Exhibit 10.2





Exhibit 10.2




INTERCREDITOR AGREEMENT




INTERCREDITOR AGREEMENT (this “Intercreditor Agreement”), dated as of November 18,
2009, among (i) Bank of America, N.A. (“Bank of America”), in its capacity as
administrative agent (the “Revolving Credit Agent”) for the Revolving Credit Lenders (as
hereinafter defined), and (ii) Sankaty Advisors, LLC, in its capacity as administrative agent (the
“Term Loan Agent”) for the Term Loan Lenders (as hereinafter defined).



WHEREAS, pursuant to a Loan and Security Agreement dated as of March 6, 2006 (as amended,
amended and restated, modified, supplemented, renewed, replaced or Refinanced in whole or in part
from time to time, and any other agreement extending the maturity of, consolidating (including
adding Subsidiaries or affiliates of any Credit Party (as defined below) or any other Persons as
parties thereto), renewing, replacing or Refinancing all or any portion of the Bank Debt, or all or
any portion of the amounts owed under any other agreement that itself is the Revolving Credit
Agreement hereunder and whether by the same or any other agent, lender or group of lenders and
whether or not increasing the amount of Bank Debt (as defined below) that may be incurred
thereunder, the “Revolving Credit Agreement”), among The Bon-Ton Department Stores, Inc., a
Pennsylvania corporation (“Bon-Ton”) and The Elder-Beerman Stores Corp., an Ohio
corporation (“Elder-Beerman” and, together with Bon-Ton, the “Borrowers”), the
“Lenders” identified therein (the “Revolving Credit Lenders”), the Revolving Credit Agent
and the other agents and arrangers from time to time party thereto, the Revolving Credit Lenders
have made loans and other extensions credit to the Borrowers; and



WHEREAS, pursuant to (a) the Guaranty dated as of March 6, 2006 (as amended, amended and
restated, modified, supplemented, renewed or replaced and in effect from time to time, including
any replacement therefor, the “Revolving Credit Guaranty”), (i) The Bon-Ton Stores, Inc.,
(ii) The Bon-Ton Giftco, Inc., (iii) The Bon-Ton Stores of Lancaster, Inc., (iv) The Bon-Ton Trade,
LLC, (v) Carson Pirie Scott II, Inc., (vi) Bon-Ton Distribution, Inc., and (vii) McRIL, LLC
(collectively, the “Initial Guarantors”) have guaranteed the “Obligations” under and as
defined in the Revolving Credit Agreement, and (b) the Revolving Credit Agreement, the Borrowers
have agreed to cause certain Subsidiaries of the Borrowers and the Initial Guarantors (such
Subsidiaries, together with the Borrowers and the Initial Guarantors being hereinafter referred to,
collectively, as the “Credit Parties”) to guarantee the “Obligations” under and as defined
in the Revolving Credit Agreement; and



WHEREAS, pursuant to a Second Lien Loan and Security Agreement, dated as of the date hereof
(as amended, amended and restated, modified, supplemented, renewed, replaced or Refinanced in whole
or in part from time to time, and any other agreement extending the maturity of, consolidating
(including adding Subsidiaries or affiliates of any Credit Party (as defined below) or any other
Persons as parties thereto), renewing, replacing or Refinancing all or any portion of the Term Loan
Debt, or all or any portion of the amounts owed under any other agreement that itself is the Term
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 Term Loan Debt (as defined below) that may be incurred
thereunder, the “Term Loan Agreement”), among the Borrowers, the “Lenders” identified
therein (the “Term Loan Lenders”) and the Term Loan Agent, the Term Loan Lenders have
agreed, upon the terms and subject to the conditions contained therein, to make a term loan in the
amount of $75,000,000 to the Borrowers; and



WHEREAS, pursuant to (a) the Guaranty dated as of the date hereof (as amended, amended and
restated, modified, supplemented, renewed or replaced and in effect from time to time, including
any replacement therefor, the “Term Loan Guaranty”), the Initial Guarantors have agreed to
guarantee the “Obligations” under and as defined in the Term Loan Agreement, and (b) the Term Loan
Agreement, the
Borrowers have agreed to cause such other Credit Parties to guarantee the “Obligations” under
and as defined in the Term Loan Agreement; and


 


 









 





WHEREAS, it is a condition precedent to the Revolving Credit Lenders’ willingness to continue
to make loans and otherwise extend credit to the Borrowers pursuant to the Revolving Credit
Agreement and the Term Loan Lenders’ willingness to make a term loan to the Borrowers pursuant to
the Term Loan Agreement that the Credit Parties, the Revolving Credit Agent and the Term Loan Agent
enter into this Intercreditor Agreement; and



WHEREAS, in order to induce the Revolving Credit Lenders to continue to make loans and
otherwise extend credit to the Borrowers pursuant to the Revolving Credit Agreement and the Term
Loan Lenders to make the term loan to the Borrowers pursuant to the Term Loan Agreement, the Credit
Parties, the Revolving Credit Agent and the Term Loan Agent have agreed to enter into this
Intercreditor Agreement.



NOW, THEREFORE, in consideration of the foregoing, the mutual agreements herein contained and
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:



1. Definitions. Capitalized terms not otherwise defined herein have the same
respective meanings given to them in the Revolving Credit Agreement. In addition, the following
terms shall have the following meanings:



Agent(s). Individually, the Revolving Credit Agent or the Term Loan Agent, as
applicable, and collectively, the Revolving Credit Agent and the Term Loan Agent.



Aggregate Borrowing Base. As of any date of determination, an amount equal to (i) the
Tranche A Borrowing Base (without giving effect to clause (a) thereof), plus (ii) Tranche
A-1 Borrowing Base (without giving effect to clause (a) thereof), in each case of clauses
(i), and (ii) hereof, including all component definitions thereof, (x) as defined in
the Revolving Credit Agreement as in effect on the date hereof and, at any time on or after the
Restatement Effective Date, the Revolving Credit Agreement as in effect on the Restatement
Effective Date and (y) based upon the most recent Borrowing Base Certificate received by the
Revolving Credit Agent prior to the funding of loans and advances by a Revolving Credit Secured
Party or the issuance, renewal or amendment of a Letter of Credit by an applicable Issuing Bank.



Aggregate Borrowing Base Formula. At any time, the formula used in determining the
Aggregate Borrowing Base at such time.



Aggregate Excess Availability. As of any date of determination, Excess Availability
under and as defined in the Revolving Credit Agreement, based upon the most recent Borrowing Base
Certificate received by the Revolving Credit Agent prior to the funding of loans or advances by a
Revolving Credit Secured Party or the issuance, renewal or amendment of a Letter of Credit by an
applicable Issuing Bank.



Asserted Known Bank Indemnification Claim. Any matters or circumstances for which
notice of demand has been made, asserted or threatened against the Revolving Credit Agent or any
Revolving Credit Secured Party whether in writing or orally that at the time of determination could
reasonably be expected to result in direct or actual damages and expenses (including, without
limitation, reasonable and documented attorneys’ fees and disbursements but excluding special,
indirect, consequential or punitive damages to the Revolving Credit Agent or any Revolving Credit
Secured Party) to the Revolving Credit
Agent or any Revolving Credit Secured Party and which are subject to indemnification by the
Credit Parties pursuant to the terms of the Revolving Credit Agreement or the Revolving Loan
Documents.


 


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Asserted Known Term Loan Indemnification Claim. Any matters or circumstances for
which notice of demand has been made, asserted or threatened against the Term Loan Agent or Term
Loan Lenders whether in writing or orally that at the time of determination could reasonably be
expected to result in direct or actual damages and expenses (including, without limitation,
reasonable and documented attorneys’ fees and disbursements but excluding special, indirect,
consequential or punitive damages to the Term Loan Agent or any Term Loan Lender) to the Term Loan
Agent or any Term Loan Lender and which are subject to indemnification by the Credit Parties
pursuant to the terms of the Term Loan Agreement or the Term Loan Documents.



Bank Debt. All Obligations under and as defined in the Revolving Credit Agreement,
which includes, without limitation, any and all principal, interest (including any interest that
accrues after the commencement by or against any Credit Party of any Insolvency Proceeding), fees,
costs, enforcement expenses (including legal fees and disbursements), letter of credit
reimbursement obligations, collateral protection expenses, Asserted Known Bank Indemnification
Claims at such time of determination, Unasserted Known Bank Indemnification Claims at such time of
determination and other reimbursement obligations (including, but not limited to, Bank Product
Obligations) created or evidenced by the Revolving Credit Agreement or any of the other Revolving
Loan Documents, or any existing, concurrent, or subsequent notes, instruments or agreements of
indebtedness, liabilities or obligations of any type or form whatsoever relating to the Revolving
Credit Agreement, the other Revolving Loan Documents and Bank Product Obligations in favor of any
Revolving Credit Secured Party, and any Refinancing of the foregoing made in accordance with the
provisions of this Intercreditor Agreement. Bank Debt shall not include interest, costs, advances,
fees, expenses or indemnities (including legal fees and disbursements) incurred in respect of the
Revolving Credit Agreement and the other Revolving Loan Documents to the extent the Revolving
Credit Agent’s or any Revolving Credit Secured Party’s claim therefor is not allowed in any
Insolvency Proceeding.



Bank Loan Termination Date. The first date on which (i) the Revolving Credit Secured
Parties have received payment in full in cash of all of the Priority Bank Debt; (ii) the Revolving
Credit Agent or the Revolving Credit Secured Parties shall have received cash collateral (or, in
connection with Letters of Credit, “back-to-back” letters of credit from a financial institution
reasonably acceptable to the Revolving Credit Agent) in such amounts as the Revolving Credit Agent
determines is reasonably necessary to secure the obligations owing to the Revolving Credit Secured
Parties (and their Affiliates) in connection with (A) any issued and outstanding Letters of Credit
constituting Priority Bank Debt but not in any event in an amount greater than 104% of the
aggregate undrawn face amount of such Letters of Credit (or such Letters of Credit shall have been
returned to the applicable Issuing Bank for cancellation), and (B) any Asserted Known Bank
Indemnification Claims, in an amount not to exceed 100% of the Credit Parties’ obligations to the
Revolving Credit Agent and the Revolving Credit Secured Parties in respect thereof; (iii) the
Revolving Credit Agent shall have received cash collateral in an amount equal to the Challenge
Period Retention Amount of the Revolving Credit Agent to be held as a reserve to pay any claims
(whether known or unknown) which may arise on or prior to the Challenge Period Termination Date;
and (iv) the commitment of the Revolving Credit Secured Parties to make any loans or provide other
financial accommodations to the Borrowers under the Revolving Loan Documents shall have been
terminated. If, at any time prior to or simultaneously with the occurrence of the Bank Loan
Termination Date, the Credit Parties enter into (x) any Refinancing of the Bank Debt, which
Refinancing is permitted under the terms of this Intercreditor Agreement or (y) Post-Petition
Financing with one or more Revolving Credit Secured Parties and such Post-Petition Financing is
entered into in accordance with Section 10.2, then, in each
case, the Bank Loan Termination Date shall automatically be deemed not to have occurred for
all purposes of this Intercreditor Agreement.


 


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Bank Product Obligations. All Bank Product Debt under and as defined in the Revolving
Credit Agreement, as in effect on the date hereof.



Challenge Period Retention Amount. An amount equal to (a) $2,000,000, in the case of
the Revolving Credit Agent, and (b) $750,000, in the case of the Term Loan Agent.



Challenge Period Termination Date. (a) With respect to a payment in full in cash of
the Priority Bank Debt or the Priority Term Loan Debt, as applicable, that is made (x) during any
Insolvency Proceeding with respect to any Credit Party or (y) within one hundred five (105) days of
the commencement of any Insolvency Proceeding with respect to any Credit Party, the first date on
which (i) the Credit Parties shall have released the Revolving Credit Secured Parties or the Term
Loan Agent and the Term Loan Lenders, as applicable, from any Claims arising out of, connected with
or related to the Revolving Loan Documents or Term Loan Documents, as the case may be, and, if
applicable, shall have stipulated in a final non-appealable order of a court of competent
jurisdiction that they have no Claims against the Revolving Credit Secured Parties or the Term Loan
Agent and the Term Loan Lenders, as applicable, and (ii) either (x) the Revolving Credit Agent or
Term Loan Agent, as applicable, shall have received a certification from each official committee
appointed in any such Insolvency Proceeding certifying to the Revolving Credit Agent or Term Loan
Agent, as applicable, that such committee will not commence any challenge to the Liens of such
Person or (y) the entry of a final non-appealable order of a court of competent jurisdiction
determining that no such committee has any claim or cause of action against the Revolving Credit
Secured Parties or the Term Loan Agent and the Term Loan Lenders, as applicable, arising out of,
connected with or related to the Revolving Loan Documents or the Term Loan Documents, as
applicable, or the Liens of the Revolving Credit Secured Parties or the Term Loan Agent and the
Term Loan Lenders, as applicable, and (b) with respect to a payment in full in cash of the Priority
Bank Debt or the Priority Term Loan Debt, as applicable, that is made at any other time, the date
that is one hundred five (105) days after date of such payment.



Claims. All past, present and future actions, causes of action, demands, suits,
claims, liabilities, Liens, lawsuits, adverse consequences, amounts paid in settlement, costs,
damages, debts, deficiencies, diminution in value, disbursements, expenses, losses and other
obligations of any kind or nature whatsoever, whether in law, equity or otherwise (including,
without limitation, interest or other carrying costs, penalties, legal, accounting and other
professional fees and expenses, and incidental, consequential and punitive damages payable to third
parties), whether known or unknown, fixed or contingent, direct, indirect, or derivative, foreseen
or unforeseen, suspected or unsuspected, then existing or which may thereafter exist against any
applicable Secured Party or any of their respective past or present officers, directors, servants,
agents, attorneys, assigns, heirs, parents or subsidiaries, whether held in a personal or
representative capacity, and which in each case are based on any act, fact, event or omission or
other matter, cause or thing, directly or indirectly arising out of, connected with or relating to
the Revolving Loan Documents or the Term Loan Documents, as applicable, or the transactions
contemplated thereby, and all other agreements, certificates, instruments and other documents and
statements (whether written or oral) related to any of the foregoing.



Collateral. All assets and properties of any kind whatsoever of any Credit Party that
is at any time subject to a Lien in favor of the Revolving Credit Agent or the Term Loan Agent.



Excluded Bank Debt. (a) The aggregate outstanding principal amount of Loans and the
aggregate face amount of Letters of Credit made, issued or incurred pursuant to the Revolving Loan
Documents which causes the amount of Loans and Letters of Credit to exceed the sum of (i) the Maximum
Bank Debt at the time of such making, issuance or incurrence, or any interest, fees or
reimbursement obligations accrued on or with respect to such excess principal amount pursuant to
this clause (a) plus (ii) the aggregate amount of interest and fees, in each case, in
respect of Loans and Letters of Credit not otherwise constituting Excluded Bank Debt, and expenses
under the Revolving Credit Agreement which have been charged to the loan account of the Borrowers
and deemed to be a Loan thereunder, (b) any Unasserted Known Bank Indemnification Claims at such
time of determination (exclusive of any such claims to the extent of the Challenge Period Retention
Amount applicable to the Revolving Credit Agent) and (c) any prepayment fee or early termination
fee set forth in the Revolving Credit Agreement. Excluded Bank Debt shall not include any portion
of Bank Debt (and interest thereon) attributable to an Inadvertent Overadvance.


 


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Excluded Term Loan Debt. (i) Any prepayment fee or early termination fee set forth in
the Term Loan Agreement, and (ii) any Unasserted Known Term Loan Indemnification Claims at such
time of determination (exclusive of any such claims to the extent of the Challenge Period Retention
Amount applicable to the Term Loan Agent).



Exigent Circumstances. An event or circumstance that materially and imminently
threatens the ability of the Revolving Credit Agent or the Term Loan Agent to realize upon all or a
material part of the Collateral, such as, without limitation, fraudulent removal or concealment
thereof, destruction (other than to the extent covered by insurance) or material waste thereof.



Inadvertent Overadvance Amounts. The aggregate amount of all Overadvances resulting
from any and all Inadvertent Overadvances.



Inadvertent Overadvance Period. The period of time following the occurrence of an
Inadvertent Overadvance and continuing until such time as no Overadvance is outstanding.



Inadvertent Overadvances. The funding of any loan or advance under the Revolving
Credit Agreement or the issuance, renewal or amendment of a Letter of Credit by an Issuing Bank
which did not result in an Overadvance when made based upon the most recent Borrowing Base
Certificate received by the Revolving Credit Agent prior to such funding or issuance, renewal or
amendment of a Letter of Credit but which has, on the relevant date of determination, become an
Overadvance as the result of (i) a decline in the value of the Aggregate Borrowing Base or the
Collateral, (ii) errors or fraud on a Borrowing Base Certificate, (iii) components of the Tranche A
Borrowing Base and/or Tranche A-1 Borrowing Base on any date thereafter being deemed ineligible,
(iv) the return of uncollected checks or other items of payment applied to the reduction of Loans
or other similar involuntary or unintentional actions, (v) the imposition of any reserve or a
reduction in advance rates after the funding of any loan or advance or the issuance, renewal or
amendment of a Letter of Credit by an Issuing Bank or (vi) any other circumstance beyond the
reasonable control of the Revolving Credit Agent or the Revolving Credit Secured Parties that
results in the reduction of the realizable value of the Tranche A Borrowing Base and/or Tranche A-1
Borrowing Base.



Insolvency Laws. (i) The Bankruptcy Code and any successor to such statute, (ii) any
statute dealing with the reorganization or liquidation of debtors, and (iii) any other applicable
insolvency or other similar law of any jurisdiction including, without limitation, any law of any
jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors
against it.



Insolvency Proceeding. (i) Any case or proceeding commenced by or against any Person
under any provision of any Insolvency Laws, or (ii) any proceeding seeking the appointment of any
trustee, receiver, interim receiver, liquidator, custodian, monitor or other insolvency official with
similar powers with respect to such Person or any of its assets, or (iii) any proceeding for
liquidation, dissolution or other winding up of the business of such Person, or (iv) any assignment
for the benefit of creditors or any marshalling of assets of such Person.


 


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Lien Enforcement Action. (i) Any action by any Revolving Credit Secured Party or the
Term Loan Agent or any Term Loan Lender to foreclose on or otherwise enforce its rights in respect
of the Lien of such Person in any Collateral, (ii) any action, as part of an exercise of rights or
remedies, by a Revolving Credit Secured Party or the Term Loan Agent or any Term Loan Lender to
take possession of, sell or otherwise realize (judicially or non-judicially) upon any Collateral
(including, without limitation, by setoff or notification of account debtors or other Persons
obligated on Collateral), and/or (iii) the commencement by any Revolving Credit Secured Party or
the Term Loan Agent or any Term Loan Lender of any legal proceedings against any Credit Party or
with respect to any Collateral to facilitate the actions described in clause (i) and
clause (ii) above; provided that, for the avoidance of doubt, none of the following
shall constitute a Lien Enforcement Action: (A) making demand for payment or accelerating the
maturity of any Bank Debt or Term Loan Debt, (B) the receipt of payments of principal of or
interest on the Bank Debt or the Term Loan Debt, or payments of other obligations arising under the
Revolving Loan Documents or the Term Loan Documents, including the receipt and application by the
Revolving Credit Agent to the Bank Debt of proceeds of Collateral received from account debtors or
other Persons obligated on Collateral or through any lockbox or other cash management arrangement,
whether or not any Revolving Credit Event of Default exists at the time of application, (C) the
implementation of reserves (including, without limitation, availability blocks) under the Revolving
Credit Agreement, (D) the reduction of advance rates under the Revolving Credit Agreement, or (E) 
the exercise by any Revolving Credit Secured Party or any of their Affiliates of any right of
offset with respect to Debt not arising under the Revolving Credit Agreement.



Materials. Shall have the meaning set forth in Section 7.6.



Maximum Bank Debt. On any date of determination thereof, an amount equal to the
result of (a) the Aggregate Borrowing Base, minus (b) the Minimum Excess Availability
Amount plus (c) (i) if no Inadvertent Overadvance Period exists with respect to the
Borrowers, Protective Overadvances in an amount up to five percent (5%) of the Aggregate Borrowing
Base or (ii) if an Inadvertent Overadvance Period exists with respect to the Borrowers, the sum of
(A) Protective Overadvances in an amount up to five percent (5%) of the Aggregate Borrowing Base,
plus (B) the Inadvertent Overadvance Amounts, plus (d) in the event that an
Insolvency Proceeding exists with respect to the Borrowers, the Permitted Insolvency Increase
Amount, minus (e) to the extent reserves in respect thereof are then applicable, but solely
to the extent the same has not been deducted in the calculation of the Aggregate Borrowing Base at
such time, an amount equal the Revolving Credit Reconciliation Amount on such date.



Minimum Excess Availability Amount. Shall mean that amount of Excess Availability at
all times required to be maintained by the Credit Parties pursuant to Section 10.3.1 (Excess
Availability) of the Revolving Credit Agreement but determined without giving effect to any
increase in the amount of such Excess Availability required under the proviso to such Section
10.3.1.



Overadvance. The making of a Loan, the issuance of a Letter of Credit or the
provision of any other credit support to the extent that, immediately after its having been made,
the result of the Aggregate Excess Availability minus the Minimum Excess Availability
Amount is less than zero ($0).



Permitted Insolvency Increase Amount. At any time, an amount equal to the result of
(a) the Aggregate Borrowing Base at such time, calculated utilizing the Aggregate Borrowing Base
Formula in effect on the date hereof and, at any time on or after the Restatement Effective Date, the
Aggregate Borrowing Base Formula in effect on the Restatement Effective Date, minus (b) the
Aggregate Borrowing Base at such time, calculated utilizing the Aggregate Borrowing Base Formula in
effect at such time; provided, however, that notwithstanding the foregoing, at any time prior to
December 30, 2010, the “Permitted Insolvency Increase Amount” shall in no event be an amount less
than five percent (5%) of the Aggregate Borrowing Base at such time.


 


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Post-Petition Financing. Shall have the meaning set forth in Section 10.2.



Post-Petition Lenders. Shall have the meaning set forth in Section 10.2.



Priority Bank Debt. All Bank Debt other than Excluded Bank Debt.



Priority Lien Agent. (a) Until the earlier of the Bank Loan Termination Date or the
Term Loan Remedies Exercise Date, the Revolving Credit Agent, (b) thereafter until all Priority
Term Loan Debt is paid in full, the Term Loan Agent, (c) following the payment in full of all
Priority Term Loan Debt, the Revolving Credit Agent until all other Bank Debt is paid in full and
(d) following the payment in full of all Bank Debt, the Term Loan Agent.



Priority Term Loan Debt. All Term Loan Debt other than Excluded Term Loan Debt.



Proposed Restated Revolving Credit Agreement. The form of Amended and Restated Loan
and Security Agreement attached hereto as Exhibit A.



Protective Overadvances. An Overadvance which the Revolving Credit Agent in its
reasonable business judgment in the performance of its duties under the Revolving Credit Agreement,
determines to be necessary or desirable to, directly or indirectly, (i) maintain, protect or
preserve the value of the Collateral and/or the Revolving Credit Agent’s rights therein as
determined in the discretion of the Revolving Credit Agent, including to preserve the Credit
Parties’ business assets and infrastructure (such as the payment of insurance premiums, taxes,
necessary suppliers, rent and payroll), (ii) to implement and exercise a Lien Enforcement Action,
(iii) to fund an orderly liquidation or wind-down of the Credit Parties’ assets or business or an
Insolvency Proceeding (whether or not occurring prior to or after the commencement of an Insolvency
Proceeding), or (iv) to enhance the likelihood, or maximize, the repayment of the Bank Debt.



Refinance. In respect of any Bank Debt or Term Loan Debt, to refinance, extend,
renew, defease, supplement, replace or repay such indebtedness, or to issue other indebtedness in
exchange or replacement for such indebtedness, in whole or in part, whether with the same or
different lenders, arrangers or agents. “Refinanced” and “Refinancing” shall have
correlative meanings.



Release Event. The occurrence and continuance, as applicable, of a Revolving Credit
Event of Default or Term Loan Event of Default, upon the written request of the Priority Lien Agent
delivered to the other Agent not less than five (5) Business Days prior to the proposed sale or
disposition of any Collateral.



Remedy Standstill Period. Whether or not any Insolvency Proceeding has been commenced
by or against any Credit Party, the period commencing on the date of the Revolving Credit Agent’s
receipt of written notice from the Term Loan Agent that a Term Loan Event of Default has occurred
and is continuing and ending on the date which is ninety (90) days after receipt of such notice.
Such written notice from the Term Loan Agent to the Revolving Credit Agent shall reference this
Intercreditor Agreement, declare a “Remedy Standstill Period” to commence and certify whether (i) the
“Obligations” under and as defined in the Term Loan Agreement are then due and payable in full
(whether as a result of acceleration hereof or otherwise) in accordance with the terms of the Term
Loan Agreement and the Term Loan Agent intends to commence Lien Enforcement Action or (ii) the Term
Loan Agent intends to commence Lien Enforcement Action.


 


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Restatement Effective Date. The first date on which the Revolving Credit Agreement
shall be amended or amended and restated after the date hereof substantially on the terms and
conditions, and in the form, of the Proposed Restated Revolving Credit Agreement with such changes
or other modifications as may be required by any Revolving Credit Lender so long as such amendment
or other modification shall not be in violation of the provisions set forth in Section 7.1.



Revolving Credit Event of Default. An Event of Default under and as defined in the
Revolving Credit Agreement.



Revolving Credit Reconciliation Amount. At any date of determination, an amount equal
to (a) at any time Prior to the Restatement Effective Date, the result of (i) the Aggregate
Borrowing Base at such time, minus (ii) the Aggregate Borrowing Base at such time,
calculated as if the Proposed Restated Revolving Credit Agreement (with such changes or other
modifications as may be required by any Revolving Credit Lender so long as such amendment or other
modification shall not be in violation of the provisions set forth in Section 7.1) were in
effect such time and (b) at any time on or after the Restatement Effective Date, zero Dollars ($0).



Revolving Credit Secured Parties. Collectively, the Secured Parties under and as
defined in the Revolving Credit Agreement.



Revolving Loan Documents. The Loan Documents under and as defined in the Revolving
Credit Agreement.



Specified Revolving Credit Amendments. Any amendment, restatement, supplement,
modification, waiver, substitution, renewal, Refinancing, replacement, extension, or consolidation
of any or all of the Revolving Loan Documents to:



(a) increase the sum of the then outstanding aggregate principal amount of the Loans and
outstanding Letters of Credit made, issued or incurred under the Revolving Credit Agreement and
any Post-Petition Financing in excess of the amount of the Maximum Bank Debt;



(b) except to allow for a Permitted Insolvency Increase Amount, (i) at any time prior to the
Restatement Effective Date, change the definitions of “Tranche A Borrowing Base” or “Tranche A-1
Borrowing Base”, and in each case any component definition thereof, as in effect on the date
hereof, in a manner which would effect an increase in the Aggregate Borrowing Base and (ii) at
any time on or after the Restatement Effective Date, change the definitions of “Tranche A
Borrowing Base” or “Tranche A-1 Borrowing Base”, and in each case any component definition
thereof, set forth in the Proposed Restated Revolving Credit Agreement, in a manner which would
effect an increase in the Aggregate Borrowing Base;


 


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(c) except to allow for a Permitted Insolvency Increase Amount, (i) at any time prior to the
Restatement Effective Date, increase the advance rates set forth in the Tranche A Inventory
Formula Amount, the Machinery and Equipment Amount, the Tranche A Real Estate Amount, the Tranche
A-1 Inventory Formula Amount or the Tranche A-1 Real Estate Amount above the rates
identified therein as in effect on the date hereof, and (ii) at any time on or after the
Restatement Effective Date, increase the advance rates set forth in the Tranche A Inventory
Formula Amount, the Tranche A Real Estate Amount, the Tranche A Credit Card Receivables Amount,
the Tranche A-1 Inventory Advance Percentage or the Tranche A-1 Real Estate Amount above the
rates identified in the Proposed Restated Revolving Credit Agreement;



(d) except to allow for a Permitted Insolvency Increase Amount, (i) at any time prior to the
Restatement Effective Date, change the definitions of “Availability Reserve”, “Inventory
Reserve”, “Rent and Charges Reserve” or “Bank Product Reserve”, in each case as in effect on the
date hereof, in a manner which would effect an increase in the Aggregate Borrowing Base or cease
deducting from the Tranche A Borrowing Base or the Tranche A-1 Borrowing Base (as applicable but
allocated among the foregoing, in the sole discretion of the Revolving Credit Agent and without
duplication) the “Availability Reserve” and (ii) at any time on or after the Restatement
Effective Date, change the definitions of “Availability Reserve”, “Credit Card Receivables
Reserve”, “Rent and Charges Reserve”, “Bank Product Reserve” or “Asset Disposition Reserve”, in
each case as set forth in the Proposed Restated Revolving Credit Agreement, in a manner which
would effect an increase in the Aggregate Borrowing Base or cease deducting from the Tranche A
Borrowing Base or the Tranche A-1 Borrowing Base (as applicable but allocated amongst the
foregoing, in the sole discretion of the Revolving Credit Agent and without duplication) the
“Availability Reserve”; or



(e) except to allow for a Permitted Insolvency Increase Amount, (i) at any time prior to the
Restatement Effective Date, add any new asset classes (i.e., types of property other than
Eligible Credit Card Accounts, Eligible Inventory and Eligible Real Estate) to the definition of
the Tranche A Borrowing Base or the Tranche A-1 Borrowing Base in effect on the date hereof and
(ii) at any time on or after the Restatement Effective Date, add any new asset classes (i.e.,
types of property other than Eligible Credit Card Accounts, Eligible Inventory and Eligible Real
Estate) to the definition of the Tranche A Borrowing Base or the Tranche A-1 Borrowing Base set
forth in the Proposed Restated Revolving Credit Agreement.



Term Loan Debt. All “Obligations” under and as defined in the Term Loan Agreement,
including, without limitation, any and all principal, interest (including any interest that accrues
after the commencement by or against the Credit Parties of any Insolvency Proceeding), fees, costs,
enforcement expenses (including legal fees and disbursements), Asserted Known Term Loan
Indemnification Claims at such time of determination, Unasserted Known Term Loan Indemnification
Claims at such time of determination, collateral protection expenses and other reimbursement
obligations created or evidenced by the Term Loan Agreement or any of the other Term Loan Documents
relating thereto in favor of the Term Loan Agent or any of the Term Loan Lenders. Term Loan Debt
shall not include interest, costs, advances, fees, expenses or indemnities (including, legal fees
and disbursements) incurred in respect of the Term Loan Agreement and the Term Loan Documents to
the extent the Term Loan Agent’s or the Term Loan Lenders’ claim therefrom is not allowed in an
Insolvency Proceeding.



Term Loan Documents. Collectively, the “Loan Documents” as such term is defined in
the Term Loan Agreement.



Term Loan Event of Default. An “Event of Default” as such term is defined in the Term
Loan Agreement.


 


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Term Loan Remedies Exercise Date. The date following the Remedy Standstill Period and
identified in the prior written notice delivered by the Term Loan Agent to the Revolving Credit
Agent as provided in Section 3.2(a), provided that the Term Loan Remedies Exercise Date
shall not be deemed to have occurred if prior to the expiration of the Remedy Standstill Period the Revolving Credit
Agent is diligently pursuing in good faith the exercise of its enforcement rights and remedies
against all or a material portion of the Collateral.



Transfer. Shall have the meaning set forth in Section 9.



Unasserted Known Bank Indemnification Claims. Any matters or circumstances for which
notice of demand has not been made or asserted against the Revolving Credit Agent or any Revolving
Credit Secured Party in any manner but which at the time of determination are known to the
Revolving Credit Agent or any Revolving Credit Secured Party and which would reasonably be expected
to result in a claim subject to indemnification by the Credit Parties pursuant to the terms of the
Revolving Credit Agreement.



Unasserted Known Term Loan Indemnification Claims. Any matters or circumstances for
which notice of demand has not been made or asserted against the Term Loan Agent or Term Loan
Lenders in any manner but which at the time of determination are known to the Term Loan Agent or
Term Loan Lenders and which would reasonably be expected to result in a claim subject to
indemnification by the Credit Parties pursuant to the terms of the Term Loan Agreement.



Voided Payment. Shall have the meaning set forth in Section 16.



2. Lien Subordination. The parties agree that, at all times, whether before during or
after any Insolvency Proceeding, to the extent valid, perfected, enforceable and not avoided, and,
in each case, irrespective of the time or manner of perfection thereof or the execution, delivery
or issuance of any Revolving Loan Documents or Term Loan Documents (a) Liens securing the Priority
Bank Debt shall be senior to the Liens securing the Priority Term Loan Debt, the Excluded Bank Debt
and the Excluded Term Loan Debt, and the Liens securing the Priority Term Loan Debt, the Excluded
Bank Debt and the Excluded Term Loan Debt shall be and are hereby rendered subordinate and junior
in priority to the Liens securing the Priority Bank Debt, (b) Liens securing the Priority Term Loan
Debt shall be senior to the Liens securing the Excluded Bank Debt and the Excluded Term Loan Debt
and the Liens securing the Excluded Bank Debt and the Excluded Term Loan Debt shall be and are
hereby rendered subordinate and junior in priority to the Liens securing the Priority Term Loan
Debt, and (c) Liens securing the Excluded Bank Debt shall be senior to the Liens securing the
Excluded Term Loan Debt and the Liens securing the Excluded Term Loan Debt shall be and are hereby
rendered subordinate and junior in priority to the Liens securing the Excluded Bank Debt. The Term
Loan Agent and the Term Loan Lenders further acknowledge and agree that the mortgages evidencing
Revolving Credit Agent’s mortgage Liens, as the same may be modified, consolidated, extended or
amended from time to time, secure future advances, the Revolving Credit Agent and the Revolving
Credit Secured Parties have, subject to the limitations contained in this Intercreditor Agreement,
a first priority mortgage lien under such mortgages to secure such future advances, and, to the
extent such mortgages of the Revolving Credit Agent encumber property and interests in
Pennsylvania, such mortgages are “open-end mortgages” as described in 42 Pa.C.S.A. §8143.


 


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2.1. Application of Collateral Proceeds.



(a) General. All proceeds of the Collateral received or collected by the Revolving
Credit Agent or the Term Loan Agent upon the occurrence of any of the following events: (i) after
the acceleration of the Bank Debt or the Term Loan Debt so long as one or more of the Revolving
Credit Secured Parties has not provided Post-Petition Financing as set forth in Section
10.2 hereof unless the indebtedness under such Post-Petition Financing provided by such
Revolving Credit Secured Party as set forth in Section 10.2 is accelerated; (ii) as proceeds of any
Lien Enforcement Action with respect to the Collateral after the occurrence and during the
continuation of a Revolving Credit Event of Default or a Term Loan Event of Default so long as
one or more of the Revolving Credit Secured Parties has not provided Post-Petition Financing as
set forth in Section 10.2 hereof and such Revolving Credit Secured Parties are not taking
any Lien Enforcement Action under such Post-Petition Financing; (iii) after the occurrence of a
Release Event pursuant to Section 2.6; (iv) after the commencement of any Insolvency
Proceeding so long as one or more of the Revolving Credit Secured Parties has not provided
Post-Petition Financing as set forth in Section 10.2 hereof; (v) upon the conduct of a
store closing, going-out-of-business or similar sale by any Credit Party for all or any material
portion of its inventory and/or stores, whether or not a Revolving Credit Event of Default or
Term Loan Event of Default then exists; or (vi) upon any other sale or disposition of all or a
material portion of the Collateral (other than in the ordinary course of business) shall be
applied: first, to the payment of the Priority Bank Debt, including the payment of
interest, fees and expenses constituting Priority Bank Debt (in each case, to the extent then due
and payable) and the provision of cash collateral to the Revolving Credit Agent in an amount
equal to (A) 104% of the undrawn amount of any Letters of Credit constituting Priority Bank Debt,
(B) 100% of the obligations in respect of Bank Product Obligations, and (C) 100% of the amount of
Asserted Known Bank Indemnification Claims at such time; second, to the provision of cash
collateral to the Revolving Credit Agent in an amount equal the Challenge Period Retention Amount
of the Revolving Credit Agent to be held as a reserve to pay any claims (whether known or
unknown) which may arise on or prior to the Challenge Period Termination Date, provided
that such portion of the Challenge Period Retention Amount which shall not have been used by the
Revolving Credit Agent to pay claims which arose on or prior to the Challenge Period Termination
Date shall be applied promptly by the Revolving Credit Agent as specified in this Section
2.1; third, to payment of the Priority Term Loan Debt, including the payment of
interest, fees and expenses constituting Term Loan Debt (in each case, to the extent then due and
payable) and the provision of cash collateral to the Term Loan Agent in an amount equal to 100%
of the amount of Asserted Known Term Loan Indemnification Claims at such time; fourth, to
the provision of cash collateral to the Term Loan Agent in an amount equal to the Challenge
Period Retention Amount of the Term Loan Agent to be held as a reserve to pay any claims (whether
known or unknown) which may arise on or prior to the Challenge Period Termination Event,
provided that such portion of the Challenge Period Retention Amount which shall not have
been used by the Term Loan Agent to pay claims which arose on or prior to the Challenge Period
Termination Date shall be applied promptly by the Term Loan Agent as specified in this
Section 2.1; fifth, to the payment of Excluded Bank Debt, and with respect to
Excluded Bank Debt constituting issued and outstanding Letters of Credit and Unasserted Known
Bank Indemnification Claims at such time, the provision of cash collateral to the Revolving
Credit Agent in respect of such Letters of Credit and Unasserted Known Bank Indemnification
Claims at such time (in an amount not to exceed 104% of the aggregate undrawn face amount of such
Letters of Credit and 100% of the amount of Unasserted Known Bank Indemnification Claims);
sixth, to the payment of Excluded Term Loan Debt (and as to Unasserted Known Term Loan
Indemnification Claims at such time in an amount not to exceed 100% of the amount of Unasserted
Known Term Loan Indemnification Claims); and seventh, to the applicable Credit Party or
as otherwise required by Applicable Law.



 


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(b) Ordinary Course Application. Any proceeds of the Collateral received or
collected by any Credit Party, the Revolving Credit Agent, the Term Loan Agent or any Term Loan
Lender prior to any of the events listed in clauses (a) through (f) above shall
be applied and treated in accordance with the applicable provisions of the Revolving Credit
Agreement.



(c) Agreement Regarding Permanent Reductions of Commitment for Specified Events.
The Revolving Credit Agent and the Revolving Credit Secured Parties hereby agree that upon
the conduct of (i) a store closing, going-out-of-business or similar sale by the Credit
Parties of all or substantially all of their retail operations or inventory, (ii) a foreclosure
by the Revolving Credit Agent of its Liens on a material portion of the Collateral, or (iii) a
disposition of a material portion of the Collateral by the Revolving Credit 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 Revolving Credit Agent shall permanently
reduce the applicable Commitments in an amount equal to the Net Proceeds received and applied to
the repayment of Loans by the Revolving Credit Agent from such sale or disposition.




2.2. Further Assurances. The Term Loan Agent hereby agrees, upon request of the
Revolving Credit Agent at any time and from time to time, to execute such other documents or
instruments as may be reasonably requested by the Revolving Credit Agent further to evidence of
public record or otherwise the senior priority of the Liens securing the Priority Bank Debt as
contemplated hereby. Following the earlier of the Bank Loan Termination Date and the Term Loan
Remedies Exercise Date, the Revolving Credit Agent hereby agrees, upon request of Term Loan Agent
at any time and from time to time, to execute such other documents or instruments as may be
reasonably requested by Term Loan Agent further to evidence of public record or otherwise the
senior priority of the Liens securing the Term Loan Debt as contemplated hereby.



2.3. Books and Records. The Term Loan Agent further agrees to maintain on its books
and records such notations as the Revolving Credit Agent may reasonably request to reflect the Lien
subordination contemplated hereby and to perfect, render enforceable, or preserve the rights of the
Revolving Credit Agent hereunder. Following the Bank Loan Termination Date, the Revolving Credit
Agent further agrees to maintain on its books and records such notations as the Term Loan Agent may
reasonably request to reflect the Lien subordination contemplated hereby and to perfect, render
enforceable, or preserve the rights of the Term Loan Agent hereunder.



2.4. Lien Validity. The subordination provisions contained herein relate solely to
the priority of Liens granted to the Revolving Credit Agent and the Term Loan Agent by the Credit
Parties. It is the Revolving Credit Agent’s responsibility to ensure the validity, perfection and
enforceability of the Liens granted by the Credit Parties to the Revolving Credit Agent for the
benefit of itself and the Revolving Credit Secured Parties. It is the Term Loan Agent’s
responsibility to ensure the validity, perfection and enforceability of the Liens granted by the
Credit Parties to the Term Loan Agent for the benefit of itself and the Term Loan Lenders. Except
as expressly set forth herein, no Revolving Credit Secured Party shall have any duties to the Term
Loan Agent or the Term Loan Lender with respect to the Collateral, and no Term Loan Lender shall
have any duties to the Revolving Credit Agent or the Revolving Credit Secured Parties with respect
to the Collateral. The Term Loan Agent and the Term Loan Lenders agree that they will not contest
the validity, perfection, priority or enforceability of the claims of the Revolving Credit Secured
Parties with respect to the Bank Debt (including any obligations arising under the Revolving Credit
Agreement or the other Revolving Loan Documents to the extent allowed in any Insolvency Proceeding)
or the Liens upon the Collateral in favor of the Revolving Credit Agent. The Revolving Credit
Secured Parties agree that they will not contest the validity, perfection, priority or
enforceability of the claims of the Term Loan Agent and the Term Loan Lenders with respect to the
Term Loan Debt (including any obligations arising under the Term Loan Agreement or the other Term
Loan Documents to the extent allowed in any Insolvency Proceeding) or the Liens upon the Collateral
in favor of the Term Loan Agent.



 


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2.5. No Debt Subordination. Nothing in this Intercreditor Agreement shall be deemed
to subordinate the right of the Term Loan Lenders to receive payment, whether before or after the
occurrence of any default, event of default or Insolvency Proceeding (other than payments from
Collateral, to the extent contrary to the provisions of Section 2.1), it being the intent
of the parties hereto that, to the extent provided in this Intercreditor Agreement, (a) the Lien of
the Term Loan Agent with respect to the Collateral shall, to the extent valid, perfected,
enforceable and not avoided, be junior and have its priority and preference of rank ceded to the
Lien of the Revolving Credit Agent with respect to the Collateral to the extent of the respective
Lien priorities set forth in Section 2 of this Intercreditor Agreement, and (b) the Lien of
the Revolving Credit Agent with respect to the Collateral shall, to the extent valid, perfected,
enforceable and not avoided, shall be senior and have priority and preference of rank to the Lien
of the Term Loan Agent with respect to the Collateral to the extent of the respective Lien
priorities set forth in Section 2 of this Intercreditor Agreement.



2.6. Collateral Release.



(a) Subject to Section 10.5(b), following the occurrence of a Release Event in which
the Revolving Credit Agent acts as “Priority Lien Agent”, upon the request of the Revolving Credit
Agent with respect to the Collateral identified in such request (which request shall include copies
of all documentation (including purchase agreements and any other relevant supporting
documentation) related to such sale or disposition, the Term Loan Agent on behalf of the Term Loan
Lenders shall:




(i) release, discharge or otherwise terminate its Liens on such Collateral, to the
extent such Collateral is to be sold or otherwise disposed of either by (A) the Revolving
Credit Agent, its agents or with the consent of the Revolving Credit Agent, or (B) any
Credit Party or its agents in accordance with the Revolving Credit Agreement;




(ii) deliver such release documents as the Revolving Credit Agent may reasonably
require in connection therewith; provided that if the closing of the sale or
disposition of such Collateral is not consummated within ten (10) days of receipt by the
Revolving Credit Agent of such release documents from the Term Loan Agent, the Revolving
Credit Agent shall promptly return all such release documents to the Term Loan Agent; and




(iii) be deemed to have consented under the Term Loan Agreement to such sale or other
disposition; provided that such deemed consent shall lapse in the event such sale or
other disposition does not occur within ten (10) days of receipt by the Revolving Credit
Agent of the relevant release, discharge and Lien termination documents from the Term Loan
Agent.



Subject to Section 10.5(b), the effectiveness of any such release, discharge, termination
and/or consent by the Term Loan Agent shall be subject to (i) the sale or other disposition of the
Collateral described in such request on the terms described in such request or on substantially
similar terms and, with respect to dispositions conducted by the Revolving Credit Agent or its
agents, in a commercially reasonable manner, and (ii) the application of the Net Proceeds of such
sale or other disposition promptly by the Revolving Credit Agent or the Term Loan Agent as
specified in Section 2.1(a) hereof.



 


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(b) Following the earlier of the Bank Loan Termination Date and the Term Loan Remedies
Exercise Date, in respect of any Release Event in which the Term Loan Agent acts as “Priority Lien
Agent”, upon the request of the Term Loan Agent with respect to the Collateral identified in such
request (which request shall include copies of all documentation (including purchase agreements and
any other relevant supporting documentation) related to such sale or disposition, the Revolving
Credit Agent on behalf of the applicable Secured Parties shall:



(i) release, discharge or otherwise terminate its Liens on such Collateral, to the
extent such Collateral is to be sold or otherwise disposed of either by (A) the Term Loan
Agent or its agents or with the consent of the Term Loan Agent, or (B) any Credit Party or
its agents in accordance with the Term Loan Agreement;




(ii) deliver such release documents as the Term Loan Agent may reasonably require in
connection therewith; provided that if the closing of the sale or disposition of
such Collateral is not consummated within ten (10) days of receipt by the Term Loan Agent of
such release documents from the Revolving Credit Agent, the Term Loan Agent shall promptly
return all such release documents to the Revolving Credit Agent; and




(iii) be deemed to have consented under the Revolving Credit Agreement to such sale or
other disposition; provided that such deemed consent shall lapse in the event such
sale or other disposition does not occur within ten (10) days of receipt by the Term Loan
Agent of the relevant release, discharge and Lien termination documents from the Revolving
Credit Agent.



Subject to Section 10.5(b), the effectiveness of any such release, discharge, termination
and/or consent by the Revolving Credit Agent shall be subject to (i) the sale or other disposition
of the Collateral described in such request on the terms described in such request or on
substantially similar terms and, with respect to dispositions conducted by the Term Loan Agent or
its agents, in a commercially reasonable manner, and (ii) the application of the Net Proceeds of
such sale or other disposition promptly by the Revolving Credit Agent or the Term Loan Agent as
specified in Section 2.1(a) hereof.



(c) In connection with any sale, lease, exchange, transfer or other disposition of Collateral
permitted under the terms of both the Revolving Credit Agreement and the Term Loan Agreement (other
than in connection with any Lien Enforcement Action), each of the Revolving Credit Agent, for
itself and on behalf of the Revolving Credit Secured Parties, and the Term Loan Agent, for itself
and on behalf of the Term Loan Lenders, shall release any of its Liens on any part of the
Collateral, or release, if so provided in the Revolving Credit Agreement and the Term Loan
Agreement, as the case may be, a Credit Party from its obligations thereunder; provided,
however, any failure by the Revolving Credit Agent or the Term Loan Agent, as applicable,
to so release its Liens shall, in any event, result in such Liens on such Collateral to be
automatically, unconditionally and simultaneously released on the day that the other agent shall
release its Liens on such Collateral; provided, further, that, the Net Proceeds of
such sale or other disposition shall be applied promptly by the Revolving Credit Agent or the Term
Loan Agent, as applicable, as specified in Section 2.1(a) hereof.



 


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3. Obligations of the Credit Parties; Remedy Standstill.



3.1. Obligations.



(a) Nothing contained herein shall impair as between the Credit Parties and the Term Loan
Lenders, the obligation of the Credit Parties to pay to the Term Loan Lenders all amounts payable
in respect of the Term Loan Debt as and when the same shall become due and payable in accordance
with the terms of the Term Loan Agreement, subject to the rights of the Revolving Credit Secured
Parties hereunder. Nothing in this Intercreditor Agreement shall have any effect on the right of
the Term Loan Agent, for the benefit of the Term Loan Lenders, to accelerate the maturity date of
the Term Loan Debt pursuant to the terms of the Term Loan Agreement or to exercise all other
rights, powers and remedies otherwise permitted by applicable law or under the Term Loan Documents
or this Intercreditor Agreement, except as expressly set forth in Section 3.2 hereof with
respect to Lien Enforcement Actions and the filing, or the participation in a filing, of any
involuntary bankruptcy petition or other Insolvency
Proceeding in respect of any Credit Party. Any Lien Enforcement Action taken by the Term Loan
Agent or the Term Loan Lenders and the filing, or the participation in a filing, of any involuntary
bankruptcy petition or other Insolvency Proceeding in respect of any Credit Party by the Term Loan
Agent or the Term Loan Lenders will be done in accordance with the provisions of this Intercreditor
Agreement.



(b) Nothing contained herein shall impair as between the Credit Parties and the Revolving
Credit Secured Parties, the obligation of the Credit Parties to pay to the Revolving Credit Secured
Parties all amounts payable in respect of the Bank Debt as and when the same shall become due and
payable in accordance with the terms of the Revolving Credit Agreement, subject to the rights of
the Term Loan Agent and the Term Loan Lenders hereunder. Nothing in this Intercreditor Agreement
shall have any effect on the right of the Revolving Credit Agent, for the benefit of the Revolving
Credit Secured Parties, to accelerate the maturity date of the Bank Debt pursuant to the terms of
the Revolving Credit Agreement or to exercise all other rights, powers and remedies otherwise
permitted by applicable law or under the Revolving Loan Documents or this Intercreditor Agreement.
Any Lien Enforcement Action taken by the Revolving Credit Secured Parties will be done in
accordance with the provisions of this Intercreditor Agreement.



3.2. Remedy Standstill Periods.



(a) Following the occurrence of any Term Loan Event of Default and until the expiration of
the Remedy Standstill Period, the Term Loan Agent may not take any Lien Enforcement Action in
respect of the Term Loan Debt; provided, however, nothing contained herein shall impair the Term
Loan Agent’s and the Term Loan Lenders’ rights to take, in the event that the Revolving Credit
Agent has declined to take such protective actions within a reasonable time period after the
written request by the Term Loan Agent to the Revolving Credit Agent to do so, any actions
(including the commencement of legal proceedings, but excluding the commencement of an
involuntary bankruptcy proceeding against any Credit Party) that the Term Loan Agent or such Term
Loan Lender deems necessary to protect and preserve, but not to realize or foreclose on, the
Collateral. After the expiration of the Remedy Standstill Period, and five (5) Business Days
prior written notice to the Revolving Credit Agent (which notice may be delivered to the
Revolving Credit Agent during the Remedy Standstill Period but in no event more than ten days
prior to the expiration thereof), the Term Loan Agent may take, for the benefit of the Term Loan
Lenders, one or more of the following actions in respect of the Term Loan Event of Default that
was the subject of the notice giving rise to such Remedy Standstill Period at the same or
different times:




(i) exercise any Lien Enforcement Action (including, without limitation, foreclosure
upon and taking possession of the Collateral); provided, however, until the
earlier of the Bank Loan Termination Date and the Term Loan Remedies Exercise Date, the Term
Loan Agent will not take or continue any Lien Enforcement Action or seek or continue
remedies under the Term Loan Documents on account of the Collateral so long as the Revolving
Credit Agent is diligently pursuing in good faith the exercise of its enforcement rights and
remedies against all or a material portion of the Collateral; and




(ii) exercise any and all other remedies under the Term Loan Documents and Applicable
Law available to the Term Loan Lenders with respect to the Collateral, including the
notification of account debtors or other Persons obligated on Collateral of the assignment
of any Credit Party’s accounts receivable to the Revolving Credit Agent and the Term Loan
Agent, all subject to the proviso in Section 3.2(a)(i) above.


 


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(b) All proceeds of Collateral received by the Term Loan Agent shall be turned over to the
Revolving Credit Agent for prompt application in accordance with Section 2.1 hereof, or,
to the extent that the Term Loan Agent is entitled to apply such proceeds to the Term Loan Debt
pursuant to the terms of this Intercreditor Agreement, applied promptly by the Term Loan Agent in
accordance with Section 2.1. This Section 3.2 shall not be construed to in any
way limit or impair the rights of the Term Loan Agent to join (but not control or object to in
any way) any foreclosure or other Lien Enforcement Action with respect to the Collateral
initiated by the Revolving Credit Agent, so long as it does not delay or interfere in any
material respect with the exercise by the Revolving Credit Secured Parties of their respective
rights as provided in this Intercreditor Agreement.



(c) Nothing contained herein shall impair the Term Loan Agent’s or any Term Loan Lender’s
rights (i) to exercise any remedies against any of the Credit Parties (other than any remedies
against any Collateral) pursuant to the Term Loan Documents, (ii) to accelerate any of the Term
Loan Debt, (iii) to make demand upon any Credit Party or any other Person liable on the Term Loan
Debt, (iv) to institute a lawsuit to collect its debt, or, after (x) the expiration of the Remedy
Standstill Period, (y) the expiration of the period commencing on the date of the Revolving
Credit Agent’s receipt of a written notice from the Term Loan Agent that a Term Loan Event of
Default has occurred and is continuing under Section 11.1(c) of the Term Loan Agreement (with
respect to a breach under Section 10.3 of the Term Loan Agreement) and ending on the date which
is ten (10) Business Days after receipt of such notice, or (z) the occurrence and during the
continuance of a Term Loan Event of Default under Section 11.1(a), 11.1(b) (to the extent arising
from fraud or a willful misrepresentation of any Credit Party), or 11.1(p) of the Term Loan
Agreement, as the case may be, the filing, or the participation in a filing, of any involuntary
bankruptcy petition or other Insolvency Proceeding in respect of any Credit Party, (v) to
exercise any of its rights or remedies with respect to the Collateral as and when permitted by
Section 3.2(a), (vi) to file a claim or statement of interest with respect to the Term
Loan Debt, (vii) to take any action (not adverse to the priority status of the Liens on the
Revolving Credit Agent, or the rights of Revolving Credit Agent to exercise remedies in respect
thereof) in order to create, perfect, preserve or protect its Lien on the Collateral subject to
the other terms of this Intercreditor Agreement; (viii) to file any necessary responsive or
defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading
made by any Person objecting to or otherwise seeking the disallowance of the claims of the Term
Loan Lenders, including, without limitation, any claims secured by the Collateral, if any, in
each case not otherwise in contravention of the terms of this Intercreditor Agreement; (ix) to
exercise any rights or remedies available to unsecured creditors or file any pleadings,
objections, motions or agreements which assert rights or interests available to unsecured
creditors of the Credit Parties arising under the Term Loan Documents, any Insolvency or
Liquidation Proceeding or applicable non-bankruptcy law, in each case, not otherwise prohibited
by the terms of this Intercreditor Agreement; and (x) to vote on any plan of reorganization,
arrangement or compromise or any proposal, file any proof of claim, make other filings and make
any arguments and motions that are, in each case, not otherwise prohibited by the terms of this
Intercreditor Agreement.



4. Collateral; Priority Lien Agent; Insurance Matters; Etc.



4.1. Payments Held in Trust.



(a) Until the Bank Loan Termination Date, the Term Loan Agent will hold in trust and
immediately pay over to the Revolving Credit Agent for the account of the Revolving Credit
Secured Parties and for application in accordance with Section 2.1 hereof, in the same
form of payment received, with appropriate endorsements, any amounts that the Term Loan Agent or
the Term Loan Lenders receive constituting proceeds of Collateral that the Term Loan Lenders are
not then entitled to apply to the Term Loan Debt pursuant to the provisions hereof; provided
that the Revolving Credit Agent will hold in trust and immediately pay over to the Term Loan
Agent, for the account of the Term Loan Lenders and the Term Loan Agent, any proceeds in excess
of the Priority Bank Debt to be applied to the Term Loan Debt as provided in Section 2.1
hereof. Until the Bank Loan Termination Date, the Term Loan Lenders shall, to the extent of all
payments or distributions made to the Revolving Credit Secured Parties pursuant to this
Intercreditor Agreement which would otherwise be payable in respect of the Term Loan Debt, be
subrogated to the rights of the Revolving Credit Secured Parties to receive payments or
distributions of cash, properties or securities applicable to the Bank Debt until the Term Loan
Debt shall be paid in full. For purposes of such subrogation, no payments or distributions to
the Revolving Credit Secured Parties of any cash, property or securities to which the Term Loan
Lenders would be entitled except for the provisions of this Intercreditor Agreement, and no
payment over to the Revolving Credit Secured Parties pursuant to this Intercreditor Agreement by
the Term Loan Agent as between any Credit Party, its creditors (other than the Revolving Credit
Secured Parties) and the Term Loan Agent shall be deemed to be a payment by the Credit Parties to
or on account of the Term Loan Debt.


 


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(b) After the Bank Loan Termination Date and until repayment of the Priority Term Loan Debt,
the Revolving Credit Agent will hold in trust and immediately pay over to the Term Loan Agent for
the account of the Term Loan Lenders and the Term Loan Agent and for application in accordance with
Section 2.1 hereof, in the same form of payment received, with appropriate endorsements,
for application to the Term Loan Debt, any cash amount that the Revolving Credit Agent receives in
violation of the provisions of Section 2.1 hereof. Until repayment of the Term Loan Debt,
the Revolving Credit Secured Parties shall, to the extent of all payments or distributions made to
the Term Loan Agent and the Term Loan Lenders pursuant to this Intercreditor Agreement which would
otherwise be payable in respect of the Bank Debt, be subrogated to the rights of the Term Loan
Agent and the Term Loan Lenders to receive payments or distributions of cash, properties or
securities applicable to the Term Loan Debt until the Bank Debt shall be paid in full. For
purposes of such subrogation, no payments or distributions to the Term Loan Agent or the Term Loan
Lenders of any cash, property or securities to which the Revolving Credit Secured Parties would be
entitled except for the provisions of this Intercreditor Agreement, and no payment over to the Term
Loan Agent or the Term Loan Lenders pursuant to this Intercreditor Agreement by the Revolving
Credit Agent as between any Credit Party, its creditors (other than the Term Loan Agent and the
Term Loan Lenders) and the Revolving Credit Agent, shall be deemed to be a payment by the Credit
Parties to or on account of the Bank Debt.



(c) After repayment of the Priority Term Loan Debt and until the payment in full of the
Excluded Bank Debt, the Term Loan Agent will hold in trust and immediately pay over to the
Revolving Credit Agent for the account of the Revolving Credit Secured Parties and for application
in accordance with Section 2.1 hereof, in the same form of payment received, with
appropriate endorsements, any amounts that the Term Loan Agent or the Term Loan Lenders receive
constituting proceeds of Collateral that the Term Loan Lenders are not then entitled to apply to
the Term Loan Debt pursuant to the provisions hereof; provided that the Revolving Credit
Agent will hold in trust and immediately pay over to the Term Loan Agent, for the account of the
Term Loan Lenders and the Term Loan Agent, any proceeds in excess of the Excluded Bank Debt to be
applied to the Term Loan Debt as provided in Section 2.1 hereof. Until the payment in full
of the Excluded Bank Debt, the Term Loan Lenders shall, to the extent of all payments or
distributions made to the Revolving Credit Secured Parties pursuant to this Intercreditor Agreement
which would otherwise be payable in respect of the Excluded Term Loan Debt, be subrogated to the
rights of the Revolving Credit Secured Parties to receive payments or distributions of cash,
properties or securities applicable to the Bank Debt until the Term Loan Debt shall be paid in
full. For purposes of such subrogation, no payments or distributions to the Revolving Credit
Secured Parties of any cash, property or securities to which the Term Loan Lenders would be
entitled except for the provisions of this Intercreditor Agreement, and no payment over to the
Revolving Credit Secured Parties pursuant to this Intercreditor Agreement by the Term Loan Agent as
between any Credit Party, its creditors (other than the Revolving Credit Secured Parties) and the
Term Loan Agent shall be deemed to be a payment by the Credit Parties to or on account of the Term
Loan Debt.


 


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4.2. Appointment of Revolving Credit Agent as Agent. The Term Loan Agent hereby
appoints the Revolving Credit Agent as its agent to perfect by possession or control its Lien on,
and to hold on its behalf, any of the Collateral (a) which Lien is capable of being perfected by
possession or control and (b) that is, at any time, delivered to and in the possession, or is under
the control of the Revolving Credit Agent, subject always to the rights of the Revolving Credit
Agent as prior Lien holder. The Revolving Credit Agent acknowledges that it holds such Collateral
for the benefit of the Term Loan Agent upon and subject to the terms contained in this
Intercreditor Agreement. After the occurrence and during the continuance of a Revolving Credit
Event of Default, the Revolving Credit Agent shall receive for the benefit of the Revolving Credit
Secured Parties, the Term Loan Agent and the Term Loan Lenders any dividends paid by any
Subsidiaries of the Credit Parties and apply such dividends in accordance with Section 2.1
hereof, to the extent then applicable.



4.3. Appointment of Term Loan Agent as Agent. The Revolving Credit Agent hereby
appoints the Term Loan Agent as its agent to perfect by possession or control its Lien on, and to
hold on its behalf, any of the Collateral which Lien is capable of being perfected by possession or
control which is delivered to and in the possession, or is under the control of the Term Loan
Agent, subject at all times to the proceeds of such Collateral being distributed in accordance with
Section 2.1. The Term Loan Agent acknowledges that it holds such Collateral for the
benefit of the Revolving Credit Secured Parties upon and subject to the terms contained in this
Intercreditor Agreement. After the occurrence and during the continuance of a Term Loan Event of
Default, the Term Loan Agent shall receive for the benefit of the Revolving Credit Secured Parties
any dividends paid by any Subsidiaries of the Credit Parties and pay over to the Revolving Credit
Agent such dividends as provided in Section 4.1.



4.4. Agent and Bailee for Perfection.



(a) Prior to the earlier of the Bank Loan Termination Date and the Term Loan Remedies
Exercise Date, except as otherwise expressly provided in this Intercreditor Agreement, (i) the
Revolving Credit Agent shall be entitled to deal with the Collateral in its possession or under
its control in accordance with the terms of the Revolving Loan Documents and (ii) the rights of
the Term Loan Agent shall at all times be subject to the terms of this Intercreditor Agreement.
Following the earlier of the Bank Loan Termination Date and the Term Loan Remedies Exercise Date,
except as otherwise expressly provided in this Intercreditor Agreement, (x) the Term Loan Agent
shall be entitled to deal with the Collateral in its possession or under its control in
accordance with the terms of the Term Loan Documents and (y) the rights of the Revolving Credit
Agent shall at all times be subject to the terms of this Intercreditor Agreement.



(b) The Revolving Credit Agent shall have no obligation whatsoever to the Term Loan Agent or
any Term Loan Lender to ensure that the Collateral in its possession or under its control is
genuine or owned by a Credit Party or to preserve the rights or benefits of any person except as
expressly set forth in this Section 4. The duties or responsibilities of the Revolving
Credit Agent under this Section 4 shall be limited solely to holding the Collateral as
agent or as bailee, as the case may be, and controlling deposit accounts and securities accounts
as agent, in each case for the Term Loan Agent for purposes of perfecting the Lien thereon held
by the Term Loan Agent. The Revolving Credit Agent shall not have, or be deemed to have, by
reason of this Intercreditor Agreement or otherwise a fiduciary relationship in respect of any
Term Loan Lender or the Term Loan Agent.
Neither any Revolving Credit Secured Party nor any of its Affiliates or their respective
officers, directors, employees, agents or representatives shall be liable to the Term Loan Agent
or any Term Loan Lender for any action taken or omitted to be taken by it under or in connection
with this Article 4. The Term Loan Agent shall have no obligation whatsoever to any
Revolving Credit Secured Party to ensure that the Collateral in its possession or under its
control is genuine or owned by a Credit Party or to preserve the rights or benefits of any person
except as expressly set forth in this Section 4. The duties or responsibilities of the
Term Loan Agent under this Section 4 shall be limited solely to holding the Collateral as
agent, mandatory or as bailee, as the case may be, and controlling deposit accounts and
securities accounts as agent, in each case for the Revolving Credit Agent for purposes of
perfecting the Lien thereon held by the Revolving Credit Agent. The Term Loan Agent shall not
have, or be deemed to have, by reason of this Intercreditor Agreement or otherwise a fiduciary
relationship in respect of any Revolving Credit Secured Party. Neither the Term Loan Agent or
any Term Loan Lender nor any of its Affiliates or their respective officers, directors,
employees, agents or representatives shall be liable to any Revolving Credit Secured Party for
any action taken or omitted to be taken by it under or in connection with this Article 4.


 


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(c) Following the earlier of the Bank Loan Termination Date and the Term Loan Remedies
Exercise Date, the Revolving Credit Agent shall transfer the possession and control of the
Collateral in its “possession” or “control”, together with any necessary endorsements and
releases but without recourse or warranty to the Term Loan Agent, at the cost and expense of the
Credit Parties pursuant to Section 3.4 of the Revolving Credit Agreement. Further, the Revolving
Credit Agent shall, at the cost and expense of the Credit Parties pursuant to Section 3.4 of the
Revolving Credit Agreement, deliver notices to the third-parties party to those collateral
documents in which the “Priority Lien Agent” is a party to indicate that the “Priority Lien
Agent” shall thereafter be the Term Loan Agent. Such notices to be substantially in the form
attached to such collateral documents.



4.5 Insurance Matters. Until the earlier of the Bank Loan Termination Date and the
Term Loan Remedies Exercise Date, the Revolving Credit Agent shall have the exclusive right,
subject to the rights of the Credit Parties under the Revolving Credit Agreement, to settle and
adjust all insurance claims compensating for the loss, damage or destruction of Collateral
(including all business interruption insurance claims). Following the earlier of the Bank Loan
Termination Date and the Term Loan Remedies Exercise Date, the Term Loan Agent shall have the
exclusive right, subject to the rights of the Credit Parties under the Term Loan Agreement, to
settle and adjust all insurance claims compensating for the loss, damage or destruction of
Collateral (including all business interruption insurance claims). Following the payment in full
of the Priority Term Loan Debt and until the payment in full of the Excluded Bank Debt, Revolving
Credit Agent shall have the exclusive right, subject to the rights of the Credit Parties under the
Term Loan Agreement, to settle and adjust all insurance claims compensating for the loss, damage or
destruction of Collateral (including all business interruption insurance claims). Following
payment in full of the Excluded Bank Debt, Term Loan Agent shall have the exclusive right, subject
to the rights of the Credit Parties under the Term Loan Agreement, to settle and adjust all
insurance claims compensating for the loss, damage or destruction of Collateral (including all
business interruption insurance claims).



In calculating the Maximum Bank Debt, any Overadvance resulting from any settlement or
adjustment of any insurance claims by any Person for an amount less then the cost of such
Inventory, in each case, shall be deemed an Inadvertent Overadvance.



 


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4.6 [Intentionally Omitted.]



4.7 No Marshaling. The Term Loan Agent agrees not to assert and hereby waives, to the
fullest extent permitted by law, any right to demand, request, plead or otherwise assert or
otherwise claim against any Revolving Credit Secured Parties the benefit of any marshaling right
that a junior secured creditor might have under applicable law with respect to the Collateral. The
Revolving Credit Agent agrees not to assert and hereby waives, to the fullest extent permitted by
law, any right to demand, request, plead or otherwise assert or otherwise claim against the Term
Loan Agent and the Term Loan Lenders the benefit of any marshaling right that a junior secured
creditor (solely with respect to the Excluded Bank Debt) might have under applicable law with
respect to the Collateral.



4.8 Cash Management Arrangements, etc. Until the earlier of the Bank Loan Termination
Date and the Term Loan Remedies Exercise Date, the Revolving Credit Agent shall have the exclusive
right to give notices, take any action under or settle any disputes arising under and in connection
with any cash management arrangement, including without limitation under Section 7.2 of the
Revolving Credit Agreement and any Security Documents required to have been delivered pursuant to
such Section 7.2 of the Revolving Credit Agreement. Further, until the Bank Loan Termination Date,
the Credit Parties shall maintain their cash management arrangements (including, without
limitation, the disposition of funds maintained in any Deposit Accounts) as provided in the
Revolving Loan Documents. Following the earlier of the Bank Loan Termination Date and the Term
Loan Remedies Exercise Date, the Term Loan Agent shall have the exclusive right to give notices,
take any action under or settle any disputes arising under and in connection with any cash
management arrangement, including without limitation under Section 7.2 of the Term Loan Agreement
and any “Security Documents” under and as defined in the Term Loan Agreement required to have been
delivered pursuant to such Section 7.2 of the Term Loan Agreement. Further, following the Bank
Loan Termination Date, the Credit Parties shall maintain their cash management arrangements
(including, without limitation, the disposition of funds maintained in any Deposit Accounts) as
provided in the Term Loan Documents. Following the payment in full of the Priority Term Loan Debt
and until the payment in full of the Excluded Bank Debt, Revolving Credit Agent shall have the
exclusive right to give notices, take any action under or settle any disputes arising under and in
connection with any cash management arrangement, including without limitation under Section 7.2 of
the Revolving Credit Agreement and any Security Documents required to have been delivered pursuant
to such Section 7.2 of the Revolving Credit Agreement. Further, until the repayment in full of the
Excluded Bank Debt, the Credit Parties shall maintain their cash management arrangements
(including, without limitation, the disposition of funds maintained in any Deposit Accounts) as
provided in the Revolving Loan Documents. Following payment in full of the Excluded Bank Debt,
Term Loan Agent shall have the exclusive right to give notices, take any action under or settle any
disputes arising under and in connection with any cash management arrangement, including without
limitation under Section 7.2 of the Term Loan Agreement and any “Security Documents” under and as
defined in the Term Loan Agreement required to have been delivered pursuant to such Section 7.2 of
the Term Loan Agreement. Further, following the payment in full of the Excluded Bank Debt, the
Credit Parties shall maintain their cash management arrangements (including, without limitation,
the disposition of funds maintained in any Deposit Accounts) as provided in the Term Loan
Documents.



5. Defense to Enforcement. If the Term Loan Agent, in contravention of the terms of
this Intercreditor Agreement, shall commence, prosecute or participate in any suit, action or
proceeding against any Collateral, then the Credit Parties may interpose as a defense or plea the
making of this Intercreditor Agreement, and any Revolving Credit Secured Party may intervene and
interpose such defense or plea in its name or in the name of such Credit Party. If the Revolving
Credit Agent, in contravention of the terms of this Intercreditor Agreement, shall commence,
prosecute or participate in any suit, action or proceeding against any Collateral, then the Credit
Parties may interpose as a defense or plea the making of this Intercreditor Agreement, and the Term
Loan Agent may intervene and interpose such defense or plea in its name or in the name of such
Credit Party.


 


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6. Advances. If any Revolving Credit Secured Party should honor a request by the
Borrowers for a loan, advance or other financial accommodation under the Revolving Credit
Agreement, whether or not the Revolving Credit Agent or any Revolving Credit Secured Party has
knowledge that the honoring of such request would result in a Term Loan Event of Default, or act,
condition or event which with notice or passage of time or both would constitute a Term Loan Event
of Default, in no event shall any Revolving Credit Secured Party have any liability to the Term
Loan Agent or any Term Loan Lender as a result of such breach.



7. Lenders’ Freedom of Dealing.



7.1. Modifications to Revolving Credit Agreement. The Revolving Credit Secured
Parties may at any time and from time to time and without consent of or notice to the Term Loan
Agent or any Term Loan Lender, without incurring any liability to the Term Loan Agent or any Term
Loan Lender and without impairing or releasing any rights or obligations hereunder or otherwise,
amend, restate, supplement, modify, waive, substitute, renew, Refinance, or replace any or all of
the Revolving Loan Documents; provided, however, that without the consent of the
Term Loan Agent, the Revolving Credit Secured Parties shall not amend, restate, supplement, modify,
waive, substitute, renew, Refinance or replace any or all of the Revolving Loan Documents to:




(i) (A) at any time prior to the Restatement Effective Date, (1) increase the rates of
interest set forth in the definition of “Applicable Margin” as defined in the Revolving Credit
Agreement as in effect on the date hereof above (x) the rates of interest set forth in the
definition of “Applicable Margin” as defined in the Proposed Restated Revolving Credit Agreement
plus (y) 2.00% per annum at any level of the pricing grid applicable thereto (other than
any increase occurring because of fluctuations in underlying rate indices or the imposition of the
Default Rate), (2) increase the percentage set forth in the definition of “Default Rate” or
increase any fees payable pursuant to Section 3.2.2(a) of the Revolving Credit Agreement, in each
case, by more than 2.00% per annum above percentage set forth in the definition of “Default Rate”
or the fees payable pursuant to Section 3.2.2(a), as applicable, in the Proposed Restated Revolving
Credit Agreement (other than any increase occurring because of fluctuations in underlying rate
indices) or (3) increase any fees payable pursuant to Section 3.2.1 of the Revolving Credit
Agreement by more than 2.00% per annum above the percentages set forth in the definition of “Unused
Line Fee Rate” in the Proposed Restated Revolving Credit Agreement (other than any increase
occurring because of fluctuations in underlying rate indices) and (B) at any time on or after the
Restatement Effective Date, increase the rates of interest set forth in the definition of
“Applicable Margin” as defined in the Proposed Restated Revolving Credit Agreement by more than
2.00% per annum at any level of the pricing grid applicable thereto (other than any increase
occurring because of fluctuations in underlying rate indices or the imposition of the Default Rate)
or increase the percentages set forth in each of the definitions of “Default Rate” or “Unused Line
Fee Rate” set forth in the Revolving Credit Agreement, or increase any fees payable pursuant to
Section 3.2.2(a) of the Revolving Credit Agreement, in each case, by more than 2.00% per annum
above the rate applicable thereto and set forth in the Proposed Restated Revolving Credit Agreement
(other than any increase occurring because of fluctuations in underlying rate indices);




 


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(ii) (A) at any time prior to the Restatement Effective Date, amend or waive any requirement
set forth in Section 10.3.1 (Excess Availability) of the Revolving Credit Agreement, if the effect
of (x) any such amendment would be to decrease in any manner the required amount of minimum Excess
Availability set forth therein as in effect on the date hereof or (y) any such waiver would permit
the Borrowers to obtain Loans in an amount which would violate (except as a result of an
Inadvertent
Overadvance, a Protective Overadvance or Permitted Insolvency Increase Amount) the minimum
Excess Availability requirement set forth in such Section 10.3.1 on the date hereof and (B) at any
time on or after the Restatement Effective Date, amend or waive any requirement set forth in
Section 10.3.1 (Excess Availability) of the Revolving Credit Agreement, if the effect of (x) any
such amendment would be to decrease in any manner the required amount of minimum Excess
Availability set forth in the Proposed Restated Revolving Credit Agreement or (y) any such waiver
would permit the Borrowers to obtain Loans in an amount which would violate (except as a result of
an Inadvertent Overadvance, a Protective Overadvance or Permitted Insolvency Increase Amount) the
minimum Excess Availability requirement set forth in such Section 10.3.1 of Proposed Restated
Revolving Credit Agreement;



(iii) shorten the scheduled maturity of the Bank Debt;




(iv) (A) at any time prior to the Restatement Effective Date, change any conditions,
covenants, defaults or events of default thereunder that expressly restricts any Credit Party from
making payments of the Term Loan Debt that would otherwise be permitted under the Revolving Loan
Documents as in effect on the date hereof and (B) at any time on or after the Restatement Effective
Date, change any conditions, covenants, defaults or events of default thereunder that expressly
restricts any Credit Party from making payments of the Term Loan Debt that would otherwise be
permitted under the Proposed Restated Revolving Credit Agreement other than as expressly provided
herein; or




(v) effect any Specified Revolving Credit Amendment.



Nothing contained herein shall limit, restrict or impair the discretionary rights and ability of
the Revolving Credit Agent to impose or establish any and all Availability Reserves, and to
thereafter reduce or eliminate such Availability Reserves, or to determine the eligibility of
Collateral for inclusion in the calculation of the Tranche A Borrowing Base or the Tranche A-1
Borrowing Base, in each case, as provided in the Revolving Credit Agreement; provided, that
the Revolving Credit Agent agrees to impose a methodology no less restrictive than that used as of
the date hereof (and, at any time on or after the Restatement Effective Date, a methodology no less
restrictive than that set forth in the Proposed Restated Revolving Credit Agreement) in determining
(a) Inventory Reserves as to shrink and, prior to the filing of any petition or the commencement of
any Insolvency Proceeding by or against any Credit Party under applicable Insolvency Laws, the rent
component of the Rent and Charges Reserve and (b) Availability Reserves in respect of Bank Product
Debt, except, in each case, the Administrative Agent may, in its reasonable exercise of its credit
judgment as an asset based lender to the retail industry, impose a methodology that is less
restrictive in determining any such reserve so long as imposing such less restrictive methodology,
either individually or in the aggregate (for all such less restrictive methodology), would not
result in an increase of more than $5,000,000 in the Aggregate Borrowing Base. The Maximum Bank
Debt is not a limitation on the discretionary rights and ability of the Revolving Credit Agent to
impose or establish any and all Availability Reserves, and to thereafter reduce or eliminate such
Availability Reserves.



 


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7.2. Modifications to Term Loan Agreement. The Term Loan Agent and the Term Loan
Lenders may at any time and from time to time and without consent of or notice to the Revolving
Credit Secured Parties, without incurring any liability to the Revolving Credit Secured Parties and
without impairing or releasing any rights or obligations hereunder or otherwise, amend, restate,
supplement, modify, waive, substitute, renew, Refinance or replace any or all of the Term Loan
Documents; provided, however, that without the consent of the Revolving Credit
Agent, the Term Loan Agent and the Term Loan Lenders shall not amend, restate, supplement, modify,
waive, substitute, renew, Refinance or replace any or all of the Term Loan Documents to:



(i) increase the aggregate outstanding principal amount of the Term Loan Debt;




(ii) increase the rates of interest set forth in the definition of “Applicable Margin” as
defined in the Term Loan Agreement by more than 2.00% per annum at any level of the pricing grid
applicable thereto (other than any increase occurring because of fluctuations in underlying rate
indices or the imposition of the “Default Rate” as defined in the Term Loan Agreement) or increase
the percentages set forth in the definition of “Default Rate” as defined in the Term Loan Agreement
by more than 2.00% per annum above the rate applicable thereto on the date hereof;




(iii) shorten the scheduled maturity of the Term Loan Debt;




(iv) require any mandatory prepayments or scheduled repayments of the Term Loan Debt except as
provided in the Term Loan Documents as in effect on the date hereof or require that any payment on
the Term Loan Debt be made earlier than the date originally scheduled for such payment;




(v) amend Section 10.3.1 (Excess Availability) of the Term Loan Agreement, if the effect of
such amendment would be to increase in any manner the required amount of minimum “Excess
Availability” set forth therein as in effect on the date hereof; or




(vi) change any conditions, covenants, defaults or events of default thereunder that expressly
restricts any Credit Party from making payments of the Bank Debt that would otherwise be permitted
under the Term Loan Documents as in effect on the date hereof.



7.3. Notifications of Modifications to Agreements.



(a) The Revolving Credit Agent shall provide prompt written notice to the Term Loan Agent of
any amendment or modification to the Revolving Credit Agreement or the other Revolving Loan
Documents, provided that the failure of the Revolving Credit Agent to give notice as
required hereby shall not result in liability for failure to do so, and shall not affect the
relative priorities of Liens as provided herein or the validity or effectiveness of any such
notice or such enforcement action as against any Credit Party.



(b) The Term Loan Agent shall provide prompt written notice to the Revolving Credit Agent of
any amendment or modification to the Term Loan Agreement or the other Term Loan Documents,
provided that the failure of the Term Loan Agent to give notice as required hereby shall
not result in liability for failure to do so, and shall not affect the relative priorities of
Liens as provided herein or the validity or effectiveness of any such notice or such enforcement
action as against any Credit Party.



7.4. Notifications of Events of Default.



(a) The Term Loan Agent shall provide a written notice to the Revolving Credit Agent
promptly following the occurrence of any Term Loan Event of Default of which the Term Loan Agent
is aware, provided that the failure of the Term Loan Agent to give notice as required
hereby shall not result in liability for failure to do so, and shall not affect the relative
priorities of Liens as provided herein or the validity or effectiveness of any such notice or
such enforcement action as against any Credit Party.


 


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(b) The Revolving Credit Agent shall provide a written notice to the Term Loan Agent
promptly following the occurrence of any Revolving Credit Event of Default of which the
Revolving Credit Agent is aware, provided that the failure of the Revolving Credit
Agent to give notice as required hereby shall not result in liability for failure to do so, and
shall not affect the relative priorities of Liens as provided herein or the validity or
effectiveness of any such notice or such enforcement action as against any Credit Party.



(c) The Revolving Credit Agent and the Term Loan Agent each will (i) absent Exigent
Circumstances, provide notice to the other of its commencement of a Lien Enforcement Action and
(ii) use commercially reasonable efforts to provide such information as it may have to the others
as the such agents may from time to time reasonably request concerning the status of the exercise
of any Lien Enforcement Action or other enforcement right or remedy, and each of the Revolving
Credit Agent and the Term Loan Agent shall be available on a reasonable basis during normal
business hours to review with each other alternatives available in exercising such rights,
including, but not limited to, advising each other of any offers which may be made from time to
time by prospective purchasers of the Collateral (subject to any confidentiality requirements as
may be imposed by such prospective purchasers); provided, that, in each case of
clauses (i) and (ii), the failure of any party to do any of the foregoing shall
not result in liability for failure to do so, and shall not affect the relative priorities of the
Revolving Credit Agent’s and the Term Loan Agent’s Liens as provided herein or the validity or
effectiveness of any notices or demands or enforcement action as against any Credit Party.



7.5. Consent to Restated Revolving Credit Agreement. Notwithstanding anything to the
contrary contained herein, the Term Loan Agent hereby consents to the amendment, or amendment and
restatement of, the Revolving Credit Agreement in substantially the form of the Proposed Restated
Revolving Credit Agreement with such changes or other modifications as may be required by any
Revolving Credit Lender so long as such amendment or other modification shall not be in violation
of the provisions set forth in Section 7.1.



7.6. Appraisals, Collateral Exams, Etc. The Revolving Credit Agent shall provide Term
Loan Agent with (x) copies of all appraisals (including so called “desktop appraisals”), collateral
exams, field audits, environmental exams, or similar reports and bank statements and other account
information received by the Revolving Credit Agent in connection with the Revolving Credit
Agreement or the other Revolving Loan Documents and (y) updated information concerning the Tranche
A Borrowing Base, the Tranche A-1 Borrowing Base and Excess Availability, as the Term Loan Agent
may reasonably request (collectively, “Materials”) and the Credit Parties irrevocably, by
their execution hereof, direct and authorize the Revolving Credit Agent to do so. The Term Loan
Agent agrees that such Materials are delivered without representation and warranty by, and without
recourse to, the Revolving Credit Secured Parties. Notwithstanding the foregoing, the failure of
the Revolving Credit Agent to provide any Materials shall not (A) affect the relative priorities of
Liens as provided herein or the validity or effectiveness of any notices or demands as against any
Credit Party, (B) impair the effectiveness of this Intercreditor Agreement or (C) give rise to any
claim or cause of action by Term Loan Agent against any Revolving Credit Secured Party or any third
person conducting such appraisals and commercial finance audits. The Term Loan Agent and the Term
Loan Lenders each acknowledges and agrees that none of the Revolving Credit Secured Parties and
their agents and employees make any representations or warranties whatsoever with respect to the
Materials of any kind, nature, or description, including without limitation, any representation as
to the completeness or accuracy of the Materials, either at the time that the Materials were
prepared or at the present time and such information is provided information purposes only, and may
not be relied upon by the Term Loan Agent or any Term Loan Lender, or any other party, in any
manner whatsoever. The Revolving Credit Agent hereby agrees to use commercially reasonable efforts
to provide the Term Loan Agent with prior notice of any inspections,
audits or appraisals (other than any such “desktop” appraisals”) made by the Revolving Credit
Agent pursuant to Section 10.1.1 of the Revolving Credit Agreement so that Term Loan Agent may
accompany the Revolving Credit Agent on any such inspections, audits or appraisals;
provided that the failure of the Revolving Credit Agent to so notify the Term Loan Agent
shall not (x) alter the rights or obligations of the parties hereto or impair the effectiveness of
this Intercreditor Agreement, (y) be deemed a breach hereof and (z) give rise to any claim or cause
of action by the Term Loan Agent against the Revolving Credit Agent.


 


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8. New Liens. Subject to Section 2 and Section 10, (i) each of the
Revolving Credit Agent and the Term Loan Agent agrees that, after the date hereof, neither such
agent nor any of the Revolving Credit Secured Parties or the Term Loan Lenders shall acquire or
hold any Lien on any assets of any Credit Party or any of their respective Subsidiaries unless,
prior to or contemporaneously therewith, such Lien on such assets has been offered to the Revolving
Credit Agent or the Term Loan Agent, as the case may be; and (ii) each Credit Party agrees not to
grant any Lien on any of its assets, or permit any of its Subsidiaries to grant a Lien on any of
its assets, in favor of any of the Revolving Credit Agent or the Term Loan Agent or any Revolving
Credit Secured Party or the Term Loan Lenders unless, prior to or contemporaneously therewith, it,
or such Subsidiary, has offered to grant a similar Lien on such assets in favor of the other
agent(s) or the other lenders or secured parties, as they case may be. To the extent that the
foregoing provisions are not complied with for any reason, each of the Revolving Credit Agent and
the Term Loan Agent agrees that any amounts received by or distributed to any of them pursuant to
or as a result of Liens granted in contravention of this Section 8 shall be subject to
Section 2.1. In the event that, pursuant to this Section 8, (a) the Revolving Credit Agent
or any Revolving Credit Secured Party shall acquire or hold any Lien on any assets of any Credit
Party and the Term Loan Agent and the Term Loan Lenders shall not have a similar Lien on such
asset, the Revolving Credit Agent or such Revolving Credit Secured Party, as the case may be, shall
be deemed, subject to Section 4.4(b), to hold such Collateral as agent or as bailee, as the case
may be, for the Term Loan Agent for purposes of perfecting the Lien of the Term Loan Agent thereon,
and (b) the Term Loan Agent or any Term Loan Lender shall acquire or hold any Lien on any assets of
any Credit Party and the Revolving Credit Agent and the Revolving Credit Secured Parties shall not
have a similar Lien on such asset, the Term Loan Agent or such Term Loan Lender, as the case may
be, shall be deemed, subject to Section 4.4(b), to hold such Collateral as agent or as bailee, as
the case may be, for the Revolving Credit Agent for purposes of perfecting the Lien of the
Revolving Credit Agent thereon.



9. Sale of the Bank Debt and the Term Loan Debt. None of the Revolving Credit Secured
Parties, Term Loan Agent or Term Loan Lender will sell, transfer, pledge, assign, hypothecate or
otherwise dispose of (collectively, a “Transfer”) any or all of the Bank Debt or Term Loan
Debt, as the case may be, to any person other than a person who agrees to become a party hereto and
to succeed to the rights and to be bound by all of the obligations of such Revolving Credit Secured
Party, Term Loan Agent or Term Loan Lender hereunder.



10. Bankruptcy Matters.



10.1. Insolvency. This Intercreditor Agreement and the priorities provided for herein
shall be applicable with respect to all Liens obtained by the Revolving Credit Agent, any Revolving
Credit Secured Party, the Term Loan Agent or any Term Loan Lender (whether obtained before or after
the filing of any petition or the commencement of any Insolvency Proceeding by or against any
Credit Party under applicable Insolvency Laws and all converted or succeeding Insolvency
Proceedings in respect thereof). The relative rights of Revolving Credit Agent, any Revolving
Credit Secured Party, the Term Loan Agent and the Term Loan Lenders in or to any distributions from
or in respect of any
Collateral or proceeds of Collateral shall continue after the commencement of any such
Insolvency Proceeding on the same basis as prior to the commencement of any such Insolvency
Proceeding, subject to any court order approving Post-Petition Financing by Post-Petition Lenders
(each as defined below) in favor of, or use of cash collateral by, any Credit Party as
debtor-in-possession.


 


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10.2. Post-Petition Financing. If any Credit Party shall become subject to an
Insolvency Proceeding and the Credit Parties or any trustee, monitor, receiver or similar official
therefor moves for (a) approval of financing to be provided in good faith by any Revolving Credit
Secured Party (in such capacity, the “Post-Petition Lenders”) as permitted under applicable
Insolvency Laws or (b) the use of cash collateral with the consent of the Revolving Credit Agent as
permitted under applicable Insolvency Laws (such use of cash collateral and any such financing
provided by the Post-Petition Lenders, the “Post-Petition Financing”), then the Term Loan
Agent and the Term Loan Lenders agree: (i) not to object to any use of cash collateral or any such
financing (nor support any other Person objecting to such use of cash collateral or such financing)
on the grounds of a failure to provide “adequate protection”, and (ii) not to demand any form of
“adequate protection” or any other form of relief in connection with such use of such cash
collateral or such financing, in each of clause (i) and clause (ii), so long as (A)
the Term Loan Agent and the Term Loan Lenders retain a Lien on the pre-petition Collateral
(including proceeds thereof arising after the commencement of such proceeding) with the same
priority as existed prior to the commencement of the case or proceeding under applicable Insolvency
Laws to the extent such Liens were valid, perfected, enforceable and not avoided, (B) the Term Loan
Agent and the Term Loan Lenders receive, as adequate protection, a replacement Lien on
post-petition assets to the same extent granted to the Post-Petition Lenders, such replacement Lien
to be subordinate to (1) the Lien of such Post-Petition Lenders, (2) the Lien of the Revolving
Credit Agent and the Lien of the Revolving Credit Secured Parties with respect to the pre-petition
obligations, (3) any adequate protection Lien provided to the Revolving Credit Agent and the
Revolving Credit Secured Parties and (4) to any carve-out amount for professionals and directors
and officers following the occurrence of any event of default under any such debtor-in-possession
financing or the United States Trustee or any other insolvency officer and its counsel that has
been agreed upon by the Revolving Credit Agent, (C) the Post-Petition Financing will not require
the Credit Parties to seek confirmation of a specific plan of reorganization or arrangement for
which all or substantially all of the material terms are set forth in the documentation evidencing
such Post-Petition Financing (but for the avoidance of doubt, such Post-Petition Financing may
include deadlines for the confirmation of a plan of reorganization or arrangement satisfactory to
the Post-Petition Lenders), (D) the Post-Petition Lenders agree that they will not seek court
approval to make, issue or incur loans or letter of credit accommodations pursuant to such
Post-Petition Financing that would cause the sum of (x) the aggregate outstanding principal amount
of such loans and letter of credit accommodations made pursuant to such financing plus (y)
the outstanding principal amount of pre-petition Bank Debt, in each case, to the extent having
priority over the Priority Term Debt to exceed the sum of (aa) the Priority Bank Debt, plus
(bb) the Permitted Insolvency Increase Amount, and (E) the Post-Petition Financing is otherwise in
compliance with the provisions of Section 7.1 (other than (x) clauses (i) and
(iii) of such Section 7.1 and (y) clause (a) of the definition of Specified
Revolving Credit Amendments). Nothing contained herein shall be deemed to limit the rights of the
Term Loan Agent or any Term Loan Lender to object to Post-Petition Financing or use of cash
collateral on any grounds other than the failure to provide “adequate protection” for the Liens of
the Term Loan Agent and the Term Loan Lenders.



10.3. Voting.





 (a) In any such Insolvency Proceeding, the Term Loan Agent and the Term
Loan Lenders shall not vote with respect to any plan or proposal or take any other action in any
way so as to contest (i) the priority, perfection or validity of any Bank Debt (including any claim
for post-petition interest thereon) or any collateral or guaranties thereof or (ii) the Term Loan
Agent’s and the Term Loan Lenders’ obligations and agreements set forth in this Intercreditor
Agreement.


 


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(b) In any such Insolvency Proceeding, the Revolving Credit Secured Parties shall not vote
with respect to any plan or proposal or take any other action in any way so as to contest (i) the
priority, perfection or validity of any Term Loan Debt (including any claim for post-petition
interest thereon) or any collateral or guaranties thereof or (ii) the Revolving Credit Secured
Parties’ obligations and agreements set forth in this Intercreditor Agreement.



10.4. Alternative Financings.



(a) The provisions hereof shall not impair the right of the Revolving Credit Secured Parties
in any Insolvency Proceeding to provide Post-Petition Financing or consent to the use of cash
collateral on terms other than as set forth herein, provided that such Post-Petition
Financing shall comply with the provisions of clauses (D) and (E) of Section
10.2. Further, nothing in this Intercreditor Agreement shall limit the rights of the
Revolving Credit Secured Parties to object to post-petition financing provided by the Term Loan
Agent and/or the Term Loan Lenders following any Insolvency Proceeding on any grounds.



(b) The Term Loan Agent and the Term Loan Lenders hereby agree that they shall not offer,
and shall not permit any Affiliate of any of them to offer, to provide any Post-Petition
Financing to the Credit Parties in any Insolvency Proceeding or endorse the provision of any
Post-Petition Financing to the Credit Parties in any Insolvency Proceeding other than
Post-Petition Financing provided by or consented to by Revolving Credit Secured Parties.



10.5. Certain Agreements by Term Loan Agent and the Revolving Credit Agent.



(a) In any such Insolvency Proceeding, the Term Loan Agent agrees, for itself and the other
Term Loan Lenders, that it shall not:




(i) other than as a result of the absence of adequate protection, seek any relief from,
or modification of, the automatic stay as provided in §362 of the Bankruptcy Code;




(ii) object to (A) the amount of the Priority Bank Debt allowed or permitted to be
asserted under any Bankruptcy Law or (B) the extent to which the Priority Bank Debt is
deemed a secured claim, including under §506(a) of the Bankruptcy Code;




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




(iv) object to the treatment of the Priority Bank Debt under a chapter 11 plan of
reorganization under the Bankruptcy Code or similar plan or reorganization or arrangement
under any other applicable Insolvency or Liquidation Proceeding, except an objection as to
the valuation of the property received by the Revolving Credit Agent and the Revolving
Credit Secured Parties in such Insolvency Proceeding.



 


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(b) The Term Loan Agent, on behalf of itself and the Term Loan Lenders, agrees that neither
it nor they will raise any objection to or oppose a sale or other disposition of any Collateral
(and any post-petition assets subject to adequate protection Liens in favor of the Revolving
Credit Secured Parties), free and clear of its Liens or other claims under Section 363 of the
Bankruptcy Code
(or any similar provision of any other Insolvency Laws or other Applicable Laws) if the
Revolving Credit Agent has consented to such sale or disposition of such assets so long as (i)
the Net Proceeds of such sale or other disposition are applied pursuant to Section 2.1 or
(ii) the interests of the Term Loan Agent and the Term Loan Lenders in the Collateral (and any
post-petition assets subject to adequate protection Liens, if any, in favor of the Term Loan
Agent) attach to the proceeds thereof, subject to the terms of this Intercreditor Agreement.
Upon request by the Revolving Credit Agent in connection therewith, the Term Loan Agent shall
affirmatively consent to such a sale or disposition.



(c) Following the Bank Loan Termination Date, the Revolving Credit Agent, on behalf of
itself and the Revolving Credit Secured Parties, agrees that neither it nor they will raise any
objection to or oppose a sale or other disposition of any Collateral (and any post-petition
assets subject to adequate protection Liens in favor of the Term Loan Agent and the Term Loan
Lenders), free and clear of its Liens or other claims under Section 363 of the Bankruptcy Code
(or any similar provision of any other Insolvency Laws or other Applicable Laws) if the Term Loan
Agent has consented to such sale or disposition of such assets so long as (i) the Net Proceeds of
such sale or other disposition are applied pursuant to Section 2.1 or (ii) the interests
of the Revolving Credit Agent and the Revolving Credit Secured Parties in the Collateral (and any
post-petition assets subject to adequate protection Liens, if any, in favor of the Revolving
Credit Agent) attach to the proceeds thereof, subject to the terms of this Intercreditor
Agreement. Following the Bank Loan Termination Date, upon request by the Term Loan Agent in
connection therewith, the Revolving Credit Agent shall affirmatively consent to such a sale or
disposition.



10.6. Unsecured Creditor Rights.  The Term Loan Agent, on behalf of itself and the
Term Loan Lenders, shall retain all rights to file any pleadings, objections, motions or agreements
which assert rights or interests available to unsecured creditors of the Credit Parties arising
under any Insolvency Law. In the event any Term Loan Lender or any Term Loan Agent in respect of
any Collateral becomes a judgment lien creditor in respect of such Collateral as a result of its
enforcement of its rights as an unsecured creditor, such judgment lien shall be subordinated to any
Lien on such Collateral securing Priority Bank Debt in respect of such Collateral on the same basis
and to the same extent as the other Liens on such Collateral securing the Term Loan Debt are
subordinated to those securing the Bank Debt under this Intercreditor Agreement. Nothing in this
Intercreditor Agreement modifies any rights or remedies which any Revolving Credit Secured Party in
respect of any Collateral may have with respect to such Collateral.



10.7. Separate Grants of Security and Separate Classifications. Each of the parties
hereto acknowledges and agrees that (i) the grants of Liens pursuant to the Revolving Loan
Documents and the Term Loan Documents constitute separate and distinct grants of Liens and (ii)
because of, among other things, their differing rights in the Collateral, the Bank Debt and the
Term Loan Debt in respect of any Collateral are fundamentally different from each other in respect
of such Collateral, and the Bank Debt and Term Loan Debt in respect of any Collateral must be
separately classified in any Insolvency Proceeding. To further effectuate the intent of the
parties as provided in the immediately preceding sentence, if it is held that, in respect of any
Collateral, the Bank Debt and the Term Loan Debt in respect of such Collateral constitute only one
secured claim (rather than separate classes of secured claims), then all distributions shall be
made as if there were separate classes of secured claims against the Credit Parties in respect of
any Collateral.



11. Revolving Credit Reconciliation Amount. Each of the Revolving Credit Agent and
the Credit Parties hereby agree that, in the event that the Revolving Credit Agreement shall not,
for any reason, be amended or amended and restated in substantially the form of the Proposed
Restated Revolving Credit Agreement (with such changes or other modifications as may be required by
any Revolving Credit
Lender so long as such amendment or other modification shall not be in violation of the
provisions set forth in Section 7.1) on or prior to January 5, 2010, the Revolving Credit
Agent shall impose and maintain each day thereafter, commencing as of January 6, 2010, a reserve
pursuant to clause (e) of the definition of Availability Reserve, as in effect on the date hereof,
in an amount equal to the Revolving Credit Reconciliation Amount applicable for such day. Such
reserve shall reflect the Revolving Credit Agent’s reconciliation of availability under the
Aggregate Borrowing Base (as defined in the Revolving Credit Agreement as in effect at such time)
and the Aggregate Borrowing Base, determined as if the Proposed Restated Revolving Credit Agreement
were then in effect.


 


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12. Credit Parties’ Obligations Absolute. Nothing contained in this Intercreditor
Agreement shall impair, as between the Credit Parties and the Term Loan Lenders, the obligation of
the Credit Parties to pay to the Term Loan Lenders all amounts payable in respect of the Term Loan
Debt as and when the same shall become due and payable in accordance with the terms thereof, or
prevent the Term Loan Agent (except as expressly otherwise provided in Sections 2,
3, 4, 5 or 10 hereof) from exercising all rights, powers and
remedies otherwise permitted by the Term Loan Documents and by applicable law upon a default in the
payment or performance of its obligations in relation to the Term Loan Debt or under any of the
Term Loan Documents, all, however, subject to the rights of the Revolving Credit Secured Parties as
set forth in this Intercreditor Agreement.



13. Notices. All notices and other communications which are required and may be given
pursuant to the terms of this Intercreditor Agreement shall be in writing and shall be sufficient
and effective in all respects if given in writing or telecopied, delivered by electronic
transmission or mailed by registered or certified mail, postage prepaid, as follows:



	 	 	 	 	 	 	 
	 	 	If to the Revolving
Credit Agent:
	 
	 

	 	 	 	 	 	Bank of America, N.A.
	 

	 	 	 	 	 	One Federal Street
	 

	 	 	 	 	 	Boston, MA 02110
	 

	 	 	 	Attention:
	 	Andrew Cerussi
	 

	 	 	 	Fax:
	 	                    
	 

	 	 	 	Email:
	 	andrew.cerussi@bankofamerica.com
	 
	 	 	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Morgan, Lewis & Bockius LLP
	 

	 	 	 	 	 	225 Franklin Street, 16th Floor
	 

	 	 	 	 	 	Boston, MA 02110
	 

	 	 	 	Attention:
	 	Matthew F. Furlong
	 

	 	 	 	Fax:
	 	617.341.7701
	 

	 	 	 	Email:
	 	mfurlong@morganlewis.com
	 
	 	 	 	 	 	 
	 	 	If to the Term Loan
Agent:
	 
	 

	 	 	 	 	 	Sankaty Advisors, LLC
	 

	 	 	 	 	 	111 Huntington Avenue
	 

	 	 	 	 	 	Boston, MA 02199
	 

	 	 	 	Attention:
	 	James Athanasoulas
	 

	 	 	 	Fax:
	 	617.516.2710
	 

	 	 	 	Email:
	 	jathanasoulas@sankaty.com
	 
	 	 	 	 	 	 
	 	 	With a copy to:	 	Proskauer Rose LLP
	 

	 	 	 	 	 	One International Place, 23rd Floor
	 

	 	 	 	 	 	Boston, MA 02110
	 

	 	 	 	Attention:
	 	Peter J. Antoszyk
	 

	 	 	 	Fax:
	 	617.526.9899
	 

	 	 	 	Email:
	 	pantoszyk@proskauer.com




or such other address or addresses as any party hereto shall have designated by written notice to
the other parties hereto. Notices shall be deemed given and effective upon the earlier to occur of
(i) the third day following deposit thereof in the U.S. mail or (ii) receipt by the party to whom
such notice is directed.




 


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14. Governing Law. THIS INTERCREDITOR AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW
SECTIONS 5-1401 AND 5-1402.



15. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
INTERCREDITOR AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT WHICH IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH OF THE PARTIES (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HAS BEEN INDUCED TO ENTER INTO THIS INTERCREDITOR AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.



16. Termination. This Intercreditor Agreement shall continue in full force and
effect, and the obligations and agreements of the Revolving Credit Agent, the Term Loan Agent and
the Credit Parties hereunder shall continue to be fully operative, until all of the Bank Debt and
Term Loan Debt shall have been paid and satisfied in full in cash (other than in connection with a
Refinancing of the Bank Debt or the Term Loan Debt, as the case may be) and such full payment and
satisfaction shall be final and not avoidable. To the extent that the Credit Parties or any
provider of collateral for the Bank Debt or the Term Loan Debt makes any payment on the Bank Debt
or Term Loan Debt that is subsequently invalidated, declared to be fraudulent or preferential or
set aside or is required to be repaid to a trustee, receiver, interim receiver, monitor or any
other party under any Insolvency Law or equitable cause (such payment being hereinafter referred to
as a “Voided Payment”), then to the extent of such Voided Payment, that portion of the Bank
Debt or Term Loan Debt that had been previously satisfied by such Voided Payment shall be revived
and continue in full force and effect as if such Voided Payment had never been made. In the event
that a Voided Payment is recovered from such Revolving Credit Secured Party, the Term Loan Agent or
any Term Loan Lender, this Intercreditor Agreement shall be in full force and effect with respect
to the Bank Debt and/or the Term Loan Debt, as applicable, and such prior termination shall not
diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from
such date of reinstatement. Any amounts required to be turned over by any Revolving Credit Secured
Party, the Term Loan Agent or any Term Loan Lender to Revolving Credit Agent or Term Loan Agent due
to such Voided Payment shall be applied pursuant to Section 2.1.


 


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17. Miscellaneous. This Intercreditor Agreement may be executed in several
counterparts and by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one instrument. In
proving this Intercreditor Agreement, it shall not be necessary to produce or account for more than
one such counterpart signed by the party against which enforcement is sought. The Revolving Credit
Agent may, in its sole and absolute discretion, waive any provisions of this Intercreditor
Agreement benefiting the Revolving Credit Agent and the Revolving Credit Secured Parties;
provided, however, that such waiver shall be effective only if in writing and
signed by the Revolving Credit Agent and shall be limited to the specific provision or provisions
expressly so waived. The Term Loan Agent may, in its sole and absolute discretion, waive any
provisions of this Intercreditor Agreement benefiting the Term Loan Agent and the Term Loan
Lenders; provided, however, that such waiver shall be effective only if in writing
and signed by the Term Loan Agent and shall be limited to the specific provision or provisions
expressly so waived. This Intercreditor Agreement (a) shall be binding upon the Revolving Credit
Secured Parties, the Term Loan Agent, the Term Loan Lenders, the Credit Parties and their
respective successors and permitted assigns, and (b) shall inure to the benefit of the Revolving
Credit Secured Parties, the Term Loan Agent, the Term Loan Lenders and their respective successors
and permitted assigns, any lender or lenders refunding or Refinancing any of the Bank Debt or the
Term Loan Debt and their respective successors and permitted assigns, but shall not otherwise
create any rights or benefits for any third party. In the event of any inconsistency or conflict
between the Revolving Loan Documents or the Term Loan Documents and this Intercreditor Agreement,
such inconsistency or conflict will, as between the Revolving Credit Secured Parties and the Term
Loan Agent and the Term Loan Lenders, be governed by the terms of this Intercreditor Agreement and
not the Revolving Loan Documents or the Term Loan Documents, as the case may be. This Intercreditor
Agreement constitutes the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements, representations and
understandings of the parties with respect to the same.



[Remainder of Page Intentionally Left Blank]




[Signature Pages follow]



 


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



	 	 	 	 	 
	 	REVOLVING CREDIT AGENT:

BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Stephen J. Garvin
 	 
	 	 	Name:  	Stephen J. Garvin 	 
	 	 	Title:  	Managing Director 	 



Signature Page to Intercreditor Agreement




 


 









 





	 	 	 	 	 
	 	TERM LOAN AGENT:

SANKATY ADVISORS, LLC,
as Term Loan Agent

 	 
	 	By:  	/s/  Michael Ewald
 	 
	 	 	Name:  	Michael Ewald 	 
	 	 	Title:  	Managing Director 	 



Signature Page to Intercreditor Agreement




 


 









 





CREDIT PARTIES ACKNOWLEDGMENT




Each of the undersigned hereby acknowledges the foregoing terms and provisions. Each of the
undersigned acknowledges that although it may sign this Intercreditor Agreement it is not a party
hereto and does not and will not receive any right, benefit, priority or interest under or because
of the existence of the foregoing Intercreditor Agreement.



	 	 	 	 	 
	 	 BORROWERS:

THE BON-TON DEPARTMENT STORES, INC.

 	 
	 	By:  	/s/ Keith E. Plowman
 	 
	 	 	Name:  	Keith E. Plowman 	 
	 	 	Title:  	Executive Vice President, Chief Financial
Officer 
and Principal Accounting Officer 	 
	 
	 	THE ELDER-BEERMAN STORES CORP.

 	 
	 	By:  	/s/  H. Todd Dissinger
 	 
	 	 	Name:  	H. Todd Dissinger 	 
	 	 	Title:  	Vice President — Treasurer 	 
	 
	 	OTHER CREDIT PARTIES:

THE BON-TON STORES, INC.

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

 	 
	 	By:  	/s/ Keith E. Plowman
 	 
	 	 	Name:  	Keith E. Plowman 	 
	 	 	Title:  	President and Chief Financial Officer 	 



Signature Page to Intercreditor Agreement




 


 









 





	 	 	 	 	 
	 	THE BON-TON STORES OF LANCASTER, INC.

 	 
	 	By:  	/s/  Robert E. Stern
 	 
	 	 	Name:  	Robert E. Stern 	 
	 	 	Title:  	Secretary and Treasurer 	 
	 
	 	THE BON-TON TRADE, LLC

 	 
	 	By:  	/s/  Keith E. Plowman
 	 
	 	 	Name:  	Keith E. Plowman 	 
	 	 	Title:  	Treasurer and Chief Financial Officer 	 
	 
	 	CARSON PIRIE SCOTT II, INC.

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

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

 	 
	 	By:  	/s/  H. Todd Dissinger
 	 
	 	 	Name:  	H. Todd Dissinger 	 
	 	 	Title:  	Vice President — Treasurer 	 



Signature Page to Intercreditor Agreement




 


 









 





EXHIBIT A




Proposed Restated Revolving Credit Agreement