Partners,
that is designated (on the cover page of this Loan Agreement or otherwise) as an
“Agent” of any type shall not have any right, power, responsibility or duty
under any Loan Documents other than those applicable to all Lenders, and shall
in no event be deemed to have any fiduciary relationship with any other Lender.
12.14. No Third Party Beneficiaries. This Section 12 is an agreement solely
among Lenders and Agent, and does not confer any rights or benefits upon
Obligors or any other Person. As between Obligors and Agent, any action that
Agent may take under any Loan Documents shall be conclusively presumed to have
been authorized and directed by Lenders as herein provided.
12.15. [Reserved].
12.16. Intercreditor Agreement. The Lenders hereby irrevocably authorize the
Agent to enter into the Intercreditor Agreement, and agree to be bound by the
provisions thereof.
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
13.1. Successors and Assigns. The provisions of this Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Obligor may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of Section 13.2, (ii) by way of
participation in accordance with the provisions of Section 13.3 or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
Sections 13.2.3 and 13.2.4 (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Loan Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Loan Agreement.
13.2. Assignments.
13.2.1. Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Loan Agreement (including all or a portion of its Term Loans at the time owing
to it); provided that:
(i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Term Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the principal outstanding balance of the Term Loans of the
assigning Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to Agent
or, if “Trade Date” is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000 unless, so long as no Event of
Default has occurred and is continuing, the Borrowers otherwise consent (such
consent not to be unreasonably withheld or delayed); provided, however that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such applicable minimum
amount has been met under this Section 13.2.1(i); and
(ii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Loan
Agreement with respect to the Term Loans assigned.

 

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Subject to acceptance and recording thereof by Agent pursuant to Section 13.2,
from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Loan Agreement and, to
the extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Loan Agreement (provided, however,
that notwithstanding the foregoing, any First Lien Agent, First Lien Lender or
any First Lien Affiliate who is an assignee shall be subject to Section 14.1.4)
and shall not be deemed to be a “Lender” for any such purpose), and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Loan
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Loan Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 3.4, 3.6, 3.7, 3.9, 5.8, 5.9 and 14.2 with respect to facts
and circumstances occurring prior to the effective date of such assignment. Upon
request, the Borrowers (at the Borrowers’ expense) shall execute and deliver a
Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Loan Agreement that does not comply with this subsection
shall be treated for purposes of this Loan Agreement as a sale by such Lender of
a participation in such rights and obligations in accordance with Section 13.3.
13.2.2. Register. Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at Agent’s office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the
Term Loans owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, and the
Borrowers, Agent and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Loan Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by each of the Borrowers at any reasonable
time and from time to time upon reasonable prior notice. In addition, at any
time that a request for a consent for a material or substantive change to the
Loan Documents is pending, any Lender may request and receive from Agent a copy
of the Register.
13.2.3. Certain Pledges. Nothing herein shall limit the right of a Lender to
pledge or assign any rights under the Loan Documents to (i) any Federal Reserve
Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Term Loans; provided that any payment by Borrowers to the assigning Lender in
respect of any Obligations assigned as described in this sentence shall satisfy
Borrowers’ obligations hereunder to the extent of such payment, and no such
assignment shall release the assigning Lender from its obligations hereunder.
13.2.4. Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

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13.3. Participations.
13.3.1. Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrowers or Agent, sell participations to any Person (other than
a natural person or any Obligor or any Affiliate or Subsidiary of any Obligor)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or
obligations under this Loan Agreement (including all or a portion of its Term
Loans owing to it); provided that (i) such Lender’s obligations under this Loan
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrowers, Agent and Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Loan Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Loan Agreement and to approve any
amendment, modification or waiver of any provision of this Loan Agreement;
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment, waiver or
other modification described Section 14.1.1 that affects such Participant
(provided, however, that notwithstanding the foregoing, any First Lien Agent,
First Lien Lender or any First Lien Affiliate who is a Participant shall be
subject to Section 14.1.4) who is a Participant shall not be entitled to vote on
matters relating to the Loan Documents (including during any Insolvency
Proceeding of any Obligor) and shall not be deemed to be a “Lender” for any such
purpose). Subject to Section 13.3.2, the Obligors agree that each Participant
shall be entitled to the benefits of Sections 3.6, 3.9, 5.8 and 5.9 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 13.2. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 11.4 as though it were a Lender,
provided such Participant agrees to be subject to Section 5.5 as though it were
a Lender.
13.3.2. Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 3.6, 5.8 or 5.9 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrowers’ prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.9 unless the Borrowers are notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 5.9 as though it were a Lender.
13.4. Tax Treatment. If any interest in a Loan Document is transferred to a
Transferee that is organized under the laws of any jurisdiction other than the
United States or any state or district thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such transfer, to
comply with the provisions of Section 5.9.
13.5. Representation of Lenders. Each Lender represents and warrants to each
Borrower, Agent and other Lenders that none of the consideration used by it to
fund its Term Loans or to participate in any other transactions under this Loan
Agreement constitutes for any purpose of ERISA or Section 4975 of the Internal
Revenue Code assets of any “plan” as defined in Section 3(3) of ERISA or
Section 4975 of the Internal Revenue Code and the interests of such Lender in
and under the Loan Documents shall not constitute plan assets under ERISA.

 

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SECTION 14. MISCELLANEOUS
14.1. Consents, Amendments and Waivers.
14.1.1. Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Agent, the Required
Lenders (or Agent acting at the direction of the Required Lenders), and each
Obligor party to such Loan Document; provided, that
(a) without the prior written consent of (i) Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent and (ii) Collateral Agent, no modification
shall be effective with respect to any provision in a Loan Document that relates
to any rights, duties or discretion of the Collateral Agent;
(b) [Reserved];
(c) without the prior written consent of each affected Lender, no modification
shall be effective that would (i) reduce the amount of, or waive or delay any
scheduled payment of, any principal, interest, fees or other amounts payable to
such Lender or (ii) extend the Termination Date;
(d) without the prior written consent of all Lenders (except a Defaulting Lender
as provided in Section 4.2), no modification shall be effective that would
(i) alter Section 5.5, Section 7.1 (except to add Collateral), Section 14.1.1;
(ii) amend the definitions of Pro Rata or Required Lenders; or (iii) release all
or substantially all of the Collateral (excluding, if any Obligor or any
Subsidiary of any Obligor becomes a debtor under the federal Bankruptcy code,
the release of “cash collateral”, as defined in Section 363(a) of the federal
Bankruptcy Code pursuant to a cash collateral stipulation with the debtor
approved by Required Lenders); or (iv) release any Obligor from liability for
any Obligations, if such Obligor is Solvent at the time of the release; and
(e) without the prior written consent of the Required Lenders and, at the time
of the effectiveness of such proposed modification, all remaining Initial
Lenders (except a Defaulting Lender as provided in Section 4.2), no modification
shall be effective that would alter Section 8.1 or Section 10.3.
14.1.2. Limitations. The agreement of Borrowers shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, and/or Agent as among themselves. The making of
any Term Loans during the existence of a Default or Event of Default shall not
be deemed to constitute a waiver of such Default or Event of Default, nor to
establish a course of dealing. Any waiver or consent granted by Lenders
hereunder shall be effective only if in writing, and then only in the specific
instance and for the specific purpose for which it is given.
14.1.3. Payment for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee
or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent (it being
understood and agreed that the payment of any amounts agreed among the
Borrowers, BAS, the Agent and any Lender or Increasing Lender participating in
connection with an increase in the Term Loan Commitments or the Term Loan
Commitments under Section 2.4 shall not be subject to this Section 14.1.3).
14.1.4. Defaulting Lender Limited Rights. Notwithstanding anything to the
contrary herein, (i) no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder and (ii) no First Lien
Agent, First Lien Lender or First Lien Affiliate who is an assignee of any
rights and obligations under this Loan Agreement or a Participant shall have any
right to approve or disapprove any amendment, waiver or consent hereunder or
shall be entitled to vote on matters relating to the Loan Documents (including
during any Insolvency Proceeding or any Obligor) and shall not be deemed to be a
“Lender” for any such purpose, except that the Commitment of such Person may not
be increased or extended without the consent of such Person.

 

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14.1.5. Amendment to First Lien Debt Documents. If any amendment or modification
to the First Lien Debt Documents amends or modifies (X) clauses (v) or (vi) of
the definition of “Permitted Acquisition” or clauses (a)(i) or (a)(ii) of the
definition of “Permitted Distribution” contained in the First Lien Debt
Documents the effect of which is more restrictive than the applicable provision
as in effect on the applicable date of determination or (Y) Sections 8.1, 8.2.1,
8.3.1 or 8.4.1 of the First Lien Loan Agreement in a manner that affects the
reporting of Collateral and the effect of which is more restrictive than the
applicable provision as in effect on the applicable date of determination, or if
any amendment or modification to the First Lien Loan Agreement or other First
Lien Debt Document adds an additional financial covenant therein, Borrowers
acknowledge and agree that this Loan Agreement or the other Loan Documents, as
the case may be, shall be automatically amended or modified to effect similar
amendments or modifications (maintaining the same percentage difference between
such provisions in such First Lien Debt Document, on the one hand, and the
corresponding provisions in this Loan Agreement or such other Loan Document, on
the other hand, to the extent applicable) with respect to this Loan Agreement or
such other Loan Documents, without the need for any further action or consent by
any Borrower or any other party. In furtherance of the foregoing, the Borrowers
shall permit the Agent and Lenders to document each such similar amendment or
modification to this Loan Agreement or such other Loan Document or insert a
corresponding new financial covenant in this Loan Agreement or such other Loan
Document without any need for any further action or consent by the Borrowers,
but failure of Agent and Lenders to do so shall in no way impair or limit the
provisions of this Section 14.1.5. Notwithstanding the foregoing for purposes of
clarity, in the event that the Agent, in its reasonable judgment, determines
that such amendment or modification, as the case may be, relates to provisions
of the First Lien Debt Documents for which a corresponding amendment or
modification of the Loan Documents would not apply (e.g. availability or
eligibility standards), such amendment or modification, as the case may be, of
the First Lien Debt Documents shall not be subject to the terms above in this
Section 14.1.5.
14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, PROCEEDINGS, COSTS AND EXPENSES OF ANY KIND (INCLUDING
REMEDIAL RESPONSE COSTS, REASONABLE AND DOCUMENTED ATTORNEYS’ FEES AND
EXTRAORDINARY EXPENSES OF ONE OUTSIDE COUNSEL, ONE LOCAL COUNSEL IN EACH
RELEVANT JURISDICTION (AS DETERMINED BY THE AGENT IN ITS REASONABLE DISCRETION),
ONE SPECIAL OR REGULATORY COUNSEL IN RESPECT OF EACH MATTER (AS REASONABLY
REQUIRED BY THE AGENT) AND CONFLICT OF INTEREST COUNSEL (AS DETERMINED BY THE
AGENT IN ITS REASONABLE DISCRETION)) AT ANY TIME (INCLUDING AFTER FULL PAYMENT
OF THE OBLIGATIONS, RESIGNATION OR REPLACEMENT OF AGENT, OR REPLACEMENT OF ANY
LENDER) INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE IN ANY WAY RELATING TO
(A) ANY LOAN DOCUMENTS OR TRANSACTIONS RELATING THERETO OR THE ADMINISTRATION OF
THE LOAN DOCUMENTS, (B) ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY
INDEMNITEE IN CONNECTION WITH ANY LOAN DOCUMENTS, (C) THE EXISTENCE OR
PERFECTION OF ANY LIENS, OR REALIZATION UPON ANY COLLATERAL, (D) EXERCISE OF ANY
RIGHTS OR REMEDIES UNDER ANY LOAN DOCUMENTS OR APPLICABLE LAW, (E) FAILURE BY
ANY OBLIGOR TO PERFORM OR OBSERVE ANY TERMS OF ANY LOAN DOCUMENT, IN EACH CASE
INCLUDING ALL REASONABLE AND DOCUMENTED OUT-OF-POCKET COSTS AND EXPENSES
RELATING TO ANY INVESTIGATION, LITIGATION, ARBITRATION OR OTHER PROCEEDING
(INCLUDING AN INSOLVENCY PROCEEDING OR APPELLATE PROCEEDINGS), WHETHER OR NOT
THE APPLICABLE INDEMNITEE IS A PARTY THERETO, (F) ANY ACTUAL OR ALLEGED
ENVIRONMENTAL RELEASE ON OR FROM ANY PROPERTY OWNED OR OPERATED BY ANY BORROWER
OR ANY OF ITS SUBSIDIARIES, OR ANY LIABILITY IN CONNECTION WITH ANY ACTUAL OR
ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAW RELATED IN ANY WAY TO ANY BORROWER OR
ANY OF ITS SUBSIDIARIES, OR (G) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT

 

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BY A THIRD PARTY OR BY A BORROWER OR ANY OTHER OBLIGOR (HEREINAFTER, “CLAIMS”)
THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS
ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a
Loan Document have any obligation thereunder to indemnify or hold harmless an
Indemnitee with respect to a Claim that is determined in a final, non-appealable
judgment by a court of competent jurisdiction to result from the gross
negligence or willful misconduct of such Indemnitee. If any claim is made
against any Indemnitee which may result in a claim under this Section 14.2
against Borrowers, such Indemnitee or Agent shall promptly send to Borrower
Agent written notice thereof, and Borrower Agent shall have the right, at its
expense and with counsel reasonably satisfactory to Agent, to defend such claim.
Neither any Indemnitee nor any Borrower shall settle any such claim without the
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the failure of such prompt notice shall not
negate or impair the obligation of the Borrowers under this Section 14.2, but
shall give Borrowers the right to withhold against any indemnity payment the
amount of any actual damages incurred by Borrowers as a result of the failure to
give such prompt notice.
14.3. Notices and Communications.
14.3.1. Notice Address. Subject to Section 4.1.4, all notices, requests and
other communications by or to a party hereto shall be in writing and shall be
given to any Borrower, at Borrower Agent’s address shown on the signature pages
hereof, and to any other Person at its address shown on the signature pages
hereof (or, in the case of a Person who becomes a Lender after the Closing Date,
at the address shown on its Assignment and Assumption Agreement), or at such
other address as a party may hereafter specify by notice in accordance with this
Section 14.3. Each such notice, request or other communication shall be
effective only (a) if given by facsimile transmission, when transmitted to the
applicable facsimile number, if confirmation of receipt is received; (b) if
given by mail, three Business Days after deposit in the U.S. mail, with
first-class postage pre-paid, addressed to the applicable address; or (c) if
given by personal delivery, when duly delivered to the notice address with
receipt acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant
to Section 2.2, 2.3, 3.1.2 or 4.1.1 shall be effective until actually received
by the individual to whose attention at Agent such notice is required to be
sent. Any written notice, request or other communication that is not sent in
conformity with the foregoing provisions shall nevertheless be effective on the
date actually received by the noticed party. Any notice received by Borrower
Agent shall be deemed received by all Borrowers.
14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents for
execution, and matters permitted under Section 4.1.4. Agent and Lenders make no
assurances as to the privacy and security of electronic communications.
Electronic and voice mail may not be used as effective notice under the Loan
Documents.
14.3.3. Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of any Borrower even if such notices
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Borrower shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of a Borrower.
14.4. Performance of Borrowers’ Obligations. Agent may, in its discretion at any
time and from time to time after the occurrence, and during the continuance, of
an Event of Default, at Borrowers’ expense, pay any amount or do any act
required of a Borrower under any Loan Documents or otherwise lawfully requested
by Agent to (a) enforce any Loan Documents or collect any Obligations;
(b) protect, insure, maintain or realize upon any Collateral; or (c) defend or
maintain the validity or priority of Agent’s Liens in any Collateral, including
any payment of a judgment, insurance premium, warehouse charge, finishing or
processing charge, or landlord claim, or any discharge of a Lien. All payments,
costs and expenses (including Extraordinary Expenses) of Agent under this
Section 14.4 shall be reimbursed to Agent by Borrowers, on demand, with interest
from the date incurred to the date of payment thereof at the Default Rate
applicable to Base Rate Term Loans. Any payment made or action taken by Agent
under this Section 14.4 shall be without prejudice to any right to assert an
Event of Default or to exercise any other rights or remedies under the Loan
Documents.

 

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14.5. Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but
they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Obligor or Subsidiary.
14.6. Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.
14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters, and they agree that these are cumulative and that each must be
performed as provided. Except as otherwise specifically provided in another Loan
Document (by specific reference to the applicable provision of this Loan
Agreement), if any provision contained herein is in direct conflict with any
provision in another Loan Document, the provision herein shall govern and
control.
14.8. Counterparts; Facsimile Signatures. Any Loan Document may be executed in
counterparts, each of which taken together shall constitute one instrument. Loan
Documents may be executed and delivered by facsimile, and they shall have the
same force and effect as manually signed originals. Agent may require
confirmation by a manually-signed original, but failure to request or deliver
same shall not limit the effectiveness of any facsimile signature.
14.9. Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents embody the entire understanding of the parties with respect to the
subject matter thereof and supersede all prior understandings regarding the same
subject matter.
14.10. Obligations of Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled, to the extent
not otherwise restricted hereunder, to protect and enforce its rights arising
out of the Loan Documents. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Loan Agreement and no action of Agent or Lenders pursuant to the
Loan Documents shall be deemed to constitute Agent and Lenders to be a
partnership, association, joint venture or any other kind of entity, nor to
constitute control of any Obligor. Each Obligor acknowledges and agrees that in
connection with all aspects of any transaction contemplated by the Loan
Documents, Obligors, Agent and Lenders have an arms-length business relationship
that creates no fiduciary duty on the part of Agent or any Lender, and each
Obligor, Agent and Lender expressly disclaims any fiduciary relationship.
14.11. Confidentiality. During the term of this Loan Agreement and for 12 months
thereafter, Agent and Lenders agree to take reasonable precautions to maintain
the confidentiality of any information that Obligors deliver to Agent and
Lenders and identify as confidential at the time of delivery, except that Agent
and any Lender may disclose such information (a) to their respective officers,
directors, employees, Affiliates and agents, including legal counsel, auditors
and other professional advisors; (b) to any party to the Loan Documents from
time to time; (c) pursuant to the order of any court or administrative agency;

 

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(d) upon the request of any Governmental Authority exercising regulatory
authority over Agent or such Lender; (e) which ceases to be confidential, other
than by an act or omission of Agent or any Lender, or which becomes available to
Agent or any Lender on a nonconfidential basis; (f) to the extent reasonably
required in connection with any litigation relating to any Loan Documents or
transactions contemplated thereby, or otherwise as required by Applicable Law;
(g) to the extent reasonably required for the exercise of any rights or remedies
under the Loan Documents; (h) to the National Association of Insurance
Commissioners or any similar organization, or to any nationally recognized
rating agency that requires access to information about a Lender’s portfolio in
connection with ratings issued with respect to such Lender; (i) to any investor
or potential investor in an Approved Fund that is a Lender or Transferee, but
solely for use by such investor to evaluate an investment in such Approved Fund,
or to any manager, servicer or other Person in connection with its
administration of any such Approved Fund; or (j) with the consent of Borrowers.
Notwithstanding the foregoing, Agent and Lenders may issue and disseminate to
the public general information describing this credit facility, including the
names and addresses of Obligors and a general description of Obligors’
businesses, and may (so long as the Borrower Agent has previously reviewed and
approved the form of such advertisement or promotional materials) use Obligors’
names in advertising and other promotional materials.
14.12. GOVERNING LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401
AND 5-1402 (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
14.13. Consent to Forum.
14.13.1. Forum. EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY FEDERAL COURT SITTING IN OR WITH JURISDICTION OVER THE SOUTHERN DISTRICT
OF NEW YORK AND OF ANY STATE COURT OF THE STATE OF NEW YORK SITTING IN THE
COUNTY OF MANHATTAN, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY
LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT
SOLELY IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS,
OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR
SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall
limit the right of Agent or any Lender to bring proceedings against any Obligor
in any other court. Nothing in this Loan Agreement shall be deemed to preclude
enforcement by Agent of any judgment or order obtained in any forum or
jurisdiction.
14.14. Waivers by Borrowers. To the fullest extent permitted by Applicable Law,
each Borrower waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding, claim or counterclaim of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which a Borrower may in any
way be liable, and hereby ratifies anything Agent may do in this regard;
(c) notice prior to taking possession or control of any Collateral; (d) any bond
or security that might be required by a court prior to allowing Agent to
exercise any rights or remedies; (e) the benefit of all valuation, appraisement
and exemption laws; (f) any claim against Agent or any Lender, on any theory of
liability, for special, indirect, consequential, exemplary or punitive damages
(as opposed to direct or actual damages) in any way relating to any Enforcement
Action, Obligations, Loan Documents or transactions relating thereto; and
(g) notice of acceptance hereof. Each Borrower acknowledges that the foregoing
waivers are a material inducement to Agent and Lenders entering into this Loan
Agreement and that Agent and Lenders are relying upon the foregoing in their
dealings with Borrowers. Each Borrower has reviewed the foregoing waivers with
its legal counsel and has knowingly and voluntarily waived its jury trial and
other rights following consultation with legal counsel. In the event of
litigation, this Loan Agreement may be filed as a written consent to a trial by
the court.

 

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14.15. Patriot Act Notice. Agent and Lenders hereby notify Borrowers that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Borrower,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding Borrowers’ management and owners,
such as legal name, address, social security number and date of birth.
14.16. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Agent and
each Lender, regardless of any investigation made by the Agent or any Lender or
on their behalf and notwithstanding that the Agent or any Lender may have had
notice or knowledge of any Default at the time of any extension of credit
hereunder, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.
14.17. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Borrower and each Guarantor acknowledges and agrees that: (i) (A) the
arranging and other services regarding this Loan Agreement provided by the Agent
are arm’s-length commercial transactions between the Borrowers and the
Guarantors and their respective Affiliates, on the one hand, and the Agent, on
the other hand, (B) each Borrower each Guarantor has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (C) each Borrowers and each Guarantor is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; and (ii) (A) the Agent is
and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as
an advisor, agent or fiduciary for any Borrower, any Guarantor or any of their
respective Affiliates, or any other Person and (B) the Agent has no obligation
to any Borrower, any Guarantor or any of their respective Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents. To the fullest
extent permitted by law, each Borrower and each Guarantor hereby waives and
releases any claims that it may have against the Agent with respect to any
breach or alleged breach of agency or fiduciary duty in connection with any
aspect of any transaction contemplated hereby.
14.18. Intercreditor Agreement Prevails. Notwithstanding anything to the
contrary contained herein, all representations, warranties and covenants of the
Obligors hereunder, and the security interest granted to the Agent and the other
Secured Parties and all other rights and benefits granted to the Agent and the
other Secured Parties hereunder, are expressly subject to the terms and
conditions of the Intercreditor Agreement.
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IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered as of
the date set forth above.

            BORROWERS:

THE BON-TON DEPARTMENT STORES, INC.
    /s/ Keith E. Plowman       By:   Keith E. Plowman      Title:     Executive
Vice President, Chief Financial
Officer and Principal Accounting Officer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

            THE ELDER-BEERMAN STORES CORP.
      /s/ H. Todd Dissinger       By:   H. Todd Dissinger      Title:     Vice
President — Treasurer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

 

 

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The following Persons are signatories to this Loan Agreement in their capacity
as Obligors and not as Borrowers:

            OBLIGORS:

THE BON-TON STORES, INC.
      /s/ Keith E. Plowman       By:   Keith E. Plowman      Title:    
Executive Vice President, Chief Financial Officer and Principal Accounting
Officer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

            THE BON-TON TRADE, LLC
      /s/ Keith E. Plowman       By:   Keith E. Plowman      Title:    
Treasurer and Chief Financial Officer   

         
 
  Address:   300 Delaware Avenue
 
      Suite 12122
 
      Wilmington, DE 19801
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (302) 652-8667

Signature Page to Second Lien Loan and Security Agreement

 

 

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            THE BON-TON STORES OF LANCASTER, INC.
    /s/ Robert E. Stern       By:   Robert E. Stern      Title:     Secretary
and Treasurer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

            THE BON-TON GIFTCO, INC.
      /s/ Keith E. Plowman       By:   Keith E. Plowman      Title:    
President and Chief Financial Officer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

            CARSON PIRIE SCOTT II, INC.
      /s/ H. Todd Dissinger       By:   H. Todd Dissinger      Title:     Vice
President — Treasurer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

Signature Page to Second Lien Loan and Security Agreement

 

 

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            BON-TON DISTRIBUTION, INC.
      /s/ H. Todd Dissinger       By:   H. Todd Dissinger      Title:     Vice
President — Treasurer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

            MCRIL, LLC
      /s/ H. Todd Dissinger       By:   H. Todd Dissinger      Title:     Vice
President — Treasurer   

         
 
  Address:   2801 East Market Street
 
      York, PA 17402
 
  Attn:   Keith E. Plowman
 
  Telecopy:   (717) 751-3196

Signature Page to Second Lien Loan and Security Agreement

 

 

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            AGENT:

SANKATY ADVISORS, LLC,
as Agent
      By:   /s/ Michael Ewald         Name:   Michael Ewald        Title:  
Managing Director   

         
 
  Address:   Sankaty Advisors, LLC
 
      111 Huntington Avenue
 
      Boston, Massachusetts 02199
 
  Attn:   James Athanasoulas
 
  Fax:   (617) 516-2710
 
  Email:   jathanasoulas@sankaty.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

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            COLLATERAL AGENT:

GB MERCHANT PARTNERS, LLC,
as Collateral Agent
      By:   /s/ D. Michael Murray         Name:   D. Michael Murray       
Title:   Managing Director   

         
 
  Address:   GB Merchant Partners, LLC
 
      101 Huntington Avenue 10th Floor
 
      Boston, MA 02199
 
  Attn:   D. Michael Murray
 
  Fax:   (617) 210-7141
 
  Email:   mmurray@gordonbrothers.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

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            DOCUMENTATION AGENT:

GA CAPITAL, LLC,
as Documentation Agent
      By:   /s/ Daniel Platt         Name:   Daniel Platt        Title:  
President   

         
 
  Address:   GA Capital, LLC
 
      130 West 42nd Street
 
      Suite 1001
 
      New York, NY 10036
 
       
 
  Attn:   Daniel Platt
 
  Fax:   646-381-9247 Fax
 
  Email:   dplatt@greatamerican.com
 
            With a copy to:    
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

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            LENDERS:

SANKATY CREDIT OPPORTUNITIES II, L.P.,
as Lender
      By:   /s/ Michael Ewald         Name:   Michael Ewald        Title:  
Managing Director   

         
 
  Address:   c/o Sankaty Advisors, LLC
 
      111 Huntington Avenue
 
      Boston, Massachusetts 02199
 
  Attn:   James Athanasoulas
 
  Fax:   (617) 516-2710
 
  Email:   jathanasoulas@sankaty.com       With a copy to:  
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

Signature Page to Second Lien Loan and Security Agreement

 

 

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            SANKATY CREDIT OPPORTUNITIES III, L.P.,
as Lender
      By:   /s/ Michael Ewald         Name:   Michael Ewald        Title:  
Managing Director   

         
 
  Address:   c/o Sankaty Advisors, LLC
 
      111 Huntington Avenue
 
      Boston, Massachusetts 02199
 
  Attn:   James Athanasoulas
 
  Fax:   (617) 516-2710
 
  Email:   jathanasoulas@sankaty.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

Signature Page to Second Lien Loan and Security Agreement

 

 

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            SANKATY CREDIT OPPORTUNITIES IV, L.P.,
as Lender
      By:   /s/ Michael Ewald         Name:   Michael Ewald        Title:  
Managing Director   

         
 
  Address:   c/o Sankaty Advisors, LLC
 
      111 Huntington Avenue
 
      Boston, Massachusetts 02199
 
  Attn:   James Athanasoulas
 
  Fax:   (617) 516-2710
 
  Email:   jathanasoulas@sankaty.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

Signature Page to Second Lien Loan and Security Agreement

 

 

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            SANKATY CREDIT OPPORTUNITIES
(OFFSHORE MASTER) IV, L.P., as Lender
      By:   /s/ Michael Ewald         Name:   Michael Ewald        Title:  
Managing Director   

         
 
  Address:   c/o Sankaty Advisors, LLC
 
      111 Huntington Avenue
 
      Boston, Massachusetts 02199
 
  Attn:   James Athanasoulas
 
  Fax:   (617) 516-2710
 
  Email:   jathanasoulas@sankaty.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

Signature Page to Second Lien Loan and Security Agreement

 

 

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            1903 ONSHORE FUNDING, LLC,
as Lender
      By:   GB Merchant Partners, LLC,         its Investment Manager           
  By:   /s/ D. Michael Murray         Name:   D. Michael Murray        Title:  
Managing Director   

         
 
  Address:   c/o GB Merchant Partners, LLC
 
      101 Huntington Avenue 10th Floor
 
      Boston, MA 02188
 
  Attn:   D. Michael Murray
 
  Fax:   (617) 210-7141
 
  Email:   mmurray@gordonbrothers.com
 
            With a copy to:
 
       
 
  Address:   Proskauer Rose LLP
 
      One International Place, 23rd Floor
 
      Boston, MA 02110
 
  Attn:   Peter J. Antoszyk
 
  Fax:   (617) 526-9899
 
  Email:   pantoszyk@proskauer.com

Signature Page to Second Lien Loan and Security Agreement

 

 

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            BANK OF AMERICA, N.A.,
as Lender
      By:   /s/ Kendra Neigoot         Name:   Kendra Neigoot        Title:  
Vice President   

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Schedule 1.1(a)
Commitments of Lenders

                      Amount of Term Loan     Amount of Term Loan      
Outstanding as of the     Proceeds Provided less the   Lender   Closing Date    
OID  
Sankaty Credit Opportunities II, L.P.
  $ 7,500,000.00     $ 7,275,000.00  
Sankaty Credit Opportunities III, L.P.
  $ 11,250,000.00     $ 10,912,500.00  
Sankaty Credit Opportunities IV, L.P.
  $ 8,190,000.00     $ 7,944,300.00  
Sankaty Credit Opportunities (Offshore Master) IV, L.P.
  $ 10,560,000.00     $ 10,243,200.00  
1903 Onshore Funding, LLC
  $ 17,500,000.00     $ 16,975,000.00  
Bank of America, N.A.
  $ 20,000,000.00     $ 19,400,000.00                
TOTAL
  $ 75,000,000.00     $ 72,750,000.00                

 

 

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Schedule 7.1(c)
Commercial Tort Claims
Bostco LLC, et al. v. MMSD, et al., Case No. 03-CV-005040 (filed August 2003 in
Cir. Ct., Milwaukee Co., WI). Bon-Ton, successor by merger to Parisian, Inc., is
one of the plaintiffs in this claim for damages to a building in Milwaukee.
Borrowers maintain a retail store and corporate offices in the building.