Exhibit 10.1





EXHIBIT 10.1 




 





THE BON-TON DEPARTMENT STORES, INC.,




and




THE ELDER-BEERMAN STORES CORP.,




as Borrowers




 






AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




Dated as of December 4, 2009




$675,000,000

 






CERTAIN FINANCIAL INSTITUTIONS,




as Lenders




and




BANK OF AMERICA, N.A.,




as Agent




BANC OF AMERICA SECURITIES LLC

GE CAPITAL MARKETS, INC., and

WELLS FARGO RETAIL FINANCE, LLC,




as Joint Lead Arrangers and Joint Book Runners




GENERAL ELECTRIC CAPITAL CORPORATION and

WELLS FARGO RETAIL FINANCE, LLC,




as Co-Syndication Agents




BANK OF AMERICA, N.A.,

GENERAL ELECTRIC CAPITAL CORPORATION, and

WELLS FARGO RETAIL FINANCE, LLC,




as Co-Collateral Agents




REGIONS BANK,




as Documentation Agent




 




 


 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
	 	 	1	 
	1.1. Definitions
	 	 	1	 
	1.2. Accounting Terms
	 	 	39	 
	1.3. Certain Matters of Construction
	 	 	39	 
	1.4. Letter of Credit Amounts
	 	 	40	 
	1.5. Certifications
	 	 	40	 
	1.6. Times of Day
	 	 	40	 
	SECTION 2. CREDIT FACILITIES
	 	 	40	 
	2.1. Commitment
	 	 	40	 
	2.1.1. Loans
	 	 	40	 
	2.1.2. Notes
	 	 	40	 
	2.1.3. Use of Proceeds
	 	 	41	 
	2.1.4. Overadvances
	 	 	41	 
	2.1.5. Protective Advances
	 	 	41	 
	2.2. Voluntary Reduction or Termination of Commitments
	 	 	42	 
	2.2.1. Voluntary Reduction or Termination of Tranche A Revolver Commitments
	 	 	42	 
	2.2.2. Voluntary Reduction or Termination of Tranche A-1 Revolver Commitments
	 	 	42	 
	2.3. Letter of Credit Facility
	 	 	43	 
	2.3.1. Issuance of Letters of Credit
	 	 	43	 
	2.3.2. Reimbursement; Participations
	 	 	45	 
	2.3.3. Cash Collateral
	 	 	47	 
	2.3.4. Role of Issuing Bank
	 	 	47	 
	2.3.5. Applicability of ISP
	 	 	47	 
	2.4. Increase in Tranche A Revolver Commitments
	 	 	47	 
	2.4.1. Request for Increase, Etc
	 	 	47	 
	2.4.2. Conditions to Effectiveness of Increase
	 	 	48	 
	2.5. Re-Allocation of Tranche A-1 Commitment
	 	 	48	 
	SECTION 3. INTEREST, FEES AND CHARGES
	 	 	48	 
	3.1. Interest
	 	 	48	 
	3.1.1. Rates and Payment of Interest
	 	 	48	 
	3.1.2. Application of Adjusted LIBOR to Outstanding Loans
	 	 	49	 






 


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(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	3.1.3. Interest Periods
	 	 	50	 
	3.1.4. Interest Rate Not Ascertainable
	 	 	50	 
	3.2. Fees
	 	 	50	 
	3.2.1. Unused Line Fee
	 	 	50	 
	3.2.2. LC Facility Fees
	 	 	50	 
	3.2.3. Agent Fees
	 	 	50	 
	3.3. Computation of Interest, Fees, Yield Protection
	 	 	50	 
	3.4. Reimbursement Obligations
	 	 	51	 
	3.5. Illegality
	 	 	51	 
	3.6. Increased Costs
	 	 	52	 
	3.7. Capital Adequacy
	 	 	53	 
	3.8. Mitigation
	 	 	53	 
	3.9. Funding Losses
	 	 	53	 
	3.10. Maximum Interest
	 	 	53	 
	SECTION 4. LOAN ADMINISTRATION
	 	 	54	 
	4.1. Manner of Borrowing and Funding Loans
	 	 	54	 
	4.1.1. Notice of Borrowing
	 	 	54	 
	4.1.2. Fundings by Lenders
	 	 	54	 
	4.1.3. Swingline Loans; Settlement
	 	 	55	 
	4.1.4. Notices
	 	 	55	 
	4.2. Defaulting Lender
	 	 	56	 
	4.3. Number and Amount of LIBOR Loans; Determination of Rate
	 	 	56	 
	4.4. Borrower Agent
	 	 	56	 
	4.5. One Obligation
	 	 	56	 
	4.6. Effect of Termination
	 	 	56	 
	SECTION 5. PAYMENTS
	 	 	57	 
	5.1. General Payment Provisions
	 	 	57	 
	5.2. Repayment of Loans
	 	 	57	 
	5.2.1. Certain Other Mandatory Repayments of the Loans and Reduction of
Commitments
	 	 	57	 
	5.3. Payment of Other Obligations
	 	 	58	 
	5.4. Marshaling; Payments Set Aside
	 	 	58	 
	5.5. Allocation of Payments
	 	 	58	 






 


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TABLE OF CONTENTS
(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	5.5.1. Pre-Default Allocation of Payments
	 	 	58	 
	5.5.2. Post-Default Allocation of Payments
	 	 	59	 
	5.5.3. Erroneous Application
	 	 	60	 
	5.6. Application of Payments
	 	 	60	 
	5.7. Loan Account; Account Stated
	 	 	60	 
	5.7.1. Loan Account
	 	 	60	 
	5.7.2. Entries Binding
	 	 	61	 
	5.8. Taxes
	 	 	61	 
	5.9. Withholding Tax Exemption
	 	 	61	 
	5.10. Nature and Extent of Each Borrower’s Liability
	 	 	62	 
	5.10.1. Joint and Several Liability
	 	 	62	 
	5.10.2. Waivers
	 	 	62	 
	5.10.3. Extent of Liability; Contribution
	 	 	63	 
	5.10.4. Joint Enterprise
	 	 	63	 
	5.10.5. Subordination
	 	 	63	 
	SECTION 6. CONDITIONS PRECEDENT
	 	 	63	 
	6.1. Conditions Precedent to Initial Loans
	 	 	63	 
	6.2. Conditions Precedent to All Credit Extensions
	 	 	66	 
	6.3. Limited Waiver of Conditions Precedent
	 	 	66	 
	SECTION 7. COLLATERAL
	 	 	67	 
	7.1. Grant of Security Interest
	 	 	67	 
	7.2. Lien on Deposit Accounts; Cash Collateral
	 	 	68	 
	7.2.1. Deposit Accounts
	 	 	68	 
	7.2.2. Cash Collateral
	 	 	68	 
	7.3. Real Estate Collateral
	 	 	69	 
	7.4. Other Collateral
	 	 	69	 
	7.4.1. Commercial Tort Claims
	 	 	69	 
	7.4.2. Certain After-Acquired Collateral
	 	 	69	 
	7.5. No Assumption of Liability
	 	 	69	 
	7.6. Further Assurances
	 	 	69	 
	7.7. Foreign Subsidiary Stock
	 	 	70	 
	7.8. Lien Releases
	 	 	70	 






 


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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	SECTION 8. COLLATERAL ADMINISTRATION
	 	 	70	 
	8.1. Borrowing Base Certificates
	 	 	70	 
	8.2. Administration of Accounts and Credit Card Receivables
	 	 	70	 
	8.2.1. Credit Card Notifications; Records
	 	 	70	 
	8.2.2. Account Verification
	 	 	71	 
	8.2.3. Maintenance of Dominion Accounts
	 	 	71	 
	8.2.4. Proceeds of Collateral
	 	 	71	 
	8.3. Administration of Inventory
	 	 	71	 
	8.3.1. Records and Reports of Inventory
	 	 	71	 
	8.3.2. Returns of Inventory
	 	 	71	 
	8.3.3. Acquisition, Sale and Maintenance
	 	 	71	 
	8.4. Administration of Equipment
	 	 	71	 
	8.4.1. Records and Schedules of Equipment
	 	 	71	 
	8.4.2. Dispositions of Equipment
	 	 	72	 
	8.4.3. Condition of Equipment
	 	 	72	 
	8.5. Administration of Deposit Accounts
	 	 	72	 
	8.6. General Provisions
	 	 	73	 
	8.6.1. Location of Collateral
	 	 	73	 
	8.6.2. Insurance of Collateral; Condemnation Proceeds
	 	 	73	 
	8.6.3. Protection of Collateral
	 	 	73	 
	8.6.4. Defense of Title to Collateral
	 	 	74	 
	8.7. Power of Attorney
	 	 	74	 
	SECTION 9. REPRESENTATIONS AND WARRANTIES
	 	 	74	 
	9.1. General Representations and Warranties
	 	 	74	 
	9.1.1. Organization and Qualification
	 	 	74	 
	9.1.2. Power and Authority
	 	 	74	 
	9.1.3. Enforceability
	 	 	75	 
	9.1.4. Capital Structure
	 	 	75	 
	9.1.5. Corporate Names; Locations
	 	 	75	 
	9.1.6. Title to Properties; Priority of Liens
	 	 	75	 
	9.1.7. Security Documents
	 	 	75	 
	9.1.8. Financial Statements
	 	 	75	 






 


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(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	9.1.9. Surety Obligations
	 	 	75	 
	9.1.10. Taxes
	 	 	75	 
	9.1.11. Brokers
	 	 	76	 
	9.1.12. Intellectual Property
	 	 	76	 
	9.1.13. Governmental Approvals
	 	 	76	 
	9.1.14. Compliance with Laws
	 	 	76	 
	9.1.15. Compliance with Environmental Laws
	 	 	76	 
	9.1.16. Burdensome Contracts
	 	 	76	 
	9.1.17. Litigation
	 	 	76	 
	9.1.18. Insurance
	 	 	76	 
	9.1.19. No Defaults
	 	 	77	 
	9.1.20. ERISA
	 	 	77	 
	9.1.21. Trade Relations
	 	 	77	 
	9.1.22. Labor Relations
	 	 	77	 
	9.1.23. Not a Regulated Entity
	 	 	77	 
	9.1.24. Margin Stock
	 	 	77	 
	9.1.25. Plan Assets
	 	 	77	 
	9.1.26. Complete Disclosure
	 	 	77	 
	9.1.27. Anti-Terrorism
	 	 	78	 
	SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
	 	 	78	 
	10.1. Affirmative Covenants
	 	 	78	 
	10.1.1. Inspections; Appraisals
	 	 	78	 
	10.1.2. Financial and Other Information
	 	 	79	 
	10.1.3. Notices
	 	 	81	 
	10.1.4. Storage Agreements
	 	 	82	 
	10.1.5. Compliance with Laws; Organic Documents; Material Contracts
	 	 	82	 
	10.1.6. Taxes
	 	 	82	 
	10.1.7. Insurance
	 	 	82	 
	10.1.8. Licenses
	 	 	82	 
	10.1.9. Future Subsidiaries
	 	 	82	 
	10.1.10. Lien Waivers
	 	 	82	 
	10.1.11. Preservation of Existence
	 	 	83	 






 


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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	10.1.12. Maintenance of Properties
	 	 	83	 
	10.1.13. Books and Records
	 	 	83	 
	10.1.14. Operation and Maintenance Plan
	 	 	83	 
	10.2. Negative Covenants
	 	 	83	 
	10.2.1. Permitted Debt
	 	 	83	 
	10.2.2. Permitted Liens
	 	 	85	 
	10.2.3. Cash Accumulation
	 	 	87	 
	10.2.4. Distributions; Upstream Payments
	 	 	87	 
	10.2.5. Restricted Investments
	 	 	87	 
	10.2.6. Disposition of Assets
	 	 	87	 
	10.2.7. Loans
	 	 	87	 
	10.2.8. Restrictions on Payment of Certain Debt
	 	 	88	 
	10.2.9. Fundamental Changes
	 	 	88	 
	10.2.10. Subsidiaries
	 	 	88	 
	10.2.11. Organic Documents
	 	 	88	 
	10.2.12. Tax Consolidation
	 	 	88	 
	10.2.13. Accounting Changes
	 	 	89	 
	10.2.14. Restrictive Agreements
	 	 	89	 
	10.2.15. Hedging Agreements
	 	 	89	 
	10.2.16. Conduct of Business
	 	 	89	 
	10.2.17. Affiliate Transactions
	 	 	89	 
	10.2.18. Plans
	 	 	89	 
	10.2.19. Amendments to Certain Material Contracts and the Second Lien Loan Documents
	 	 	89	 
	10.2.20. No Speculative Transactions
	 	 	90	 
	10.2.21. Passive Company Status
	 	 	90	 
	10.2.22. General Partner
	 	 	90	 
	10.2.23. Sale-Leaseback Transactions
	 	 	90	 
	10.2.24. Debt under Senior Note Debt Documents
	 	 	90	 
	10.2.25. Use of Proceeds
	 	 	90	 
	10.2.26. Acquisition of Debt
	 	 	90	 
	10.2.27. No Inconsistent Agreements
	 	 	90	 
	10.2.28. Stay, Extension and Usury Laws
	 	 	91	 






 


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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	10.3. Financial Covenants
	 	 	91	 
	10.3.1. Excess Availability
	 	 	91	 
	SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
	 	 	91	 
	11.1. Events of Default
	 	 	91	 
	11.2. Remedies upon Default
	 	 	93	 
	11.3. License
	 	 	93	 
	11.4. Setoff
	 	 	93	 
	11.5. Remedies Cumulative; No Waiver
	 	 	94	 
	11.5.1. Cumulative Rights
	 	 	94	 
	11.5.2. Waivers
	 	 	94	 
	SECTION 12. AGENT
	 	 	94	 
	12.1. Appointment, Authority and Duties of Agent
	 	 	94	 
	12.1.2. Duties
	 	 	95	 
	12.1.3. Agent Professionals
	 	 	95	 
	12.1.4. Instructions of Required Lenders
	 	 	95	 
	12.1.5. Co-Collateral Agents
	 	 	95	 
	12.1.6. No Fiduciary Relationship
	 	 	95	 
	12.2. Agreements Regarding Collateral and Field Examination Reports
	 	 	95	 
	12.2.1. Lien Releases; Care of Collateral
	 	 	95	 
	12.2.2. Possession of Collateral
	 	 	96	 
	12.2.3. Reports
	 	 	96	 
	12.3. Reliance By Agent
	 	 	96	 
	12.4. Action Upon Default
	 	 	96	 
	12.5. Ratable Sharing
	 	 	96	 
	12.6. Indemnification of Agent Indemnitees
	 	 	97	 
	12.6.1. INDEMNIFICATION
	 	 	97	 
	12.6.2. Proceedings
	 	 	97	 
	12.7. Limitation on Responsibilities of Agent
	 	 	97	 
	12.8. Successor Agent
	 	 	98	 
	12.8.1. Resignation; Successor Agent
	 	 	98	 
	12.8.2. Separate Collateral Agent
	 	 	98	 
	12.9. Due Diligence and Non-Reliance
	 	 	98	 






 


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(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	12.10. Replacement of Certain Lenders
	 	 	99	 
	12.11. Remittance of Payments and Collections
	 	 	99	 
	12.11.1. Remittances Generally
	 	 	99	 
	12.11.2. Failure to Pay
	 	 	99	 
	12.11.3. Recovery of Payments
	 	 	99	 
	12.12. Agent in its Individual Capacity
	 	 	99	 
	12.13. Agent Titles
	 	 	100	 
	12.14. No Third Party Beneficiaries
	 	 	100	 
	12.15. Mortgage Intercreditor Agreement
	 	 	100	 
	12.16. Intercreditor Agreement
	 	 	100	 
	SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
	 	 	100	 
	13.1. Successors and Assigns
	 	 	100	 
	13.2. Assignments
	 	 	101	 
	13.2.1. Assignments by Lenders
	 	 	101	 
	13.2.2. Register
	 	 	102	 
	13.2.3. Certain Pledges
	 	 	102	 
	13.2.4. Electronic Execution of Assignments
	 	 	102	 
	13.3. Participations
	 	 	102	 
	13.3.2. Limitations upon Participant Rights
	 	 	103	 
	13.4. Tax Treatment
	 	 	103	 
	13.5. Representation of Lenders
	 	 	103	 
	SECTION 14. MISCELLANEOUS
	 	 	103	 
	14.1. Consents, Amendments and Waivers
	 	 	103	 
	14.1.1. Amendment
	 	 	103	 
	14.1.2. Limitations
	 	 	104	 
	14.1.3. Payment for Consents
	 	 	104	 
	14.1.4. Generally
	 	 	104	 
	14.2. Indemnity
	 	 	104	 
	14.3. Notices and Communications
	 	 	105	 
	14.3.1. Notice Address
	 	 	105	 
	14.3.2. Electronic Communications; Voice Mail
	 	 	106	 
	14.3.3. Non-Conforming Communications
	 	 	106	 






 


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TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	14.4. Performance of Borrowers’ Obligations
	 	 	106	 
	14.5. Credit Inquiries
	 	 	106	 
	14.6. Severability
	 	 	106	 
	14.7. Cumulative Effect; Conflict of Terms
	 	 	106	 
	14.8. Counterparts; Facsimile Signatures
	 	 	106	 
	14.9. Entire Agreement
	 	 	106	 
	14.10. Obligations of Lenders
	 	 	107	 
	14.11. Confidentiality
	 	 	107	 
	14.12. GOVERNING LAW
	 	 	107	 
	14.13. Consent to Forum
	 	 	107	 
	14.13.1. Forum
	 	 	107	 
	14.14. Waivers by Borrowers
	 	 	108	 
	14.15. Patriot Act Notice
	 	 	108	 
	14.16. Survival of Representations and Warranties
	 	 	108	 
	14.17. No Advisory or Fiduciary Responsibility
	 	 	109	 
	14.18. Resignation as Issuing Bank or Provider of Swingline Loans after Assignment
	 	 	109	 
	14.19. Amendment and Restatement of Existing Loan Agreement
	 	 	110	 
	14.20. Intercreditor Agreement Prevails
	 	 	110	 







 


ix









 







LIST OF EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A

	 	Tranche A Revolver Note
	Exhibit B

	 	Tranche A-1 Revolver Note
	Exhibit C

	 	Assignment and Assumption Agreement
	Exhibit D

	 	Compliance Certificate
	Exhibit E

	 	Credit Card Notification
	Exhibit F

	 	Guaranty
	Exhibit G

	 	Co-Collateral Agent Rights Agreement






	 	 	 
	Schedule 1.1(a)

	 	Commitments of Lenders
	Schedule 1.1(b)

	 	Restricted Investments Existing on the Closing Date
	Schedule 1.1(c)

	 	Certain Existing Bank Products
	Schedule 2.3.2

	 	Existing Letters of Credit
	Schedule 7.1(c)

	 	Commercial Tort Claims
	Schedule 7.2.1

	 	Secondary Operating Deposit Accounts
	Schedule 7.3

	 	Mortgaged Real Estate
	Schedule 8.2.1

	 	Existing Credit Card Arrangements
	Schedule 8.5

	 	Deposit Accounts
	Schedule 8.5(a)

	 	Excluded Deposit and Disbursement Accounts
	Schedule 8.5(b)

	 	Excluded Trust Accounts
	Schedule 8.6.1

	 	Chief Executive Offices and other Business Locations
	Schedule 9.1.4

	 	Names and Capital Structure
	Schedule 9.1.5

	 	Former Corporate Names and Trade Names
	Schedule 9.1.12

	 	Intellectual Property
	Schedule 9.1.15

	 	Environmental Matters
	Schedule 9.1.16

	 	Restrictive Agreements
	Schedule 9.1.17

	 	Litigation
	Schedule 9.1.22

	 	Labor Contracts
	Schedule 10.2.1

	 	Existing Debt
	Schedule 10.2.2

	 	Existing Liens
	Schedule 10.2.2(c)

	 	Existing Tax Liens
	Schedule 10.2.17

	 	Existing Affiliate Transactions







 


 









 







AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the “Loan Agreement”) is dated
as of December 4, 2009, among THE BON-TON DEPARTMENT STORES, INC. (“Bon-Ton”), a
Pennsylvania corporation and THE ELDER-BEERMAN STORES CORP., an Ohio corporation
(“Elder-Beerman” and together with Bon-Ton, collectively, the “Borrowers”), each of
the other Obligors party hereto, the financial institutions party to this Loan Agreement from time
to time as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a national banking
association, as agent for the Lenders (“Agent”), with BANC OF AMERICA SECURITIES LLC, GE
CAPITAL MARKETS, INC. and WELLS FARGO RETAIL FINANCE, LLC, acting as joint lead arrangers and joint
bookrunners hereunder (in such capacity, the “Joint Lead Arrangers”), BANK OF AMERICA,
N.A., GENERAL ELECTRIC CAPITAL CORPORATION and WELLS FARGO RETAIL FINANCE, LLC, acting as
co-collateral agents hereunder (in such capacity, the “Co-Collateral Agents”), GENERAL
ELECTRIC CAPITAL CORPORATION and WELLS FARGO RETAIL FINANCE, LLC, acting as co-syndication agents
hereunder (in such capacity, the “Co-Syndication Agents”) and REGIONS BANK, acting as
documentation agent hereunder (in such capacity, the “Documentation Agent”).



R E C I T A L S:




Borrowers have requested that Lenders make available a credit facility, to be used by
Borrowers to finance their mutual and collective business enterprise. Lenders are willing to
provide such credit facility on the terms and conditions set forth in this Loan Agreement.




NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties agree as follows:



SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION



1.1. Definitions. As used herein, the following terms have the meanings set forth below:




Account — as defined in the UCC, including all rights to payment for goods sold
or leased, or for services rendered.




Account Control Agreements — each deposit account control agreement and other
bank account control agreement required pursuant to Section 7.2.1 or Section 8.5, in each
case, in form and substance reasonably satisfactory to Agent.




Account Debtor — a Person who is obligated under an Account, Chattel Paper or
General Intangible.




Adjusted LIBOR — for any Interest Period, with respect to LIBOR Loans, the per
annum rate of interest (rounded upward, if necessary, to the nearest 1/16th of 1%) equal to
the highest of (a) the rate per annum equal to the British Bankers Association LIBOR Rate
(“BBA LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by Agent from time to time) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, (b) the rate determined in accordance with clause
(a) of this sentence calculated based on an Interest Period of three months and (c) 1.25%.
If such rate is not available at such time for any reason, then “Adjusted LIBOR” for such
Interest Period shall be the rate per annum (rounded upward, if necessary, to the nearest
1/16th of 1%) equal to the highest of (a) the rate determined by Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the LIBOR Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period would be
offered by Bank of America’s London Branch to major banks in the London interbank eurodollar
market at their request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period), (b) the rate determined in accordance with clause
(a) of this sentence calculated based on an Interest Period of three months and (c) 1.25%.
If the Board of Governors shall impose a Reserve Percentage with respect to LIBOR deposits,
then Adjusted LIBOR shall equal the amount determined above, divided by (1 minus the
Reserve Percentage).


 


 









 






Affiliate — with respect to any Person, another Person (a) who directly, or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with such first Person; (b) who beneficially owns 10% or more of the voting
securities or any class of Equity Interests of such first Person; (c) at least 10% of whose
voting securities or any class of Equity Interests is beneficially owned, directly or
indirectly, by such first Person; or (d) who is an officer, director, partner or managing
member of such first Person. “Control” means the possession, directly or
indirectly, of the power to direct or cause direction of the management and policies of a
Person, whether through ownership of Equity Interests, by contract or otherwise.




Agent — as defined in the Preamble.




Agent Indemnitees — Agent and its Related Parties.




Agent Parties — as defined in Section 10.1.2.




Agent Professionals — attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround consultants, and other
professionals and experts retained by Agent.




Allocable Amount — as defined in Section 5.10.3.




Anti-Terrorism Laws — any laws relating to terrorism or money laundering,
including the Patriot Act.




Applicable Law — all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question, including
all applicable statutory law, common law and equitable principles, and all provisions of
constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental
Authorities.




Applicable Margin — with respect to any Type of Loan, the margin set forth
below, as determined by the average daily Excess Availability during the Fiscal Quarter of
the Parent most recently then ended:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	LIBOR	 	 	LIBOR	 	 	Base Rate	 	 	Base Rate	 
	 	 	 	 	 	 	Tranche A	 	 	Tranche A-1	 	 	Tranche A	 	 	Tranche A-1	 
	 	 	 	 	Average Excess	 	Revolver	 	 	Revolver	 	 	Revolver	 	 	Revolver	 
	Level	 	 	Availability	 	Loans	 	 	Loans	 	 	Loans	 	 	Loans	 
	 
	I	 	 	Greater than $250,000,000
	 	 	3.75	%	 	 	6.75	%	 	 	2.75	%	 	 	5.75	%
	II	 	Less than or Equal to $250,000,000
	 	 	4.00	%	 	 	7.00	%	 	 	3.00	%	 	 	6.00	%






 


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Until July 31, 2010, margins shall be determined as if Level II were applicable.
Thereafter, the margins shall be subject to increase or decrease on a quarterly basis.
Not more than ten (10) Business Days after the first day of each Fiscal Quarter, Agent shall
determine the Applicable Margin for such Fiscal Quarter (which shall be effective as of the
first Business Day of such Fiscal Quarter) based on the average daily Excess Availability
for the prior Fiscal Quarter.




Appraised Value —  the fair market value of any Eligible Real Estate as
determined pursuant to the most recent appraisal received by Agent from an independent
third-party appraiser reasonably acceptable to Required Lenders, pursuant to Section
10.1.1(b).




Approved Fund — any Fund that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.




Approved Shipper — any reputable and creditworthy shipper or freight forwarder
transporting finished goods Inventory to a Borrower’s Distribution Center.




Asset Disposition — a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including a disposition of Property in connection
with a sale-leaseback transaction or synthetic lease; provided, however,
that in no event shall a termination of a lease be deemed to be an Asset Disposition.




Asset Disposition Reserve — a reserve established by Agent in connection with
any Asset Disposition of Eligible Real Estate in an amount equal to 25% of the result (but
not less than zero) of (a) the Net Proceeds from such Asset Disposition of Eligible Real
Estate minus (b) the sum of (i) Tranche A Real Estate Amount with respect to such
Eligible Real Estate plus (ii) Tranche A-1 Real Estate Amount with respect to such
Eligible Real Estate; provided, however, that the Agent shall not create
such reserve, or if a reserve is created or has been created prior to such Asset
Disposition, shall release such reserve, in each case to the extent that the Obligors (i)
invest at any time after the Closing Date whether prior to, or following, any such Asset
Disposition in owned Eligible Real Estate (including, without limitation, by way of
improvements and/or additions on or to, replacements to, or purchases of, any Eligible Real
Estate) and such investment has resulted in, or is reasonably expected to result in, an
increase in the Appraised Value of Eligible Real Estate or (ii) repay the Term Loan Debt
using any cash of the Obligors and their Subsidiaries in accordance with this Loan Agreement
(in each case, as evidenced by a certificate of a Senior Officer of the Borrower Agent (w)
stating the amount that is being, or has been, so invested or used to repay the Term Loan
Debt, (x) providing a reasonable explanation of the investment or repayment being made, (y)
in the case of an investment, that such investment has resulted in, or is reasonably
expected to result in, an increase in the Appraised Value of Eligible Real Estate and (z)
indicating the amount of such reserve that may be released by Agent in connection with such
investment or repayment, and Agent is entitled to rely on any such certificate and
statements therein).




Assignee Group — two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.




Assignment and Assumption Agreement — an assignment and assumption agreement
between a Lender and Eligible Assignee, substantially in the form of Exhibit C.




Available Basket Amount — means, on any date of determination, an amount equal
to the result of (i) net cash proceeds actually received by an Obligor from the issuance of
any Equity Interests (or capital contributions in respect of Equity Interests held in an
Obligor) after the Closing Date (“net equity issuance proceeds”), minus (ii)
such net equity issuance proceeds
which have been utilized by the Obligors and their Subsidiaries to make Investments.


 


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Availability Reserve — the sum (without duplication) of (a) the Inventory
Reserve; (b) Credit Card Receivables Reserve, (c) the Rent and Charges Reserve; (d) the Bank
Product Reserve; (e) such reserves which Agent may establish from time to time in the
reasonable exercise of its credit judgment with respect to any liabilities secured by Liens
upon Collateral that are or which may become senior to Agent’s Liens (irrespective of
whether such liabilities or Liens are permitted hereunder and provided that imposition of
any such reserve shall not waive an Event of Default arising therefrom); (f) reserves in
respect of store closures or liquidations as Agent in the reasonable exercise of its credit
judgment may elect to impose from time to time, (g) reserves in respect of such claims
against or liabilities as Agent in the reasonable exercise of its credit judgment determines
may need to be satisfied in connection with any realization on the Collateral, (h) reserves
in respect of consignment arrangements and any proceeds arising therefrom (but limited to
the amount of the associated consignment payable) as Agent in the reasonable exercise of its
credit judgment may elect to impose from time to time, unless Agent has received a
Consignment Agreement in respect of such arrangements, (i) the Asset Disposition Reserve,
(j) reserves in respect of Debt in an aggregate principal amount of $25,000,000 or more
maturing within 45 days of the date of determination as Agent in the reasonable exercise of
its credit judgment may elect to impose from time to time and (k) such additional reserves,
in such amounts and with respect to such matters (including, without limitation, reserves
which Agent may establish from time to time, in its reasonable exercise of its credit
judgment, as being appropriate to reflect impediments to Agent’s ability to realize the full
value of the Collateral in a liquidation) as Agent in its reasonable exercise of its credit
judgment may elect to impose from time to time.




Bank of America — Bank of America, N.A., a national banking association, and
its successors and permitted assigns.




Bank of America Indemnitees — Bank of America and its officers, directors,
employees, Affiliates, agents, advisors and attorneys.




Bank Product — any of the following products, services or facilities extended
to Parent or any Subsidiary by any Lender or any of its Affiliates: (a) Cash Management
Services; (b) products under Hedging Agreements; (c) commercial credit card and purchasing
cards extended to Parent or such Subsidiary; (d) other banking products or services as may
be requested by Parent or any Subsidiary, other than letters of credit and leases and (e)
those other bank products and services set forth on Schedule 1.1(c); provided,
however, that for any of the foregoing to be included for purposes of a distribution
under Section 5.5.1(j) or Section 5.5.2(k), the applicable bank product provider and Obligor
must have previously provided written notice to Agent of (i) the existence of such Bank
Product, (ii) the maximum dollar amount of obligations arising thereunder to be included as
a Bank Product Reserve (“Bank Product Amount”), and (iii) the methodology to be used
by such parties in determining the Bank Product Debt owing from time to time. The Bank
Product Amount may be changed from time to time upon written notice to Agent by the Secured
Party and Obligor.




Bank Product Amount — as defined in the definition of Bank Product.




Bank Product Debt — Debt and other obligations of an Obligor relating to Bank
Products.




Bank Product Reserve — the aggregate amount of reserves established by Agent in
the reasonable exercise of its credit judgment from time to time, in consultation with the
Borrower Agent, in respect of Bank Product Debt.


 


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Bankruptcy Code — Title 11 of the United States Code, as amended and in effect.




BAS — Banc of America Securities LLC.




Base Rate — for any day, a fluctuating rate per annum equal to the highest of
(a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for
such day as publicly announced from time to time by Bank of America as its “prime rate,” and
(c) the Adjusted LIBOR for a one-month Interest Period in effect for such day (or if such
day is not a Business Day, the immediately preceding Business Day) plus 1.00%. The
“prime rate” is a rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in the Base Rate due to a change in any of the foregoing
shall take effect at the opening of business on the day specified in the public announcement
of such change.




Base Rate Loan — any Loan that bears interest based on the Base Rate.




Base Rate Tranche A Revolver Loan — a Tranche A Revolver Loan that bears
interest at the Base Rate plus the Applicable Margin for Base Rate Tranche A Revolver Loans.




Base Rate Tranche A-1 Revolver Loan — a Tranche A-1 Revolver Loan that bears
interest at the Base Rate plus the Applicable Margin for Base Rate Tranche A-1 Revolver
Loans.




Board of Directors — (a) with respect to a corporation, the board of directors
of the corporation or, except in the context of the definitions of “Change of Control” and
“Continuing Directors,” a duly authorized committee thereof; (b) with respect to a
partnership, the Board of Directors of the general partner of the partnership or, if the
partnership has more than one general partner, the managing general partner of the
partnership; and (c) with respect to any other Person, the board or committee of such Person
serving a similar function.




Board of Governors — the Board of Governors of the Federal Reserve System.




Bon-Ton — as defined in the Preamble.




Borrowed Money — with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced
by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues
interest or is a type upon which interest charges are customarily paid (excluding trade
payables owing in the Ordinary Course of Business), or (iv) was issued or assumed as full or
partial payment for Property; (b) Capital Leases; (c) reimbursement obligations with respect
to letters of credit; and (d) guaranties of any Debt of the foregoing types owing by another
Person.




Borrower Account — a special account established by Borrowers, at Bank of
America or another bank reasonably acceptable to Agent, subject to a control agreement in
favor of Agent, for the benefit of the Lenders, in form and substance reasonably
satisfactory to Agent.




Borrower Agent — as defined in Section 4.4.




Borrowing — a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.




Borrowing Base Certificate — a certificate, in form and substance reasonably
satisfactory to Agent, by which Borrowers certify calculation of the Tranche A Borrowing
Base and the Tranche A-1 Borrowing Base.


 


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Business Day — any day (a) excluding Saturday, Sunday and any other day on
which banks are permitted to be closed under the laws of the State of New York and (b) when
used with reference to a LIBOR Loan, also excluding any day on which banks do not conduct
dealings in Dollar deposits on the London interbank market.




Capital Adequacy Regulation — any law, rule, regulation, guideline, request or
directive of any central bank or other Governmental Authority, whether or not having the
force of law, regarding capital adequacy of a bank or any Person controlling a bank.




Capital Expenditures — all liabilities incurred, expenditures made or payments
due (whether or not made) by Parent or any Subsidiary for the acquisition of any fixed
assets, or any improvements, replacements, substitutions or additions thereto, in each case
that are required to be capitalized for financial reporting purposes in accordance with
GAAP.




Capital Lease — any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.




Capital Stock — (a) in the case of a corporation, corporate stock; (b) in the
case of an association or other business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock; (c) in
the case of a partnership or limited liability company, partnership or membership interests
(whether general or limited); and (d) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.




Cash Collateral — cash, and any interest or other income earned thereon, that
is delivered to Agent to Cash Collateralize any Obligations.




Cash Collateral Account — a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its discretion,
which account shall be subject to Agent’s Liens for the benefit of Secured Parties.




Cash Collateralize — the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 104% of the
aggregate LC Obligations, and (b) with respect to any inchoate or contingent Obligations
(including Obligations arising under Bank Products), Agent’s good faith estimate of the
amount due or to become due, including all fees and other amounts relating to such
Obligations. “Cash Collateralization” has a correlative meaning.




Cash Equivalents — (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States government,
maturing within 12 months of the date of acquisition; (b) certificates of deposit, time
deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and
overnight bank deposits, in each case which are issued by a commercial bank organized under
the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P
or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender)
not subject to offset rights; (c) repurchase obligations with a term of not more than 30
days for underlying investments of the types described in clauses (a) and (b) entered into
with any bank meeting the qualifications specified in clause (b); (d) commercial paper rated
A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the
date of acquisition; and (e) shares of any money market fund that has substantially all of
its assets invested continuously in the types of investments referred to above, has net
assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or
S&P.


 


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Cash Management Services — any services provided from time to time by any
Lender or any of its Affiliates to Parent or any Subsidiary in connection with operating,
collections, payroll, trust, or other depository or disbursement accounts, including
automatic clearinghouse, controlled disbursement, depository, electronic funds transfer,
information reporting, lockbox, stop payment, overdraft and/or wire transfer services.




CERCLA — the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. § 9601 et seq.).




Change of Control — means the occurrence of any of the following: (a) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or substantially all of
the properties or assets of the Parent and the other Obligors, taken as a whole, to any
“person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934);
(b) the adoption by the shareholders of Parent of a plan relating to the liquidation or
dissolution of the Parent; (c) the Parent (by way of a report or any other filing pursuant
to Section 13(d) of the Securities Exchange Act of 1934, proxy, vote, written notice or
otherwise) becomes aware of the acquisition by any “person” or “group” (within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, or any
successor provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Securities
Exchange Act of 1934, or any successor provision), other than the Permitted Holders, in a
single transaction or in a series of related transactions, by way of merger, consolidation
or other business combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, or any successor provision) of 50% or
more of the total voting power of the Voting Stock of the Parent; (d) the first day on which
a majority of the members of the Board of Directors of the Parent are not Continuing
Directors; (e) the Parent consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Parent, in any such event pursuant to
a transaction in which any of the outstanding Voting Stock of the Parent or such other
Person is converted into or exchanged for cash, securities or other property, other than any
such transaction where (A) the Voting Stock of the Parent outstanding immediately prior to
such transaction is converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the voting power of
the outstanding shares of such Voting Stock of such surviving or transferee Person
(immediately after giving effect to such issuance) and (B) immediately after such
transaction, no “person” or “group” (as such terms are used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934) other than a Permitted Holder becomes, directly or
indirectly, the beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, or any successor provision) of 50% or more of the voting power of the
Voting Stock of the surviving or transferee Person or (f) the failure of (x) Bon-Ton to be a
wholly-owned direct Subsidiary of the Parent or (y) the failure of any other Borrower to be
a wholly-owned indirect Subsidiary of the Parent.




Chattel Paper — as defined in the UCC.




Claims — as defined in Section 14.2.




Closing Date — as defined in Section 6.1.




Co-Collateral Agents – as defined in the Preamble.




Co-Collateral Agent Rights Agreement – a letter agreement by and among Agent,
the Co-Collateral Agents and the Obligors setting for the rights of the Co-Collateral Agents
concerning certain matters, substantially in the form of Exhibit G hereto.


 


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Co-Syndication Agents — as defined in the Preamble.




Collateral — all Property described in Section 7.1, all Property described in
any Security Documents as security for any Obligations, and all other Property that now or
hereafter secures (or is intended to secure) any Obligations.




Commercial Tort Claim — as defined in the UCC.




Commitment — for any Lender, the aggregate principal amount of such Lender’s
Tranche A Revolver Commitment and Tranche A-1 Revolver Commitment. “Commitments”
means the aggregate principal amount of all Tranche A Revolver Commitments and Tranche A-1
Revolver Commitments.




Commitment Termination Date — the earliest to occur of (a) the Termination
Date; (b) the date on which Borrowers terminate the Commitments pursuant to Section 2.2; or
(c) the date on which the Commitments are terminated pursuant to Section 11.2.




Compliance Certificate — a certificate, substantially in the form of Exhibit D
hereto, by which Borrowers certify compliance with Section 10.3 and calculate the applicable
Level for the Applicable Margin and Unused Line Fee Rate.




Consignment Agreement — a written agreement by the relevant consignor and
consignee Obligor in favor of the Agent, in form and substance reasonably satisfactory to
Agent, expressly acknowledging that (x) such goods are held on consignment and the
consignor thereof retains title to such goods, (y) the consignor of such goods shall
disclaim any interest or Lien it may have in the proceeds of such goods, and (z) consignee
shall segregate such consigned goods from the consignee’s other personal Property.




Consolidated EBITDA — for any period, for the Parent and its Subsidiaries on a
consolidated basis, an amount equal to Consolidated Net Income for such period plus
(a) the following to the extent deducted in calculating such Consolidated Net Income: (i)
Consolidated Fixed Charges for such period, (ii) the provision for Federal, state, local and
foreign income taxes of the Parent and its Subsidiaries for such period, (iii) depreciation
and amortization expense, (iv) all cash proceeds of business interruption insurance received
by the Obligors to the extent not included in Consolidated Net Income, (v) non-cash losses
in respect to obligations under Hedging Agreements, (vi) cost savings in connection with any
Permitted Acquisition to the extent (A) actually realized, (B) projected or anticipated and
permitted or required under Regulation S-K under the Securities Laws or Regulation S-X under
the Securities Laws or (C) reasonably expected to be realized (and, in the case of clause
(c), reasonably approved by the Agent as such) within the next four (4) Fiscal Quarters
after such Permitted Acquisition is effected; provided that all such cost savings
shall be set forth in an officer’s certificate from a Senior Officer of the Borrowers in
reasonable detail describing and quantifying such cost savings, (vii) non-cash impairment
charges, asset write-offs or charges due to the disposal of long-lived assets under GAAP to
the extent such impairment charge, asset write-off or charge reduced Consolidated Net
Income, (viii) the cumulative non-cash effect of accounting changes to the extent such
changes result in a reduction of Consolidated Net Income, (ix) any non-cash losses, expenses
or charges reducing Consolidated Net Income, excluding any non-cash charge that, in the
ordinary course of business, results in an accrual of a reserve for cash charges in any
future period, (x) expenses reducing Consolidated Net Income incurred to the extent
reimbursed in cash by indemnification provisions in any agreement in connection with any
Permitted Acquisition and such reimbursed amount was not included within the calculation of
Consolidated Net Income, (xi) non-cash losses recognized and expenses incurred in connection
with the effect of currency and exchange rate


 


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fluctuations on intercompany balances and
other balance sheet items, and (xii) other non-recurring or unusual expenses of the Obligors and their Subsidiaries which are allowed
in accordance with GAAP to be classified as non-recurring or unusual expenses to the extent
reducing such Consolidated Net Income; provided that such expenses shall not exceed
$20,000,000 in any period of four consecutive fiscal quarters and minus (b) the
following to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits of the Parent and its Subsidiaries for such
period, (ii) all non-cash items increasing Consolidated Net Income for such period, (iii)
amounts paid in cash in respect of non-cash charges which were added back to Consolidated
EBITDA in a prior period and (iv) other non-recurring or unusual income of the Obligors and
their Subsidiaries which are allowed in accordance with GAAP to be classified as
non-recurring or unusual income to the extent increasing such Consolidated Net Income and in
excess of $20,000,000 in any period of four consecutive fiscal quarters.




Consolidated Fixed Charges — for any period, for the Parent and its
Subsidiaries on a consolidated basis, the sum of cash payments made or required to be made
on a pro forma basis for (a) all scheduled permanent principal payments, interest, premium
payments, debt discount, fees (excluding any fees incurred in connection with the closing of
the Second Lien Debt Documents or the Loan Documents), charges and related expenses of the
Parent and its Subsidiaries in connection with Borrowed Money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each case
determined in accordance with GAAP and (b) the portion of rent expense of the Parent and its
Subsidiaries with respect to such period under Capital Leases determined in accordance with
GAAP.




Consolidated Fixed Charge Coverage Ratio — as of any date of determination, the
ratio of (a) the result of (i) Consolidated EBITDA for the four prior fiscal quarter period
ending on such date, minus (ii) Capital Expenditures (net of landlord or vendor
contributions for Capital Expenditures) for such period (but not less than zero),
minus (iii) cash Federal, state, local or foreign income taxes (net of tax refunds
in cash) of the Parent and its Subsidiaries paid for such period (but not less than zero),
to (b) Consolidated Fixed Charges for such period.




Consolidated Net Income — for any period, for the Parent and its Subsidiaries
on a consolidated basis, the net income of the Parent and its Subsidiaries (excluding
extraordinary gains and extraordinary losses, in each case determined in accordance with
GAAP) for that period.




Contingent Obligation — any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease, dividend or other
obligation (“primary obligations”) of another obligor (“primary obligor”) in
any manner, whether directly or indirectly, including any obligation of such Person under
any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary
obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance
by any other party to an agreement; and (c) arrangement (i) to purchase any primary
obligation or security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital, net worth
or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of
assuring the ability of the primary obligor to perform a primary obligation, or (v)
otherwise to assure or hold harmless the holder of any primary obligation against loss in
respect thereof; provided that “Contingent Obligation” shall not include any product
warranties given in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be the stated or determinable amount of the primary obligation
(or, if less, the maximum amount for which such Person may be liable under the instrument
evidencing the Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability with respect thereto.


 


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Continuing Directors — as of any date of determination, those members of the
Board of Directors of the Parent, each of whom: (1) was a member of such Board of Directors
on the Closing Date; or (2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of such Board
of Directors at the time of such nomination or election.




Convertible Note Debt — unsecured Debt of Bon-Ton and any other Obligor which
may be convertible, exercisable or exchangeable for or into Capital Stock of Bon-Ton or any
other Obligor (other than Disqualified Stock).




Convertible Note Debt Documents — all agreements, instruments and documents
from time to time executed in favor of all or any of the holders of the Convertible Note
Debt.




Copyright Security Agreements — each memorandum of grant of security interest
in copyrights or other copyright security agreement pursuant to which an Obligor grants to
Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in copyrights,
as security for the Obligations.




Credit Card Issuer — collectively (x) MasterCard International, Inc., Visa,
U.S.A., Inc., Visa International and American Express, World Financial Network National Bank
and Discover and (y) HSBC, as issuer of the Borrowers’ private label credit card program,
and any replacement thereof that is reasonably acceptable to Agent.




Credit Card Notification — as defined in Section 6.1(p).




Credit Card Processor — any Person that acts as a credit card clearinghouse or
processor with respect to any sales transactions involving credit card purchases by
customers using credit cards issued by any Credit Card Issuer.




Credit Card Receivables — collectively, all present and future rights of
Obligors to payment from (a) any Credit Card Issuer or Credit Card Processor arising from
sales of goods or rendition of services to customers who have purchased such goods or
services using a credit or debit card and (b) any Credit Card Issuer or Credit Card
Processor in connection with the sale or transfer of Accounts arising pursuant to the sale
of goods or rendition of services to customers who have purchased such goods or services
using a credit card or a debit card, including, but not limited to, all amounts at any time
due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit
Card Notifications or otherwise.




Credit Card Receivables Reserve — reserves, established by Agent in its
reasonable exercise of its credit judgment, to reflect factors that may negatively impact
the value of Credit Card Receivables (including, without limitation, for chargeback or other
accrued liabilities or offsets by Credit Card Processors and amounts to adjust for material
claims, offsets, defenses or counterclaims or other material disputes with an Account
Debtor).




CWA — the Clean Water Act (33 U.S.C. §§ 1251 et seq.).




Debt — as applied to any Person, without duplication, whether or not included
as indebtedness or liabilities in accordance with GAAP (a) all obligations of such Person
for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments; (b) all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations of
such Person under any Hedging Agreement; (d) all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts payable in the
ordinary course of business); (e)
indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned
or being purchased by such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; (f) Capital Leases and synthetic lease
obligations; (g) all obligations of such Person in respect of Disqualified Stock; and (h)
all Guarantees of such Person in respect of any of the foregoing. For all purposes hereof,
the Debt of any Person shall include the Debt of any partnership or joint venture (other
than a joint venture that is itself a corporation or limited liability company) in which
such Person is a general partner or a joint venturer, unless such Debt is expressly made
non-recourse to such Person.



 


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Default — an event or condition that, with the lapse of time or giving of
notice, would constitute an Event of Default.




Default Rate — for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable thereto.




Defaulting Lender — any Lender that (a) has failed to fund any portion of the
Loans or any payment in respect of an LC Obligation required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to any Agent or any other
Lender any other amount required to be paid by it hereunder within one Business Day of the
date when due unless the subject of a good faith dispute or unless such failure has been
cured or (c) has been deemed insolvent or become the subject of an Insolvency Proceeding.




Deposit Account — as defined in the UCC.




Disqualified Institution — a business competitor of the Borrowers and their
Subsidiaries identified by the Borrower Agent in its reasonable discretion and in writing to
the Agent from time to time, and their known Affiliates.




Disqualified Stock — any Capital Stock that, by its terms (or by the terms of
any security into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder thereof), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date that is six
months after the Termination Date. Notwithstanding the preceding sentence, any Capital
Stock that would constitute Disqualified Stock solely because the holders thereof have the
right to require the Parent to repurchase such Capital Stock upon the occurrence of a change
of control or an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Parent may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with Section
10.2.4. The term “Disqualified Stock” shall also include any options, warrants or other
rights that are convertible into Disqualified Stock or that are redeemable at the option of
the holder, or required to be redeemed, prior to the date that is six months after the
Termination Date.




Distribution — any declaration or payment of a distribution, interest or
dividend on any Equity Interest (other than payment-in-kind); any distribution, advance or
repayment of Debt to a holder of Equity Interests; or any purchase, redemption, or other
acquisition or retirement for value of any Equity Interest.


 


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Distribution Center — the warehouse and distribution facilities operated by the
Obligors and located at 3585 S. Church Street, Whitehall, Pennsylvania, 1340 East
Dayton-Yellow Springs Road, Fairborn, Ohio, 4650 Shepard Trial, Rockford, Illinois and 1835
Jefferson Avenue,
Naperville, Illinois, and any other warehouse and distribution facilities operated by
the Borrowers.




Document — as defined in the UCC.




Documentation Agent – as defined in the Preamble.




Dollars — lawful money of the United States.




Dominion Account — each special account established by Borrowers at Bank of
America or another bank reasonably acceptable to Agent, over which Agent has exclusive
control for withdrawal purposes.




Eligible Assignee — a Person that is (a) a Lender, U.S.-based Affiliate of a
Lender or Approved Fund; (b) any other financial institution approved by Agent (such
approval not to be unreasonably withheld or delayed) and, so long as no Event of Default
under Section 11.1(a) or Section 11.1(k) has occurred and is continuing, Borrower Agent
(which approval by Borrower Agent shall not be unreasonably withheld or delayed, and shall
be deemed given if no objection is made within two Business Days after notice of the
proposed assignment), that is organized under the laws of the United States or any state or
district thereof, has total assets in excess of $5 billion, extends asset-based lending
facilities in its ordinary course of business and whose becoming an assignee would not
constitute a prohibited transaction under Section 4975 of ERISA or any other Applicable Law;
provided that the foregoing criteria in this clause (b) may be waived pursuant to
the written approval of both of Agent and Borrower Agent; and (c) during any Event of
Default under Section 11.1(a) or Section 11.1(k), any Person acceptable to Agent in its
discretion; provided that notwithstanding the foregoing, “Eligible Assignee” shall
not include (i) any Obligor or any Affiliate or Subsidiary of any Obligor and (ii) any
Disqualified Institution who is identified by the Borrower Agent as such prior to an
assignment.




Eligible Credit Card Accounts — at the time of any determination thereof, each
Credit Card Receivable that satisfies the following criteria at the time of creation and
continues to meet the same at the time of such determination: such Credit Card Receivable
has been earned by performance and represents the bona fide amounts due to a Borrower from
a Credit Card Processor and/or Credit Card Issuer, and in each case originated in the
ordinary course of business of such Borrower. Without limiting the foregoing, to qualify
as an Eligible Credit Card Account, an Account shall indicate no Person other than a
Borrower as payee or remittance party.  In determining the amount to be so included, the
face amount of an Account shall be reduced by, without duplication, to the extent not
reflected in such face amount, (i) the amount of all accrued and actual discounts, claims,
credits or credits pending, promotional program allowances, price adjustments, finance
charges or other allowances (including any amount that a Borrower may be obligated to
rebate to a customer, a Credit Card Processor or Credit Card Issuer pursuant to the terms
of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all
cash received in respect of such Account but not yet applied by the Obligors to reduce the
amount of such Credit Card Receivable. Any Credit Card Receivables meeting the foregoing
criteria shall be deemed Eligible Credit Card Accounts but only as long as such Credit Card
Receivable is not included within any of the following categories, in which case such
Credit Card Receivable shall not constitute an Eligible Credit Card Account:




(a) Credit Card Receivables which do not constitute an “Account” (as defined in the
UCC);




(b) Credit Card Receivables due from Credit Card Processors that have been outstanding
for more than five (5) Business Days from the date of sale;


 


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(c) Credit Card Receivables that are not denominated in U.S. dollars;




(d) Credit Card Receivables with respect to which the Borrowers do not have good,
valid and marketable title thereto;




(e) Credit Card Receivables due from Credit Card Processors or Credit Card Issuers
that (i) are not subject to a first priority (other than Permitted Liens entitled to
priority under Applicable Law) perfected security interest in favor of Agent for the
benefit of the Secured Parties or (ii) are subject to any Liens except for (x) Liens in
favor of the Agent and (y) Liens permitted pursuant to clauses (c) — (x) of Section 10.2.2,
so long as such Liens (other than Permitted Liens entitled to priority under Applicable
Law) are junior to the Liens granted to Agent;




(f) Credit Card Receivables due from Credit Card Processors or Credit Card Issuers
which are disputed between a Borrower and a Credit Card Processor or Credit Card Issuers,
or with respect to which a claim, counterclaim, offset or chargeback has been asserted, by
the related Credit Card Processor or Credit Card Issuers (but only to the extent of such
dispute, claim, counterclaim, offset or chargeback);




(g) Credit Card Receivables due from Credit Card Processors or Credit Card Issuers as
to which the Credit Card Processor or the Credit Card Issuers has the right under certain
circumstances to require the Borrowers to repurchase such Accounts from such Credit Card
Processor or such Credit Card Issuers;




(h) Except as otherwise approved by Agent, Credit Card Receivables due from Credit
Card Processors or Credit Card Issuers as to which the Agent has not received a Credit Card
Notification;




(i) Credit Card Receivables due from a Credit Card Processor or Credit Card Issuer of
the applicable credit card which is the subject of any proceeding under any debtor relief
law;




(j) Credit Card Receivables which are not a valid, legally enforceable obligation of
the applicable Credit Card Processor or Credit Card Issuer with respect thereto;




(k) Credit Card Receivables which are evidenced by “chattel paper” or an “instrument”
of any kind unless such “chattel paper” or “instrument” is in the possession of Agent, and
to the extent necessary or appropriate, endorsed to Agent; or




(l) Credit Card Receivables due from Credit Card Issuers or Credit Card Processors
which Agent determines, in its in its reasonable credit judgment, to be unlikely to be
collected.




Notwithstanding the above, Agent reserves the right, at any time and from time to time
after the Closing Date, to adjust the criteria set forth above, to establish new criteria
and to adjust the applicable advance rate with respect to Eligible Credit Card Accounts, in
its reasonable credit judgment, subject to the approval of the Supermajority Lenders in the
case of adjustments of criteria or establishment of new criteria which have the effect of
making more credit available or subject to the approval of all Lenders (except Defaulting
Lenders as provided in Section 4.2) in the case of changes in the applicable advance rates
which have the effect of making more credit available.


 


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Eligible Inventory — Inventory owned by a Borrower that Agent, in its
reasonable credit
judgment, deems, based on (i) the most recent Borrowing Base Certificate delivered to
Agent, (ii) the salability, at retail, of such Inventory (valued at the lower of cost or
market), (iii) such other factors as affect the marketability of such Inventory and (iv)
other information available to Agent, in its reasonable credit judgment, to be “Eligible
Inventory” for purposes of this Loan Agreement. Without limiting the foregoing, no
Inventory shall be Eligible Inventory unless (a) it is finished goods and not
work-in-process, raw materials, packaging or shipping materials, labels, samples, display
items, bags, replacement parts or manufacturing supplies; (b) it is not held on consignment;
(c) it is in new and saleable condition and is not damaged, defective, shopworn or otherwise
unfit for sale; (d) it is not slow-moving, obsolete or unmerchantable, and does not
constitute returned to vendor or repossessed goods; (e) to the knowledge of the Obligors it
meets all standards imposed by any Governmental Authority, and does not constitute hazardous
materials under any Environmental Law; (f) it conforms with the covenants and
representations herein and in the other Loan Documents; (g) it is (unless such Inventory
constitutes Eligible L/C Inventory) subject to Agent’s duly perfected, first priority Lien,
and is free and clear from all Liens or rights of any person (including, without limitation,
the rights of any purchaser that has made progress payments and the rights of any surety
that has issued a bond to assure such Borrower’s performance with respect to the Inventory)
except (x) Agent and the Lenders and (y) Liens permitted pursuant to clauses (c) — (w) of
Section 10.2.2, so long as such Liens (other than Permitted Liens entitled to priority under
Applicable Law) are junior to the Liens granted to Agent and the Lenders; (h) it is within
the continental United States, is not in transit except between locations of Borrowers where
such locations are in compliance with the provisions of clause (k) below (unless such
Inventory constitutes Eligible In-Transit Inventory or Eligible L/C Inventory) and is not
consigned to any Person; (i) it is not subject to any warehouse receipt or negotiable
Document unless such document has been delivered to the Agent or other Persons acceptable to
it with all necessary endorsements free and clear of all Liens other than Liens in Agent’s
favor; (j) if it has a value exceeding $500,000 in the aggregate, it is not subject to any
License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of
such Inventory, unless Agent has received an appropriate Lien Waiver; (k) it is not located
on leased premises (1) consisting of a Large Inventory Location or (2) located in a Landlord
Lien State, or in the possession of a warehouseman, processor, repairman, mechanic, shipper,
freight forwarder or other Person unless, in each case, the lessor or such Person has
delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; (l)
it is reflected in the details of the current inventory stock ledger of the applicable
Borrower; (m) it is of a type held for sale in the ordinary course of such Borrower’s
business; (n) the representations or warranties pertaining to Inventory set forth in this
Loan Agreement and the other Loan Documents are true in all material respects as to such
Inventory; (o) it does not consist of any costs associated with advertising load or unearned
discounts; and (p) it is covered by casualty insurance reasonably acceptable to Agent.




Eligible In-Transit Inventory — means without duplication of other Eligible
Inventory, all finished goods Inventory (valued at the lower of cost or market) owned by
Borrowers, not covered by Letters of Credit, which Inventory (a) is located in the
continental United States and in transit to one of the Borrower’s facilities and which
Inventory (i) is owned by a Borrower and either (A) has been paid for with a draw of an
Eligible Trade L/C by a Borrower or (B) payment for which is not yet due and has not yet
been paid for by a Borrower but which is located at one of Borrowers’ distribution
facilities and has not yet been recorded on a Borrower’s inventory stock ledger in the
ordinary course; (ii) is fully insured; (iii) is subject to a first priority security
interest in and Lien upon such goods in favor of Agent (except for any possessory Lien upon
such goods in the possession of a freight carrier or shipping company securing only the
freight charges for the transportation of such goods to such Borrower); (iv) is evidenced or
deliverable pursuant to Documents that have been delivered to Agent or an agent acting on
its behalf pursuant to a Lien Waiver or designating Agent as consignee; and (v) is otherwise
“Eligible Inventory” hereunder; or (b) in transit for not more than forty (40) days directly
from a point of


 


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shipment outside of the continental United States to one of the Obligors’
owned or leased locations within the continental United States, provided that, with respect to this clause (b),
(i) a Borrower has title to such Inventory, and either (X) such Inventory is not subject to
a negotiable bill of lading or other document of title and the shipping documents relating
to such Inventory (including, without limitation, so-called “forwarders cargo receipts” or
“non-negotiable express bills of lading”) reasonably acceptable to the Agent have been
delivered to the Agent or an agent acting on behalf of the Agent and such shipping documents
name a Borrower as consignee and shipper (or such other arrangements reasonably satisfactory
to the Agent relating to such shipping documents in respect of such Inventory shall have
been made) or (Y) in the event such Inventory is subject to negotiable bills of lading or
other documents of title, such negotiable bills of lading or other documents of title have
been (1) upon the request of the Agent, issued with the Agent as consignee and a Borrower as
shipper and (2) delivered to the Agent or an agent acting on behalf of the Agent (or such
other arrangements reasonably satisfactory to the Agent relating to such negotiable bills of
lading or other documents of title in respect of such Inventory shall have been made), (iii)
such Inventory is subject, to the reasonable satisfaction of Agent, to a first priority
perfected security interest in favor of Agent, (iv) at the request of Agent, the vendor or
the supplier of such Inventory has agreed to waive its claims in or to such Inventory
(including any right to stop such Inventory in transit), in a manner reasonably acceptable
to Agent, once such Inventory is delivered to a freight forwarder or other representative of
the Borrowers who has entered into an agreement of the type described in clause (vi) below,
(v) such Inventory is covered by insurance reasonably acceptable to Agent, (vi) at the
request of the Agent, each relevant freight carrier, freight forwarder, customs broker and
shipping company in possession of such in-transit Inventory shall have (A) entered into
bailee arrangements reasonably satisfactory to Agent and (B) indicated or otherwise
acknowledged Agent’s security interest in such Inventory and in any shipping documents
issued or carried by such freight carrier or shipping company (including, without
limitation, waybills, airway bills, seaway bills, receipts, or any similar document), in
each case, in a manner reasonably satisfactory to Agent, and (vii) such Inventory would
otherwise satisfy all of the requirements of “Eligible Inventory” hereunder.
Notwithstanding the foregoing, in no event shall the aggregate amount of the Tranche A
Borrowing Base and the Tranche A-1 Borrowing Base comprised of Eligible In-Transit Inventory
under clause (b) above exceed $7,500,000.




Eligible L/C Inventory — as of any date of determination, without duplication
of other Eligible Inventory, all finished goods Inventory (valued at the lower of cost or
market) covered by an Eligible Trade L/C issued for the account of a Borrower, which
inventory (a) meets all of the requirements for Eligible Inventory, (b) will be Eligible
In-Transit Inventory upon a draw of the subject Eligible Trade Letter of Credit, and (c)
will be received by a Borrower in the United States not later than 90 days from the date of
determination (as determined by the Borrowers consistent with their past practices).




Eligible Real Estate — Real Estate owned by a Borrower described on Schedule
7.3 (as may be updated pursuant to, and in accordance with, Section 7.3) and which Agent, in
its discretion, deems to be Eligible Real Estate. Without limiting the generality of the
foregoing, no Real Estate shall be Eligible Real Estate unless: (a) it is located in the
United States; (b) it is subject to Agent’s duly perfected, first priority Lien, and no
other Lien except Permitted Liens; (c) it is subject to a title insurance policy reasonably
acceptable to Agent and Agent has received title searches, reasonably acceptable to it, with
respect to such Real Estate; (d) it has been appraised by a third party appraiser reasonably
acceptable to Agent; (e) Agent has received an environmental site assessment of such Real
Estate reasonably acceptable to Agent, which such environmental site assessment shall
include Phase I reports and, if requested by Agent, Phase II reports; (f) if requested by
Agent, Agent has received estoppel agreements reasonably acceptable to Agent, from ground
lessors; (g) Agent has received all other Related Real Estate Documents requested by it with
respect to such Real Estate and such Related Real Estate Documents are reasonably
satisfactory to Agent and (h) such Real Estate is improved by fully constructed
buildings occupied by a Borrower or a Guarantor.


 


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Eligible Trade L/C — any Letter of Credit issued in compliance with Section
2.3.1(e) for payment of the purchase price of finished good Inventory which will be Eligible
In-Transit Inventory upon presentation of a draft under such Letter of Credit.




Enforcement Action — any rightful action to enforce any Obligations or Loan
Documents or to realize upon any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, or otherwise).




Environmental Agreement — each agreement of Obligors with respect to any Real
Estate subject to a Mortgage, pursuant to which Obligors agree to indemnify and hold
harmless Agent and Lenders from liability under any Environmental Laws, except for liability
caused by any actions of Agent or the Lenders which are in violation of the Environmental
Laws.




Environmental Laws — all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies), relating to public health (but excluding
occupational safety and health, to the extent regulated by OSHA) or the protection or
pollution of the environment, including CERCLA, RCRA and CWA.




Environmental Notice — a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a possible
violation of, litigation relating to, or potential fine or liability under any Environmental
Law, or with respect to any Environmental Release, environmental pollution or hazardous
materials, including any complaint, summons, citation, order, claim, demand or request for
correction, remediation or otherwise.




Environmental Release — a release as defined in CERCLA or under any other
Environmental Law.




Equipment — as defined in the UCC, including all machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory), and all parts, accessories and special tools therefor, and
accessions thereto and, in any event, including all such Person’s machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and computer
equipment including embedded software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real property, together
with all additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.




Equity Interest — the interest of any (a) shareholder in a corporation, (b)
partner in a partnership (whether general, limited, limited liability or joint venture), (c)
member in a limited liability company, or (d) other Person having any other form of equity
security or ownership interest.




ERISA — the Employee Retirement Income Security Act of 1974.




Event of Default — as defined in Section 11.




Excess Availability — determined as of any date, the amount of Tranche A Excess
Availability plus the amount of Tranche A-1 Excess Availability.


 


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Excess Availability Trigger Event — the first date on which Excess Availability
for five (5) consecutive days is less than the greater of (i) $90,000,000 or (ii) 17.5% of
the lesser of (x) the Tranche A Revolver Commitments, plus the Tranche A-1 Revolver
Commitments or (y) the Tranche A Borrowing Base, plus the Tranche A-1 Borrowing
Base.




Excess Availability Trigger Period — any period (a) commencing upon the
occurrence of a Excess Availability Trigger Event and (ii) ending on the date that Excess
Availability for a period of ninety (90) consecutive calendar days exceeds the greater of
(i) $90,000,000 or (ii) 17.5% of the lesser of (x) the Tranche A Revolver Commitments,
plus the Tranche A-1 Revolver Commitments or (y) the Tranche A Borrowing Base,
plus the Tranche A-1 Borrowing Base.




Excluded Tax — Tax on the net income or gross receipts of a Lender or any
franchise or capital stock tax.




Existing Credit Agreement — that certain Loan and Security Agreement, dated
March 6, 2006, by and among The Bon-Ton Department Stores, Inc. and the other borrowers
party thereto, the lenders party thereto, Bank of America, N.A. as the agent, Banc of
America Securities LLC and GE Capital Markets, Inc., as co-lead arrangers and joint book
runners, General Electric Capital Corporation and Citicorp North America, Inc., as
co-syndication agents and Wells Fargo Retail Finance, LLC and JPMorgan Chase Bank, N.A., as
co-documentation agents, as amended by that certain Amendment No. 1 to Loan and Security
Agreement dated as of November 20, 2007 and that certain Amendment No. 2 to Loan and
Security Agreement dated as of November 18, 2009, and as in effect from time to time.




Extraordinary Expenses — all reasonable and documented out-of-pocket costs,
expenses or advances that Agent or any Co-Collateral Agent may incur during a Default or
Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor,
including those relating to (a) any audit, inspection, repossession, storage, repair,
appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or
other preservation of or realization upon any Collateral; (b) any action, arbitration or
other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way relating to any
Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens
with respect to any Collateral), Loan Documents or Obligations, including any lender
liability or other Claims; (c) the exercise, protection or enforcement of any rights or
remedies of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or
satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any
Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout,
restructuring or forbearance with respect to any Loan Documents or Obligations; or (g)
Protective Advances. Such costs, expenses and advances include transfer fees, taxes,
storage fees, insurance costs, permit fees, utility reservation and standby fees, legal
fees, financial advisor fees, appraisal fees, brokers’ fees and commissions, auctioneers’
fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid
to employees of any Obligor or independent contractors in liquidating any Collateral, and
travel expenses.




Federal Funds Rate — for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole multiple of
1/100 of 1%) charged to Bank of America, N.A. on such day on such transactions as reasonably
determined by the Agent.


 


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Fee Letter — the fee letter agreement between Agent, Banc of America Securities
LLC, and the Borrowers.




Fiscal Quarter — each successive period of thirteen weeks, commencing on the
first day of a Fiscal Year.




Fiscal Total Stores — in respect of any Fiscal Year, an amount of Stores equal
to the sum of (x) the aggregate number of Stores open on the first Business Day of such
Fiscal Year, plus (y) the aggregate number of Stores acquired or opened during such
Fiscal Year.




Fiscal Year — the fiscal year of Parent and Subsidiaries, for accounting and
tax purposes, which is the 52 or 53 week period ending on the Saturday nearer January 31 of
each calendar year (e.g., a reference to fiscal 2004 is a reference to the fiscal year ended
January 29, 2005).




Fixtures — as such term is defined in the UCC, now owned or hereafter acquired
by any Obligor located at a parcel of Real Estate subject to a Mortgage.




FLSA — the Fair Labor Standards Act of 1938, as amended.




Force Majeure — an event or force beyond the reasonable control of the
Obligors, including, without limitation, acts of God, acts of public enemy, terrorism, wars,
riots and civil disturbances, explosions, epidemics, natural disasters, fires, vandalism,
strikes, lock-outs or other labor difficulties, embargoes, shortages or unavailability of
materials, supplies, labor, equipment or systems, or fuel or energy shortage.




Foreign Lender — any Lender that is organized under the laws of a jurisdiction
other than the laws of the United States, or any state or district thereof.




Foreign Plan — any employee benefit plan or arrangement maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of the United
States, or any employee benefit plan or arrangement mandated by a government other than the
United States for employees of any Obligor or Subsidiary.




Foreign Subsidiary — a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Internal Revenue Code, such that a guaranty by such Subsidiary of
the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would
result in tax liability to the Obligors.




Full Payment — with respect to any Obligations, (a) the full and indefeasible
cash payment thereof (other than contingent indemnification Obligations with respect to
which no claim has been asserted in writing), including any interest, fees and other charges
accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); and (b)
if such Obligations are LC Obligations or inchoate or contingent in nature (other than
contingent indemnification Obligations with respect to which no claim has been asserted in
writing), Cash Collateralization thereof (or delivery of a standby letter of credit
acceptable to Agent in its reasonable discretion, in the amount of required Cash
Collateral). No Loans shall be deemed to have been paid in full until all Commitments
related to such Loans have expired or been terminated.




Fund — any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in
the ordinary course of its activities.


 


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GAAP — generally accepted accounting principles in the United States in effect
from time to time.




General Intangibles — as defined in the UCC, including choses in action, causes
of action, company or other business records, inventions, blueprints, designs, patents,
patent applications, trademarks, trademark applications, trade names, trade secrets, service
marks, goodwill, brand names, copyrights, registrations, licenses, franchises, customer
lists, permits, tax refund claims, computer programs, operational manuals, internet
addresses and domain names, insurance refunds and premium rebates, all rights to
indemnification, contract rights and all other intangible Property of any kind.




Goods — as defined in the UCC.




Governmental Approvals — all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all Governmental
Authorities.




Governmental Authority — any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions for or pertaining to any
government or court, in each case whether associated with the United States, a state,
district or territory thereof, or a foreign entity or government.




Guarantor Payment — as defined in Section 5.10.3.




Guarantors — each of (a) the Parent, (b) the Bon-Ton Giftco, Inc., (c) The
Bon-Ton Stores of Lancaster, Inc., (d) The Bon-Ton Trade, LLC, (e) Carson Pirie Scott II,
Inc., (f) Bon-Ton Distribution, Inc., (g) McRIL, LLC,  and each other Person who guarantees
payment or performance of any Obligations.




Guaranty — each guaranty agreement executed by a Guarantor in favor of Agent,
substantially in the form of Exhibit F hereto.




Hedging Agreement — an agreement relating to any swap, cap, floor, collar,
option, forward, cross right or obligation, or combination thereof or similar transaction,
with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.




Impacted Lender — a Defaulting Lender or a Lender as to which (a) the Agent or
any Issuing Bank has a good faith belief that such Lender has defaulted in fulfilling its
obligations under one or more other syndicated credit facilities or (b) an entity that
controls such Lender has been deemed insolvent or become subject to an Insolvency
Proceeding.




Increase Effective Date — as defined in Section 2.4.1.




Increasing Lender – as defined in Section 2.4.1.




Indemnitees — Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees
and Bank of America Indemnitees.



 


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Insolvency Proceeding — any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to, (a) the
entry of an order
for relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt
adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator,
conservator or other custodian for such Person or any part of its Property; or (c) an
assignment or trust mortgage for the benefit of creditors.




Instrument — as defined in the UCC.




Intellectual Property — all intellectual and similar Property of a Person,
including inventions, designs, patents, patent applications, copyrights, trademarks, service
marks, trade names, trade secrets, confidential or proprietary information, customer lists,
know-how, software and databases; all embodiments or fixations thereof and all related
documentation, registrations and franchises; all books and records describing or used in
connection with the foregoing; and all licenses or other rights to use any of the foregoing.




Intellectual Property Claim — any claim or assertion (whether in writing, by
suit or otherwise) that the Parent or any Subsidiary’s ownership, use, marketing, sale or
distribution of any Inventory, Equipment, Intellectual Property or other Property violates
another Person’s Intellectual Property.




Intercreditor Agreement – the intercreditor agreement by and among Agent, the
Second Lien Agent, each of the Borrowers and the Guarantors, dated as of November 18, 2009,
as amended by that certain first amendment dated as of the Closing Date and as may be
further amended, restated, supplemented or otherwise modified from time to time.




Interest Period — as defined in Section 3.1.3.




Inventory — as defined in the UCC, including all goods intended for sale,
lease, display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with the
manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such
goods, or otherwise used or consumed in such Person’s business (but excluding Equipment).




Inventory Reserve — reserves, established by Agent, based on the most recent
appraisal of Borrowers’ Inventory performed by an appraiser and on terms reasonably
satisfactory to Agent and the most recent commercial finance exam of the Borrowers’ books
and records performed by an examiner and on terms reasonably satisfactory to Agent, to
reflect factors that may negatively impact the Value of Inventory, including change in
salability, obsolescence, seasonality, theft, shrinkage, damage, customer credit
liabilities, imbalance, change in composition or mix, markdowns, vendor chargebacks and with
respect to Eligible Inventory that has been subject to a Letter of Credit for a period in
excess of ninety (90) days.




Investment — any (a) acquisition of all or substantially all assets of, or any
line of business or division of, a Person; (b) acquisition of record or beneficial ownership
of any Equity Interests of a Person; (c) any advance or capital contribution to, guarantee
or assumption of debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the investor guarantees
Debt of such other Person, or (d) other investment in a Person. For purposes of the Loan
Documents, the outstanding amount of any Investment made by any Person at any time shall be
calculated as the excess of the initial amount of such Investment made by such Person
(including the fair market value of all property transferred by such Person as part of such
Investment) over all returns of principal or capital thereof received in cash on or
prior to such time by such Person (including all cash dividends, cash distributions and cash
repayments of Debt received by such Person).


 


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Investment Property — as defined in the UCC.




IRC – means the Internal Revenue Code of 1986, as amended, and any successor
thereto.




ISP — with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or
such later version thereof as may be in effect at the time of issuance).




Issuing Bank — (a) Bank of America or an Affiliate of Bank of America, Wells
Fargo Bank, N.A. or an Affiliate of Wells Fargo Bank, N.A. or any other Lender or an
Affiliate of such Lender, and any other Person designated by a Lender (and acceptable to the
Borrower), in each case, in its capacity as issuer of Letters of Credit hereunder, or any
successor issuer of Letters of Credit hereunder and (b) with respect to the Letters of
Credit issued by such issuer prior to the Closing Date and described on Schedule 2.3.2, and
with respect to any other Letters of Credit issued by such Issuing Bank.




Issuing Bank Indemnitees — Issuing Bank and its officers, directors, employees,
Affiliates, agents, advisors and attorneys.




Joint Lead Arrangers – as defined in the Preamble.




Landlord Lien State — (i) the states of Washington, Virginia, Pennsylvania and
(ii) such other state(s) or jurisdictions in which a landlord’s claim for rent or other
obligations has priority over the Lien of Agent in any of the Collateral.




Large Inventory Location — any distribution center (including each Distribution
Center), warehouse, cross-docking station or storage facility at which Inventory is located.




LC Application — an application by Borrower Agent to Issuing Bank for issuance
of a Letter of Credit, in form and substance reasonably satisfactory to Issuing Bank.




LC Conditions — the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving effect to such
issuance, total LC Obligations do not exceed the Letter of Credit Subline, no Tranche A
Overadvance or Tranche A-1 Overadvance exists and, if no Tranche A Revolver Loans are
outstanding, the LC Obligations do not exceed the Tranche A Borrowing Base (without giving
effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such
Letter of Credit is (i) no more than 365 days from issuance, in the case of standby Letters
of Credit, (ii) no more than 180 days from issuance, in the case of documentary Letters of
Credit, and (iii) at least 5 Business Days prior to the Termination Date; (d) the Letter of
Credit and payments thereunder are denominated in Dollars; (e) the form of the proposed
Letter of Credit is reasonably satisfactory to Agent and Issuing Bank in their discretion
and (f) the Issuing Bank’s compliance with the requirements of Section 2.3.1(j).




LC Documents — all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in
connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.




LC Guaranty — a guaranty issued by an Issuing Bank to another Person in
connection with the issuance by such other Person of Letters of Credit hereunder.




LC Obligations — the sum (without duplication) of (a) all amounts owing by
Borrowers for any drawings under Letters of Credit (including in respect of any payment made
by Issuing Bank under any LC Guaranty and any deferred payment or acceptance liabilities in
respect of
such Letter of Credit); (b) the aggregate undrawn amount of all outstanding Letters of
Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.


 


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LC Request — a request for issuance of a Letter of Credit, to be provided by
Borrower Agent to Issuing Bank, in form reasonably satisfactory to Agent and Issuing Bank.




LC Reserve — the aggregate of all LC Obligations, other than (a) those that
have been Cash Collateralized and (b) if no Default or Event of Default exists, those
constituting charges owing to the Issuing Bank.




Lender Indemnitees — Lenders and their officers, directors, employees,
Affiliates, agents, advisors and attorneys.




Lenders — as defined in the preamble to this Loan Agreement, including the
Tranche A Lenders, the Tranche A-1 Lenders, Agent in its capacity as a provider of Swingline
Loans and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and
Assumption Agreement.




Letter of Credit — any standby or documentary letter of credit issued by
Issuing Bank for the account of a Borrower, or any indemnity, guarantee, exposure
transmittal memorandum or similar form of credit support issued by Agent or Issuing Bank for
the benefit of a Borrower.




Letter-of-Credit Right — as defined in the UCC.




Letter of Credit Subline — $150,000,000. The Letter of Credit Subline is part
of, and not in addition to, the Tranche A Revolver Commitment.




LIBOR Loan — each set of LIBOR Tranche A Revolver Loans or LIBOR Tranche A-1
Revolver Loans having a common length and commencement of Interest Period.




LIBOR Tranche A Revolver Loan — a Tranche A Revolver Loan that bears interest
at Adjusted LIBOR plus the Applicable Margin for LIBOR Tranche A Revolver Loans.




LIBOR Tranche A-1 Revolver Loan — a Tranche A-1 Revolver Loan that bears
interest at Adjusted LIBOR plus the Applicable Margin for LIBOR Tranche A-1 Revolver Loans.




License — any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing, distribution or
disposition of Collateral, any use of Property or any other conduct of its business.




Licensor — any Person from whom an Obligor obtains the right to use any
Intellectual Property.




Lien — any Person’s interest in Property securing an obligation owed to, or a
claim by, such Person, whether such interest is based on common law, statute or contract,
including liens, security interests, pledges, hypothecations, statutory trusts,
reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Property.



 


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Lien Waiver — an agreement, in form and substance reasonably satisfactory to
Agent, by which (a) for any material Collateral located on leased premises, the lessor
waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent to
enter upon the premises and remove the Collateral or to use the premises to store or dispose
of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper,
customs broker or freight
forwarder, such Person waives or subordinates any Lien it may have on the Collateral,
agrees to hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any Collateral
held by a repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or
subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to
Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property
rights, the Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s
Liens with respect to the Collateral, including the right to dispose of it with the benefit
of the Intellectual Property, whether or not a default exists under any applicable License.




Loan — a Tranche A Revolver Loan or Tranche A-1 Revolver Loan.




Loan Account — the loan account established by each Lender on its books
pursuant to Section 5.7.




Loan Agreement – as defined in the Preamble.




Loan Documents — this Loan Agreement, Other Agreements and Security Documents.




Loan Year — each calendar year commencing on the Closing Date and on each
anniversary of the Closing Date.




Margin Stock — as defined in Regulation U of the Board of Governors.




Master Lease Agreement — collectively, (i) Lease Agreement dated as of March 6,
2006 between Bonstores Realty One, LLC, a Delaware limited liability company, as landlord,
and Bon-Ton, as successor by merger to Herberger’s Department Stores, LLC, a Minnesota
limited liability company, as tenant, as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the Loan Documents, (ii) Master
Lease Agreement dated as of March 6, 2006 between Bonstores Realty One, LLC, a Delaware
limited liability company, as landlord, and Carson Pirie Scott II, Inc., formerly known as
McRae’s, Inc., a Mississippi corporation, as tenant, as it may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the Loan Documents,
(iii) Lease Agreement dated as of March 6, 2006 between Bonstores Realty One, LLC, a
Delaware limited liability company, as landlord, and McRIL, LLC, a Virginia limited
liability company, as tenant, as it may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the Loan Documents, (iv) Master Lease
Agreement dated as of March 6, 2006 between Bonstores Realty One, LLC, a Delaware limited
liability company, as landlord, and Bon-Ton, as successor by merger to Parisian, Inc., an
Alabama corporation, as tenant, as it may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the Loan Documents, (v) Lease Agreement dated
as of March 6, 2006 currently between Bonstores Realty One, LLC, a Delaware limited
liability company, as landlord, and Bon-Ton Distribution, Inc., formerly known as Saks
Distribution Centers, Inc., an Illinois corporation, as tenant, as it may be amended,
restated, supplemented or otherwise modified from time to time in accordance with the Loan
Documents, (vi) Master Lease Agreement dated as of March 6, 2006 between Bonstores Realty
One, LLC, a Delaware limited liability company, as landlord, and The Elder-Beerman Stores,
Corp., an Ohio corporation, as tenant, as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the Loan Documents, (vii) Master
Lease Agreement dated as of March 6, 2006 between Bonstores Realty Two, LLC, a Delaware
limited liability company, as landlord, and Carson Pirie Scott II, Inc., formerly known as
McRae’s, Inc., a Mississippi corporation, as tenant, as it may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the Loan Documents,
(viii) Master Lease Agreement dated as of March 6, 2006 between Bonstores Realty Two, LLC, a
Delaware limited liability company, as
landlord, and McRIL, LLC, a Virginia limited liability company, as tenant, as it may be
amended, restated, supplemented or otherwise modified from time to time in accordance with
the Loan Documents, (ix) Master Lease Agreement dated as of March 6, 2006 between Bonstores
Realty Two, LLC, a Delaware limited liability company, as landlord, and Bon-Ton, as
successor by merger to Parisian, Inc., an Alabama corporation, as tenant, as it may be
amended, restated, supplemented or otherwise modified from time to time in accordance with
the Loan Documents and (x) such other leases and subleases as may be entered into between an
SPE and an Obligor from time to time.


 


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Material Adverse Effect — the effect of any event or circumstance occurring
after January 31, 2009 (except for general economic or political conditions or conditions
generally applicable to the department store industry, or terrorist events or wars) that,
taken as a whole, has or could be reasonably expected to have a material adverse effect on:
(a) the business, operations, liabilities (actual or contingent), Properties, or financial
condition of the Obligors and their Subsidiaries considered as a whole, or the value of the
Collateral, taken as a whole, the enforceability of any Loan Documents, or on the validity
or priority of Agent’s Liens on any Collateral; (b) the ability of the Obligors taken as a
whole to perform any obligations under the Loan Documents, including repayment of any
Obligations; or (c) the rights or remedies of Agent or any Lender to enforce or collect the
Obligations or to realize upon the Collateral.




Material Contract — any agreement or arrangement to which Parent or a
Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a material
contract under the Securities Exchange Act of 1934, (b) for which breach, termination,
nonperformance or failure to renew could reasonably be expected to have a Material Adverse
Effect, or (c) that relates to the Mortgage Loan Debt, the Senior Note Debt, the Second Lien
Debt, the Convertible Note Debt or other Debt in an aggregate principal amount of $5,000,000
or more.




Moody’s — Moody’s Investors Service, Inc., and its successors.




Mortgage — each mortgage, deed of trust or deed to secure debt pursuant to
which an Obligor grants to Agent, for the benefit of Secured Parties, Liens upon the Real
Estate owned by such Obligor, as security for the Obligations.




Mortgage Intercreditor Agreement — the Intercreditor Agreement, dated as of
March 6, 2006, by and among the Mortgage Loan Lender and Bank of America, in its capacity as
the administrative agent under the Existing Credit Agreement.




Mortgage Loan Debt — (a) the Debt of SPEs in an aggregate principal amount not
to exceed $260,000,000, represented by the Mortgage Loan Debt Documents, (b) the Debt
evidenced by each guaranty of a Master Lease Agreement, executed by the Parent in favor of
the Mortgage Loan Lender, as in effect on the date hereof and as may be further amended,
restated, supplemented or otherwise modified from time to time in accordance with the Loan
Documents and (c) the Debt evidenced by each Exceptions to Non-Recourse Guaranty, entered
into on the March 6, 2006, by each of Bonstores Realty One, LLC and Bonstores Realty Two,
LLC in favor of the Mortgage Loan Lender, as in effect on the date hereof and as may be
further amended, restated, supplemented or otherwise modified from time to time in
accordance with the Loan Documents.




Mortgage Loan Debt Documents — the (a) Loan Agreement (the “Bonstores One
Agreement”), dated as of March 6, 2006, as amended on May 4, 2006, and as it may be
further amended, restated, supplemented or otherwise modified from time to time in
accordance with the Loan Documents, between Bonstores Realty One, LLC and the Mortgage Loan
Lender, (b) the Loan Agreement (the “Bonstores Two Agreement”), dated as of March 6,
2006, as amended on
May 4, 2006, and as it may be further amended, restated, supplemented or otherwise
modified from time to time in accordance with the Loan Documents, between Bonstores Realty
Two, LLC and the Mortgage Loan Lender, (c) each of the Loan Documents (as defined in the
Bonstores One Agreement), (d) each of the Loan Documents (as defined in the Bonstores Two
Agreement), (e) each Master Lease Agreement and (f) each guaranty of a Master Lease
Agreement by the Parent in favor of the Mortgage Loan Lender.


 


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Mortgage Loan Lender — Bank of America, N.A., in its capacity as lender under
the Mortgage Loan Debt Documents.




Multiemployer Plan — any employee benefit plan or arrangement described in
Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor or
Subsidiary.




Net Proceeds — with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by Parent or a Subsidiary in cash from
such disposition, net of (a) reasonable and customary costs and expenses actually incurred
in connection therewith, including legal fees and sales commissions; (b) amounts applied to
repayment of Debt secured by a Permitted Lien; (c) taxes due as a result of, or in
connection with, such Asset Disposition; and (d) reserves for indemnities, until such
reserves are no longer needed.




Notes — each Tranche A Revolver Note, Tranche A-1 Revolver Note or other
promissory note executed by a Borrower to evidence any Obligations.




Notice of Borrowing — a Notice of Borrowing to be provided by Borrower Agent to
request the funding of a Borrowing of Loans, in form reasonably satisfactory to Agent.




Notice of Conversion/Continuation — a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans as LIBOR
Loans, in form reasonably satisfactory to Agent.




NRV Percentage — the net orderly liquidation value of Inventory of each
Borrower, expressed as a percentage (which shall be adjusted on a monthly basis), expected
to be realized at an orderly, negotiated sale held within a reasonable period of time, net
of all liquidation expenses, as determined from the most recent appraisal of Borrowers’
Inventory performed by an appraiser and on terms reasonably satisfactory to Agent.




Obligations — all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit, (c)
interest, expenses, fees and other sums payable by Obligors under Loan Documents, (d)
obligations of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank
Product Debt, and (g) other Debts, obligations and liabilities of any kind owing by Obligors
pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced
by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising
from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or
to become due, primary or secondary, or joint or several.




Obligor — each Borrower, Guarantor, or other Person that is liable for payment
of any Obligations or that has granted a Lien in favor of Agent on its assets to secure any
Obligations.




Ordinary Course of Business — the ordinary course of business of Parent or any
Subsidiary, consistent with past practices and undertaken in good faith.




Organic Documents — with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability agreement,
operating agreement,
members agreement, shareholders agreement, partnership agreement, certificate of
partnership, certificate of formation, voting trust agreement, or similar agreement or
instrument governing the formation or operation of such Person.


 


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OSHA — the Occupational Safety and Hazard Act of 1970, as amended.




Other Agreement — each Note, Guaranty, LC Document, LC Guaranty, Fee Letter,
Lien Waiver, Real Estate Related Document, Borrowing Base Certificate, Compliance
Certificate, the Mortgage Intercreditor Agreement, the Intercreditor Agreement, the
Perfection Certificate, the Post-Closing Agreement, financial statement or report delivered
hereunder, or other document, instrument or agreement (other than this Loan Agreement or a
Security Document) now or hereafter delivered by an Obligor or other Person to Agent or a
Lender in connection with any transactions relating hereto.




Overadvance Loan — a Base Rate Tranche A Revolver Loan made when a Tranche A
Overadvance exists or is caused by the funding of a Tranche A Revolver Loan.




Parent — The Bon-Ton Stores, Inc., a Pennsylvania corporation and parent
company of Bon-Ton.




Participant — as defined in Section 13.3.1.




Passive Company — collectively, The Bon-Ton Properties- Eastview G.P., Inc.,
The Bon-Ton Properties- Marketplace G.P., Inc., The Bon-Ton Properties- Greece Ridge G.P.,
Inc., The Bon-Ton Properties- Eastview L.P., The Bon-Ton Properties- Marketplace L.P., and
The Bon-Ton Properties- Greece Ridge L.P.




Patriot Act — the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115
Stat. 272 (2001).




Payment Intangible — as defined in the UCC.




Payment Item — each check, draft or other item of payment payable to an
Obligor, including those constituting proceeds of any Collateral.




Perfection Certificate — that certain Perfection Certificate dated as of the
date hereof, and delivered by the Obligors to Agent.




Permitted Acquisition — any acquisition by any Obligor, whether by purchase,
merger or otherwise, of all or substantially all of the assets of, the Equity Interests of,
or a business line or unit or a division of, any Person; provided that:




(i) immediately prior to, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing or would result therefrom;




(ii) all transactions in connection therewith shall be consummated, in all material
respects, in accordance with all applicable laws and in conformity with all applicable
Governmental Approvals;




(iii) such acquisition shall be consensual and shall have been approved by the Board of
Directors of such Person;


 


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(iv) in the case of the acquisition of Equity Interests, the issuer of such Equity
Interests shall become a Subsidiary of the applicable Obligor immediately after consummation
of the applicable transaction, and such Obligor shall have taken, or caused to be taken, as
of the date such Person becomes a Subsidiary of such Obligor, the actions set forth in
Section 10.1.9;




(v) Excess Availability on the date of the making of such acquisition on a pro forma
basis after giving effect to such acquisition, and projected Excess Availability on a pro
forma basis for the upcoming twelve month period (after giving effect to such acquisition)
is, in each case, greater than or equal to 20% of the lesser of (A) the Tranche A Revolver
Commitments, plus the Tranche A-1 Revolver Commitments or (B) the Tranche A
Borrowing Base, plus the Tranche A-1 Borrowing Base;




(vi) except if such acquisition is made within 180 days of an equity issuance and
solely with the cash proceeds in an aggregate amount not to exceed the Available Basket
Amount then in effect, as of the monthly fiscal period most recently then ended, the
Consolidated Fixed Charge Coverage Ratio (on a pro forma trailing 12 fiscal month basis,
giving effect to the making of such acquisition, and any Borrowings made in connection
therewith, determined as though such acquisition and such Borrowings occurred on the first
day of the twelve (12) fiscal month period ended prior to such acquisition) is not less than
1.00 to 1.00;




(vii) any Person or assets or division as acquired in accordance herewith shall be in
same business or lines of business in which the Borrower and/or its Subsidiaries are engaged
as of the Closing Date or a line of business reasonably related or incidental thereto; and




(viii) the Borrower Agent shall have delivered to Agent not less than then (10) days
prior to the consummation of such acquisition a certificate, in form and substance
reasonably satisfactory to Agent, from a Senior Officer of the Borrower Agent certifying
that the conditions set forth in clauses (i) through (vii) above are satisfied (which
certificate shall attach supporting projections, information and calculations with respect
to the requirements set forth in clause (v) and (vi) above (all based on projections of the
financial performance of the Obligors believed to be fair and reasonable at the time made)).




Permitted Asset Disposition — as long as no Default or Event of Default exists
or would result therefrom, and, if so required pursuant to Section 5.2, all Net Proceeds are
remitted to Agent for application to the Obligations pursuant to Section 5.5, an Asset
Disposition that is (a) a sale of Inventory or Equipment in the Ordinary Course of Business;
(b) a disposition of Equipment so long as (x) the Equipment subject to such disposition has
a fair market value or book value (whichever is more) of $500,000 or less and (y) all
Equipment disposed of pursuant to this clause (b) in the aggregate during any fiscal year of
the Parent has a fair market or book value (whichever is more) of $3,000,000 or less, (c) a
disposition of Equipment or Inventory that is obsolete, unmerchantable or otherwise
unsalable in the Ordinary Course of Business, (d) the licensing of Intellectual Property to
third Persons on reasonable and customary terms in the ordinary course of business
consistent with past practice; provided that such licensing does not materially
interfere with the business of the Parent or any other Obligor, (e) the sale or other
disposition of Cash Equivalents, (f) dispositions of accounts receivable (other than Credit
Card Receivables) in connection with the compromise, settlement or collection thereof in the
Ordinary Course of Business or in bankruptcy or similar proceedings (it being understood
that customary chargebacks and offsets, discounts, allowances and credits by Credit Card
Processors made in the ordinary course of business shall not constitute a disposition of a
Credit Card Receivable for the purposes of this clause (f)), (g) any Permitted Distribution,
(h) any Investment which is not a Restricted Investment, (i) the unwinding of any Hedging
Agreements, (j) subleases entered into in the ordinary course of business of any Obligor,
(k) the disposition of any Real Estate which, pursuant to


 


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Section 7.3, is not required to be subject to a Mortgage hereunder, (l) the dispostion of any Real Estate which is required to be subject to a Mortgage hereunder, so long as
(x) no Default or Event of Default has occurred and is continuing or would result therefrom
and (y) the Obligors receive, at the consummation of such Asset Disposition, gross proceeds,
in cash, from such sale in an amount not less than 70% of the appraised value of such Real
Estate, as set forth in the most recent appraisal provided to the Agent, (m) the disposition
by Borrower Agent of 100% of the membership interests in Bonstores Realty One, LLC to
Bonstores Holdings One, LLC, (n) the disposition by Borrower Agent of 100% of the membership
interests in Bonstores Realty Two, LLC to Bonstores Holdings Two, LLC, (o) a Permitted Store
Closure, (p) a sale or other disposition of any property in connection with any transaction
covered by, but not prohibited by, Section 10.2.23, (q) a disposition of assets acquired in
a Permitted Acquisition so long as (i) such disposition is consummated within 180 days after
the consummation of such Permitted Acquisition and (ii) such assets do not constitute
Inventory or Accounts; and (r) a transfer of condemned property as a result of the exercise
of “eminent domain” or other similar policies to the respective Governmental Authority or
agency that has condemned the same (whether by deed in lieu of condemnation or otherwise),
and transfers of properties that have been subject to a casualty to the respective insurer
of such property as part of an insurance settlement.




Permitted Business — any business conducted or proposed to be conducted by the
Parent and the other Obligors on the Closing Date and other businesses reasonably related or
ancillary thereto.




Permitted Contingent Obligations — Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course of Business;
(b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date,
and any extension or renewal thereof that does not increase the amount of such Contingent
Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with
respect to surety, appeal or performance bonds, or other similar obligations; (e) arising
from customary indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g)
in an aggregate amount of $1,000,000 or less at any time.




Permitted Distribution — (a) a dividend by the Parent or redemption or
repurchase of equity securities of the Parent so long as (i) no Default or Event of Default
shall have occurred and be continuing or would result after giving effect to any such
Distribution, (ii) Excess Availability on the date of the making of such Distribution on a
pro forma basis after giving effect to such Distribution, and projected Excess Availability
on a pro forma basis for the upcoming twelve month period (after giving effect to such
Distribution) is, in each case, greater than or equal to 25% of the lesser of (A) the
Tranche A Revolver Commitments, plus the Tranche A-1 Revolver Commitments or (B) the
Tranche A Borrowing Base, plus the Tranche A-1 Borrowing Base, (iii) as of the
monthly fiscal period most recently then ended, the Consolidated Fixed Charge Coverage Ratio
(on a pro forma trailing 12 fiscal month basis, giving effect to the making of such
Distribution, and any Borrowings made in connection therewith, determined as though such
Distribution and such Borrowings occurred on the first day of the twelve (12) fiscal month
period ended prior to such Distribution) is not less than 1.25 to 1.00 and (iv) the
Borrowers shall have provided the Agent with a certificate not less than ten (10) days prior
to the making of such Permitted Distribution executed by a Senior Officer, evidencing
compliance, after giving effect to such Distribution, with the requirements set forth in
clauses (i) through (iii) above (which certificate shall attach supporting projections,
information and calculations with respect to the requirements set forth in clauses (ii) and
(iii) above (all based on projections of the financial performance of the Obligors believed
to be fair and reasonable at the time made)), (b) dividends by the Parent or redemptions or
repurchases of equity securities of the Parent in an aggregate amount not to exceed (x)
$5,000,000 in any fiscal year of the Parent or (y) $20,000,000 during the term of this Loan
Agreement, (c) the purchase, repurchase,


 


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redemption, acquisition or retirement for value of any capital stock of the Parent upon the exercise of warrants,
options or similar rights if such capital stock constitutes all or a portion of the exercise
price or is surrendered in connection with satisfying any federal or state income tax
obligation incurred in connection with such exercise; provided that no cash payment in
respect of such purchase, repurchase, redemption, acquisition, retirement or exercise shall
be made by any Obligor, (d) so long as no Default has occurred and is continuing or would
result therefrom, payments to Parent to permit Parent, and which are used by Parent, to
redeem equity interests of Parent held by any current or former employee, officer, director
or consultant of Parent (or any other Obligor) or their respective estates, spouses, former
spouses or family members pursuant to the terms of any employee equity subscription
agreement, stock option agreement or similar agreement entered into in the ordinary course
of business; provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired equity interests in any fiscal year will not exceed $3,000,000, (e) a
repurchase of capital stock deemed to occur upon the cashless exercise of stock options and
warrants, and (f) distributions to Parent to enable Parent to pay, and which are used by
Parent to pay, customary and reasonable costs and expenses of an offering of securities of
Parent so long as the Parent reimburses the applicable Obligor promptly upon the
consummation of such offering.




Permitted Holders — (1) Tim Grumbacher and his immediate family members (as
defined by the National Association of Security Dealers Automatic Quotation system listing
requirements) or the spouses and former spouses (including widows and widowers), heirs or
lineal descendants of any of the foregoing; (2) an estate, trust (including a revocable
trust, declaration of trust or a voting trust), guardianship, other legal representative
relationship or custodianship for the primary benefit of one or more individuals described
in clause (1) above or controlled by one or more individuals described in clause (1) above;
(3) a corporation, partnership, limited liability company, foundation, charitable
organization or other entity if a majority of the voting power and, if applicable, a
majority of the value of the equity ownership of such corporation, partnership, limited
liability company, foundation, charitable organization or other entity is directly or
indirectly owned by or for the primary benefit of one or more individuals or entities
described in clauses (1) or (2) above; (4) a corporation, partnership, limited liability
company, foundation, charitable organization or other entity controlled directly or
indirectly by one or more individuals or entities described in clauses (1), (2) or (3)
above; and (5) any “person” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Securities Exchange Act of 1934, or any successor provision) acting on behalf of the
Parent as underwriter pursuant to an offering that is temporarily holding securities in
connection with such offering.




Permitted Lien — as defined in Section 10.2.2.




Permitted Purchase Money Debt — Purchase Money Debt of Parent and Subsidiaries
that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate
principal amount does not exceed $25,000,000 at any time.




Permitted Store Closures — the closure or liquidation of a Store by the
Borrowers or any Subsidiary; provided that (a) neither the Borrowers nor any of
their Subsidiaries shall close or liquidate, as of any date of determination, in any Fiscal
Year (x) Stores representing more than 10% of the Fiscal Total Stores for such Fiscal Year
(this clause (x) determined by the result of (i) the sum of (A) the number of Stores closed
or liquidated during such Fiscal Year, plus (B) the number of Stores that Borrowers
or its Subsidiaries intend to close on or about such date of determination during such
Fiscal Year, divided by (ii) Fiscal Total Stores for such Fiscal Year) and
(y) Stores representing more than 25% of the Total Stores (this clause (y) determined by the
result of (i) the sum of (A) the number of Stores closed or liquidated since the Closing
Date plus (B) the number of Stores that the Borrowers or its Subsidiaries intend to
close on or about such date of determination, divided by (ii) Total Stores)
and (b) if the number of Stores that the
Borrowers or their Subsidiaries intend to close or liquidate on any date of
determination in a Fiscal Year when aggregated with the number of Stores closed or
liquidated by the Borrowers or their Subsidiaries prior to such date within the same Fiscal
Year exceed twenty (20) Stores, then all such Stores that are being closed or liquidated on
such date plus any Stores closed or liquidated on any date thereafter in the same Fiscal
Year shall be closed or liquidated by a liquidator or under the supervision of a consultant
(such liquidator or consultant shall be reasonably acceptable to the Agent) and pursuant to
liquidation or consulting arrangements reasonably acceptable to Agent. For purposes of this
defined term and any other defined term included herein, Store relocations shall be ignored.


 


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Person — any individual, corporation, limited liability company, partnership,
joint venture, joint stock company, land trust, business trust, unincorporated organization,
Governmental Authority or other entity.




Plan — an employee pension benefit plan that is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal Revenue Code and
that is either (a) maintained by Parent or Subsidiary for employees or (b) maintained
pursuant to a collective bargaining agreement, or other arrangement under which more than
one employer makes contributions and to which Parent or Subsidiary is making or accruing an
obligation to make contributions or has within the preceding five years made or accrued such
contributions.




Pledge Agreement — each pledge agreement pursuant to which an Obligor pledges
to Agent, for the benefit of Secured Parties, such Obligor’s equity interests, as security
for the Obligations.




Post-Closing Agreement — means that certain letter agreement dated as of the
Closing Date among Agent and the Obligors setting forth any applicable conditions reasonably
required by Agent to be fulfilled by Obligors, as applicable, subsequent to the Closing Date
in time periods as set forth therein, as amended, restated, supplemented or otherwise
modified from time to time.




Pro Rata — (a) with respect to any Tranche A Lender, a percentage (expressed as
a decimal, rounded to the ninth decimal place) determined (i) while the Tranche A Revolver
Commitments are outstanding, by dividing the amount of such Tranche A Lender’s Tranche A
Revolver Commitment by the aggregate amount of all Tranche A Revolver Commitments; and (ii)
at any other time, by dividing the amount of such Tranche A Lender’s Tranche A Revolver
Loans and LC Obligations by the aggregate amount of all outstanding Tranche A Revolver Loans
and LC Obligations and (b) with respect to any Tranche A-1 Lender, a percentage (expressed
as a decimal, rounded to the ninth decimal place) determined (i) while the Tranche A-1
Revolver Commitments are outstanding, by dividing the amount of such Tranche A-1 Lender’s
Tranche A-1 Revolver Commitment by the aggregate amount of all Tranche A-1 Revolver
Commitments; and (ii) at any other time, by dividing the amount of such Tranche A-1 Lender’s
Tranche A-1 Revolver Loans by the aggregate amount of all outstanding Tranche A-1 Revolver
Loans.




Properly Contested — with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s liability to
pay; (b) the obligation is being properly contested in good faith by appropriate proceedings
promptly instituted and diligently pursued; (c) appropriate reserves have been established
in accordance with GAAP; (d) non-payment could not be reasonably expected to have a Material
Adverse Effect, nor result in forfeiture or sale of any assets of the Obligor; (e) no Lien
is imposed on assets of the Obligor, unless bonded and stayed to the reasonable satisfaction
of Agent; and (f) if the obligation results from entry of a judgment or other order, such
judgment or order is stayed pending appeal or other judicial review.


 


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Property — any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.




Protective Advances — as defined in Section 2.1.5.




Purchase Money Debt — (a) Debt (other than the Obligations) for payment of any
of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within
10 days before or after acquisition of any fixed assets, for the purpose of financing any of
the purchase price thereof; (c) Capital Leases and (d) any renewals, extensions or
refinancings (but not increases) thereof.




Purchase Money Lien — a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt, and any proceeds thereof, and constituting a
Capital Lease, a purchase money security interest under the UCC or a purchase money
mortgage.




RCRA — the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).




Real Estate — all right, title and interest (whether as owner, lessor or
lessee) in any real Property or any buildings, structures, parking areas or other
improvements thereon.




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




Refinancing Conditions — the following conditions for Refinancing Debt: (a) it
is in an aggregate principal amount that does not exceed the principal amount of the Debt
being extended, renewed or refinanced, plus the amount of any premiums required to be paid
thereon, accrued interest and reasonable fees and expenses associated therewith; (b) it has
a final maturity no sooner than, a weighted average life no less than, and an interest rate
on market terms for the type of Debt being refinanced, extended, or renewed; (c) it is
subordinated to the Obligations at least to the same extent as the Debt being extended,
renewed or refinanced; (d) the representations, covenants and defaults applicable to it are
on market terms for the type of Debt being extended, renewed or refinanced; (e) no
additional Lien is granted to secure it (other than to secure the additional Debt permitted
to be incurred pursuant to clause (a) of this definition); provided that with
respect to any extension, renewal or refinancing of the Senior Note Debt, Liens may be
granted to the holders thereof so long as such Liens are permitted under Section 10.2.2(s);
(f) no additional Person is obligated on such Debt; provided that with respect to
any extension, renewal or refinancing of the Senior Note Debt, any Obligor may be obligated
in respect thereof; and (g) upon giving effect to it, no Default or Event of Default exists.




Refinancing Debt — Borrowed Money that is the result of an extension,
replacement, renewal or refinancing of Debt permitted under Section 10.2.1 (b), (c), (d),
(e), (i), (k), (p), (u) or (v).




Register — as defined in Section 13.2.2.




Reimbursement Date — as defined in Section 2.3.2.




Related Parties — with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents, trustees, attorneys and advisors of such
Person and of such Person’s Affiliates.


 


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Related Real Estate Documents — with respect to any Real Estate subject to a
Mortgage,
the following, in form and substance reasonably satisfactory to Agent and received by
Agent for review at least 15 days prior to the effective date of the Mortgage (or such
shorter length of time acceptable to Agent in its reasonable discretion): (a) a mortgagee
title policy (or binder therefor) covering Agent’s interest under the Mortgage, in a form
and amount and by an insurer reasonably acceptable to Agent, which must be fully paid on
such effective date; (b) such assignments of leases, rents, estoppel letters, attornment
agreements, consents, waivers and releases as Agent may require with respect to other
Persons having an interest in the Real Estate; (c) a current, as-built survey of the Real
Estate, containing a metes-and-bounds property description and flood plain certification,
and certified by a licensed surveyor reasonably acceptable to Agent; (d) flood insurance in
an amount, with endorsements and by an insurer reasonably acceptable to Agent, if the Real
Estate is within a flood plain; (e) a current appraisal of the Real Estate, prepared by an
appraiser reasonably acceptable to Agent, and in form and substance satisfactory to Required
Lenders; (f) a Phase I (and to the extent appropriate, Phase II) environmental assessment
report, prepared by an environmental consulting firm reasonably satisfactory to Agent, and
accompanied by such reports, certificates, studies or data as Agent may reasonably require,
which shall all be in form and substance reasonably satisfactory to Agent; and (g) an
Environmental Agreement and such other documents, instruments or agreements as Agent may
reasonably require with respect to any environmental risks regarding the Real Estate.




Rent and Charges Reserve — the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic,
shipper, freight forwarder or other Person who possesses any Collateral or could assert a
Lien on any Collateral; and (b) a reserve at least equal to three months rent and other
charges that could be payable to any such Person, unless it has executed a Lien Waiver.




Report — as defined in Section 12.2.3.




Reportable Event — any event set forth in Section 4043(b) of ERISA.




Required Lenders — Lenders (subject to Section 4.2) having (a) Commitments in
excess of 50% of the aggregate Commitments; and (b) if the Commitments have terminated,
Loans and LC Obligations in excess of 50% of all outstanding Loans and LC Obligations;
provided that the unused Commitments of, and the portion of the Loans and LC
Obligations held or deemed held by, (i) any Defaulting Lender or (ii) any Second Lien Agent,
Second Lien Lender or Second Lien Affiliate, in each case, shall be excluded for purposes of
making a determination of Required Lenders.




Reserve Percentage — the reserve percentage (expressed as a decimal, rounded
upward to the nearest 1/8th of 1%) applicable to member banks under regulations issued from
time to time by the Board of Governors for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).


 


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Restricted Investment — any Investment by Parent or a Subsidiary, other than
(a) (i) Investments in Subsidiaries to the extent existing on the Closing Date and (ii)
Investments in any Borrower or Guarantor; (b) Cash Equivalents that are subject to Agent’s
Lien and control, pursuant to documentation in form and substance reasonably satisfactory to
Agent; (c) loans and advances permitted under Section 10.2.7, (d) investments held by the
Obligors comprised of notes payable, or stock or other securities issued by Account Debtors
to any Obligor pursuant to negotiated agreements with respect to settlement of such Account
Debtor’s Accounts in the ordinary course of business consistent with past practice, (e) any
Investment made as a result of the receipt of non-cash consideration from an Permitted Asset
Disposition, (f) Investments evidenced by Hedging Agreements which are otherwise permitted
to be entered into pursuant to
Section 10.2.15, (g) stock, obligations or securities received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business or received in
satisfaction of judgment, (h) advances to customers or suppliers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable, prepaid
expenses or deposits on the balance sheet of any Obligor and endorsements for collection or
deposit arising in the ordinary course of business, (i) commission, payroll, travel and
similar advances to officers and employees of any Obligor so long as such advances are
otherwise permitted under Section 10.2.7, (j) Investments consisting of the licensing or
contribution of Intellectual Property in the ordinary course of business, (k) Permitted
Acquisitions, (l) Investments described on Schedule 1.1(b) and modifications and
replacements thereof so long as the amount of such Investment does not increase, (m)
Investments resulting from deposits referred to herein in Sections 10.2.2(e), (m) and (p),
and other deposits made in the ordinary course of business securing obligations or
performance under real estate or personal property leases, (n) other Investments (not
constituting the acquisition of all or substantially all of the assets of, or the Equity
Interests of, or a business line or unit or a division of, any Person) made within 180 days
of an equity issuance and made solely with the cash proceeds of such equity issuance in an
aggregate amount not to exceed the Available Basket Amount then in effect so long as (i) no
Default or Event of Default shall have occurred and be continuing immediately prior to
making such Investment and after giving effect thereto and (ii) Excess Availability on the
date of the making of such Investment on a pro forma basis after giving effect to such
Investment, and projected Excess Availability on a pro forma basis for the upcoming twelve
month period (after giving effect to such Investment) is, in each case, greater than or
equal to 20% of the lesser of (A) the Tranche A Revolver Commitments, plus the
Tranche A-1 Revolver Commitments or (B) the Tranche A Borrowing Base, plus the
Tranche A-1 Borrowing Base and (o) Investments in any Subsidiary that is not an Obligor in
an amount not to exceed $1,000,000 at any time outstanding.




Restrictive Agreement — an agreement (other than a Loan Document) that
conditions or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money, to grant Liens on any assets, to declare or make Distributions, to
modify, extend or renew any agreement evidencing Borrowed Money, or to repay any
intercompany Debt.




S&P — Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.




Sarbanes-Oxley — the Sarbanes-Oxley Act of 2002, as amended and in effect.




Second Lien Affiliate — with respect to any Second Lien Lender or the Second
Lien Agent, another Person who directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Second Lien Lender or the
Second Lien Agent, as the case may be.




Second Lien Agent — the administrative and/or collateral agent, as applicable,
for the Second Lien Debt under the Second Lien Loan Documents, and its successors and
permitted assigns in such capacity.




Second Lien Debt — the Debt under the Second Lien Loan Documents and any
Refinancing Debt thereof which satisfies the Refinancing Conditions.




Second Lien Lenders — the lenders under the Second Lien Loan Documents, and
their successors and permitted assigns.



 


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Second Lien Loan Agreement — the loan agreement, dated as of November 18, 2009,
by and among the Borrowers, the Guarantors, the Second Lien Agent, the Second Lien Lenders
and each other party thereto, in form and substance reasonably satisfactory to the Agent, as
it may be amended, restated, supplemented, modified, renewed, replaced or Refinanced in
whole or in part from time to time and any other agreement extending the maturity of,
consolidating, otherwise restructuring, renewing, replacing or Refinancing all or any
portion of the Second Lien Debt or all or any portion of the amounts owed under any other
agreement that itself is the Second Lien Loan Agreement hereunder and whether by the same or
any other agent, lender or group of lenders and whether or not increasing the amount of
Second Lien Debt that may be incurred thereunder, in each case in a manner not inconsistent
with this Loan Agreement and the Intercreditor Agreement.




Second Lien Loan Documents — collectively, the Second Lien Loan Agreement and
each of the other documents (including, without limitation, all guaranties and security
documents), agreements, instruments, filings and certificates from time to time executed in
favor of the Second Lien Agent and/or the Second Lien Lenders, in each case, (x) with
respect to such documents as in effect on the date of issuance of the Second Lien Debt, in
form and substance reasonably satisfactory to the Agent and (y) with respect to such
documents in effect after such date, as any of the same may be amended, restated,
supplemented, modified, renewed, replaced or Refinanced in whole or in part from time to
time, in each case in a manner not inconsistent with the Intercreditor Agreement.




Securities Laws — the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards
and practices promulgated, approved or incorporated by the SEC or the Public Company
Accounting Oversight Board, as each of the foregoing may be amended and in effect on any
applicable date hereunder.




Secured Parties — Agent, Co-Collateral Agents, Issuing Banks, Lenders and
providers of Bank Products.




Security Documents — this Loan Agreement, Pledge Agreements, Mortgages,
Trademark Security Agreements, the Copyright Security Agreements, the Account Control
Agreements and all other documents, instruments and agreements now or hereafter securing (or
given with the intent to secure) any Obligations.




Senior Note Debt — the unsecured Debt of Bon-Ton in an aggregate principal
amount not to exceed $510,000,000, represented by the Senior Note Debt Documents.




Senior Note Debt Documents — the Senior Note Indenture, the 10.25% senior notes
issued by the Parent in connection therewith, and all other instruments and documents from
time to time executed in favor of all or any of the holders of the Senior Note Debt, as any
of the same may be amended, restated, supplemented, modified, renewed, replaced or
Refinanced in whole or in part from time to time, in each case in a manner not inconsistent
with the Loan Documents.




Senior Note Indenture — the Senior Note Indenture, dated as of March 6, 2006,
by and among Bon-Ton and The Bank of New York, as trustee, as it may be amended, restated,
supplemented, modified, renewed, replaced or Refinanced in whole or in part from time to
time and any other agreement extending the maturity of, consolidating, otherwise renewing,
replacing or Refinancing all or any portion of the Debt under the Senior Note Debt Documents
or all or any portion of the amounts owed under any other agreement that itself is the
Senior Note Indenture hereunder and whether by the same or any other agent, lender or group
of lenders and whether or not increasing the amount of Debt under the Senior Note Debt
Documents that may be incurred thereunder, in each case in a manner not inconsistent with
the Loan Documents.


 


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Senior Officer — the chairman of the board, president, chief executive officer,
treasurer, member manager or chief financial officer of a Borrower or, if the context
requires, an Obligor.




Settlement Report — a report delivered by Agent to Lenders summarizing the
Loans and participations in LC Obligations outstanding as of a given settlement date,
allocated to Lenders on a Pro Rata basis in accordance with their Commitments.




Software — as defined in the UCC.




Solvent — as to any Person, such Person (a) owns Property whose Fair Salable
Value is greater than the amount required to pay all of its debts (including contingent,
subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present Fair
Salable Value (as defined below) is greater than the probable total liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they
become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has
capital that is not unreasonably small for its business and is sufficient to carry on its
business and transactions and all business and transactions in which it is about to engage;
(e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f)
has not incurred (by way of assumption or otherwise) any obligations or liabilities
(contingent or otherwise) under any Loan Documents, or made any conveyance in connection
therewith, with actual intent to hinder, delay or defraud either present or future creditors
of such Person or any of its Affiliates. “Fair Salable Value” means the amount that
could be obtained for assets within a reasonable time, either through collection or through
sale under ordinary selling conditions by a capable and diligent seller to an interested
buyer who is willing (but under no compulsion) to purchase. For the purposes of this
definition, any right of contribution of such Person existing by law, contract or otherwise
shall be deemed an asset of such Person.




SPE — collectively, Bonstores Realty One, LLC, a Delaware limited liability
company (“BROLLC”); Bonstores Holdings One, LLC, a Delaware limited liability
company and the sole member of BROLLC; Bonstores Realty Two, LLC, a Delaware limited
liability company (“BRTLLC”); and Bonstores Holdings Two, LLC, a Delaware limited
liability company and the sole member of BRTLLC, each a special purpose entity and a
borrower of the Mortgage Loan Debt.




Statutory Reserves — the percentage (expressed as a decimal) established by the
Board of Governors as the then stated maximum rate for all reserves (including those imposed
by Regulation D of the Board of Governors, all basic, emergency, supplemental or other
marginal reserve requirements, and any transitional adjustments or other scheduled changes
in reserve requirements) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency Liabilities (or any successor category of liabilities under
Regulation D).




Store — any retail department store operated by the Parent or any of its
Subsidiaries.




Subsidiary — any entity at least 50% of whose voting securities or Equity
Interests is owned by any Obligor or any combination of Obligors (including indirect
ownership by an Obligor through other entities in which such Obligor directly or indirectly
owns 50% of the voting securities or Equity Interests).




Supermajority Lenders — Lenders (subject to Section 4.2) having (a) Commitments
in excess of 75% of the aggregate Commitments; and (b) if the Commitments have terminated,
Loans and LC Obligations in excess of 75% of all outstanding Loans and LC Obligations;
provided that the unused Commitments of, and the portion of the Loans and LC
Obligations held or deemed held by, (i) any Defaulting Lender or (ii) any Second Lien Agent,
Second Lien Lender
or Second Lien Affiliate, in each case, shall be excluded for purposes of making a
determination of Supermajority Lenders.


 


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Supporting Obligation — as defined in the UCC.




Swingline Loan — any Borrowing of Base Rate Tranche A Revolver Loans funded
with Agent’s funds, until such Borrowing is settled among Lenders pursuant to Section 4.1.3.




Taxes — any taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature, including income, receipts, excise,
property, sales, use, transfer, license, payroll, withholding, social security, franchise,
intangibles, stamp or recording taxes imposed by any Governmental Authority, and all
interest, penalties and similar liabilities relating thereto.




Termination Date — June 4, 2013.




Total Facility Usage Ratio — with respect to the Borrowers for any period, the
percentage derived by dividing (a) the sum of, without duplication, (x) the average daily
principal balance of all Loans during such period plus (y) the average daily undrawn
amount of all outstanding Letters of Credit during such period by (b) the average daily
amount of the Commitments during such period.




Total Stores — as to any date of determination, an amount equal to the sum of
(x) the aggregate number of Stores open on the Closing Date plus (y) the aggregate
number of Stores acquired or opened through such date of determination.




Trademark Security Agreements — each trademark collateral security and pledge
agreement or other trademark security agreement pursuant to which an Obligor grants to
Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in trademarks,
as security for the Obligations.




Tranche A Borrowing Base — on any date of determination, an amount equal to the
lesser of (a) the aggregate amount of Tranche A Revolver Commitments, minus the LC
Reserve and (b) the sum of (i) the Tranche A Inventory Formula Amount, plus (ii) the
Tranche A Fixed Asset Availability Amount, plus (iii) the Tranche A Credit Card
Receivables Amount minus (iv) the Availability Reserve, minus (v) the LC
Reserve.




Tranche A Credit Card Receivables Amount — 90% of the book value of Eligible
Credit Card Accounts.




Tranche A Excess Availability — determined as of any date, the amount that
Borrowers are entitled to borrow as Tranche A Revolver Loans, being the Tranche A Borrowing
Base minus the principal balance of all Tranche A Revolver Loans.




Tranche A Fixed Asset Availability Amount — the lesser of (x) $65,000,000
minus the Tranche A-1 Real Estate Amount and (y) Tranche A Real Estate Amount.




Tranche A Inventory Formula Amount — 85% of the NRV Percentage of the Value of
Eligible Inventory.




Tranche A Lenders — the Lenders indicated on Schedule 1.1(a) as Lenders of
Tranche A Revolver Loans, Agent in its capacity as a provider of Swingline Loans and any
other Person who hereafter becomes a “Tranche A Lender” pursuant to an Assignment and
Assumption Agreement.


 


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Tranche A Overadvance — as defined in Section 2.1.4.




Tranche A Real Estate Amount — at any date of determination, 50% (or 40% at all
times on and after December 31, 2010) of the Appraised Value of Eligible Real Estate.




Tranche A Revolver Commitment — for any Tranche A Lender, its obligation to
make Tranche A Revolver Loans and to participate in LC Obligations up to the maximum
principal amount shown on Schedule 1.1(a), or as specified hereafter in the most recent
Assignment and Assumption Agreement to which it is a party. “Tranche A Revolver
Commitments” means the aggregate amount of such commitments of all Lenders. On the
Closing Date, the Tranche A Revolver Commitments are $625,000,000.




Tranche A Revolver Loan — (a) a Loan made pursuant to Section 2.1.1(a), (b) any
Swingline Loan, (c) any Overadvance Loan deemed by Agent to be a Tranche A Revolver Loan or
(d) any Protective Advance deemed by Agent to be a Tranche A Revolver Loan.




Tranche A Revolver Note — a promissory note to be executed by Borrowers in
favor of a Lender in the form of Exhibit A, which shall be in the amount of such Lender’s
Tranche A Revolver Commitment and shall evidence the Tranche A Revolver Loans made by such
Lender.




Tranche A-1 Borrowing Base — on any date of determination, an amount equal to
the lesser of (a) the aggregate amount of Tranche A-1 Revolver Commitments and (b) the sum
of (i) the Tranche A-1 Inventory Formula Amount, plus (ii) the Tranche A-1 Real
Estate Amount, minus (iii) the Availability Reserve (to the extent the Availability
Reserve is not deducted from the Tranche A Borrowing Base).




Tranche A-1 Excess Availability — determined as of any date, the amount that
Borrowers are entitled to borrow as Tranche A-1 Revolver Loans, being the Tranche A-1
Borrowing Base minus the principal balance of all Tranche A-1 Revolver Loans.




Tranche A-1 Inventory Formula Amount — on any date of determination, the
Tranche A-1 Inventory Advance Percentage of the NRV Percentage of the Value of Eligible
Inventory.




Tranche A-1 Inventory Advance Percentage — (a) at all times prior to December
31, 2009, 10%, (b) from and after December 31, 2009 through and including October 30, 2010,
7.50%, (c) from and after October 31, 2010 through and including November 29, 2010, 6.50%,
(d) from and after November 30, 2010 through and including December 30, 2010, 5.50% and (e)
from December 31, 2010 and at all times thereafter, 5.00%. If any date on which the Tranche
A-1 Inventory Advance Percentage is to be adjusted is not a Business Day, then the Tranche
A-1 Inventory Advance Percentage shall be adjusted on the Business Day next succeeding such
day.




Tranche A-1 Lenders — the Lenders indicated on Schedule 1.1(a) as Lenders of
Tranche A-1 Revolver Loans and any other Person who hereafter becomes a “Tranche A-1 Lender”
pursuant to an Assignment and Assumption Agreement.




Tranche A-1 Overadvance — as defined in Section 2.1.4.




Tranche A-1 Real Estate Amount — at any date of determination, 10% of the
Appraised Value of Eligible Real Estate.




Tranche A-1 Revolver Commitment — for any Lender, its obligation to make
Tranche A-1 Revolver Loans up to the maximum principal amount shown on Schedule 1.1(a), or
as specified hereafter in the most recent Assignment and Assumption Agreement to which it is
a party. “Tranche A-1 Revolver Commitments” means the aggregate amount of such
commitments of all
Lenders. On the Closing Date, the Tranche A-1 Revolver Commitments are $50,000,000.


 


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Tranche A-1 Revolver Loan — (a) a Loan made pursuant to Section 2.1.1(b), (b)
any Overadvance Loan deemed by Agent to be a Tranche A-1 Revolver Loan or (c) any Protective
Advance deemed by Agent to be Tranche A-1 Revolver Loan.




Tranche A-1 Revolver Note — a promissory note to be executed by Borrowers in
favor of a Lender in the form of Exhibit B, which shall be in the amount of such Lender’s
Tranche A-1 Revolver Commitment and shall evidence the Tranche A-1 Revolver Loans made by
such Lender.




Transferee — any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.




Trigger Event — any date on which (a) an Event of Default occurs or (b) an
Excess Availability Trigger Event occurs.




Trigger Event Period — any period (a) commencing upon the occurrence of a
Trigger Event and (ii) ending on a Trigger Event Termination Date.




Trigger Event Termination Date — any date during a Trigger Event Period on
which (a) with respect to a Trigger Event resulting from the occurrence of an Event of
Default, all Events of Default have been waived or remedied in accordance with the terms of
the Loan Documents or (b) with respect to an Excess Availability Trigger Event, Excess
Availability for a period of ninety (90) consecutive calendar days exceeds the greater of
(i) $90,000,000 or (ii) 17.5% of the lesser of (x) the Tranche A Revolver Commitments,
plus the Tranche A-1 Revolver Commitments or (y) the Tranche A Borrowing Base,
plus the Tranche A-1 Borrowing Base; provided, however, that in no
event shall a Trigger Event Termination Date be deemed to have occurred (and a Trigger Event
Period may not end) more than two (2) times during any period of twelve (12) consecutive
months.




Type — any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the
same interest option and, in the case of LIBOR Loans, the same Interest Period.




UCC — the Uniform Commercial Code as in effect in the State of New York or,
when the laws of any other jurisdiction govern the perfection or enforcement of any Lien,
the Uniform Commercial Code of such jurisdiction.




Unused Line Fee Rate — for any Fiscal Quarter, the applicable percentage per
annum set forth below determined by reference to the Total Facility Usage Ratio for the
prior Fiscal Quarter:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total Facility Usage	 	 	 
	Level	 	 	Ratio	 	Unused Fee	 
	I	 	 	Greater than or equal to 66%
	 	 	0.50	%
	II	 	Greater than 33% but less than 66%
	 	 	0.75	%
	III	 	Less than or equal to 33%
	 	 	1.00	%






 


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Prior to the beginning of the first full Fiscal Quarter after the Closing Date, the
Unused Line Fee Rate shall be determined as if Level II were applicable. Thereafter, the
Unused Line Fee Rate shall be subject to increase or decrease on a Fiscal Quarter basis.
Not more than ten (10) Business Days after the first day of each Fiscal Quarter, the Agent
shall determine the Unused Line Fee Rate for such Fiscal Quarter (which shall be effective
as of the first Business Day of such Fiscal Quarter) based on the Total Facility Usage Ratio
for the prior Fiscal Quarter.




Upstream Payment — a Distribution by a Subsidiary or any Obligor to any
Obligor.




Value — for Inventory, its value determined on the basis of the lower of cost
or market, calculated on a first-in, first-out basis.




Voting Stock — of any Person as of any date means the capital stock of such
Person that is at the time entitled to vote in the election of the Board of Directors of
such Person.




Wells Fargo — Wells Fargo Retail Finance, LLC.



1.2. Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting determinations shall be made,
and all financial statements shall be prepared, in accordance with GAAP applied on a basis
consistent with the most recent audited financial statements of Parent delivered to Agent before
the Closing Date and using the same inventory valuation method as used in such financial
statements, except for any change required or permitted by GAAP if Parent and Borrowers’ certified
public accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is
amended in a manner that preserves the original intent thereof in light of such change in GAAP.



1.3. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder” and
other words of similar import refer to this Loan Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the
computation of periods of time from a specified date to a later specified date, “from” means “from
and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each Loan Document, the
parties agree that the rule of ejusdem generis shall not be applicable to limit any provision.
Section titles appear as a matter of convenience only and shall not affect the interpretation of
any Loan Document. All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document, instrument or agreement
include any amendments, waivers and other modifications, extensions or renewals (to the extent
permitted by the Loan Documents); (c) any section means, unless the context otherwise requires, a
section of this Loan Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e)
any Person include successors and assigns; (f) time of day means time of day at Agent’s notice
address under Section 14.3.1; or (g) discretion of Agent, Issuing Bank or any Lender means the sole
and absolute discretion of such Person. All calculations of Value, fundings of Loans, issuances of
Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise
requires, all determinations (including calculations of Tranche A Borrowing Base, Tranche A-1
Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be
made in light of the circumstances existing at such time. Tranche A Borrowing Base and Tranche A-1
Borrowing Base calculations shall be consistent with historical methods of valuation and
calculation, and otherwise reasonably satisfactory to Agent (and not necessarily calculated in
accordance with GAAP). Borrowers shall have the burden of establishing any alleged negligence,
misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents. No
provision of any Loan Documents shall be construed against any party by reason of such party
having, or being deemed to
have, drafted the provision. Whenever the phrase “to the best of Borrowers’ knowledge” or
words of similar import are used in any Loan Documents, it means actual knowledge of a Senior
Officer.




 


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1.4. Letter of Credit Amounts. Unless otherwise specified herein, the amount of a
Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in
effect at such time; provided, however, that with respect to any Letter of Credit
that by its terms provides for one or more automatic increases in the stated amount thereof, the
amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of
Credit after giving effect to all such increases, whether or not such maximum stated amount is in
effect at such time.



1.5. Certifications. All certifications and other statements made by any officer,
director or employee of an Obligor pursuant to any Loan Document are and will be made on the behalf
of such Obligor and not in such officer’s, director’s or employee’s individual capacity.



1.6. Times of Day. Unless otherwise specified, all references herein to times of day
shall be references to Eastern time (daylight or standard, as applicable).



SECTION 2. CREDIT FACILITIES




2.1. Commitment.



2.1.1. Loans. (a) Tranche A Revolver Loans. Each Tranche A Lender agrees,
severally on a Pro Rata basis up to its Tranche A Revolver Commitment, on the terms set forth
herein, to make Tranche A Revolver Loans to Borrowers from time to time through the Commitment
Termination Date. The Tranche A Revolver Loans may be repaid and reborrowed as provided herein.
The Borrowers shall not request, and the Tranche A Lenders shall not advance any Tranche A Revolver
Loans (other than (i) Swingline Loans as provided in Section 4.1.3 and (ii) Tranche A Revolver
Loans used to reimburse a draw on a Letter of Credit as provided in Section 2.3.2) at any time when
there exists any Tranche A-1 Excess Availability. Other than as set forth in Section 2.1.4 and in
Section 2.1.5, the Tranche A Lenders shall not have any obligation to honor a request for a Tranche
A Revolver Loan if (i) the unpaid balance of Tranche A Revolver Loans outstanding at such time
(including the requested Tranche A Revolver Loan) would exceed the Tranche A Borrowing Base or (ii)
the unpaid balance of all Loans outstanding at such time (including the requested Loan) would
exceed Excess Availability.



(b) Tranche A-1 Revolver Loans. Each Tranche A-1 Lender agrees, severally on a Pro
Rata basis up to its Tranche A-1 Revolver Commitment, on the terms set forth herein, to make
Tranche A-1 Revolver Loans to Borrowers from time to time through the Commitment Termination Date.
The Tranche A-1 Revolver Loans may be repaid and reborrowed as provided herein. In no event shall
the Tranche A-1 Lenders have any obligation to honor a request for a Tranche A-1 Revolver Loan if
(i) the unpaid balance of Tranche A-1 Revolver Loans outstanding at such time (including the
requested Tranche A-1 Revolver Loan) would exceed the Tranche A-1 Borrowing Base or (ii) the unpaid
balance of all Loans outstanding at such time (including the requested Loan) would exceed Excess
Availability. The credit facility provided under the Tranche A-1 Revolver Commitments hereunder is
funded on a first-in basis and repaid on a last-out basis, all as provided herein.



(c) Tranche A Borrowing Base and Tranche A-1 Borrowing Base. The Tranche A Borrowing
Base and the Tranche A-1 Borrowing Base shall be determined from time to time by Agent by reference
to the most recent Borrowing Base Certificate delivered by the Borrowers. The Agent may from time
to time establish and modify the Availability Reserve.



2.1.2. Notes. The Loans made by each Lender and interest accruing thereon shall be
evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall
deliver a Tranche A Revolver Note and/or a Tranche A-1 Revolver Note, as applicable, to such
Lender.


 


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2.1.3. Use of Proceeds. The proceeds of Loans shall be used by Borrowers solely (a)
to satisfy existing Debt and other obligations under the Existing Credit Agreement and the related
documents; (b) to pay fees and transaction expenses associated with the closing of this credit
facility; (c) to pay Obligations in accordance with this Loan Agreement; and (d) for working
capital and other lawful corporate purposes of the Obligors and their Subsidiaries, which purposes
shall include, without limitation, the making of loans to Affiliates of the Borrowers, capital
expenditures, acquisitions and distributions, so long as each of the foregoing does not violate the
terms of this Loan Agreement.



2.1.4. Overadvances. If the aggregate Tranche A Revolver Loans exceed the Tranche A
Borrowing Base (“Tranche A Overadvance”) at any time, the excess amount shall be payable by
Borrowers on demand by Agent or the Required Lenders, but all such Loans shall nevertheless
constitute Obligations secured by the Collateral and entitled to all benefits of the Loan
Documents. If the aggregate Tranche A-1 Revolver Loans exceed the Tranche A-1 Borrowing Base
(“Tranche A-1 Overadvance”) at any time, the excess amount shall be, so long as there are
no Tranche A Revolver Loans and no Letters of Credit outstanding, payable by Borrowers on demand by
Agent or the Required Lenders, but all such Loans shall nevertheless constitute Obligations secured
by the Collateral and entitled to all benefits of the Loan Documents. Unless its authority has
been revoked in writing by Required Lenders, Agent may require the Tranche A Lenders to honor
requests for Overadvance Loans and to forbear from requiring Borrowers to cure a Tranche A
Overadvance so long as, at the time of the making of a Tranche A Overadvance (a) Overadvance Loans
have not been outstanding for more than ninety (90) total days in the preceding 365 day period and
(b) the aggregate amount of all Overadvance Loans and Protective Advances are not known by Agent to
exceed 5% of the Tranche A Borrowing Base plus 5% of the Tranche A-1 Borrowing Base. In no
event shall Overadvance Loans be required that would cause (x) the outstanding Loans and LC
Obligations to exceed the aggregate Commitments or (y) the outstanding Tranche A Revolver Loans and
LC Obligations to exceed the Tranche A Revolver Commitments. Any funding of an Overadvance Loan or
sufferance of a Tranche A Overadvance shall not constitute a waiver by Agent or Lenders of the
Event of Default caused thereby. Overadvance Loans shall be funded as Base Rate Tranche A Revolver
Loans. In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section nor
authorized to enforce any of its terms. Each Tranche A Lender shall participate in each
Overadvance Loan on a Pro Rata basis.



2.1.5. Protective Advances. Agent shall be authorized, in its discretion, at any time
that a Default or Event of Default exists or any conditions in Section 6.2 are not satisfied to
make Loans (“Protective Advances”) (so long as at the time of the making of any Protective
Advance, Protective Advances which constitute Overadvance Loans have not been outstanding for more
than ninety (90) total days in the preceding 365 day period) up to an aggregate amount equal to (i)
5% of the Tranche A Borrowing Base plus 5% of the Tranche A-1 Borrowing Base minus
(ii) the aggregate amount of all Overadvance Loans, if Agent deems such Loans necessary or
desirable to (a) preserve or protect any Collateral, or to enhance the collectibility or repayment
of Obligations; or (b) pay any other amounts chargeable to Obligors under any Loan Documents,
including costs, fees and expenses. All Protective Advances shall be Obligations, secured by the
Collateral, and shall be treated for all purposes as Extraordinary Expenses. Protective Advances
shall be funded as Base Rate Tranche A Revolver Loans. Each Tranche A Lender shall participate in
each Protective Advance on a Pro Rata basis. In no event shall Protective Advances be made where
the making of such Protective Advances would cause (x) the outstanding Loans and LC Obligations to
exceed the aggregate Commitments or (y) the outstanding Tranche A Revolver Loans and LC Obligations
to exceed the Tranche A Revolver Commitments then in effect.


 


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2.2. Voluntary Reduction or Termination of Commitments.




2.2.1. Voluntary Reduction or Termination of Tranche A Revolver Commitments.



(a) The Tranche A Revolver Commitments shall terminate on the Termination Date, unless sooner
terminated in accordance with this Loan Agreement. Upon at least 5 Business Days prior written
notice to Agent at any time, Borrowers may, at their option, terminate the Tranche A Revolver
Commitments. Any notice of termination given by Borrowers shall be irrevocable unless such
notice is conditioned upon the effectiveness of other financing arrangements in which case such
notice may be revoked if such condition is not satisfied. On the termination date specified in
such notice of termination, Borrowers shall make payment in full, in cash, of Tranche A Revolver
Loans and all interest thereon and all Obligations due and owing to the Agent or any Tranche A
Lender, in its capacity as a Tranche A Lender.



(b) Borrowers may permanently reduce the Tranche A Revolver Commitments, on a Pro Rata basis
for each Tranche A Lender, from time to time upon written notice to Agent, which notice shall
specify the amount of the reduction, shall be irrevocable once given unless such notice is
conditioned upon the effectiveness of other financing arrangements in which case such notice may be
revoked if such condition is not satisfied and shall be given at least 5 Business Days prior to the
requested reduction date. Each reduction shall be in a minimum amount of $10,000,000, or an
increment of $1,000,000 in excess thereof. In connection with any reduction of the Tranche A
Revolver Commitments, the Borrowers shall prepay the Tranche A Revolver Loans and Cash
Collateralize Letters of Credit in an amount sufficient to cause the outstanding Tranche A Revolver
Loans and Letters of Credit to not exceed the Tranche A Revolver Commitments then in effect.




2.2.2. Voluntary Reduction or Termination of Tranche A-1 Revolver Commitments.



(a) The Tranche A-1 Revolver Commitments shall terminate on the Termination Date, unless
sooner terminated in accordance with this Loan Agreement. Upon at least 5 Business Days prior
written notice to Agent, Borrowers may, at their option, terminate the Tranche A-1 Revolver
Commitments so long as the Borrower has (i) certified in writing (pursuant to a certificate signed
on its behalf by a Senior Officer) that there are no Tranche A Revolver Loans or LC Obligations
outstanding as of the date of such notice or the date of such termination, (ii) certified in
writing that Tranche A Excess Availability is greater than or equal to twenty-five percent (25%) of
the Tranche A Borrowing Base, (iii) certified in writing that no Default or Event of Default exists
or would result from such termination and (iv) has provided Agent with a Borrowing Base
Certificate, in form and substance reasonably satisfactory to Agent, demonstrating that average
Tranche A Excess Availability for the twelve-month period following such termination, calculated on
a pro forma basis after giving effect to such termination, will be greater than or equal to
twenty-five percent (25%) of the Tranche A Borrowing Base. Any notice of termination given by
Borrowers shall be irrevocable unless such notice is conditioned upon the effectiveness of other
financing arrangements in which case such notice may be revoked if such condition is not satisfied.
On the termination date specified in such notice of termination, Borrowers shall make payment in
full, in cash of Tranche A-1 Revolver Loans and all interest thereon and all Obligations due and
owing to the Agent or any Tranche A-1 Lender, in its capacity as a Tranche A-1 Lender.



(b) Borrowers may permanently reduce the Tranche A-1 Revolver Commitments, on a Pro Rata basis
for each Tranche A-1 Lender, upon at least 5 Business Days prior written notice to Agent, so long
as a Senior Officer of the Borrower has (i) certified in writing that there are no Tranche A
Revolver Loans or LC Obligations outstanding as of the date of such notice or the date of such
reduction, (ii) certified in writing that Tranche A Excess Availability is greater than or equal to
twenty-five percent (25%) of the Tranche A Borrowing Base, (iii) certified in writing that no
Default or Event of Default exists or would result from such reduction and (iv) has provided Agent
with a Borrowing Base Certificate, in form and substance reasonably satisfactory to Agent,
demonstrating that average Tranche A Excess Availability for the twelve-month period following such
reduction, calculated on a pro forma basis after giving effect to such reduction, will be greater
than or equal to twenty-five percent (25%) of the Tranche A Borrowing Base. Any such notice of
reduction shall specify the amount of the reduction, shall be irrevocable once given unless such
notice is conditioned upon the effectiveness of other financing arrangements in which case such
notice may be revoked if such condition is not satisfied, shall be given at least five Business
Days prior to the requested reduction date. Each reduction shall be in a minimum amount of
$5,000,000, or an increment of $1,000,000 in excess thereof. In connection with any reduction
of the Tranche A-1 Revolver Commitments, the Borrowers shall prepay the Tranche A-1 Revolver
Loans in an amount sufficient to cause the outstanding Tranche A-1 Revolver Loans to not exceed the
Tranche A-1 Revolver Commitments then in effect.


 


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2.3. Letter of Credit Facility.



2.3.1. Issuance of Letters of Credit. Issuing Bank agrees, in reliance upon the
agreements of the Lenders set forth in this Section 2.3, to issue or cause the issuance of Letters
of Credit from time to time until five (5) Business Days prior to the Termination Date (or until
the date of termination of the Tranche A Revolver Commitments, if earlier), on the terms set forth
herein, including the following:



(a) Each Borrower acknowledges that Issuing Bank’s willingness to issue or cause the issuance
of any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with respect
to the requested Letter of Credit, as well as such other instruments and agreements as Issuing Bank
may customarily require for issuance of a letter of credit of similar type and amount. Issuing
Bank shall have no obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC
Request and LC Application not later than 11:00 a.m. at least three Business Days prior to the
requested date of issuance; and (ii) each LC Condition is satisfied. If Issuing Bank receives
written notice from a Tranche A Lender at least one Business Day before issuance of a Letter of
Credit that any LC Condition has not been satisfied, Issuing Bank shall have no obligation to issue
the requested Letter of Credit (or any other) until such LC Condition is satisfied or until
Required Lenders have waived such condition in accordance with this Loan Agreement. Prior to
receipt of any such notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC
Conditions. No Issuing Bank shall be under any obligation to issue any Letter of Credit if (i) any
order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to
enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any law applicable to
such Issuing Bank or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that
such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank
any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such
Issuing Bank in good faith deems material to it, (ii) the issuance of such Letter of Credit would
violate one or more policies of such Issuing Bank applicable to letters of credit generally or
(iii) any Lender is at such time an Impacted Lender, unless such Issuing Bank has entered into
arrangements satisfactory to such Issuing Bank with the Borrowers or such Impacted Lender to
eliminate such Issuing Bank’s risk with respect to such Impacted Lender.



(b) Letters of Credit may be requested by a Borrower only (i) to support obligations of such
Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent and
Lenders may approve from time to time in writing. The renewal or extension of any Letter of Credit
shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC
Application shall be required at the discretion of Issuing Bank.


 


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(c) Borrowers assume all risks of the acts, omissions or misuses of any Letter of Credit by
the beneficiary. In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank
or any Lender shall be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition, packing, value or delivery
of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Documents or of any endorsements thereon; the time, place,
manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions,
delay, default or fraud by any shipper or other Person in
connection with any goods, shipment or delivery; any breach of contract between a shipper or
vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or
the proceeds thereof; or any consequences arising from causes beyond the control of Issuing Bank,
Agent or any Lender, including any act or omission of a Governmental Authority. The rights and
remedies of Issuing Bank under the Loan Documents shall be cumulative. Issuing Bank shall be fully
subrogated to the rights and remedies of each beneficiary whose claims against Borrowers are
discharged with proceeds of any Letter of Credit.



(d) In connection with its administration of and enforcement of rights or remedies under any
Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully
protected in acting, upon any certification, notice or other communication in whatever form
believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or
made by a proper Person. Issuing Bank may consult with and employ legal counsel, accountants and
other experts to advise it concerning its obligations, rights and remedies, and shall be entitled
to act upon, and shall be fully protected in any action taken in good faith reliance upon, any
advice given by such experts. Issuing Bank may employ agents and attorneys-in-fact in connection
with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the
negligence or misconduct of any such agents or attorneys-in-fact selected with reasonable care.



(e) Agent shall have no obligation to approve any request for a commercial Letter of Credit
for the purchase of finished goods unless each of the following documents are required as
conditions to any draw thereon, and for such commercial Letter of Credit to constitute an Eligible
Trade L/C, such documents being in the possession of Agent (either directly or through its agent)
must be conditions to any draw thereon (except that Agent may waive any one or more of the
following conditions):




(i) the original Eligible Trade L/C, if only one draw is permitted thereunder or if
multiple draws are permitted and the subject draw is the final draw thereunder;




(ii) an inspection certificate in form reasonably acceptable to Agent, in its
discretion, executed by a Borrower’s employee or agent at the point of origin of the
finished goods;




(iii) a commercial invoice with respect to the purchase order(s) against which such
finished goods are being delivered and a packaging list with respect to such goods;




(iv) a non-negotiable ocean bill of lading, freight forwarders cargo receipt, a house
bill of lading or a copy of an airway bill of lading issued by an Approved Shipper with
respect to the finished goods being shipped and providing for the delivery thereof to a
Borrower; and




(v) a certificate of origin or other documents of title with respect to such Inventory.



(f) The parties hereto agree that each outstanding letter of credit described on Schedule
2.3.2 shall be deemed to be a Letter of Credit issued pursuant to this Loan Agreement.



(g) Promptly after receipt of any LC Application, the Issuing Bank will confirm with the Agent
(by telephone or in writing) that the Agent has received a copy of such LC Application from the
Borrowers and, if not, the Issuing Bank will, upon the request of the Agent, provide the Agent with
a copy thereof. Subject to the requirements of subsection (j) below, unless the Issuing Bank has
received written notice from any Lender, the Agent or any Borrower, at least one Business Day prior
to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in Section 6 shall not then be satisfied, then, subject to the
terms and conditions hereof, the Issuing Bank shall, on the requested date, issue a Letter of
Credit for the account of the Borrowers.


 


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(h) The obligation of the Borrowers to reimburse the Issuing Bank for each drawing under each
Letter of Credit and to repay each borrowing under each Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Loan
Agreement under all circumstances, including the following: (i) any lack of validity or
enforceability of such Letter of Credit, this Loan Agreement, or any other Loan Document; (ii) the
existence of any claim, counterclaim, setoff, defense or other right that any Borrower or any
Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit
(or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing
Bank or any other Person, whether in connection with this Loan Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or
any unrelated transaction; (iii) any draft, demand, certificate or other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such Letter of
Credit; (iv) any payment by the Issuing Bank under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any
payment made by the Issuing Bank under such Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any transferee of such
Letter of Credit; or (v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Borrower or any Subsidiary.



(i) The Borrowers shall promptly examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrowers’
instructions or other irregularity, the Borrowers will immediately notify the Issuing Bank. The
Borrowers shall be conclusively deemed to have waived any such claim against the Issuing Bank and
its correspondents unless such notice is given as aforesaid.



(j) Each Issuing Bank shall, before the issuance of any Letter of Credit, notify the Agent in
writing of the issuance of each Letter of Credit hereunder and, upon the request of the Agent,
provide Agent with a copy of any such Letter of Credit (it being understood that such Issuing Bank
may update Agent one time during a Business Day with respect to all relevant Letters of Credit). A
failure of any Issuing Bank (other than Bank of America) to comply with the requirements of this
clause (j) in respect any Letter of Credit may, as determined by the Agent in its sole discretion,
cause the LC Obligations in respect of such Letter of Credit to be excluded from the Obligations.




2.3.2. Reimbursement; Participations.



(a) If Issuing Bank honors any request for payment under a Letter of Credit or, if applicable
a LC Guaranty with respect to a Letter of Credit, Borrowers shall pay to Issuing Bank, on the same
day (“Reimbursement Date”), the amount paid by Issuing Bank under such Letter of Credit or,
if applicable, under a LC Guaranty with respect to such Letter of Credit, together with interest at
the interest rate for Base Rate Tranche A Revolver Loans from the Reimbursement Date until payment
by Borrowers. The obligation of Borrowers to reimburse Issuing Bank for any payment made under a
Letter of Credit or LC Guaranty shall be absolute, unconditional, irrevocable, and joint and
several, and shall be paid without regard to any lack of validity or enforceability of any Letter
of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at
any time against the beneficiary. Whether or not Borrower Agent submits a Notice of Borrowing,
Borrowers shall be deemed to have requested a Borrowing of Base Rate Tranche A Revolver Loans in an
amount necessary to pay all amounts due Issuing Bank on any Reimbursement Date and each Tranche A
Lender agrees to fund its Pro Rata share of
such Borrowing whether or not the Tranche A Commitments have terminated, a Tranche A
Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.


 


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(b) Upon issuance of a Letter of Credit, each Tranche A Lender shall be deemed to have
irrevocably and unconditionally purchased from Issuing Bank, without recourse or warranty, an
undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of
Credit. If Issuing Bank makes any payment under a Letter of Credit or a LC Guaranty and Borrowers
do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and
each Tranche A Lender shall promptly (within one Business Day) and unconditionally pay to Agent,
for the benefit of Issuing Bank, such Tranche A Lender’s Pro Rata share of such payment. Upon
request by a Tranche A Lender, Issuing Bank shall furnish copies of any Letters of Credit and LC
Documents in its possession at such time.



(c) The obligation of each Tranche A Lender to make payments to Agent for the account of
Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit or LC Guaranty
shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff,
qualification or exception whatsoever, and shall be made in accordance with this Loan Agreement
under all circumstances, irrespective of any lack of validity or unenforceability of any Loan
Documents; any draft, certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or the existence of any setoff or defense that
any Obligor may have with respect to any Obligations. Issuing Bank does not assume any
responsibility for any failure or delay in performance or any breach by any Borrower or other
Person of any obligations under any LC Documents. Issuing Bank does not make to Lenders any
express or implied warranty, representation or guaranty with respect to the Collateral, LC
Documents or any Obligor. Issuing Bank shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of any LC Documents; the validity,
genuineness, enforceability, collectibility, value or sufficiency of any Collateral or the
perfection of any Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor.



(d) If any Lender fails to make available to the Agent for the account of the Issuing Bank any
amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.3
by the time specified in Section 2.3, the Issuing Bank shall be entitled to recover from such
Lender (acting through the Agent), on demand, such amount with interest thereon for the period from
the date such payment is required to the date on which such payment is immediately available to the
Issuing Bank at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the Issuing Bank in accordance with banking industry rules on interbank compensation,
plus any administrative, processing or similar fees customarily charged by the Issuing Bank in
connection with the foregoing. If such Lender pays such amount (with interest and fees as
aforesaid), the amount so paid shall constitute such Lender’s required payment by such Lender
pursuant to the foregoing provisions of this Section 2.3. A certificate of the Issuing Bank
submitted to any Lender (through the Agent) with respect to any amounts owing under this Section
2.3 shall be conclusive absent manifest error.



(e) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action
taken or omitted to be taken in connection with any LC Documents except as a result of its actual
gross negligence or willful misconduct. Issuing Bank shall not have any liability to any Lender if
Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives
written instructions from Required Lenders.


 


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2.3.3. Cash Collateral. If any LC Obligations, whether or not then due or payable,
shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that
Tranche A Excess Availability is less than zero, (c) after the date on which the Tranche A Revolver
Commitment has been terminated, or (d) within five Business Days prior to the Termination Date, then Borrowers
shall, at Issuing Bank’s or Agent’s request, pay to Issuing Bank the amount of all outstanding LC
Obligations and Cash Collateralize or backstop in a manner agreed to by the Borrower Agent and the
Issuing Bank, all outstanding Letters of Credit. If Borrowers fail to Cash Collateralize or
backstop outstanding Letters of Credit as required herein, Tranche A Lenders may (and shall upon
direction of Agent) advance, as Base Rate Tranche A Revolver Loans, the amount of the Cash
Collateral required (whether or not the Commitments have terminated, any Tranche A Overadvance or
Tranche A-1 Overadvance exists, or the conditions in Section 6 are satisfied).



2.3.4. Role of Issuing Bank. Each Lender and each Borrower agree that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the Issuing Bank, the
Agent, any of their respective Related Parties nor any correspondent, participant or assignee of
the Issuing Bank shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or document in connection therewith. None of the Issuing Bank, the Agent,
any of their respective Related Parties nor any correspondent, participant or assignee of the
Issuing Bank shall be liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.3.1(h); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrowers may have a claim against the Issuing Bank, and the Issuing
Bank may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove
were caused by the Issuing Bank’s bad faith, willful misconduct or gross negligence or the Issuing
Bank’s failure to pay under any Letter of Credit after the presentation to it by the beneficiary of
a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the Issuing Bank shall
not be responsible for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.



2.3.5. Applicability of ISP. Unless otherwise expressly agreed by the Issuing Bank
and the Borrowers when a Letter of Credit is issued, the rules of the ISP shall apply to each
Letter of Credit.




2.4. Increase in Tranche A Revolver Commitments.



2.4.1. Request for Increase, Etc. Provided no Default or Event of Default has
occurred and is continuing, upon notice to the Administrative Agent (which shall promptly notify
the Lenders or such subset of Lenders as requested by the Borrower Agent), the Borrower Agent may,
not more than two (2) times in any calendar year, request an increase in the Tranche A Revolver
Commitments; provided that in no event shall the aggregate Tranche A Revolver Commitments
(after giving effect to all requested increases therein) exceed $800,000,000. Any such increase in
the Tranche A Revolver Commitments may be provided by, at the election of the Borrower Agent, any
Lender willing to participate in such increase or, subject to the approval of the Agent, Eligible
Assignees designated by the Borrower that are willing to participate in such increase (each, an
“Increasing Lender”) who shall become a Lender pursuant to a joinder agreement in form and
substance reasonably satisfactory to the Agent, pursuant to which such Eligible Assignees shall
become a party to this Loan Agreement. Any increase in the Tranche A Revolver Commitments shall be
in a minimum amount of $25,000,000 and shall be on the same terms and conditions as this Loan
Agreement and the other Loan Documents (except
for the payment of any amounts (including, without limitation, any fees agreed among the
Borrowers, BAS, the Agent and any Lender or Increasing Lender participating in connection with such
increase, which amounts shall not be subject to any “pro rata sharing” provisions hereof). The
Borrower Agent shall determine (A) the final allocation of such increase among Increasing Lenders
and Schedule 1.1(a) attached hereto shall be automatically updated to reflect the same and
(B) the effective date (the “Increase Effective Date”) of any such increase. Nothing
contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of any
Lender to increase its Tranche A Revolver Commitment hereunder.


 


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2.4.2. Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower Agent shall deliver to the Agent a certificate of each Obligor dated as of
the Increase Effective Date signed by a Senior Officer of such Obligor (i) certifying and attaching
the resolutions adopted by such Obligor approving or consenting to such increase and (ii)
certifying that, before and after giving effect to such increase, (A) the representations and
warranties contained in Section 9 and the other Loan Documents are true and correct in all material
respects on and as of the Increase Effective Date, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they are true and correct in
all material respects as of such earlier date, and except that for purposes of this Section 2.4,
the representations and warranties contained in Section 9.1.8 shall be deemed to refer to the most
recent financial statements furnished to the Agent under this Loan Agreement, and (B) no Default or
Event of Default has occurred and is continuing. The Borrowers shall prepay any Loans outstanding
on the Increase Effective Date (and pay any additional amounts required pursuant to Section 3.9) to
the extent necessary to keep the outstanding Tranche A Revolver Loans ratable with any revised Pro
Rata shares arising from any nonratable increase in the Tranche A Revolver Commitments under this
Section 2.4.



2.5. Re-Allocation of Tranche A-1 Commitment. On December 31, 2010, the Tranche A-1
Commitments shall be reduced by $20,000,000 and such amount shall be reallocated to the Tranche A
Commitments. Such reduction shall be allocated on a pro rata basis among the Tranche A-1 Lenders,
and such reallocation shall be allocated on a pro rata basis among such Tranche A-1 Lenders (in
their capacity as Tranche A Lenders). For the avoidance of doubt, the reallocation described in
this Section 2.5 is not subject to the requirements of Section 2.2.2(b).



SECTION 3. INTEREST, FEES AND CHARGES




3.1. Interest.



3.1.1. Rates and Payment of Interest.



(a) The Obligations shall bear interest (i) if a Base Rate Tranche A Revolver Loan, at the
Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Tranche A Revolver
Loans; (ii) if a Base Rate Tranche A-1 Revolver Loan, at the Base Rate in effect from time to time,
plus the Applicable Margin for Base Rate Tranche A-1 Revolver Loans; (iii) if a LIBOR Tranche A
Revolver Loan, at Adjusted LIBOR for the applicable Interest Period, plus the Applicable Margin for
LIBOR Tranche A Revolver Loans; (iv) if a LIBOR Tranche A-1 Revolver Loan, at Adjusted LIBOR for
the applicable Interest Period, plus the Applicable Margin for LIBOR Tranche A-1 Revolver Loans;
and (v) if any other Obligation (including, to the extent permitted by law, interest not paid when
due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate
Tranche A-1 Revolver Loans. Interest shall accrue from the date the Loan is advanced or the
Obligation is incurred or payable, until paid by Borrowers. If a Loan is repaid on the same day
made, one day’s interest shall accrue.


 


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(b) During any Event of Default, at the election of the Agent or the Required Lenders,
Obligations shall bear interest at the Default Rate. Each Borrower acknowledges that the cost,
expense and risk to Agent and each Lender due to an Event of Default are difficult to ascertain and
that the Default Rate is a fair and reasonable estimate to compensate Agent and Lenders for such
added cost, expense and risk.



(c) Interest accrued on the Loans shall be due and payable in arrears, (i) with respect to
each Base Rate Loan, on the first day of each month, (ii) with respect to each LIBOR Loan, on the
last day of its Interest Period; provided that if any Interest Period for a LIBOR
Loan exceeds three months, interest accrued on such LIBOR Loan shall also be due and payable on the
respective dates that fall every three months after the beginning of such Interest Period, (iii) on
any date of prepayment, with respect to the principal amount of Loans being prepaid; and (iv) with
respect to any termination or reduction of the Tranche A Revolver Commitments or the Tranche A-1
Revolver Commitments, on the date of such termination or reduction with respect to the principal
amount of Loans where the commitment to make such Loans is being terminated. Interest accrued on
any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment
date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest
accrued at the Default Rate shall be due and payable on demand.




3.1.2. Application of Adjusted LIBOR to Outstanding Loans.



(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Tranche A Revolver Loans to,
or to continue any LIBOR Tranche A Revolver Loan at the end of its Interest Period as, a LIBOR
Tranche A Revolver Loan. Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Tranche A-1 Revolver Loans
to, or to continue any LIBOR Tranche A-1 Revolver Loan at the end of its Interest Period as, a
LIBOR Tranche A-1 Revolver Loan. During any Default or Event of Default, Agent may (and shall at
the direction of Required Lenders) declare that no Loan may be made, converted or continued as a
Tranche A LIBOR Revolver Loan. During any Default or Event of Default, Agent may (and shall at the
direction of Required Lenders) declare that no Loan may be made, converted or continued as a
Tranche A-1 LIBOR Revolver Loan.



(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans, Borrower Agent
shall give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three
Business Days before the requested conversion or continuation date. Promptly after receiving any
such notice, Agent shall notify each Tranche A Lender or Tranche A-1 Lender, as applicable,
thereof. Each Notice of Conversion/Continuation shall be irrevocable, and shall specify the
aggregate principal amount of Loans to be converted or continued, the conversion or continuation
date (which shall be a Business Day), and the duration of the Interest Period (which shall be
deemed to be one month if not specified). If, upon the expiration of any Interest Period in
respect of any LIBOR Tranche A Revolver Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate
Tranche A Revolver Loans. If, upon the expiration of any Interest Period in respect of any LIBOR
Tranche A-1 Revolver Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate
Tranche A-1 Revolver Loans.




 


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3.1.3. Interest Periods. In connection with the making, conversion or continuation of
any LIBOR Loans, Borrowers shall select an interest period (“Interest Period”) to apply,
which interest period shall be one, two, three or six months; provided, however,
that:



(a) the Interest Period shall commence on the date the Loan is made or continued as, or
converted into, a LIBOR Loan, and shall expire on the numerically corresponding day in the calendar
month at its end;



(b) if any Interest Period commences on a day for which there is no corresponding day in the
calendar month at its end or if such corresponding day falls after the last Business Day of such
month, then the Interest Period shall expire on the last Business Day of such month; and if any
Interest Period would expire on a day that is not a Business Day, the period shall expire on the
next Business Day; and




(c) no Interest Period shall extend beyond the Termination Date.



3.1.4. Interest Rate Not Ascertainable. If Agent shall determine that on any date for
determining Adjusted LIBOR, due to any circumstance affecting the London interbank market, adequate
and fair means do not exist for ascertaining such rate on the basis provided herein, then Agent
shall immediately notify Borrowers of such determination. Until Agent notifies Borrowers that such
circumstance no longer exists, the obligation of Lenders to make LIBOR Loans shall be suspended,
and no further Loans may be converted into or continued as LIBOR Loans.




3.2. Fees.



3.2.1. Unused Line Fee. Borrowers shall pay to Agent (i) for the Pro Rata benefit of
the Tranche A Lenders, a fee equal to Unused Line Fee Rate then in effect times the amount by which
the Tranche A Revolver Commitments exceed the average daily principal balance of Tranche A Revolver
Loans and stated amount of Letters of Credit during any month and (ii) for the Pro Rata benefit of
the Tranche A-1 Lenders, a fee equal to Unused Line Fee Rate then in effect times the amount by
which the Tranche A-1 Revolver Commitments exceed the average daily principal balance of Tranche
A-1 Revolver Loans during any month. The fees payable under this Section 3.2.1 shall be payable in
arrears, on the first day of each month and on the Commitment Termination Date.



3.2.2. LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata benefit
of the Tranche A Lenders, a fee equal to the Applicable Margin in effect for LIBOR Tranche A
Revolver Loans times the average daily stated amount of Letters of Credit, which fee shall be
payable monthly in arrears, on the first day of each month; (b) to each Issuing Bank, a fronting
fee, for the account of such Issuing Bank, with respect to each Letter of Credit issued by such
Issuing Bank in the amount agreed to between such Issuing Bank and the Borrower Agent, which fee
shall be payable upon issuance of the Letter of Credit and on each anniversary date of such
issuance, and shall be payable on any increase in stated amount made between any such dates; and
(c) to Issuing Bank, for its own account, all customary charges associated with the issuance,
amending, negotiating, payment, processing, transfer and administration of Letters of Credit, which
charges shall be paid as and when incurred. During an Event of Default, at the election of the
Agent or the Required Lenders, the fee payable under clause (a) shall be increased by 2% per annum.



3.2.3. Agent Fees. In consideration of Agent’s syndication of the Commitments and
service as Agent hereunder, Parent and Borrowers shall pay to Agent, for its own account, the fees
described in the Fee Letter.



3.3. Computation of Interest, Fees, Yield Protection. All computations of interest
for Base Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computation of interest, as well as fees and other charges
calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of
360 days. Each determination by Agent of any interest, fees or interest rate hereunder shall be
final, conclusive and binding for all purposes, absent error. All fees shall be fully earned when
due and shall not be subject to rebate or refund, nor subject to proration except as specifically
provided herein. All fees payable under Section 3.2 are compensation for services and are not, and
shall not be deemed to be, interest or any other charge for the use, forbearance or detention of
money. A certificate as to amounts payable by Borrowers under
Section 3.4, 3.6, 3.7, 3.9 or 5.8, submitted to Borrowers by Agent or the affected Lender, as
applicable, shall be final, conclusive and binding for all purposes, absent error.


 


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3.4. Reimbursement Obligations. Borrowers shall reimburse Agent and each
Co-Collateral Agent for all Extraordinary Expenses. Borrowers shall also reimburse Agent for all
reasonable and documented legal fees of one outside counsel, one local counsel in each relevant
jurisdiction (as determined by the Agent in its reasonable discretion), one special or regulatory
counsel in respect of each matter (as reasonably required by the Agent) and conflict of interest
counsel (as determined by the Agent in its reasonable discretion), accounting, appraisal,
consulting and other reasonable and documented fees, out-of-pocket costs and expenses incurred by
it in connection with (a) syndication, negotiation and preparation of any Loan Documents, including
any amendment or other modification thereof; (b) administration of and actions relating to any
Collateral, Loan Documents, and transactions contemplated thereby, including any actions taken to
perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required
hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each
inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by
Agent’s personnel or a third party. Borrowers shall also reimburse Lenders for all costs and
expenses incurred by them (but limited to legal fees of one outside counsel for all Lenders, one
local counsel in each relevant jurisdiction (as determined by the Lenders in their reasonable
discretion), one special or regulatory counsel in respect of each matter (as reasonably required by
the Lenders) and conflict of interest counsel (as determined by the any Lender in its reasonable
discretion)) during an Event of Default in connection with the enforcement or preservation of any
rights under this Loan Agreement or any of the other Loan Documents. Borrowers shall also
reimburse each Co-Collateral Agent for all reasonable and documented legal fees of one outside
counsel incurred by it in connection with (a) syndication, negotiation and preparation of any Loan
Documents, including any amendment, waiver, consent, supplement, restatement or other modification
thereof or thereto; and (b) administration and enforcement of and actions relating to any
Collateral, Loan Documents, and transactions contemplated thereby. All amounts reimbursable by
Borrowers under this Section 3.4 shall constitute Obligations secured by the Collateral and shall
be payable within ten Business Days after presentation by Agent to Borrowers of a reasonably
detailed itemization of such amounts.



3.5. Illegality. Notwithstanding anything to the contrary herein, if (a) any change
in any law or interpretation thereof, made after the date hereof, by any Governmental Authority
makes it unlawful for a Lender to make or maintain a LIBOR Loan or to maintain any Commitment with
respect to LIBOR Loans or (b) a Lender determines that the making or continuance of a LIBOR Loan
has become impracticable as a result of a circumstance that adversely affects the London interbank
market or the position of such Lender in such market, then such Lender shall give notice thereof to
Agent and Borrowers and may (i) declare that LIBOR Loans will not thereafter be made by such
Lender, whereupon (x) where such Lender is a Tranche A Lender any request for a LIBOR Tranche A
Revolver Loan from such Lender shall be deemed to be a request for a Base Rate Tranche A Revolver
Loan and (y) where such Lender is a Tranche A-1 Lender any request for a LIBOR Tranche A-1 Revolver
Loan from such Lender shall be deemed to be a request for a Base Rate Tranche A-1 Revolver Loan
unless such Lender’s declaration has been withdrawn (and it shall be withdrawn promptly upon
cessation of the circumstances described in clause (a) or (b) above); and/or (ii) (x) where such
Lender is a Tranche A Lender, require that all outstanding LIBOR Tranche A Revolver Loans made by
such Lender be converted to Base Rate Tranche A Revolver Loans immediately, in which event all
outstanding LIBOR Tranche A Revolver Loans of such Lender shall be immediately converted to Base
Rate Tranche A Revolver Loans and (y) where such Lender is a Tranche A-1 Lender, require that all
outstanding LIBOR Tranche A-1 Revolver Loans made by such Lender be converted to Base Rate Tranche
A-1 Revolver Loans immediately, in which event all outstanding LIBOR Tranche A-1 Revolver Loans of
such Lender shall be immediately converted to Base Rate Tranche A-1 Revolver Loans.


 


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3.6. Increased Costs. If, by reason of (a) the introduction of or any change
(including any change by way of imposition or increase of Statutory Reserves or other reserve
requirements) in any law
or interpretation thereof, in each case made after the date hereof, or (b) the compliance with
any guideline or request from any Governmental Authority or other Person exercising control over
banks or financial institutions generally (whether or not having the force of law), promulgated
after the date hereof:




(i) a Lender shall be subject to any Tax with respect to any LIBOR Loan or Letter of
Credit or its obligation to make LIBOR Loans, issue Letters of Credit or participate in LC
Obligations, or a change shall result in the basis of taxation of any payment to a Lender
with respect to its LIBOR Loans or its obligation to make LIBOR Loans, issue Letters of
Credit or participate in LC Obligations (except for Excluded Taxes); or




(ii) any reserve (including any imposed by the Board of Governors), special deposits or
similar requirement against assets of, deposits with or for the account of, or credit
extended by, a Lender shall be imposed or deemed applicable, or any other condition
affecting a Lender’s LIBOR Loans or obligation to make LIBOR Loans, issue Letters of Credit
or participate in LC Obligations shall be imposed on such Lender or the London interbank
market;



and as a result there shall be a material increase in the cost to such Lender of agreeing to make
or making, funding or maintaining LIBOR Loans, Letters of Credit or participations in LC
Obligations (except to the extent already included in determination of Adjusted LIBOR), or there
shall be a reduction in the amount receivable by such Lender, then the Lender shall promptly notify
Borrowers and Agent of such event, and Borrowers shall, within five days following demand therefor,
pay such Lender the amount of such increased costs or reduced amounts; provided, however, that such
Lender shall repay to Borrowers any amounts paid by Borrowers to such Lender under this Section 3.6
at any time such Lender shall determine that such change or compliance was not applicable to, or
required by, such Lender.



If a Lender determines that, because of circumstances described above or any other
circumstances arising hereafter affecting such Lender, the London interbank market or the Lender’s
position in such market, Adjusted LIBOR or its Applicable Margin, as applicable, will not
adequately and fairly reflect the cost to such Lender of funding or maintaining LIBOR Loans,
issuing Letters of Credit or participating in LC Obligations, then (A) the Lender shall promptly
notify Borrowers and Agent of such event; (B) such Lender’s obligation to make or maintain LIBOR
Loans, issue Letters of Credit or participate in LC Obligations shall be immediately suspended,
until each condition giving rise to such suspension no longer exists; and (C) (x) where such Lender
is a Tranche A Lender such Lender shall make a Base Rate Tranche A Revolver Loan as part of any
requested Borrowing of LIBOR Tranche A Revolver Loans, which Base Rate Tranche A Revolver Loan
shall, for all purposes, be considered part of such Borrowing and (y) where such Lender is a
Tranche A-1 Lender such Lender shall make a Base Rate Tranche A-1 Revolver Loan as part of any
requested Borrowing of LIBOR Tranche A-1 Revolver Loans, which Base Rate Tranche A-1 Revolver Loan
shall, for all purposes, be considered part of such Borrowing.



Within fifteen (15) days after receipt by Borrower Agent of written notice and/or demand from
any Lender (an “Affected Lender”) (i) stating that, pursuant to Section 3.5, that such
Lender can no longer make LIBOR Loans or (ii) demanding payment of additional amounts or increased
costs pursuant to Section 3.6, Borrower Agent may, at its option, notify Agent and such Affected
Lender of its intention to replace the Affected Lender. So long as no Default or Event of Default
shall have occurred and be continuing, Borrower Agent may obtain, at Borrowers’ expense, a
replacement Lender (“Replacement Lender”) for the Affected Lender, which Replacement Lender
must be an Eligible Assignee. If Borrowers obtain a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must sell and assign its Loans
and Commitments to such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and fees with respect thereto through
the date of such sale; provided that Borrowers shall have reimbursed such Affected
Lender for the additional amounts or increased costs that it is entitled to receive under this Loan
Agreement through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers
shall not have the right to obtain a Replacement Lender if the Affected Lender (i) in the case
of a notice under Section 3.5, rescinds its notice that it can no longer fund LIBOR Loans or
(ii) in the case of a demand under Section 3.6, rescinds its demand for increased costs or
additional amounts, within fifteen (15) days following its receipt of Borrower Agent’s notice of
intention to replace such Affected Lender. Furthermore, if Borrower Agent gives a notice of
intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter,
Borrowers’ rights under this paragraph as to such noticed replacement shall terminate.


 


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3.7. Capital Adequacy. If a Lender determines that any introduction of or any change
in a Capital Adequacy Regulation, any change in the interpretation or administration of a Capital
Adequacy Regulation by a Governmental Authority charged with interpretation or administration
thereof, or any compliance by such Lender or any Person controlling such Lender with a Capital
Adequacy Regulation, in each case made after the date hereof, increases the amount of capital
required or expected to be maintained by such Lender or Person (taking into consideration its
capital adequacy policies and desired return on capital) as a consequence of such Lender’s
Commitments, Loans, participations in LC Obligations or other obligations under the Loan Documents,
then Borrowers shall, within five days following demand therefor, pay such Lender an amount
sufficient to compensate for such increase. A Lender’s demand for payment shall set forth the
nature of the occurrence giving rise to such compensation and a calculation of the amount to be
paid. In determining such amount, the Lender may use any reasonable averaging and attribution
method.



3.8. Mitigation. Each Lender agrees that, upon becoming aware that it is subject to
Section 3.5, 3.6, 3.7 or 5.8, it will take reasonable measures to reduce Borrowers’ obligations
under such Sections, including funding or maintaining its Commitments or Loans through another
office, as long as use of such measures would not adversely affect the Lender’s Commitments, Loans,
business or interests, and would not be inconsistent with any applicable legal or regulatory
restriction.



3.9. Funding Losses. If for any reason (other than default by a Lender) (a) any
Borrowing of, or conversion to or continuation of, a LIBOR Loan does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not
withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day other than the end of
its Interest Period, or (c) Borrowers fail to repay a LIBOR Loan when required hereunder, then
Borrowers shall pay to Agent its customary administrative charge and to each Lender all losses and
expenses that it sustains as a consequence thereof, including any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds,
but excluding any loss of profits in connection therewith. Lenders shall not be required to
purchase Dollar deposits in the London interbank market or any other offshore Dollar market to fund
any LIBOR Loan, but the provisions hereof shall be deemed to apply as if each Lender had purchased
such deposits to fund its LIBOR Loans.



3.10. Maximum Interest. In no event shall interest, charges or other amounts that are
contracted for, charged or received by Agent and Lenders pursuant to any Loan Documents and that
are deemed interest under Applicable Law (“interest”) exceed the highest rate permissible
under Applicable Law (“maximum rate”). If, in any month, any interest rate, absent the
foregoing limitation, would have exceeded the maximum rate, then the interest rate for that month
shall be the maximum rate and, if in a future month, that interest rate would otherwise be less
than the maximum rate, then the rate shall remain at the maximum rate until the amount of interest
actually paid equals the amount of interest which would have accrued if it had not been limited by
the maximum rate. If, upon payment in full, in cash, of the Obligations, the total amount of
interest actually paid under the Loan Documents is less than the total amount of interest that
would, but for this Section 3.10, have accrued under the Loan Documents, then Borrowers shall, to
the extent permitted by Applicable Law, pay to Agent, for the account of Lenders, (a) the lesser of
(i) the amount of interest that would have been charged if the maximum rate had been in effect at
all times, or (ii) the amount of interest that would have accrued had the interest rate otherwise
set forth in the Loan Documents been in effect, minus (b) the amount of interest actually
paid under the Loan Documents. If a court of competent jurisdiction determines that Agent or any
Lender has received interest in excess of the maximum amount allowed under Applicable Law, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, Obligations other than
interest (regardless of any erroneous application thereof by Agent or any Lender), and upon payment
in full, in cash of the Obligations, any balance shall be refunded to Borrowers. In determining
whether any excess interest has been charged or received by Agent or any Lender, all interest at
any time charged or received from Borrowers in connection with the Loan Documents shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Obligations.


 


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SECTION 4. LOAN ADMINISTRATION




4.1.  Manner of Borrowing and Funding Loans.



4.1.1. Notice of Borrowing.



(a) Whenever Borrowers desire funding of a Borrowing of Loans, Borrower Agent shall give Agent
a Notice of Borrowing. Such notice must be received by Agent no later than 12:00 noon (i) on the
Business Day of the requested funding date, in the case of Base Rate Loans, and (ii) at least three
Business Days prior to the requested funding date, in the case of LIBOR Loans. Notices received
after 12:00 noon shall be deemed received on the next Business Day. Each Notice of Borrowing shall
be irrevocable and shall specify (A) the principal amount of the Borrowing, (B) the requested
funding date (which must be a Business Day), (C) whether the Borrowing is to be made as Base Rate
Tranche A Revolver Loans, Base Rate Tranche A-1 Revolver Loans, LIBOR Tranche A Revolver Loans or
LIBOR Tranche A-1 Revolver Loans, and (D) in the case of LIBOR Loans, the duration of the
applicable Interest Period (which shall be deemed to be one month if not specified).



(b) Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations
(whether principal, interest, fees or other charges, including Extraordinary Expenses, LC
Obligations, Cash Collateral and Bank Product Debt) shall be deemed to be a request for Base Rate
Loans on the due date, in the amount of such Obligations. Such Base Rate Loans shall be Base Rate
Tranche A-1 Revolver Loans so long as there is any Tranche A-1 Excess Availability and thereafter
shall be Base Rate Tranche A Revolver Loans.



(c) If Borrowers establish a controlled disbursement account with Agent or any Affiliate of
Agent, then the presentation for payment of any check or other item of payment drawn on such
account at a time when there are insufficient funds to cover it shall be deemed to be, on the date
of such presentation, in the amount of the check and items presented for payment, a request for
Base Rate Tranche A-1 Revolver Loans to the extent that there exists sufficient Tranche A-1 Excess
Availability therefore and thereafter shall be deemed to be a request for Base Rate Tranche A
Revolver Loans. The proceeds of such Loans may be disbursed directly to the controlled
disbursement account or other appropriate account.



4.1.2. Fundings by Lenders. Each Tranche A Lender shall timely honor its Tranche A
Revolver Commitment by funding its Pro Rata share of each Borrowing of Tranche A Revolver Loans
that is properly requested hereunder and each Tranche A-1 Lender shall timely honor its Tranche A-1
Revolver Commitment by funding its Pro Rata share of each Borrowing of Tranche A-1 Revolver Loans
that is properly requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent
shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by
12:00 noon on the proposed funding date for Base Rate Loans or by 3:00 p.m. at least three Business
Days before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent such Lender’s Pro
Rata share of the Borrowing to the account specified by Agent in immediately available funds not
later than 2:00 p.m. on the requested funding date, unless Agent’s notice is received after the
times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m. on the next
Business Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse the
proceeds of the Loans as directed by
Borrower Agent. Unless Agent shall have received (in sufficient time to act) written notice
from a Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent may assume
that such Lender has deposited or promptly will deposit its share with Agent, and Agent may
disburse a corresponding amount to Borrowers. If a Lender’s share of any Borrowing is not in fact
received by Agent, then Borrowers agree to repay to Agent on demand the amount of such share,
together with interest thereon from the date disbursed until repaid, at the rate applicable to such
Borrowing. If any Lender makes available to the Agent funds for any Loan to be made by such Lender
as provided in this Loan Agreement, and such funds are not made available to the Borrowers by the
Agent because the conditions to the applicable credit extension set forth in Section 6 are not
satisfied or waived in accordance with the terms hereof, the Agent shall return such funds (in like
funds as received from such Lender) to such Lender, without interest.


 


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4.1.3. Swingline Loans; Settlement.



(a) In reliance upon the agreements of the other Lenders set forth in this Section 4.1.3,
Agent may, in its sole and absolute discretion (unless Agent has knowledge that the conditions set
forth in Section 6.2 have not been met), advance Swingline Loans to Borrowers out of Agent’s own
funds, up to an aggregate outstanding amount of $75,000,000, unless the funding is specifically
required to be made by all Lenders hereunder. Each Swingline Loan shall constitute a Base Rate
Tranche A Revolver Loan for all purposes, except that payments thereon shall be made to Agent for
its own account. The obligation of Borrowers to repay Swingline Loans shall be evidenced by the
records of Agent and need not be evidenced by any promissory note. If the Agent shall elect not to
fund a requested Swingline Loan for any reason, the Agent shall notify the Borrower Agent of such
election after the receipt of the borrowing notice in respect of such Swingline Loan.



(b) To facilitate administration of the Loans, Tranche A Lenders and Agent agree (which
agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that
settlement among them with respect to Swingline Loans and other Tranche A Revolver Loans may take
place periodically on a date determined from time to time by Agent, which shall occur at least once
every week. On each settlement date, settlement shall be made with each Lender in accordance with
the Settlement Report delivered by Agent to Tranche A Lenders. Between settlement dates, Agent may
in its discretion apply payments on Loans to Swingline Loans, regardless of any designation by
Borrower or any provision herein to the contrary. Each Tranche A Lender’s obligation to make
settlements with Agent is absolute and unconditional, without offset, counterclaim or other
defense, and whether or not the Tranche A Commitments have terminated, a Tranche A Overadvance
exists, or the conditions in Section 6 are satisfied. If, due to an Insolvency Proceeding with
respect to a Borrower or otherwise, any Swingline Loan may not be settled among Tranche A Lenders
hereunder, then each Tranche A Lender shall be deemed to have purchased from Agent a Pro Rata
participation in each unpaid Swingline Loan and shall transfer the amount of such participation to
Agent, in immediately available funds, within one Business Day after Agent’s request therefor.



4.1.4. Notices. Each Borrower authorizes Agent and Lenders to extend, convert or
continue Loans, effect selections of interest rates, and transfer funds to or on behalf of
Borrowers based on telephonic or other e-mailed, electronic or internet-based instructions in form,
in each case, acceptable to the Agent and the Borrowers. Borrowers shall confirm each such request
by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if
applicable, but if it differs in any material respect from the action taken by Agent or Lenders,
the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any
liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its
understanding of telephonic or other e-mailed, electronic or internet-based instructions in form,
in each case, reasonably acceptable to the Agent and the Borrowers, from a person believed in good
faith by Agent or any Lender to be a person authorized to give such instructions on a Borrower’s
behalf.


 


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4.2. Defaulting Lender. If a Lender is a Defaulting Lender, Agent may (but shall not
be required to), in its discretion, retain payments that would otherwise be made to such Defaulting
Lender hereunder, apply the payments to such Lender’s defaulted obligations or readvance the funds
to Borrowers in accordance with this Loan Agreement. The failure of any Lender to fund a Loan or
to make a payment in respect of a LC Obligation shall not relieve any other Lender of its
obligations hereunder, and no Lender shall be responsible for default by another Lender. Lenders
and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by
any Borrower) that, solely for purposes of determining a Defaulting Lender’s right to vote on
matters relating to the Loan Documents and to share in payments, fees and Collateral proceeds
thereunder, a defaulting Lender shall not be deemed to be a “Lender” until all its defaulted
obligations have been cured.



4.3. Number and Amount of LIBOR Loans; Determination of Rate. For ease of
administration, all LIBOR Tranche A Revolver Loans having the same length and beginning date of
their Interest Periods shall be aggregated together, and such Loans shall be allocated among
Tranche A Lenders on a Pro Rata basis and all LIBOR Tranche A-1 Revolver Loans having the same
length and beginning date of their Interest Periods shall be aggregated together, and such Loans
shall be allocated among Tranche A-1 Lenders on a Pro Rata basis. No more than ten LIBOR Tranche A
Revolver Loans and LIBOR Tranche A-1 Revolver Loans, in the aggregate, may be outstanding at any
time, and each aggregate LIBOR Loan when made, continued or converted shall be in a minimum amount
of $10,000,000, or an increment of $1,000,000 in excess thereof. Upon determining Adjusted LIBOR
for any Interest Period requested by Borrowers, Agent shall promptly notify Borrowers thereof by
telephone or electronically and, if requested by Borrowers, shall confirm any telephonic notice in
writing.



4.4. Borrower Agent. Each Borrower hereby designates Bon-Ton (“Borrower
Agent”) as its representative and agent for all purposes under the Loan Documents, including
requests for Loans and Letters of Credit, designation of interest rates, delivery or receipt of
communications with Agent, Issuing Bank or any Lender, preparation and delivery of Borrowing Base
Certificates and financial reports, receipt and payment of Obligations, requests for waivers,
amendments or other accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender.
Borrower Agent hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon,
and shall be fully protected in relying upon, any notice or communication (including any notice of
borrowing) delivered by Borrower Agent on behalf of any Borrower. Agent and Lenders may give any
notice or communication with a Borrower hereunder to Borrower Agent on behalf of such Borrower.
Agent shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or
all purposes under the Loan Documents. Each Borrower agrees that any notice, election,
communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall
be binding upon and enforceable against it.



4.5. One Obligation. The Loans, LC Obligations and other Obligations shall constitute
one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document)
shall be secured by Agent’s Lien upon all Collateral; provided, however, that Agent
and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against,
each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.



4.6. Effect of Termination. On the effective date of any termination of the
Commitments, all Obligations shall be immediately due and payable, and any Lender may terminate its
and its Affiliates’ Bank Products (including, with the consent of Agent, any Cash Management
Services). All undertakings of Borrowers contained in the Loan Documents shall survive any
termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies
under the Loan Documents until the occurrence of payment in full, in cash of all accrued and unpaid
principal, interest and fees, and any other Obligations then due and owing, the payment of any
appropriate collateral deposits in connection with other Obligations and the occurrence of the
Commitment Termination Date. Notwithstanding such payment in full, in cash, of all accrued and
unpaid principal, interest and fees, and any other Obligations then due and
owing, the payment of any appropriate collateral deposits in connection with other Obligations
and the occurrence of the Commitment Termination Date, Agent shall not be required to terminate its
Liens in any Collateral unless, with respect to any damages Agent may incur as a result of the
dishonor or return of Payment Items applied to Obligations, Agent receives (a) a written agreement,
executed by Borrowers and any Person whose advances are used in whole or in part to satisfy the
Obligations, indemnifying Agent and Lenders from any such damages; or (b) such Cash Collateral as
Agent, in its discretion, deems necessary to protect against any such damages. The provisions of
Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.4, 5.8, 12, and 14.2, and the obligation of each Obligor and
Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment
of the Obligations and any release relating to this credit facility.


 


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SECTION 5. PAYMENTS




5.1. General Payment Provisions. All payments of Obligations shall be made in
Dollars, without condition, deduction, offset, counterclaim or defense of any kind, free of (and
without deduction for) any Taxes, and in immediately available funds, not later than 2:00 p.m. on
the due date. Any payment after such time shall be deemed made on the next Business Day.
Borrowers may, at the time of payment, specify to Agent the Obligations to which such payment is to
be applied, but Agent shall in all events retain the right to apply such payment in such manner as
Agent, subject to the provisions hereof, may determine to be appropriate. If any payment under the
Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be
extended to the next Business Day and such extension of time shall be included in any computation
of interest and fees. Any payment of a LIBOR Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9. Any prepayment of the Tranche A Revolver Loan
shall be applied first to Base Rate Tranche A Revolver Loans and then to LIBOR Tranche A Revolver
Loans. Any prepayment of the Tranche A-1 Revolver Loan shall be applied first to Base Rate Tranche
A-1 Revolver Loans and then to LIBOR Tranche A-1 Revolver Loans. Unless the Agent shall have
received notice from the Borrower Agent prior to the time at which any payment is due to the Agent
for the account of the Lenders or the Issuing Bank hereunder that the Borrowers will not make such
payment, the Agent may assume that the Borrowers have made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrowers have not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Agent forthwith on demand the amount so distributed to such Lender or the Issuing
Bank, in immediately available funds with interest thereon, for each day from and including the
date such amount is distributed to it to but excluding the date of payment to the Agent, at the
greater of the Federal Funds Rate and a rate determined by the Agent in accordance with banking
industry rules on interbank compensation.



5.2. Repayment of Loans. The Loans shall be due and payable in full on the
Termination Date, unless payment is sooner required hereunder. The Loans may be prepaid in
accordance with Section 5.1. The Loans shall also be prepaid as soon as practicable but no later
than three (3) Business Days after the consummation of any Asset Disposition (other than any Asset
Disposition by any SPE or Passive Company) (x) specified in clauses (l) through (r) of the
definition of “Permitted Asset Disposition” or (y) occurring after the commencement and during the
continuation of a Trigger Event Period (or if a Trigger Event would occur after giving effect to
any such Asset Disposition), in each case, in an amount equal to 100% of the Net Proceeds of such
Asset Disposition, with such Net Proceeds to be applied to the Obligations in accordance with
Section 5.5. The Loans shall also be prepaid in accordance with Section 8.6.2.



5.2.1. Certain Other Mandatory Repayments of the Loans and Reduction of Commitments.
As soon as practicable but no later than three (3) Business Days after (i) a store closing,
going-out-of-business or similar sale by all of the Obligors of all or substantially all of their
retail operations or Inventory, (ii) a foreclosure by Agent of its Liens on a material portion of
the Collateral or (iii) a disposition of a material portion of the Collateral by Agent as a result of the
cessation of retail operations at all or substantially all Stores, excluding Force Majeure or
Ordinary Course of Business temporary closures, the Borrowers agree and acknowledge that the Net
Proceeds therefrom shall be applied to the Obligations in accordance with Section 5.5 and the
Commitments shall be permanently reduced in an amount equal to such Net Proceeds so applied. Each
prepayment made pursuant to this Section 5.2.1 shall be accompanied by the payment of accrued
interest to the date of such payment on the amount prepaid.




 


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5.3. Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan
Documents or, if no payment date is specified, on demand.



5.4. Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any Obligations. If any
Obligor makes a payment to Agent or Lenders, or if Agent or any Lender receives payment from the
proceeds of Collateral, exercise of setoff or otherwise, and such payment is subsequently
invalidated or required to be repaid to a trustee, receiver or any other Person, then the
Obligations originally intended to be satisfied, and all Liens, rights and remedies therefor, shall
be revived and continued in full force and effect as if such payment had not been received and any
enforcement or setoff had not occurred.




5.5. Allocation of Payments.



5.5.1. Pre-Default Allocation of Payments. Notwithstanding anything herein to the
contrary, at all times when no Event of Default has occurred and is continuing, all payments,
whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be
allocated as follows:



(a) first, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;




(b) second, to all amounts owing to Agent on Swingline Loans or Protective Advances;




(c) third, to all amounts owing to Issuing Bank on LC Obligations;



(d) fourth, to all Obligations constituting fees owing to the Tranche A Lenders in
their capacity as Tranche A Lenders (excluding amounts relating to Bank Products);



(e) fifth, to all Obligations constituting interest then owing on Tranche A Revolver
Loans (excluding amounts relating to Bank Products);



(f) sixth, to all other Obligations owing to the Tranche A Lenders in their capacity
as Tranche A Lenders, other than Bank Product Debt;



(g) seventh, to all Obligations constituting fees owing to the Tranche A-1 Lenders in
their capacity as Tranche A-1 Lenders (excluding amounts relating to Bank Products);



(h) eighth, to all Obligations constituting interest then owing on Tranche A-1
Revolver Loans (excluding amounts relating to Bank Products);



(i) ninth, to all other Obligations owing to the Tranche A-1 Lenders in their capacity
as Tranche A-1 Lenders, other than Bank Product Debt;


 


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(j) tenth, to Bank Product Debt owing to the Lenders and their Affiliates for which
Agent has received written notice as provided under the definition of “Bank Product”; and



(k) eleventh, to Bank Product Debt owing to the Lenders and their Affiliates for which
Agent has not received written notice as provided under the definition of “Bank Product”.



Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof
and then to the next category. If amounts are insufficient to satisfy a category, they shall be
applied on a pro rata basis among the Obligations in the category. Amounts distributed with
respect to any Bank Product Debt or LC Obligations shall be the lesser of the applicable LC
Obligations or Bank Product Amount last reported to Agent or the actual LC Obligations or Bank
Product Debt as calculated by the methodology reported to Agent for determining the amount due.
Agent shall have no obligation to calculate the amount to be distributed with respect to any Bank
Product Debt, but may rely upon written notice of the amount (setting forth a reasonably detailed
calculation) from the Secured Party. In the absence of such notice, Agent may assume the amount to
be distributed is the Bank Product Amount last reported to it. The allocations set forth in this
Section 5.5.1 are solely to determine the rights and priorities of Agent and Lenders as among
themselves, and may be changed by agreement among them without the consent of any Obligor.



5.5.2. Post-Default Allocation of Payments. Notwithstanding anything herein to the
contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from
payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as
follows:



(a) first, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;




(b) second, to all amounts owing to Agent on Swingline Loans or Protective Advances;




(c) third, to all amounts owing to Issuing Bank on LC Obligations;



(d) fourth, to all Obligations constituting fees owing to the Tranche A Lenders in
their capacity as Tranche A Lenders (excluding amounts relating to Bank Products);



(e) fifth, to all Obligations constituting interest then owing on Tranche A Revolver
Loans (excluding amounts relating to Bank Products);




(f) sixth, to provide Cash Collateral for outstanding Letters of Credit;



(g) seventh, to all other Obligations owing to the Tranche A Lenders in their capacity
as Tranche A Lenders, other than Bank Product Debt;



(h) eighth, to all Obligations constituting fees owing to the Tranche A-1 Lenders in
their capacity as Tranche A-1 Lenders (excluding amounts relating to Bank Products);



(i) ninth, to all Obligations constituting interest then owing on Tranche A-1 Revolver
Loans (excluding amounts relating to Bank Products);



(j) tenth, to all other Obligations owing to the Tranche A-1 Lenders in their capacity
as Tranche A-1 Lenders, other than Bank Product Debt;



(k) eleventh, to Bank Product Debt owing to the Lenders and their Affiliates for which
Agent has received written notice as provided under the definition of “Bank Product”; and



(l) twelfth, to Bank Product Debt owing to the Lenders and their Affiliates for which
Agent has not received written notice as provided under the definition of “Bank Product”.




 


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Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof
and then to the next category. If amounts are insufficient to satisfy a category, they shall be
applied on a pro rata basis among the Obligations in the category. Amounts distributed with
respect to any Bank Product Debt or LC Obligations shall be the lesser of the applicable LC
Obligations or Bank Product Amount last reported to Agent or the actual LC Obligations or Bank
Product Debt as calculated by the methodology reported to Agent for determining the amount due.
Agent shall have no obligation to calculate the amount to be distributed with respect to any Bank
Product Debt, but may rely upon written notice of the amount (setting forth a reasonably detailed
calculation) from the Secured Party. In the absence of such notice, Agent may assume the amount to
be distributed is the Bank Product Amount last reported to it. The allocations set forth in this
Section 5.5.2 are solely to determine the rights and priorities of Agent and Lenders as among
themselves, and may be changed by agreement among them without the consent of any Obligor. This
Section 5.5.2 is not for the benefit of or enforceable by any Obligor.



5.5.3. Erroneous Application. Agent shall not be liable for any application of
amounts made by it in error (unless it has been determined in a final, non-appealable judgment by a
court of competent jurisdiction that such error was a result of the gross negligence or willful
misconduct of Agent) and if any such application is subsequently determined to have been made in
error, the sole recourse of any Lender or other Person to which such amount should have been made
in error (unless it has been determined in a final, non-appealable judgment by a court of competent
jurisdiction that such error was a result of the gross negligence or willful misconduct of Agent)
shall be to recover the amount from the Person that actually received it (and, if such amount was
received by any Lender, such Lender hereby agrees to return it).



5.6. Application of Payments. On each Business Day occurring prior to the
commencement of a Trigger Event Period, the available balance in the main Dominion Account on each
Business Day (to the extent practicable and consistent with past practices) shall be transferred,
by the Borrowers, to the Borrower Account on the next Business Day (to the extent practicable and
consistent with past practices). On each Business Day after the commencement and during the
continuation of a Trigger Event Period, the available balance in the Dominion Accounts on such
Business Day shall be transferred, by the Agent, to a Borrower Account at Bank of America, and
shall be applied to the Obligations on the next Business Day. Each Obligor irrevocably waives the
right at all times after the commencement and during the continuation of a Trigger Event Period to
direct the application of any payments or Collateral proceeds, and agrees that Agent (subject to
Section 5.5.1 and Section 5.5.2, as applicable) shall have the continuing, exclusive right to apply
and reapply same against the Obligations, in such manner as Agent deems advisable, notwithstanding
any entry by Agent in its records. If, as a result of Agent’s receipt of Payment Items or proceeds
of Collateral, a credit balance exists, the balance shall not accrue interest in favor of Obligors
and shall be made available to Borrowers as long as no Default or Event of Default exists.




5.7. Loan Account; Account Stated.



5.7.1. Loan Account. Agent shall maintain in accordance with its usual and customary
practices an account or accounts (“Loan Account”) evidencing the Debt of Borrowers
resulting from each Loan or issuance of a Letter of Credit from time to time. Any failure of Agent
to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise
affect the obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a single
Loan Account in the name of Borrower Agent, and each Borrower confirms that such arrangement shall
have no effect on the joint and several character of its liability for the Obligations.


 


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5.7.2. Entries Binding. Entries made in the Loan Account shall constitute presumptive
evidence of the information contained therein. If any information contained in the Loan Account is
provided to or inspected by any Person, then such information shall be conclusive and binding on
such Person for all purposes absent demonstrable error, except to the extent such Person notifies
Agent in writing within 30 days after receipt or inspection that specific information is subject to
dispute.



5.8. Taxes. If any Taxes (except Excluded Taxes) shall be payable by any party due to
the execution, delivery, issuance or recording of any Loan Documents, or the creation or repayment
of any Obligations, Borrowers shall pay (and shall promptly reimburse Agent and Lenders for their
payment of) all such Taxes, including any interest and penalties thereon, and will indemnify and
hold harmless Indemnitees against all liability in connection therewith. If Borrowers shall be
required by Applicable Law to withhold or deduct any Taxes (except Excluded Taxes) with respect to
any sum payable under any Loan Documents, (a) the sum payable to Agent or such Lender shall be
increased as may be necessary so that, after making all required withholding or deductions, Agent
or such Lender (as the case may be) receives an amount equal to the sum it would have received had
no such withholding or deductions been made; (b) Borrowers shall make such withholding or
deductions; and (c) Borrowers shall pay the full amount withheld or deducted to the relevant taxing
or other authority in accordance with Applicable Law.



5.9. Withholding Tax Exemption. At least five Business Days prior to the first date
for payment of interest or fees hereunder to a Foreign Lender, the Foreign Lender shall deliver to
Borrowers and Agent two duly completed copies of IRS Form W-8BEN or W-8ECI (or any subsequent
replacement or substitute form therefor), certifying that such Lender can receive payment of
Obligations without deduction or withholding of any United States federal income taxes. Each
Foreign Lender shall deliver to Borrowers and Agent two additional copies of such form before the
preceding form expires or becomes obsolete or after the occurrence of any event requiring a change
in the form, as well as any amendments, extensions or renewals thereof as may be reasonably
requested by Borrowers or Agent, in each case, certifying that the Foreign Lender can receive
payment of Obligations without deduction or withholding of any such taxes unless any change in
treaty or law has occurred that renders such forms inapplicable or prevents the Foreign Lender from
certifying that it can receive payments without deduction or withholding of such taxes. During any
period that a Foreign Lender does not or is unable to establish that it can receive payments
without deduction or withholding of such taxes, other than by reason of any change in treaty or law
that occurs after it becomes a Lender, Agent may withhold taxes from payments to such Foreign
Lender at the applicable statutory and treaty rates, and Borrowers shall not be required to pay any
additional amounts under Section 5.8 or this Section 5.9 as a result of such withholding. Each
Lender or Agent that is organized under the laws of the United States, or any state or district
thereof shall provide to the Borrowers (and in the case of a Lender, to the Agent) two duly
executed copies of IRS Form W-9. In the event that any Lender or Agent does not comply with the
requirements of this Section 5.9, Borrowers may withhold taxes from payments to such Lender or
Agent as required by applicable law. In the event of the resignation or removal of the Agent
pursuant to Section 12.8 hereunder, the successor Agent shall be subject to the provisions of this
Section 5.9 in the same manner as a its predecessor Agent, and shall be required to provide the
appropriate IRS Form W-8BEN or W-8ECI to the Borrowers as required in this Section 5.9. In the
event that the successor Agent does not comply with the requirements of this Section 5.9, Borrowers
may withhold taxes from payments to such successor Agent as required by applicable law.


 


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5.10. Nature and Extent of Each Borrower’s Liability.



5.10.1. Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt
payment and performance of, all Obligations and all agreements under the Loan Documents. Each
Borrower agrees that its guaranty of obligations hereunder constitute a continuing guaranty of
payment and performance and not of collection, that such obligations shall not be discharged until
Full Payment of the Obligations and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor
is or may become a party or liable; (b) the absence of any action to enforce this Loan Agreement
(including this Section 5.10.1) or any other Loan Document, or any waiver, consent or indulgence of
any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or guaranty for the
Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof
(including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application of Section
1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as
debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of
any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under
Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that
might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.




5.10.2. Waivers.



(a) Each Borrower expressly waives all rights that it may have now or in the future under any
statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to
proceed against any Obligor, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among
each Borrower, Agent and Lenders that the provisions of this Section 5.10.2 are of the essence of
the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and
Lenders would decline to make Loans and issue Letters of Credit. Notwithstanding anything to the
contrary in any Loan Document, and except as set forth in Section 5.10.3, each Borrower expressly
waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off, as well as all defenses available to a surety, guarantor or
accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section
5.10.2 is necessary to the conduct and promotion of its business, and can be expected to benefit
such business.



(b) Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem
appropriate, including realization upon Collateral or any Real Estate by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies under this Section
5.10. If, in the exercise of any rights or remedies, Agent or any Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to “election of remedies” or
otherwise, each Borrower consents to such action by Agent or such Lender and waives any claim based
upon such action, even if the action may result in loss of any rights of subrogation that any
Borrower might otherwise have had but for such action. Any election of remedies that results in
denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any
Borrower shall not impair any other Borrower’s obligation to pay the full amount of the
Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies,
such as nonjudicial foreclosure with respect to any security for the Obligations, even though that
election of remedies destroys such Borrower’s rights of subrogation against any other Person. If
Agent bids at any foreclosure or trustee’s sale or at any private sale, Agent may bid all or a
portion of the Obligations and the amount of such bid need not be paid by Agent but shall be
credited against the Obligations. The amount of the successful bid at any such sale, whether Agent
or any other Person is the successful bidder, shall be conclusively deemed to be the fair market
value of the Collateral, and the difference between such bid amount and the remaining balance of
the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under
this Section 5.10, notwithstanding that any present or future law or court decision may have the
effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise
be entitled but for such bidding at any such sale.


 


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5.10.3. Extent of Liability; Contribution.



(a) Notwithstanding anything herein to the contrary, each Borrower’s liability under this
Section 5.10 shall be limited to the greater of (i) all amounts for which such Borrower is
primarily liable and (ii) such Borrower’s Allocable Amount.



(b) If any Borrower makes a payment under this Section 5.10 of any Obligations (other than
amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking
into account all other Guarantor Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the
aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such
Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments from, and to be
reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The
“Allocable Amount” for any Borrower shall be the maximum amount that could then be
recovered from such Borrower under this Section 5.10 without rendering such payment voidable or
avoidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.



(c) Nothing contained in this Section 5.10 shall limit the liability of any Borrower to pay
Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower
and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC
Obligations relating to Letters of Credit issued to support such Borrower’s business, and all
accrued interest, fees, expenses and other related Obligations with respect thereto, for which such
Borrower shall be primarily liable for all purposes hereunder.



5.10.4. Joint Enterprise. Each Borrower has requested that Agent and Lenders make
this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’
business most efficiently and economically. Borrowers’ business is a mutual and collective
enterprise, and Borrowers believe that consolidation of their credit facility will enhance the
borrowing power of each Borrower and ease the administration of their relationship with Lenders,
all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent’s and
Lenders’ willingness to extend credit to Borrowers and to administer the Collateral on a combined
basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers’
request.



5.10.5. Subordination. Each Borrower hereby subordinates any claims, including any
right of payment, subrogation, contribution and indemnity, that it may have at any time against any
other Obligor, howsoever arising, to the Full Payment of all Obligations.



SECTION 6. CONDITIONS PRECEDENT




6.1. Conditions Precedent to Initial Loans. In addition to the conditions set forth
in Section 6.2, Lenders shall not be required to fund any requested Loan, issue any Letter of
Credit, or otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”)
that each of the following conditions has been satisfied:



(a) Notes shall have been executed by Borrowers and delivered to each Lender that requests
issuance of a Note. Each of this Loan Agreement and the other Loan Document shall have been duly
executed and delivered to Agent by each of the signatories thereto, and each shall be in form and
substance reasonably satisfactory to the Agent and each of the Lenders, and each Obligor shall be
in compliance with all terms thereof.



 


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(b) Agent and the Lenders shall be satisfied that the Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first priority (subject only to
Permitted Liens entitled to priority under Applicable Law) perfected security interest in and Lien
upon the
Collateral and shall have received (i) evidence that all filings, recordings, deliveries of
instruments and other actions necessary or desirable in the commercially reasonable opinion of
Agent to protect and preserve such security interests shall have been duly effected, (ii) UCC and
Lien searches (and the equivalent thereof in all applicable foreign jurisdictions) and other
evidence reasonably satisfactory to Agent that such Liens are the only Liens upon the Collateral,
except Permitted Liens and Liens to be discharged on or prior to the Closing Date, (iii) evidence
that the payment (or evidence of provision for payment) of all filing and recording fees and taxes
due and payable in respect thereof has been made in form and substance reasonably satisfactory to
Agent and each of the Lenders, and (iv) a completed and fully executed perfection certificate in
form and substance reasonably satisfactory to Agent;



(c) Agent shall have received the Related Real Estate Documents for all Real Estate subject to
a Mortgage.



(d) Agent shall have received duly executed agreements establishing each Dominion Account and
related lockbox and the Borrower Account, each in form and substance, and with financial
institutions, reasonably satisfactory to Agent and each of the Lenders.



(e) Agent shall have received a certificate, in form and substance reasonably satisfactory to
it and each of the Lenders, from the chief financial officer of each Borrower (with such
certification to be in such Person’s capacity as chief financial officer of such Borrower and not
in such Person’s individual capacity) certifying that:




(i) after giving effect to the initial Loans and transactions hereunder, (A) (x) Parent
and its Subsidiaries, on a consolidated basis, are Solvent and (y) each Borrower,
individually, is Solvent; (B) no Default or Event of Default exists; (C) the representations
and warranties set forth in Section 9 are true and correct in all material respects; and (D)
each Borrower has complied in all material respects with all agreements and conditions to be
satisfied by it under the Loan Documents;




(ii) there is no action, suit, investigation or proceeding pending or, to the knowledge
of Parent or its Subsidiaries, threatened in writing in any court or before any arbitrator
or governmental authority that could reasonably be expected to have a Material Adverse
Effect;




(iii) all Loans made by the Lenders to the Borrowers hereunder are and shall remain in
full compliance with the Federal Reserve’s margin regulations; and




(iv) no law or regulation to which any Borrower is subject is applicable to the
transactions contemplated hereby which could reasonably be expected to have a Material
Adverse Effect on any Obligor or a Material Adverse Effect on the transactions contemplated
hereby.



(f) Agent shall have received a certificate of a duly authorized officer of each Obligor (with
such certification to be in such Person’s capacity as an officer of such Obligor and not in such
Person’s individual capacity), certifying (i) that attached copies of such Obligor’s Organic
Documents are true and complete, and in full force and effect, without amendment except as shown,
(ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents
is true and complete, and that such resolutions are in full force and effect, were duly adopted,
have not been amended, modified or revoked, and constitute all resolutions adopted with respect to
this credit facility, and (iii) to the title, name and signature of each Person authorized to sign
the Loan Documents.



(g) Agent shall have received a written opinion of Paul, Weiss, Rifkind, Wharton & Garrison
LLP, as well as any relevant local counsel to Obligors or Agent, in form and substance reasonably
satisfactory to Agent and each of the Lenders.


 


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(h) Agent shall have received copies of the charter documents of each Obligor, certified as
appropriate by the Secretary of State or another official of such Obligor’s jurisdiction of
organization. Agent shall have received good standing or subsistence certificates, as applicable,
for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s
jurisdiction of organization and each jurisdiction where such Obligor’s conduct of business or
ownership of Property necessitates qualification.



(i) Agent shall (i) have received copies of policies of insurance, (ii) be reasonably
satisfied with the amount, types and terms and conditions of all insurance maintained by the
Obligors and their Subsidiaries, and (iii) have received certificates of insurance with
endorsements naming Agent, for the benefit of the Secured Parties, as loss payee or additional
insured, as applicable, with respect to each insurance policy required to be maintained with
respect to the Collateral and otherwise in form and substance reasonably satisfactory to Agent and
each of the Lenders.




(j) [Reserved].



(k) Borrowers shall have paid all reasonable and documented fees and out-of-pocket expenses to
be paid to Agent and Lenders on the Closing Date (including, without limitation, all reasonable and
documented fees, out-of-pocket charges and disbursements of one outside counsel, one local counsel
in each relevant jurisdiction (as determined by the Agent in its reasonable discretion), one
special or regulatory counsel in respect of each matter (as reasonably required by the Agent) and
conflict of interest counsel (as determined by the Agent in its reasonable discretion), accounting,
appraisal, consulting and other reasonable and documented fees, out-of-pocket to the extent
invoiced prior to or on the Closing Date.



(l) Agent shall have received copies of the Second Lien Loan Documents (if applicable) and all
certificates, opinions and other material documents delivered thereunder, certified by a Senior
Officer as complete and correct (with such certification to be in such Person’s capacity a Senior
Officer of an Obligor and not in such Person’s individual capacity), and the Agent shall be
satisfied with the terms and conditions and provisions thereof.



(m) Agent and the Lenders shall have agreed to satisfactory intercreditor arrangements with
the Second Lien Agent and Agent shall have received a fully executed Intercreditor Agreement in
full force and effect.



(n) Agent shall have received all inventory and asset appraisals, commercial finance audits,
field audits and such other reports, audits and other information or certifications as it may
reasonably request with respect to the Collateral.



(o) Agent shall have received a flow of funds, in form and substance reasonably satisfactory
to it.



(p) Agent shall have received copies of notifications, instructing each of Mastercard, Visa,
HSBC and each Obligor’s other Credit Card Processor required by Agent to transfer all amounts owing
by such Credit Card Processor to an Obligor directly to the Borrower Account or other Deposit
Account reasonably acceptable to Agent and subject to control arrangements reasonably satisfactory
to Agent, with (x) such notifications (each, a “Credit Card Notification”) to be
substantially the form attached hereto as Exhibit E, or in such other form reasonably acceptable to
Agent, (y) such notifications to be executed by each relevant Obligor, sent to each such Credit
Card Processor and (z) Agent to be satisfied that the Obligors have exercised commercially
reasonable efforts to obtain acknowledgments of such Credit Card Notifications from such Credit
Card Processors.


 


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(q) Agent shall have received an officer’s certificate of a Senior Officer of the Borrowers
indicating that Excess Availability as of the Closing Date, after giving effect to the transactions
contemplated hereby, is not less than $210,000,000.



(r) Agent shall have received an omnibus assignment agreement from all of the non-continuing
lenders under the Existing Credit Facility, in form and substance reasonably satisfactory to Agent.



(s) Agent shall have received such other certificates, documents, agreements and information
in respect of any Obligor as Administrative Agent may reasonably request.



For purposes of determining compliance with the conditions specified in this Section 6.1, each
Lender that has signed this Loan Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to a Lender unless the Agent shall have received
written notice from such Lender prior to the proposed Closing Date specifying its objection
thereto.



6.2. Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and Lenders
shall not be required to fund any Loans, arrange for issuance of any Letters of Credit or grant any
other accommodation to or for the benefit of Borrowers, unless the following conditions are
satisfied:



(a) No Default or Event of Default shall exist at the time of, or result from, such funding,
issuance or grant;



(b) The representations and warranties of each Obligor in the Loan Documents shall be true and
correct in all material respects on the date of, and upon giving effect to, such funding, issuance
or grant (except for representations and warranties that expressly relate to an earlier date and
except for changes therein which do not cause a violation of this Loan Agreement);



(c) All conditions precedent to fund any Loans, arrange for issuance of any Letters of Credit
or grant any other accommodation to or for the benefit of Borrowers set forth in any other Loan
Document shall be satisfied;



(d) No event shall have occurred or circumstance exist that has or could reasonably be
expected to have a Material Adverse Effect; and




(e) With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied.



Each request (or deemed request) by Borrowers for funding of a Loan, issuance of a Letter of Credit
or grant of an accommodation shall constitute a representation by Borrowers that the foregoing
conditions are satisfied on the date of such request and on the date of such funding, issuance or
grant.



6.3. Limited Waiver of Conditions Precedent. If Agent, Issuing Bank or Lenders fund
any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation when any
conditions precedent are not satisfied (regardless of whether the lack of satisfaction was known or
unknown at the time), it shall not operate as a waiver of (a) the right of Agent, Issuing Bank and
Lenders to insist upon satisfaction of all conditions precedent with respect to any subsequent
funding, issuance or grant; nor (b) any Default or Event of Default due to such failure of
conditions or otherwise.


 


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SECTION 7. COLLATERAL




7.1. Grant of Security Interest. To secure the prompt payment and performance of all
Obligations, each Obligor hereby grants to Agent, for the benefit of Secured Parties, a continuing
security
interest in and Lien upon all of the following personal and fixture property, assets and
rights of such Obligor of every kind and nature, whether now owned or hereafter acquired or
arising, and wherever located:




(a) all Accounts and all Credit Card Receivables;




(b) all Chattel Paper, including electronic chattel paper;



(c) all Commercial Tort Claims described on Schedule 7.1(c), as shall be amended from time to
time in accordance with Section 7.4.1;




(d) all Deposit Accounts;




(e) all Documents;



(f) subject to the proviso to Section 7.1(m), all General Intangibles, including Payment
Intangibles, Software and Intellectual Property; provided, however, that the grant
of security interest shall not include any intent-to-use application for a trademark that may be
deemed invalidated, canceled or abandoned due to the grant and/or enforcement of such security
interest unless and until such time that the grant and/or enforcement of the security interest will
not affect the status or validity of such trademark;



(g) all Goods, including Inventory, Equipment and Fixtures, excluding (i) any motor vehicles
and (ii) any Equipment subject to Purchase Money Liens securing Permitted Purchase Money Debt so
long as the documents evidencing such Permitted Purchase Money Debt expressly prohibit a second
priority lien on such Equipment;




(h) all Instruments;




(i) all Investment Property;




(j) all Letter-of-Credit Rights;




(k) all Supporting Obligations;



(l) all monies, whether or not in the possession or under the control of Agent, a Lender, or a
bailee or Affiliate of Agent or a Lender, including any Cash Collateral;



(m) all equity interests in any Subsidiary of such Obligor; provided that such
grant of security interest shall not extend to the partnership interests in any of The Bon-Ton
Properties-Eastview L.P., The Bon-Ton Properties- Marketplace L.P., or The Bon-Ton Properties-
Greece Ridge L.P., to the extent that the grant of such security interest would constitute or
result in a breach or termination pursuant to the terms of, or a default under, any lease, loan
document, partnership agreement or other organizational document of such limited partnership, so
long as such restrictive provision is enforceable under Applicable Law;



(n) all accessions to, substitutions for, and all replacements, products, and cash and
non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to
insurance policies, and claims against any Person for loss, damage or destruction of any
Collateral; and



 


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(o) all books and records (including customer lists, files, correspondence, tapes, computer
programs, print-outs and computer records) pertaining to the foregoing;


provided, however, that notwithstanding any of the other provisions set forth
herein and solely with respect to assets other than Inventory, Accounts, and other assets of the
types that are not included in the Tranche A Borrowing Base or the Tranche A-1 Borrowing Base, this
Loan Agreement shall not constitute a grant of a security interest in, and “Collateral” shall not
include any property to the extent that a grant of security interest therein (x) is prohibited by
any requirements of law or (y) is prohibited by or constitutes a breach or default under or results
in the termination of or requires any consent not obtained under any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or any applicable
shareholder or similar agreement, in the case of clause (x) and (y), solely to the extent such
prohibition or breach or default or requirement for consent is in effect and is enforceable under
Applicable Law.




7.2. Lien on Deposit Accounts; Cash Collateral.



7.2.1. Deposit Accounts. To further secure the prompt payment and performance of all
Obligations, each Obligor hereby grants to Agent, for the benefit of Secured Parties, a continuing
security interest in and Lien upon all of such Obligor’s right, title and interest in and to each
Deposit Account of such Obligor (except for those referred to in clauses (i) through (iv) of
Section 8.5) and any deposits or other sums at any time credited to any such Deposit Account,
including any sums in any blocked or lockbox accounts or in any accounts into which such sums are
swept. Prior to the commencement of a Trigger Event Period, each Obligor shall direct each bank or
other depository to deliver to the Borrower Account, on each Business Day (to the extent
practicable and consistent with past practices), all available balances in each Deposit Account
maintained by such Obligor with such depository (except for (a) those Deposit Accounts referred to
in clauses (i) through (iv) of Section 8.5 and (b) those Deposit Accounts exclusively used as
secondary operating accounts and described on Schedule 7.2.1 (as may be updated with the reasonable
approval of Agent with respect to such secondary operating accounts) so long as the average account
balances in such accounts described in this clause (b) are in amounts consistent with the Ordinary
Course of Business of the Obligors); provided, however, that the Obligors may
maintain an aggregate account balance in local Deposit Accounts not to exceed $5,000 for each Store
supported by such local Deposit Account for petty cash and Store expense reimbursement purposes.
At all times after the commencement and during the continuation of a Trigger Event Period, the
Agent shall direct each bank or other depository to deliver to a Borrower Account at Bank of
America on each Business Day, for application to the Obligations then outstanding, all available
balances in each Deposit Account maintained by any Obligor with such depository (except for those
Deposit Accounts referred to in clauses (i) through (iv) of Section 8.5). Each Obligor irrevocably
appoints, at all times after the commencement and during the continuation of a Trigger Event
Period, Agent as such Obligor’s attorney in fact to collect such balances to the extent any such
delivery is not so made. Each Obligor waives the right at all times after the commencement and
during the continuation of a Trigger Event Period to direct the application of any payments or
Collateral proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and
reapply same against the Obligations, in such manner as Agent deems advisable, notwithstanding any
entry by Agent in its records. If, as a result of Agent’s receipt of Payment Items or proceeds of
Collateral, a credit balance exists, the balance shall not accrue interest in favor of Obligors and
shall be made available to Borrowers as long as no Default or Event of Default exists.



7.2.2. Cash Collateral. Any Cash Collateral may be invested, in Agent’s discretion,
in Cash Equivalents, but Agent shall have no duty to do so, regardless of any agreement,
understanding or course of dealing with any Obligor, and shall have no responsibility for any
investment or loss. Each Obligor hereby grants to Agent, for the benefit of Secured Parties, a
security interest in all Cash Collateral held from time to time and all proceeds thereof, as
security for the Obligations, whether such Cash Collateral is held in the Cash Collateral Account
or elsewhere. Agent may apply Cash Collateral to the payment of any Obligations, in such order as
Agent may elect, as they become due and payable. The Cash Collateral Account and all Cash
Collateral shall be under the sole dominion and control of Agent. No Obligor or other Person
claiming through or on behalf of any Obligor shall have any right to any Cash
Collateral, until payment in full, in cash of all Obligations and the occurrence of the
Commitment Termination Date.


 


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7.3. Real Estate Collateral. The Obligations shall be secured by Mortgages upon (x)
all Real Estate owned by Obligors described on Schedule 7.3 and (y) all leasehold interests in Real
Estate described on Schedule 7.3. The Mortgages shall be duly recorded, at Borrowers’ expense, in
each office where such recording is required to constitute a fully perfected Lien on the Real
Estate covered thereby. If any Obligor acquires any fee ownership in any Real Estate after the
Closing Date (unless such Real Estate is encumbered by Permitted Purchase Money Debt, the terms of
which expressly prohibit a Lien junior in priority on such Real Estate) having a value in excess of
$5,000,000, such Obligor shall, within 60 days, execute, deliver and record a Mortgage sufficient
to create a first priority perfected Lien (or, where such Real Estate is subject to Permitted
Purchase Money Debt and the documents evidencing such Debt permit Agent to hold a lien junior in
priority on such Real Estate, a Lien junior in priority) in favor of Agent on such Real Estate, and
shall deliver all Related Real Estate Documents. The Agent shall amend Schedule 7.3 to reflect
thereon any Real Estate that becomes subject to the requirements set forth in the preceding
sentence after the Closing Date.




7.4. Other Collateral.



7.4.1. Commercial Tort Claims. Obligors shall promptly notify Agent in writing if
Parent or any Subsidiary has a Commercial Tort Claim (other than, as long as no Event of Default
exists, a Commercial Tort Claim for less than $1,000,000) and, upon Agent’s request, shall promptly
execute such documents and take such actions as Agent deems appropriate (including amending
Schedule 7.1(c))to confer upon Agent (for the benefit of Secured Parties) a duly perfected, first
priority (subject to Permitted Liens entitled to priority under Applicable Law) Lien upon such
claim.



7.4.2. Certain After-Acquired Collateral. Obligors shall promptly (or, in the case of
Intellectual Property, within 20 Business Days after the first day of each Fiscal Quarter) notify
Agent in writing if, after the Closing Date, Parent or any Subsidiary obtains any interest in any
Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments, Intellectual
Property that is registered or subject to a pending application for registration, Investment
Property or Letter-of-Credit Rights which has not yet been perfected and, upon Agent’s reasonable
request, shall promptly execute such documents and take such actions as Agent deems reasonably
appropriate to effect Agent’s duly perfected, first priority (subject to Permitted Liens entitled
to priority under Applicable Law) Lien upon such Collateral, including obtaining any appropriate
possession, control agreement or Lien Waiver to the extent required by Section 10.1.10. If any
Collateral is in the possession of a third party, at Agent’s request, Obligors shall use
commercially reasonable efforts to obtain an acknowledgment that such third party holds the
Collateral for the benefit of Agent. Notwithstanding the foregoing, if any additional
notifications are required to be delivered to Second Lien Agent under Section 7.4.2 of the Second
Lien Loan Agreement, such notification shall be required hereunder.



7.5. No Assumption of Liability. The Lien on Collateral granted hereunder is given as
security only and shall not subject Agent or any Lender to, or in any way modify, any obligation or
liability of the Obligors relating to any Collateral.



7.6. Further Assurances. Promptly upon request, Obligors shall deliver such
instruments, assignments, title certificates, or other documents or agreements, and shall take such
actions, as Agent reasonably deems appropriate under Applicable Law to evidence or perfect its Lien
on any Collateral, or otherwise to give effect to the intent of this Loan Agreement. Each Obligor
authorizes Agent to file any financing statement that indicates the Collateral as “all assets” or
“all personal property” of such Obligor, or words to similar effect, and ratifies any action taken
by Agent before the Closing Date to effect or perfect its Lien on any Collateral.


 


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7.7. Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral shall
include only 65% of the voting securities of any first tier Foreign Subsidiary.



7.8. Lien Releases. (a) Upon the occurrence of payment, in full, in cash of the
Obligations (other than unmatured Contingent Obligations) and the occurrence of the Commitment
Termination Date or (b) with respect to any Collateral that is the subject of an Asset Disposition
which Borrowers certify in writing to Agent is a Permitted Asset Disposition or a disposition of
Equipment permitted under Section 8.4.2 (and Agent may rely conclusively on any such certificate
without further inquiry), Agent will, at the Borrower’s expense, execute and deliver to the
applicable Obligor such documents as such Obligor may reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted under the Loan Documents.



SECTION 8. COLLATERAL ADMINISTRATION




8.1. Borrowing Base Certificates. The Borrowers shall deliver to the Agent and each
Co-Collateral Agent (and Agent shall promptly deliver same to Lenders) (i) at all times prior to
the commencement of a Trigger Event Period, not later than the twelfth (12th) Business Day after
the immediately preceding fiscal month end, and at such other times as Agent may reasonably
request, a Borrowing Base Certificate prepared as of the close of business of the previous month or
such other date so requested by the Agent and (ii) at all times (x) after the commencement and
during the continuation of a Trigger Event Period or (y) during the periods from and including the
fiscal month of October of any fiscal year through and including the Friday of the second fiscal
week of January of such fiscal year, not later than the last Business Day of each week, and at such
other times as Agent or any Co-Collateral Agent may request, a Borrowing Base Certificate prepared
as of the close of business of the previous week or such other date so requested by Agent or a
Co-Collateral Agent, with such weekly Borrowing Base Certificates (other than those coinciding with
a month end) updated for purchases and sales of Inventory from the prior week in a manner
consistent with the past practices of the Obligors and reasonably approved by Agent. All
calculations of Tranche A Excess Availability, Tranche A-1 Excess Availability and Excess
Availability in any Borrowing Base Certificate shall originally be made by Borrowers and certified
by a Senior Officer (with such certification to be in such Person’s capacity as a Senior Officer of
an Obligor and not in such Person’s individual capacity), provided that Agent may from time to time
review and adjust any such calculation (a) to reflect its reasonable estimate of declines in value
of any Collateral, due to collections received in the Dominion Accounts or otherwise; (b) to adjust
advance rates to reflect changes in dilution, quality, mix and other factors affecting Collateral;
and (c) to the extent the calculation is not made in accordance with this Loan Agreement or does
not accurately reflect the Availability Reserve or the LC Reserve.




8.2. Administration of Accounts and Credit Card Receivables.



8.2.1. Credit Card Notifications; Records. Schedule 8.2.1 sets forth, as of
the Closing Date, all arrangements to which any Obligor is a party with respect to the payment to
any Obligor of the proceeds of credit card charges for sales by such Obligor. The Obligors shall
deliver to Agent Credit Card Notifications instructing each of their Credit Card Issuers or Credit
Card Processors to transfer all amounts owing by such processor or issuer to an Obligor directly to
the Borrower Account or a Dominion Account, with such Credit Card Notifications to be executed by
each relevant Obligor and accompanied by evidence that such Credit Card Notifications have been
received by such Credit Card Issuers or Credit Card Processors. The Obligors shall exercise
commercially reasonable efforts to obtain acknowledgments to such Credit Card Notifications from
each of the Credit Card Issuers and Credit Card Processors. Each Obligor shall keep accurate and
complete records of its Credit Card Receivables, and shall submit to Agent Credit Card Receivables
reports, including all additions and reductions (cash and non-cash) with respect to Credit Card
Receivables of the Obligors in each case accompanied by such supporting detail and documentation as
shall be reasonably requested by Agent, in form reasonably satisfactory to Agent, on such periodic
basis as Agent may request.


 


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8.2.2. Account Verification. Whether or not a Default or Event of Default exists,
Agent shall have the right at any time, in the name of Agent, any designee of Agent or any Obligor
to verify the validity, amount or any other matter relating to any Accounts of Obligors by mail,
telephone or otherwise. Obligors shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.



8.2.3. Maintenance of Dominion Accounts. Obligors shall maintain Dominion Accounts
pursuant to lockbox or other arrangements reasonably acceptable to Agent. Obligors shall obtain an
agreement (in form and substance reasonably satisfactory to Agent) from each lockbox servicer and
Dominion Account bank, establishing Agent’s control over and Lien in the lockboxes or Dominion
Accounts, requiring immediate deposit of all remittances received in the lockbox to a Dominion
Account and, if such Dominion Account is not maintained with Bank of America, directing, in
accordance with Section 5.6, the account bank to transfer at the end of each Business Day available
funds in the Dominion Accounts to the Borrower Account consistent with past practice, and waiving
offset rights of such servicer or bank against any funds in the lockboxes or Dominion Accounts,
except offset rights for customary administrative charges. Neither Agent nor Lenders assume any
responsibility to Obligors for any lockbox arrangements or Dominion Accounts, including any claim
of accord and satisfaction or release with respect to any Payment Items accepted by any bank.



8.2.4. Proceeds of Collateral. Obligors shall request in writing and otherwise take
all reasonable steps to ensure that all payments on Accounts or otherwise relating to Collateral
are made directly to a Dominion Account (or a lockbox relating to a Dominion Account). If any
Obligor or Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold
same in trust for Agent and promptly (not later than the next Business Day) deposit same into a
Dominion Account.




8.3. Administration of Inventory.



8.3.1. Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and additions, and shall
submit to Agent inventory reports in form reasonably satisfactory to Agent, on such periodic basis
as Agent may request. Each Obligor shall conduct a physical inventory at least once per calendar
year (and on a more frequent basis if requested by Agent when an Event of Default exists) and
periodic cycle counts consistent with historical practices, and shall provide to Agent a report
based on each such inventory and count promptly upon completion thereof, together with such
supporting information as Agent may request. Agent may participate in and observe each inventory
or physical count.



8.3.2. Returns of Inventory. No Obligor shall return any Inventory to a supplier,
vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the
Ordinary Course of Business and (b) no Event of Default, Tranche A Overadvance or Tranche A-1
Overadvance exists or would result therefrom.



8.3.3. Acquisition, Sale and Maintenance. No Obligor shall acquire or accept any
Inventory which is part of the Borrowing Base on consignment or approval. No Obligor shall sell
any Inventory on consignment or approval. Obligors shall use, store and maintain all Inventory
with reasonable care and caution, in accordance with applicable standards of any insurance and in
conformity with all Applicable Law, and shall make current rent payments (within applicable grace
periods provided for in leases) at all locations where any Collateral is located.




8.4. Administration of Equipment.



8.4.1. Records and Schedules of Equipment. Each Obligor shall keep accurate and
complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and
dispositions thereof, and shall submit to Agent, on such periodic basis as Agent may request, a
current schedule
thereof, in form reasonably satisfactory to Agent. Promptly upon request, Obligors shall
deliver to Agent evidence of their ownership or interests in any Equipment.


 


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8.4.2. Dispositions of Equipment. No Obligor shall sell, lease or otherwise dispose
of any Equipment, without the prior written consent of Agent, other than (a) a Permitted Asset
Disposition; and (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of
like function and value, if the replacement Equipment is acquired substantially contemporaneously
with such disposition and is free of Liens (other than Permitted Liens).



8.4.3. Condition of Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements and repairs have been made so that the value and operating
efficiency of the Equipment is preserved at all times, reasonable wear and tear excepted. Except
where failure to do so would not reasonably be expected to result in a Material Adverse Effect,
each Obligor shall ensure that the Equipment is mechanically and structurally sound, and capable of
performing the functions for which it was designed, in accordance with the manufacturer’s published
and recommended specifications.



8.5. Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit Accounts
maintained by Obligors as of the Closing Date (or, after any update to such Schedule 8.5 in
accordance with the last sentence of this Section 8.5, as of the date of such amendment). Each
Obligor shall take all actions necessary to establish Agent’s control (pursuant to an Account
Control Agreement) of each Deposit Account other than:




(i) each Deposit Account exclusively used for payroll, payroll taxes, or employee
benefits as set forth in Schedule 8.5(a) or any replacement account exclusively used for
payroll, payroll taxes or employee benefits;




(ii) each disbursement account of the Obligors as set forth on Schedule 8.5(a) or any
replacement disbursement account that is reasonably acceptable to Agent;




(iii) each trust account listed on Schedule 8.5(b) maintained at U.S. Bank National
Association (or any replacement account thereof) so long as the average account balance in
the accounts described in this clause (iii) is in an amount consistent with the ordinary
course of business and past practices of the Obligors and, in any event, does not exceed (x)
at any time other than during a Trigger Event Period, $10,000,000 in the aggregate or (y)
after the commencement and during the continuation of a Trigger Event Period, $2,000,000 in
the aggregate; and




(iv) each Deposit Account, other than those described in clauses (i) through (iii)
above, containing not more than $75,000 at any time; provided that the
aggregate amount contained in all such accounts under this clause (iv) shall not exceed
$750,000 at any time; provided, however, that not later than ten (10)
Business Days after the commencement of the first Trigger Event Period to occur after the
Closing Date, the Obligors shall either (a) take all actions necessary to establish the
Agent’s control of each such Deposit Account referred to in this clause (iv) or (b) close
the Deposit Accounts referenced in this clause (iv) and transfer all balances and all
related deposit activity to a Deposit Account over which the Agent’s control has already
been established.



Each Obligor shall be the sole account holder of each Deposit Account and shall not allow any other
Person (other than Agent and the Second Lien Agent) to have control over a Deposit Account. Each
Obligor shall promptly notify Agent of any opening or closing of a Deposit Account and, at the
request of Agent, will amend Schedule 8.5 (and Schedule 8.5(a) or Schedule 8.5(b), if applicable)
to reflect the same.


 


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8.6. General Provisions.



8.6.1. Location of Collateral. All tangible items of Collateral, other than (i)
tangible inventory having an aggregate value of no more than $500,000, and (ii) Inventory in
transit, shall at all times be kept by Obligors at the business locations set forth in Schedule
8.6.1, except that Obligors may (a) make sales or other dispositions of Collateral in accordance
with Section 10.2.6; and (b) move Collateral to another location in the United States, so long as,
if such Collateral has an aggregate value of more than $500,000 the Borrower Agent has provided
Agent with 30 Business Days prior written notice thereof.




8.6.2. Insurance of Collateral; Condemnation Proceeds.



(a) Each Obligor shall maintain insurance with respect to the Collateral, covering casualty,
hazard, public liability, theft, malicious mischief, and such other risks, in such amounts, with
such endorsements, and with such insurers as are reasonably satisfactory to Agent. All proceeds
under each policy shall be payable to Agent. From time to time upon request, Obligors shall
deliver to Agent the originals or certified copies of its insurance policies and updated flood
plain searches. Unless Agent shall agree otherwise, each policy shall include reasonably
satisfactory endorsements (i) showing Agent as sole loss payee or additional insured, as
appropriate; (ii) requiring 30 days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever; and (iii) specifying that the interest of Agent shall not be
impaired or invalidated by any act or neglect of any Obligor or the owner of the Property, nor by
the occupation of the premises for purposes more hazardous than are permitted by the policy. If
any Obligor fails to provide and pay for such insurance, Agent may, at its option, but shall not be
required to, procure the insurance and charge Obligors therefor. Each Obligor agrees to deliver to
Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of
Default exists, Obligors may settle, adjust or compromise any insurance claim, as long as the
proceeds are delivered to Agent. If an Event of Default exists, only Agent shall be authorized to
settle, adjust and compromise such claims.



(b) Any proceeds of insurance (other than proceeds from workers’ compensation or D&O
insurance) and any awards arising from condemnation of any Collateral shall be paid to Agent.



(c) If requested by Obligors in writing within 30 days after Agent’s receipt of any insurance
proceeds or condemnation awards relating to any loss or destruction of Equipment or Real Estate,
Obligors may use such proceeds or awards to repair or replace such Equipment or Real Estate (and
until so used, the proceeds shall, at the Borrower’s election be held by Agent as Cash Collateral)
as long as (i) no Default or Event of Default exists; (ii) such repair or replacement is promptly
undertaken and concluded, in accordance with plans reasonably satisfactory to Agent; (iii)
replacement buildings are constructed on the sites of the original casualties (or in close
proximity thereto) and are of comparable size, quality and utility to the destroyed buildings; (iv)
the repaired or replaced Property is free of Liens, other than Permitted Liens; (v) Obligors comply
with disbursement procedures for such repair or replacement as Agent may reasonably require; and
(vi) the aggregate amount of such proceeds or awards from any single casualty or condemnation does
not exceed $5,000,000. Any such proceeds or awards not applied to repair or replace such Equipment
or Real Estate in accordance with this Section 8.6.2(c) shall be applied, by the Agent, to the
Obligations in accordance with Section 5.5.



8.6.3. Protection of Collateral. All expenses of protecting, storing, warehousing,
insuring, handling, maintaining and shipping any Collateral, all Taxes (other than Excluded Taxes)
payable with respect to any Collateral (including any sale thereof), and all other payments
required to be made by Agent to any Person to realize upon any Collateral, shall be borne and paid
by Obligors. Agent shall not be liable or responsible in any way for the safekeeping of any
Collateral, for any loss or damage thereto (except for reasonable care in its custody while
Collateral is in Agent’s actual possession), for any
diminution in the value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other Person whatsoever, but the same shall be at Obligors’ sole risk.


 


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8.6.4. Defense of Title to Collateral. Each Obligor shall at all times defend its
title to Collateral and Agent’s Liens therein against all Persons, claims and demands whatsoever,
except Permitted Liens.



8.7. Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Obligor’s true and lawful attorney (and
agent-in-fact) for the purposes provided in this Section 8.7. Agent, or Agent’s designee, may,
during the continuation of an Event of Default, without notice and in either its or an Obligor’s
name, but at the cost and expense of Obligors:



(a) Endorse an Obligor’s name on any Payment Item or other proceeds of Collateral (including
proceeds of insurance) that come into Agent’s possession or control; and



(b) (i) Notify any Account Debtors of the assignment of their Accounts, demand and enforce
payment of Accounts, by legal proceedings or otherwise, and generally exercise any rights and
remedies with respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or release
any Accounts or other Collateral, or any legal proceedings brought to collect Accounts or
Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for such
amounts and at such times as Agent deems advisable; (iv) take control, in any manner, of any
proceeds of Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim or other
document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien
or similar document; (vi) receive, open and dispose of mail addressed to an Obligor, and notify
postal authorities to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse any Chattel Paper, Document, Instrument, invoice, freight bill, bill of
lading, or similar document or agreement relating to any Accounts, Inventory or other Collateral;
(viii) use an Obligor’s stationery and sign its name to verifications of Accounts and notices to
Account Debtors; (ix) use the information recorded on or contained in any data processing equipment
and computer hardware and software relating to any Collateral; (x) make and adjust claims under
policies of insurance; (xi) take any action as may be necessary or appropriate to obtain payment
under any letter of credit or banker’s acceptance for which an Obligor is a beneficiary; and (xii)
take all other actions as Agent deems reasonably appropriate to fulfill any Obligor’s obligations
under the Loan Documents.



SECTION 9. REPRESENTATIONS AND WARRANTIES




9.1. General Representations and Warranties. To induce Agent and Lenders to enter
into this Loan Agreement and to make available the Commitments, Loans and Letters of Credit, each
Obligor represents and warrants that:



9.1.1. Organization and Qualification. Each Obligor and Subsidiary is duly organized,
validly existing and in good standing or subsisting, as applicable under the laws of the
jurisdiction of its organization. Each Obligor and Subsidiary is duly qualified, authorized to do
business and in good standing as a foreign corporation in each jurisdiction where failure to be so
qualified could reasonably be expected to have a Material Adverse Effect.



9.1.2. Power and Authority. Each Obligor is duly authorized to execute, deliver and
perform its Loan Documents. The execution, delivery and performance of the Loan Documents by each
Obligor have been duly authorized by all necessary action, and do not (a) require any consent or
approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b)
contravene the Organic Documents of any Obligor; (c) violate or cause a material default under any
Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other
than Permitted Liens and Liens granted hereunder) on any Property of any Obligor.


 


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9.1.3. Enforceability. Each Loan Document is a legal, valid and binding obligation of
each Obligor party thereto, enforceable against each Obligor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles.



9.1.4. Capital Structure. Schedule 9.1.4 shows as of the date hereof, for each
Obligor and Subsidiary (other than the Parent), its name, its jurisdiction of organization, its
duly authorized and validly issued Equity Interests, the holders of its Equity Interests, and all
agreements binding on such holders with respect to their Equity Interests. Each Obligor has good
title to its Equity Interests in its Subsidiaries, subject only to Agent’s and the Second Lien
Agent’s Lien, and all such Equity Interests are duly issued, fully paid and non-assessable. There
are no outstanding options to purchase, warrants, subscription rights, agreements to issue or sell,
convertible interests, phantom rights or powers of attorney relating to any Equity Interests of any
Obligor (other than the Parent) or Subsidiary.



9.1.5. Corporate Names; Locations. During the five years preceding the Closing Date,
except as shown on Schedule 9.1.5, no Obligor or Subsidiary has been known as or used any
corporate, fictitious or trade names, has been the surviving corporation of a merger or
combination, or has acquired any substantial part of the assets of any Person. The chief executive
offices and other places of business of Obligors and Subsidiaries as of the date hereof are shown
on Schedule 8.6.1.



9.1.6. Title to Properties; Priority of Liens. Each Obligor and Subsidiary has good
and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to
all of its personal Property, including all Property reflected in any financial statements
delivered to Agent or Lenders, in each case free of Liens except Permitted Liens. Each Obligor and
Subsidiary has paid and discharged all lawful claims that, if unpaid, could become a Lien on its
Properties, other than Permitted Liens. All Liens of Agent in the Collateral are duly perfected,
first priority (subject to Permitted Liens entitled to priority under Applicable Law) Liens.



9.1.7. Security Documents. The Security Documents are effective to create in favor of
the Agent a legal, valid, perfected and enforceable first priority (subject to Permitted Liens
entitled to priority under Applicable Law) security interest in and Lien upon the Collateral.



9.1.8. Financial Statements. The consolidated and, if applicable, combined balance
sheets, and related statements of income, cash flow and shareholder’s equity, of Obligors and
Subsidiaries that have been and are hereafter delivered to Agent and Lenders, pursuant to Section
6.1(n) or otherwise, are prepared in accordance with GAAP, and fairly present the financial
positions and results of operations of Obligors and Subsidiaries at the dates and for the periods
indicated, subject, in the case of interim statements, to normal year-end adjustments. All
projections delivered from time to time to Agent and Lenders have been prepared in good faith,
based on reasonable assumptions in light of the circumstances at such time. Since January 31, 2009
there have been no changes in the financial condition of any Obligor or Subsidiary that, alone or
in the aggregate, could reasonably be expected to have a Material Adverse Effect. Parent and its
Subsidiaries, on a consolidated basis, are Solvent. Each Borrower, individually, is Solvent.



9.1.9. Surety Obligations. No Obligor or Subsidiary is obligated as surety or
indemnitor under any bond or other contract that assures payment or performance of any obligation
of any Person, except as is not prohibited hereunder.



9.1.10. Taxes. Each Obligor and Subsidiary has filed all material federal, state and
local tax returns and other reports that it is required by law to file, and has paid, or made
provision for the payment of, all Taxes upon it, its income and its Properties that are due and
payable, except to the extent being Properly Contested. The provision for Taxes on the books of
each Obligor and Subsidiary is adequate for all years not closed by applicable statutes, and for
its current Fiscal Year.


 


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9.1.11. Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the Loan Documents.



9.1.12. Intellectual Property. Each Obligor and Subsidiary owns or has the lawful
right to use all Intellectual Property necessary for the conduct of its business, without conflict
with any rights of others. There is no pending or, to any Obligor’s knowledge, threatened material
Intellectual Property Claim with respect to any Obligor, any Subsidiary or any of their Property
(including any Intellectual Property). All Intellectual Property registered with the U.S. Patent
and Trademark Office which is owned by any Obligor or Subsidiary is shown on Schedule 9.1.12.



9.1.13. Governmental Approvals. Each Obligor and Subsidiary has, is in compliance
with, and is in good standing with respect to, all material Governmental Approvals necessary to
conduct its business and to own, lease and operate its Properties. All necessary material import,
export or other licenses, permits or certificates for the import or handling of any goods or other
Collateral have been procured and are in effect, and Obligors and Subsidiaries have complied with
all foreign and domestic laws with respect to the shipment and importation of any goods or
Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse
Effect.



9.1.14. Compliance with Laws. Each Obligor and Subsidiary has duly complied, and its
Properties and business operations are in compliance, in all material respects with all Applicable
Law, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.
There have been no citations, notices or orders of material noncompliance issued to any Obligor or
Subsidiary under any Applicable Law.



9.1.15. Compliance with Environmental Laws. Since the Closing Date, except as
disclosed on Schedule 9.1.15 or as could not reasonably be expected to have a Material Adverse
Effect, (a) no Obligor’s or Subsidiary’s past or present operations, Real Estate or other
Properties are subject to any federal, state or local investigation to determine whether any
remedial action is needed to address any environmental pollution, hazardous material or
environmental clean-up, (b) no Obligor or Subsidiary has received any Environmental Notice, (c) no
Obligor or Subsidiary has any material contingent liability with respect to any Environmental
Release, environmental pollution or hazardous material on any Real Estate now or previously owned,
leased or operated by it, and (d) the representations and warranties contained in the Environmental
Agreement are true and correct in all material respects on the Closing Date.



9.1.16. Burdensome Contracts. No Obligor or Subsidiary is a party or subject to any
contract, agreement or charter restriction that could reasonably be expected to have a Material
Adverse Effect. No Obligor or Subsidiary is party or subject to any material Restrictive
Agreement, except as shown on Schedule 9.1.16, none of which prohibit the execution or delivery of
any Loan Documents by an Obligor nor the performance by an Obligor of any obligations thereunder.



9.1.17. Litigation. Except as shown on Schedule 9.1.17, there are no proceedings or
investigations pending or, to any Obligor’s knowledge, threatened in writing against any Obligor or
Subsidiary, or any of their businesses, operations, Properties or conditions, that (a) relate to
any Loan Documents or transactions contemplated thereby; (b) as of the Closing Date, could
reasonably be expected to result in damages or penalties in excess of $10,000,000 (net of insurance
proceeds which the Borrowers reasonably believe will cover such claim or claims) or (c) could
reasonably be expected to have a Material Adverse Effect if determined adversely to any Obligor or
Subsidiary. No Obligor or Subsidiary is in default with respect to any order, injunction or
judgment of any Governmental Authority.



9.1.18. Insurance. The properties of the Obligor and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the Obligor, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies
engaged in similar
businesses and owning similar properties in localities where the Obligor or the applicable
Subsidiary operates.


 


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9.1.19. No Defaults. No Default or Event of Default has occurred and is continuing.
No Obligor or Subsidiary is in default, and no event or circumstance has occurred or exists that
with the passage of time or giving of notice would constitute a default, under any Material
Contract or in the payment of any Borrowed Money. There is no basis upon which any party (other
than an Obligor or Subsidiary) could terminate a Material Contract prior to its scheduled
termination date.




9.1.20. ERISA. No Obligor or Subsidiary has any Multiemployer Plan or Foreign Plan.



9.1.21. Trade Relations. There exists no actual or threatened termination, limitation
or modification of any business relationship between any Obligor or Subsidiary and any customer or
supplier, or any group of customers or suppliers, who individually or in the aggregate are material
to the business of such Obligor or Subsidiary. There exists no condition or circumstance that
could reasonably be expected to impair the ability of any Obligor or Subsidiary to conduct its
business at any time hereafter in substantially the same manner as conducted on the Closing Date.



9.1.22. Labor Relations. Except as described on Schedule 9.1.22, no Obligor or
Subsidiary is party to or bound by any (a) management agreement, (b) consulting agreement where the
aggregate obligations of such Obligor or Subsidiary thereunder are in excess of $100,000 or (c)
collective bargaining agreement. There are no material grievances, disputes or controversies with
any union or other organization of any Obligor’s or Subsidiary’s employees, or, to any Obligor’s
knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.



9.1.23. Not a Regulated Entity. No Obligor is (a) required to be registered as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended; or (b)
subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public
utilities code or any other Applicable Law regarding its authority to incur Debt.



9.1.24. Margin Stock. No Obligor or Subsidiary is engaged, principally or as one of
its important activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No Loan proceeds or Letters of Credit will be used by Obligors to
purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin
Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.



9.1.25. Plan Assets. No Obligor is an entity deemed to hold “plan assets” within the
meaning of 29 C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of Section 4975 of the
Internal Revenue Code), and neither the execution of this Loan Agreement nor the funding of any
Loans gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code.



9.1.26. Complete Disclosure. No (x) Loan Document or (y) information provided by or
on behalf of any Obligor and included in the confidential information memorandum, dated October
2009, and delivered to the Lenders in connection with the syndication of the Commitments, contains
any untrue statement of a material fact, nor fails to disclose any material fact necessary to make
the statements contained therein not materially misleading in light of the circumstances under
which they were delivered.



 


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9.1.27. Anti-Terrorism. No Obligor appears on any list of “Specially Designated
Nationals” or other list of known or suspected terrorists that has been generated by the Office of
Foreign Assets Control of the United States Department of Treasury (“OFAC”), nor is any
Obligor a citizen or
resident of any country that is subject to embargo or trade sanctions enforced by OFAC, or
otherwise is a Person (i) whose property or interest in property is blocked or subject to blocking
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)), (ii) who engages in any dealings or transactions prohibited by Section 2 of
such executive order, or, to its knowledge, is otherwise associated with any such person in any
manner violative of Section 2, or (iii) subject to the limitations or prohibitions under any other
OFAC regulation or executive order.



SECTION 10. COVENANTS AND CONTINUING AGREEMENTS




10.1. Affirmative Covenants. For so long as any Commitments or Obligations are
outstanding, each Obligor shall, and shall cause each Subsidiary to:



10.1.1. Inspections; Appraisals. (a) Permit Agent from time to time, subject (except
when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit
and inspect the Properties of any Obligor, inspect, audit and make extracts from any Obligor’s
books and records, and discuss with its officers, employees, agents, advisors and independent
accountants such Obligor’s business, financial condition, assets, prospects and results of
operations. Lenders may participate in any such visit or inspection, at their own expense.
Neither Agent nor any Lender shall have any duty to any Obligor to make any inspection, nor to
share any results of any inspection, appraisal or report with any Obligor. To the extent any
appraisal or other information is shared by Agent or a Lender with any Obligor, such Obligor
acknowledges that it was prepared by Agent and Lenders for their purposes and Obligors shall not be
entitled to rely upon it. The Agent shall provide each Co-Collateral Agent with all final
Collateral appraisals and audit reports promptly after the Agent’s receipt thereof.



(b) Reimburse Agent for all reasonable and documented out-of-pocket charges, costs and
expenses of Agent in connection with (i) examinations of any Obligor’s books and records or any
other financial or Collateral matters as Agent deems appropriate, (x) other than those times
described in clause (y), up to twice per Loan Year or (y) at all times during a continuation of an
Excess Availability Trigger Period and for a period of twelve (12) calendar months following the
end of any such Excess Availability Trigger Period, up to three times per Loan Year; (ii)
appraisals of Inventory (x) other than those times described in clause (y), up to twice per Loan
Year or (y) at all times during a continuation of an Excess Availability Trigger Period and for a
period of twelve (12) calendar months following the end of any such Excess Availability Trigger
Period, up to three times per Loan Year; (iii) appraisals of Eligible Real Estate, in form and
detail reasonably satisfactory to Agent, (x) at all times other than those described in clause (y),
once per Loan Year if so requested by Agent or (y) at all times during a continuation of an Excess
Availability Trigger Period and for a period of twelve (12) calendar months following the end of
any such Excess Availability Trigger Period, twice per Loan Year if so requested by Agent; and (iv)
environmental assessment reports as Agent deems appropriate in its reasonable discretion, with
respect to the Eligible Real Estate of the Obligors; provided, however, that (x)
during an Event of Default, the Agent may conduct any examinations and appraisals in its reasonable
discretion without regard to any such limits and (y) if any examination or appraisal is initiated
during an Event of Default, all reasonable and documented out-of-pocket charges, costs and expenses
therefor shall be reimbursed by Obligors without regard to such limits. Obligors shall pay Agent’s
then standard charges for each day that an employee of Agent or its Affiliates is engaged in any
examination activities in connection with the foregoing, and shall pay the standard charges of
Agent’s internal appraisal group. This Section shall not be construed to limit Agent’s right to
conduct examinations or to obtain appraisals at any time in its discretion, nor to use third
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10.1.2. Financial and Other Information. Keep adequate records and books of account
with respect to its business activities, in which proper entries are made in accordance with GAAP
reflecting all financial transactions; and furnish to Agent and Lenders:



(a) within 90 days after the close of each Fiscal Year, balance sheets as of the end of such
Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such
Fiscal Year, on a consolidated basis for Obligors and Subsidiaries, which consolidated statements
shall all be in reasonable detail and prepared in accordance with GAAP, audited and accompanied by
(i) a certification (without qualification as to scope or “going concern” (or similar)
qualification) by a firm of independent certified public accountants of recognized standing
selected by Borrowers and reasonably acceptable to Agent (with the Agent hereby acknowledging and
agreeing that each of PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte & Touche are
acceptable), which certification shall be prepared in accordance with GAAP and applicable
Securities Laws and (ii) an attestation report of such certified public accountants as to the
Obligors’ internal controls pursuant to Section 404 of Sarbanes-Oxley, and shall set forth in
comparative form corresponding figures for the preceding Fiscal Year and other information
reasonably acceptable to Agent;



(b) within 45 days after the end of each fiscal quarter (but within 60 days after the last
fiscal quarter of each Fiscal Year), unaudited balance sheets as of the end of such fiscal quarter
and the related statements of income and cash flow for such fiscal quarter and for the portion of
the Fiscal Year then elapsed, on a (i) consolidated basis for Obligors and Subsidiaries and (ii)
combined basis for Obligors and Subsidiaries other than the SPEs and Passive Companies, setting
forth in comparative form corresponding figures for the preceding Fiscal Year as well as the
applicable projections for such period delivered under Section 10.1.2(f) and certified by the
Borrower Agent pursuant to a certificate signed on behalf of Borrower Agent by a Senior Officer of
the Borrower Agent (with such certification to be in such Person’s capacity as a Senior Officer of
such Obligor and not in such Person’s individual capacity) as prepared in accordance with GAAP and
fairly presenting the financial position and results of operations for such quarterly period,
subject to normal year-end adjustments and the absence of footnotes;



(c) within 30 days after the end of each month (but within 60 days after the last month in a
Fiscal Year), unaudited balance sheets as of the end of such month and the related statements of
income and cash flow for such month and for the portion of the Fiscal Year then elapsed, on a
consolidated basis for Parent and Subsidiaries, setting forth in comparative form corresponding
figures for the preceding Fiscal Year as well as the applicable projections for such period
delivered under Section 10.1.2(f) and certified by a Senior Officer (with such certification to be
in such Person’s capacity as a Senior Officer of such Obligor and not in such Person’s individual
capacity) of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial
position and results of operations for such month and period, subject to normal year-end
adjustments and the absence of footnotes;



(d) concurrently with delivery of financial statements under clauses (a) and (b) above, or
more frequently if requested by Agent while an Event of Default exists, a Compliance Certificate
executed by a Senior Officer of Borrower Agent (with such certification to be in such Person’s
capacity as a Senior Officer of Borrower Agent and not in such Person’s individual capacity);



(e) concurrently with delivery of financial statements under clause (a) above, and otherwise
promptly after the request by Agent, copies of any detailed audit reports or management letters
submitted to the board of directors (or the audit committee of the board of directors) of any
Obligor by independent accountants in connection with the accounts or books of any Obligor or any
Subsidiary, or any audit of any of them;



(f) not later than 45 days after the beginning of the then current Fiscal Year, projections of
Obligors’ consolidated balance sheets, results of operations, cash flow and Availability for the
current Fiscal Year and the next two Fiscal Years, year by year, and for the current Fiscal Year,
month by month;



(g) at Agent’s request, a listing of the Obligors’ consolidated trade payables, specifying the
trade creditor and balance due, and a detailed trade payable aging;


 


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(h) promptly after the sending or filing thereof, copies of any proxy statements, financial
statements or reports that any Obligor has made generally available to its shareholders; copies of
any regular, periodic and special reports or registration statements or prospectuses that any
Obligor files with the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements made available by an
Obligor to the public concerning material changes to or developments in the business of such
Obligor, if and to the extent such information is not available on the SEC’s or the Parent’s
website;



(i) promptly after the sending or filing thereof, copies of any annual report to be filed in
connection with each Plan or Foreign Plan;



(j) promptly upon the consummation of the transactions relating to the Convertible Note Debt
or any Refinancing Debt, copies certified by a Senior Officer as complete and correct (with such
certification to be in such Person’s capacity a Senior Officer of an Obligor and not in such
Person’s individual capacity) of the Convertible Note Debt Documents or the documents relating to
the Refinancing Debt, as the case may be.



(k) promptly (x) upon delivery thereof, copies of all documents and materials of a material
financial nature provided to any other creditor of any Obligor or any Subsidiary and (y) upon
receipt thereof, copies of all material notices or information or material non-ordinary course
correspondence received from, or on behalf of, any other creditor of any Obligor or any Subsidiary
(including, without limitation, any default or similar notices);



(l) promptly upon request therefor, all information pertaining to the Obligors and their
Subsidiaries reasonably requested by any Lender in order for such Lender to comply with the
provisions of the Patriot Act; and



(m) such other reports and information (financial or otherwise) as Agent may request from time
to time in connection with any Collateral or any Obligor’s or Subsidiary’s financial condition or
business.



Documents required to be delivered pursuant to Section 10.1.2(a) or Section 10.1.2(b) (to the
extent any such documents are included in materials otherwise filed with the Securities and
Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which the applicable Borrower posts such documents, or provides a
link thereto on such Borrowers’ website on the internet at the website address indicated in writing
to Agent and Lenders by the Borrower Agent; or (ii) on which such documents are posted on the
Borrower’s behalf on an internet or intranet website, if any, to which each Lender and Agent have
access (whether a commercial, third-party website or whether sponsored by Agent); provided
that: (i) such Borrower shall deliver paper copies of such documents to Agent or any Lender that
requests such Borrower to deliver such paper copies until a written request to cease delivering
paper copies is given by Agent or such Lender and (ii) such Borrower shall notify Agent and each
Lender (by telecopier or electronic mail) of the posting of any such documents and provide to Agent
by electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrowers shall be required to
provide paper copies of the Compliance Certificates to Agent and the Lenders. Except for such
Compliance Certificates, Agent shall have no obligation to request the delivery or to maintain
copies of the documents referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrowers with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.


 


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The Obligors hereby acknowledge that (a) Agent and/or Banc of America Securities LLC will make
available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf
of the Obligors hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on
IntraLinks or another similar electronic system (the “Platform”) and (b) certain of
the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Obligors or their securities) (each, a “Public
Lender”). The Obligors hereby agree that (w) all Borrower Materials that are to be made
available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” the Obligors shall be deemed to have authorized the Agent, the
Banc of America Securities LLC, the Issuing Bank and the Lenders to treat such Borrower Materials
as not containing any material non-public information with respect to the Obligors or their
securities for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 14.11); (y) all Borrower Materials marked “PUBLIC” are permitted to
be made available through a portion of the Platform designated “Public Investor;” and (z) Agent and
Banc of America Securities LLC shall be entitled to treat any Borrower Materials that are not
marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated
“Public Investor.”



THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO
NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM,
AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE
PLATFORM. In no event shall the Agent or any of its Related Parties (collectively, the “Agent
Parties”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) arising out of the Borrowers’ or the Agent’s transmission of Borrower Materials through
the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent or such Related Party;
provided, however, that in no event shall the Agent or any of its Related Parties
have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or actual damages).



10.1.3. Notices. Notify Agent and Lenders in writing, promptly after any Senior
Officer of the Parent or the Borrower Agent obtaining knowledge thereof, of any of the following
that affects an Obligor: (a) the threat (in writing) or commencement of any proceeding or
investigation, whether or not covered by insurance, reasonably likely to result in a Material
Adverse Effect; (b) any material pending or threatened (in writing) labor dispute, strike or
walkout, or the expiration of any material labor contract; (c) any material default under or
termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any
judgment in an amount exceeding $5,000,000; (f) the assertion of any Intellectual Property Claim,
if an adverse resolution is reasonably likely to result in a Material Adverse Effect; (g) any
violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws), if an adverse resolution is reasonably likely to result in a Material Adverse
Effect; (h) any material Environmental Release by an Obligor or on any Property owned, leased or
occupied by an Obligor; or receipt of any material Environmental Notice; (i) the discharge of or
any withdrawal or resignation by Obligors’ independent accountants; (j) any opening of a new
office, place of business or Distribution Center where Collateral with a fair market value of
$2,000,000 or more will be located, at least 30 days prior to such opening, (k) any “default” or
“event of default” under any Second Lien Debt Documents, Mortgage Loan Debt Documents, Senior Note
Debt Documents or Convertible Note Debt Documents, as the case may be, or (l) as soon as
practicable, in any event prior thereto, any waiver, consent, amendment or permanent prepayment or
permanent commitment reduction (and the amount
thereof) pursuant to the Second Lien Debt Documents, Mortgage Loan Debt Documents, Senior Note
Debt Documents or Convertible Note Debt Documents, as the case may be.



 


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10.1.4. Storage Agreements. Upon request, provide Agent with copies of all existing
agreements, and promptly after execution thereof provide Agent upon request with copies of all
future agreements, between an Obligor and any warehouseman, processor, shipper, bailee, customs
broker or other Person (other than store landlords) that owns any premises at which any Collateral
having an aggregate value of more than $500,000 may be kept or that otherwise may possess or handle
any Collateral.



10.1.5. Compliance with Laws; Organic Documents; Material Contracts. Comply (a) with
all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws
regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the
ownership of its Properties or conduct of its business, unless failure to comply or maintain could
not reasonably be expected to have a Material Adverse Effect, (b) with all Organic Documents unless
failure to comply therewith would not (x) be reasonably expected to have a Material Adverse Effect
and (y) be reasonably expected to have a materially adverse effect on the Agent or any Lender and
(c) with all of its Material Contracts except in each case where the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any material Environmental Release occurs at or on any Properties
of any Obligor or Subsidiary, it shall act promptly and diligently to investigate and report to
Agent and all appropriate Governmental Authorities the extent of, and to make appropriate remedial
action to eliminate, such Environmental Release, whether or not directed to do so by any
Governmental Authority.



10.1.6. Taxes. Pay and discharge all material Taxes prior to the date on which they
become delinquent or penalties attach, unless such Taxes are being Properly Contested.



10.1.7. Insurance. In addition to the insurance required hereunder with respect to
Collateral, maintain insurance with insurers reasonably satisfactory to Agent, with respect to the
Properties, business and business interruption of Obligors and Subsidiaries of such type (including
product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation
insurance), in each case, in such amounts, and with such coverages and deductibles as are customary
for companies similarly situated.



10.1.8. Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) or any other material Property of Obligors
and Subsidiaries in full force and effect, if the failure to maintain such License is reasonably
likely to result in a Material Adverse Effect.



10.1.9. Future Subsidiaries. Promptly notify Agent upon any Person becoming a
Subsidiary and on the date such Person becomes a Subsidiary, unless such Person is a Foreign
Subsidiary, SPE or Passive Company, cause it to guaranty the Obligations by executing a Guaranty in
favor of the Agent, and to execute and deliver such documents, instruments and agreements and to
take such other actions as Agent shall reasonably require to evidence and perfect a first priority
(subject to Permitted Liens entitled to priority under Applicable Law) Lien in favor of Agent (for
the benefit of Secured Parties) on all assets of such Person constituting Collateral (provided that
perfection of any such Lien shall be required to the same extent required by this Loan Agreement on
the Closing Date), including delivery of such legal opinions, in form and substance reasonably
satisfactory to Agent, as it shall deem appropriate.



10.1.10. Lien Waivers. Use commercially reasonable efforts to deliver Lien Waivers
for each of the Obligor’s leased locations that constitutes a Large Inventory Location and for each
of the Obligor’s leased locations in a Landlord Lien State.


 


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10.1.11. Preservation of Existence. Preserve, renew and maintain in full force and
effect its legal existence and good standing under the laws of the jurisdiction of its organization
except in a transaction permitted by Section 10.2.6 or Section 10.2.9.



10.1.12. Maintenance of Properties. Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in working order and
condition, ordinary wear and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.



10.1.13. Books and Records. Maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied shall be made of all
material financial transactions and matters involving the assets and business of such Obligors or
such Subsidiary, as the case may be.



10.1.14. Operation and Maintenance Plan. If recommended by any environmental report
furnished to the Agent and if required by applicable Environmental Law with respect to any
individual parcel of Real Estate, the Obligors shall establish and comply with an operations and
maintenance program with respect to such individual parcel of Real Estate, in form and substance
reasonably acceptable to Agent, prepared by an environmental consultant reasonably acceptable to
Agent. Without limiting the generality of the preceding sentence, Agent may require (a) periodic
notices or reports regarding matters addressed by the operation and maintenance program to Agent in
form, substance and at such intervals as Agent may reasonably require, (b) and amendment to such
operations and maintenance program reasonably required to address changing circumstances or
applicable laws, (c) access to such parcel of Real Estate, subject to Section 10.1.1, to review and
assess the environmental condition of such parcel and Obligors’ compliance with such operations and
maintenance program, and (d) variation of the operations and maintenance program reasonably
required in response to the reports provided by any such consultants, as required by applicable
Environmental Law.



10.2. Negative Covenants. For so long as any Commitments or Obligations are
outstanding, each Obligor shall not, and shall cause each Subsidiary not to:




10.2.1. Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except:




(a) the Obligations;




(b) the Mortgage Loan Debt;




(c) the Senior Note Debt;




(d) Permitted Purchase Money Debt;



(e) Borrowed Money (other than the Obligations, Mortgage Loan Debt, the Senior Note Debt and
Permitted Purchase Money Debt), but only to the extent outstanding on the Closing Date, not
satisfied with proceeds of the initial Loans and set forth on Schedule 10.2.1;



(f) Bank Product Debt; provided that with respect to such Bank Product Debt in
respect of Hedging Agreements, such Obligor is otherwise permitted to enter into such Hedging
Agreement pursuant to Section 10.2.15;




(g) Permitted Contingent Obligations;



(h) Refinancing Debt as long as each Refinancing Condition is satisfied;


 


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(i) Debt that is not included in any of the preceding clauses of this Section 10.2.1, is not
secured by a Lien and the principal amount thereof does not exceed, in the aggregate at any time
(x) $5,000,000 minus (y) the then outstanding principal amount of Permitted Purchase Money
Debt in excess of $20,000,000;



(j) the guarantee by any Obligor of Debt of another Obligor so long as such Debt was otherwise
permitted to be incurred under this Section 10.2.1;




(k) Second Lien Debt in an aggregate principal amount not to exceed $100,000,000;



(l) the incurrence by any Obligor of Debt arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of any other Obligor pursuant to
such agreements, in any case incurred in connection with the disposition of any business, assets or
capital stock of any Obligor (other than guarantees of Debt incurred by any Person acquiring all or
any portion of such business, assets or capital stock of such Obligor for the purpose of financing
such acquisition), so long as the principal amount does not exceed the gross proceeds actually
received by any Obligor in connection with such disposition;



(m) the incurrence by any Obligor of Debt arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against insufficient funds in
the ordinary course of business, provided, however, that such Debt is extinguished within five
Business Days of its Incurrence;




(n) Debt in respect of loans permitted to be made pursuant to Section 10.2.7;



(o) an unsecured guarantee by any Obligor of the obligations of any other Obligor, as tenant,
under any Master Lease Agreement;



(p) Convertible Note Debt in an aggregate principal amount not to exceed $100,000,000;
provided that (i) the final maturity of such Debt shall not occur prior to June 30, 2013,
(ii) there shall be no scheduled amortization or mandatory prepayments or mandatory repayments of
such Debt prior to June 30, 2013, (iii) 100% of the net proceeds from the issuance of such Debt is
applied to the repayment of the outstanding Loans, (iv) both before and after giving effect to the
Convertible Debt Documents, no Default or Event of Default shall exist and (v) prior to the
consummation of any Convertible Note Debt transaction, Agent shall have received an officer’s
certificate (in form and substance reasonably satisfactory to Agent) from a Senior Officer of the
Borrowers certifying that the conditions set forth in this clause (p) are satisfied;



(q) unsecured Debt owed to sellers constituting consideration for Permitted Acquisitions on
terms and conditions reasonably acceptable to Agent;



(r) unsecured Debt consisting of earn-out obligations in connection with any Permitted
Acquisition;



(s) Debt of a Person or Debt attaching to assets of a Person that, in either case, becomes a
Subsidiary of a Borrower after the date hereof as the result of a Permitted Acquisition,
provided that such Debt existed at the time such Person became a Subsidiary or at the time
such assets were acquired and, in each case, was not created in anticipation thereof;



(t) Debt in respect of deferred compensation incurred in the ordinary course of business;


 


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(u) Debt incurred in connection with any sale or disposition of any property in connection
with any transaction covered by, but not prohibited by, Section 10.2.23; and



(v) Debt owing to any insurance company in connection with the financing of any insurance
premiums permitted by such insurance company in the ordinary course of business.



10.2.2. Permitted Liens. Create or suffer to exist any Lien upon any of its Property,
except the following (collectively, “Permitted Liens”):




(a) Liens in favor of Agent;



(b) Purchase Money Liens securing Permitted Purchase Money Debt (provided that such Liens
shall not, for the avoidance of doubt, secure the Debt permitted pursuant to Section 10.2.1(p) and
(r));



(c) (i) Liens for Taxes not yet due or being Properly Contested, (ii) Liens for Taxes that are
set forth in Schedule 10.2.2(c); provided that such Taxes (and the Liens in respect
thereof) are satisfied or are being Properly Contested not later than the date that is 90 days
after the Closing Date and (iii) other Liens for Taxes in an aggregate amount not to exceed
$500,000; provided that such Taxes (and the Liens in respect thereof) are satisfied or are
being Properly Contested not later than the date that is 90 days after a Senior Officer of a
Borrower becomes aware of such Liens;



(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in the
Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet
due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use
of the Property or materially impair operation of the business of any Obligor or Subsidiary;



(e) Liens incurred or deposits made in the Ordinary Course of Business to secure the
performance of tenders, bids, leases, contracts (except those relating to Borrowed Money),
statutory obligations and other similar obligations, or arising as a result of progress payments
under government contracts, as long as such Liens are at all times junior to Agent’s Liens;



(f) Liens arising by virtue of a judgment or judicial order against any Obligor or Subsidiary,
or any Property of an Obligor or Subsidiary not giving rise to an Event of Default;



(g) easements, rights-of-way, restrictions, covenants or other agreements of record, and other
similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do
not interfere with the Ordinary Course of Business;



(h) normal and customary rights of setoff upon deposits in favor of depository institutions,
and Liens of a collecting bank on Payment Items in the course of collection;



(i) (x) Liens securing the Second Lien Debt; provided that such Liens are subject to,
and have the priority set forth in, the Intercreditor Agreement in all respects and (y) Liens on
the assets of any SPE securing the Mortgage Loan Debt and the Refinancing Debt of Mortgage Loan
Debt;



(j) Liens on property of a Person existing at the time such Person is merged with or into or
consolidated with any Obligor; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets other than those of
the Person merged into or consolidated with such Obligor;



(k) Liens on property existing at the time of acquisition thereof by any Obligor, provided
that such Liens were in existence prior to the contemplation of such acquisition and do not
extend to (i) any Accounts or Inventory or (ii) any property other than the property so
acquired by such Obligor;



 


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(l) Liens incurred or deposits made in the ordinary course of business in connection with
worker’s compensation, unemployment insurance or other social security obligations;



(m) Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of Debt), leases, or other similar obligations arising in the
ordinary course of business;



(n) survey exceptions, encumbrances, easements or reservations of, or rights of others for,
rights of way, zoning or other restrictions as to the use of properties, and defects in title
which, in the case of any of the foregoing, were not incurred or created to secure the payment of
Debt, and which in the aggregate do no materially adversely affect the value of such properties or
materially impair the use for the purposes of which such properties are held by any Obligor;



(o) judgment and attachment Liens not giving rise to an Event of Default and notices of lis
pendens and associated rights related to litigation being contested in good faith by appropriate
proceedings and for which adequate reserves have been made;



(p) Liens, deposits or pledges to secure public or statutory obligations, surety, stay,
appeal, indemnity, performance or other similar bonds or obligations; and Liens, deposits or
pledges in lieu of such bonds or obligations, or to secure such bonds or obligations, or to secure
letters of credit in lieu of or supporting the payment of such bonds or obligations;



(q) any interest or title of a lessor, licensor or sublicensor in the property subject to any
lease, license or sublicense, including any interest of a Licensor in any License;




(r) Liens arising from UCC financing statements regarding operating leases or consignments;



(s) Liens securing Refinancing Debt of the Senior Note Debt; provided that any such
Liens are (i) limited to the collateral securing the Obligations and do not extend to any other
assets of the Parent and its Subsidiaries and (ii) expressly subordinated to the Liens securing the
Obligations and subject to an intercreditor agreement, in form and substance and on terms and
conditions, reasonably acceptable to Agent and the Co-Collateral Agents, and such intercreditor
agreement is in full force and effect;



(t) Liens for assessments and governmental charges not yet delinquent or being contested in
good faith and for which adequate reserves have been established to the extent required by GAAP;



(u) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being Properly Contested;




(v) deposits in the ordinary course of business to secure liability to insurance carriers;



(w) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods in the ordinary course of
business;


 


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(x) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code
on items in the course of collection, (ii) attaching to commodity trading accounts or other
commodity brokerage amounts incurred in the ordinary course of business and (iii) in favor of
banking institutions arising as a matter of law encumbering deposits (including the right of
set-off) and which are within the general parameters customary in the banking industry;



(y) existing Liens shown on Schedule 10.2.2 and Liens securing Refinancing Debt in respect
thereof; and



(z) the licensing of Intellectual Property to third Persons on reasonable and customary terms
in the ordinary course of business consistent with past practice; provided that such
licensing does not (i) materially interfere with the business of the Parent or any other Obligor or
(ii) interfere with the Agent’s liens or security interests or the Agent’s right to dispose of any
Collateral subject to such Intellectual Property.



10.2.3. Cash Accumulation. Permit, for a period exceeding five (5) consecutive
Business Days, cash or Cash Equivalents in an aggregate amount in excess of $65,000,000 (other than
(a) cash and Cash Equivalents reasonably necessary for the Obligors and their Subsidiaries to
satisfy the current liabilities incurred by them in the ordinary course of their business and
without acceleration of the satisfaction of such current liabilities and (b) so long as no Trigger
Event Period exists, proceeds from the issuance of Equity Interests of the Obligors for a period of
180 days after the receipt by the Obligors thereof) to accumulate and be maintained in the Deposit
Accounts and investment accounts of the Obligors which are under the control of Agent (subject to
Section 8.5); provided, however, that the Obligors’ obligations under this Section
10.2.3 shall be suspended if and for so long as there are no Loans outstanding and all Letters of
Credit have been Cash Collateralized.



10.2.4. Distributions; Upstream Payments. Declare or make any Distributions, except
(i) Upstream Payments or (ii) Permitted Distributions; or create or suffer to exist any encumbrance
or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions
(a) under the Loan Documents and the Second Lien Loan Documents, (b) under Applicable Law, (c) in
effect on the Closing Date as shown on Schedule 9.1.16 and (d) as set forth in documents evidencing
Refinancing Debt with respect to the documents described on Schedule 9.1.16.




10.2.5. Restricted Investments. Make any Restricted Investment.



10.2.6. Disposition of Assets. Make any Asset Disposition (other than any Asset
Disposition by any SPE or Passive Company), except a Permitted Asset Disposition, a disposition of
Equipment under Section 8.4.2, or a transfer of Property by any Obligor to another Obligor.



10.2.7. Loans. Make any loans or other extensions of credit to any Person, except (a)
advances to an officer or employee of any Obligor for salary, travel expenses, relocation expenses,
commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and
extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial
institutions permitted hereunder; (d) loans or other extensions of credit from Obligor to Obligor
so long as (x) each Borrower is Solvent and (y) Parent and its Subsidiaries, on a consolidated
basis, are Solvent, in each case, at the time of any such loan or extension of credit; (e) loans or
other extensions of credit by any Obligor to any Subsidiary that is not an Obligor in an amount not
to exceed $1,000,000 at any time outstanding; and (f) loans or other extensions of credit by any
Subsidiary that is not an Obligor to any Obligor.



 


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10.2.8. Restrictions on Payment of Certain Debt. Make any payments (whether voluntary
or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to
the Senior Note Debt, the Mortgage Loan Debt, the Second Lien Debt, the Convertible Note Debt and
Refinancing Debt of any of the Senior Note Debt, the Mortgage Loan Debt, the Convertible Note Debt
and the Second Lien Debt other than (a) payments of interest, fees and expenses due in the
ordinary course, (b) regularly scheduled principal payments with respect to the Mortgage Loan Debt
and Refinancing Debt of the Mortgage Loan Debt and the Second Lien Debt, (c) payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) of the
Senior Note Debt, the Second Lien Debt, the Mortgage Loan Debt and the Convertible Note Debt
derived solely from Refinancing Debt which meets the Refinancing Condition, (d) prepayments of the
Second Lien Debt with the proceeds of Asset Dispositions, insurance proceeds and condemnation
awards solely to the extent (i) the Net Proceeds, insurance proceeds or condemnation awards, as
applicable, were required to be applied to the Obligations pursuant to Section 5.2 hereof and (ii)
the Required Lenders (or other parties authorized hereunder, as applicable) and each of the
Co-Collateral Agents have waived, forgiven or postponed for more than ten (10) Business Days (by
way of amendment, consent or otherwise) such requirement; and (e) other payments (whether voluntary
or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) of Senior Note
Debt, Mortgage Loan Debt, Second Lien Debt, Convertible Note Debt and Refinancing Debt of the
Senior Note Debt, the Second Lien Debt, the Convertible Note Debt and the Mortgage Loan Debt, so
long as (i) no Default or Event of Default shall have occurred and be continuing or would result
after giving effect to any such payment, (ii) Excess Availability on the date of the making of such
payment on a pro forma basis after giving effect to such payment, and projected Excess Availability
on a pro forma basis for the upcoming twelve month period (after giving effect to such payment) is,
in each case, greater than or equal to 25% of the lesser of (x) the Tranche A Revolver Commitments
plus the Tranche A-1 Revolver Commitments or (y) the Tranche A Borrowing Base, plus
the Tranche A-1 Borrowing Base, (iii) as of the monthly fiscal period most recently then ended, the
Consolidated Fixed Charge Coverage Ratio (on a pro forma trailing 12 fiscal month basis, giving
effect to the making of such payment, and any Borrowings made in connection therewith, determined
as though such payment and such Borrowings occurred on the first day of the twelve (12) fiscal
month period ended prior to such payment) is not less than 1.1 to 1.00, and (iv) the Borrowers
shall have provided the Agent with a certificate not less than then (10) days prior to the making
of such payment executed by a Senior Officer, evidencing compliance, on a pro forma basis, after
giving effect to such payment, with the requirements set forth in clauses (d)(ii) and (d)(iii)
above).



10.2.9. Fundamental Changes. (a) Merge, combine or consolidate with any Person, or
liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or
in a series of related transactions, except (i) for mergers or consolidations of (x) an Obligor
with another Obligor or (y) a Subsidiary that is not an Obligor with any other Subsidiary that is
not an Obligor, (ii) for liquidation or dissolution of any non-Obligor Subsidiary of the Borrowers,
so as long as (x) the net assets of such Subsidiaries remaining after payments to creditors are
distributed to an Obligor and (y) in any event, 100% of the Capital Stock or other equity
securities held by such dissolving Subsidiary are transferred to an Obligor, (iii) for liquidation
or dissolution of any Obligor (other than any Borrower) on terms and conditions reasonably
acceptable to Agent or (iv) to affect the transactions otherwise permitted pursuant to Section
10.2.5; or (b) without fifteen (15) days prior written notice to the Agent, change its name or
conduct business under any fictitious name, change its tax, charter or other organizational
identification number, or change its form or state of organization.



10.2.10. Subsidiaries. Form or acquire any Subsidiary after the Closing Date, except
in accordance with Sections 10.1.9 and 10.2.5; or permit any existing Subsidiary to issue any
additional Equity Interests except (a) director’s qualifying shares and (b) Equity Interests issued
to an Obligor.



10.2.11. Organic Documents. Amend, modify or otherwise change, in a manner which
would be materially adverse to any Lender, any of its Organic Documents as in effect on the Closing
Date.



10.2.12. Tax Consolidation. File or consent to the filing of any consolidated income
tax return with any Person other than Obligors and Subsidiaries.


 


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10.2.13. Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its
Fiscal Year.



10.2.14. Restrictive Agreements. Other than any conditions or restrictions in respect
to Distributions by the Parent, become a party to any Restrictive Agreement, except (a) a
Restrictive Agreement as in effect on the Closing Date and shown on Schedule 9.1.16; (b) a
Restrictive Agreement relating to secured Debt permitted hereunder, if such restrictions apply only
to the collateral for such Debt; (c) customary provisions in leases and other contracts restricting
assignment thereof; (d) Restrictive Agreements contained in documents evidencing Refinancing Debt
of the Senior Note Debt; (e) Restrictive Agreements contained in documents evidencing the Second
Lien Debt or the Refinancing Debt of the Second Lien Debt; (f) Restrictive Agreements contained in
documents evidencing the Convertible Note Debt or Refinancing Debt of the Convertible Note Debt, in
each case that are no more restrictive than the Restrictive Agreements contained in the documents
evidencing the Second Lien Debt; and (g) customary restrictions entered into in the ordinary course
of business in asset sale agreements, sale-leaseback agreements, stock sale agreements and other
similar agreements limiting the transfer of the assets subject thereto pending the consummation of
the sale provided therein.



10.2.15. Hedging Agreements. Enter into any Hedging Agreement, except to hedge risks
arising in the Ordinary Course of Business and not for speculative purposes.



10.2.16. Conduct of Business. Engage in any business other than Permitted Businesses,
except to such extent as would not be material to the Obligors taken as a whole.



10.2.17. Affiliate Transactions. Enter into or be party to any transaction with an
Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable
compensation to officers and employees for services actually rendered, and loans and advances
permitted by Section 10.2.7; (c) payment of customary directors’ fees and indemnities; (d)
transactions solely among Obligors; (e) transactions with Affiliates that were entered into prior
to the Closing Date, as shown on Schedule 10.2.17 or as thereafter amended or replaced in any
manner, that, taken as a whole, is not more adverse to the interests of the Lenders in any material
respect than such agreement as it was in effect on the date hereof; (f) transactions contemplated
by the Mortgage Loan Debt Documents and (g) transactions with Affiliates in the Ordinary Course of
Business, upon fair and reasonable terms fully disclosed to Agent and no less favorable than would
be obtained in a comparable arm’s-length transaction with a non-Affiliate.




10.2.18. Plans. Become party to any Multiemployer Plan or Foreign Plan.



10.2.19. Amendments to Certain Material Contracts and the Second Lien Loan Documents.
Except in connection with any Refinancing Debt permitted hereunder, change, waive or amend any
agreement or arrangement to which Parent or a Subsidiary is party that relates to any Mortgage Loan
Debt Document, the Convertible Note Debt Document or any Senior Note Debt Document if such change,
waiver or amendment (i) increases the principal balance of such Debt, or increases any required
payment of principal or interest; (ii) accelerates the date on which any installment of principal
or any interest is due, or adds any additional redemption, put or prepayment provisions; (iii)
shortens the final maturity date or otherwise accelerates amortization; (iv) increases the interest
rate; (v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any
representation, covenant or default that is more onerous or restrictive in any material respect for
any Obligor or Subsidiary, or that is otherwise materially adverse to any Obligor, any Subsidiary
or Lenders; or (vii) could reasonably be considered to be materially adverse to the Lenders. Each
Obligor shall not, and shall not permit any Subsidiary to, change, waive, refinance or amend any of
the Second Lien Loan Documents if such change, waiver, refinancing or amendment is prohibited by
the Intercreditor Agreement.




 


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10.2.20. No Speculative Transactions. Engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to hedge against fluctuations in
the prices of commodities owned or purchased by it and the values of foreign currencies receivable
or payable by it and interest swaps, caps or collars.



10.2.21. Passive Company Status. Where such Obligor or such Subsidiary is a Passive
Company, engage in any trade or business or incur any Debt or guaranteed Debt except for the trade
or business in which it is engaged on the Closing Date.



10.2.22. General Partner. Be or become the general partner of any partnership other
than (a) a Passive Company and (b) any Subsidiary with nominal assets; provided
that notwithstanding anything to the contrary contained herein, at no time may any assets
(other than assets with a fair market value of nominal amount) of any Obligor be transferred to any
such Subsidiary described in this clause (b).



10.2.23. Sale-Leaseback Transactions. Engage in any sale-leaseback, synthetic lease
or similar transaction involving any of its assets other than (x) any such transaction entered into
by any SPE or Passive Company where such transaction involves only the assets of such SPE or
Passive Company and (y) such transactions involving assets of the Obligors with a fair market value
of not more than $75,000,000 in the aggregate; provided that, in the case of clause (y),
(a) the terms and conditions of any such transaction shall be reasonably acceptable to Agent; (b)
the Net Proceeds received from such sale are not less than 70% of the most recent appraised value
of such assets; and (c) simultaneously with the consummation of any such transaction the Obligors
shall (i) deliver to Agent a Lien Waiver in form and substance satisfactory to Agent (or Agent
shall take an appropriate Rent and Charges Reserve), (ii) adjust the Tranche A Borrowing Base and
the Tranche A-1 Borrowing Base to reflect the sale of Eligible Real Estate included therein, if
any, and (iii) apply proceeds from such transaction to the prepayment of the Loans to the extent
required by Section 5.2.



10.2.24. Debt under Senior Note Debt Documents. Incur any Indebtedness (as defined in
the Senior Note Indenture), other than (i) the Obligations, (ii) the Mortgage Loan Debt and any
Refinancing Debt of the Mortgage Loan Debt, (iii) the Second Lien Debt and any Refinancing Debt of
the Second Lien Debt and (iv) the Convertible Note Debt, that at the time of the incurrence
thereof, or at any time thereafter, is Indebtedness (as defined in the Senior Note Indenture)
permitted to be incurred under the Senior Note Indenture as a result of such Indebtedness (as
defined in the Senior Note Indenture) being permitted under Section 4.09(b)(1) of the Senior Note
Indenture.



10.2.25. Use of Proceeds. The proceeds of Loans or Letters of Credit shall not be
used by Borrowers, whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.



10.2.26. Acquisition of Debt. Purchase, redeem, prepay, tender for or otherwise
acquire, directly or indirectly, any of the outstanding Second Lien Debt. For the avoidance of
doubt, this Section 10.2.26 is not intended and shall not prevent Obligors from making (a)
regularly scheduled payments of principal and interest pursuant to the Second Lien Loan Agreement,
or (b) any prepayments of the Second Lien Loan Agreement not otherwise prohibited by this Loan
Agreement or the Intercreditor Agreement.



10.2.27. No Inconsistent Agreements. Except for entering into the obligations under
the Intercreditor Agreement, enter into any contractual obligation or enter into any amendment or
other modification to any currently existing contractual obligation, which by its terms restricts
or prohibits the ability of the Borrowers to pay the principal of or interest on the Loans, Cash
Collateralize the Letters of Credit or prohibits the ability of the Obligors to fully satisfy all
of the Obligations.


 


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10.2.28. Stay, Extension and Usury Laws. Insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law
wherever enacted (to the extent that it may lawfully do so), now or at any time hereafter in force,
that may affect the covenants or the performance of its obligations under the Loans, this Loan
Agreement or the other Loan Documents, and each Obligor hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to Lenders, but shall suffer and permit
the execution of every such power as though no such law has been enacted.



10.3. Financial Covenants. For so long as any Commitments or Obligations are
outstanding, Borrowers shall:




10.3.1. Excess Availability. Maintain Excess Availability, at all times, of at
least $75,000,000; provided that at any time the Commitments are greater than
$700,000,000 as a result of an increase in the Commitments under Section 2.4.1, such amount
shall be increased by an amount equal to the result of (a) $5,000,000 multiplied by (b) the
quotient of (i) the result of (x) the aggregate Commitments at such time minus (y)
$700,000,000 divided by (ii) $100,000,000.



SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT




11.1. Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:



(a) Any Borrower fails to pay (i) any principal of the Loans when due (whether at stated
maturity, on demand, upon acceleration or otherwise) or (ii) any interest on the Loans or any fee
or any other amount (other than an amount payable under clause (i) of this Section) payable under
this Loan Agreement or any other Loan Document, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of one (1) Business Day;



(b) (i) Any information contained in any Compliance Certificate or Borrowing Base Certificate
was untrue or incorrect in any material respect when made or (ii) any representation or warranty
made or delivered to Agent or any Lender by any Obligor herein, in connection with any Loan
Document or transaction contemplated thereby, or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate or Compliance Certificate) is
untrue, incorrect or misleading in any material respect when given or confirmed;



(c) Any Obligor breaches or fails to perform any covenant contained in (i) Section 7.2 of this
Loan Agreement (other than inadvertent breaches of such covenant), (ii) in Sections 8.1, 8.2.3,
10.1.1, 10.1.2(a), 10.1.2(b), 10.1.2(c), 10.1.2(d), 10.1.2(e), 10.1.2(f), 10.1.3(k), 10.1.3(l),
10.2 or 10.3 of this Loan Agreement or (iii) any provision contained in the Intercreditor
Agreement;



(d) Any Obligor breaches or fails to perform any other covenant contained in any Loan
Documents, and such breach or failure is not cured within 30 days after a Senior Officer of such
Obligor has knowledge thereof or receives written notice thereof from Agent, whichever is sooner;
provided, however, that such notice and opportunity to cure shall not apply if the breach or
failure to perform is not capable of being cured within such period;



(e) Any Guarantor repudiates, revokes or attempts to revoke its Guaranty; any Obligor denies
or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection
or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect
for any reason (other than a waiver or release by Agent and Lenders);


 


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(f) Any (x) breach or default of an Obligor or any Subsidiary of an Obligor occurs under any
document, instrument or agreement to which it is a party or by which it or any of its Properties is
bound relating to any Debt (other than the Obligations) in excess of $5,000,000 if the maturity of
or any payment with respect to such Debt may be accelerated or demanded due to such breach or (y)
Debt (other than the Obligations) in excess of $5,000,000 of any Obligor or any Subsidiary of any
Obligor is required to be repaid, repurchased, redeemed or defeased;



(g) Any judgment or order for the payment of money is entered against an Obligor in an amount
that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all
Obligors, $5,000,000 (other than amounts covered by insurance for which the insurer thereof has not
challenged such coverage), unless a stay of enforcement of such judgment or order is in effect, by
reason of a pending appeal or otherwise;



(h) (i) Any Obligor becomes unable or admits in writing its inability or fails generally to
pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of any Obligor and is
not released, vacated or fully bonded within 60 days after its issue or levy;



(i) Any loss, theft, damage or destruction occurs with respect to any Collateral if the amount
not covered by insurance exceeds $5,000,000;



(j) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authority
from conducting any material part of its business; any Obligor suffers the loss, revocation or
termination of any material license, permit, lease or agreement necessary to its business and such
loss, revocation or termination could reasonably be expected to result in a Material Adverse
Effect; there is a cessation of any material part of an Obligor’s business for a material period of
time not covered by business interruption insurance; any material Collateral or Property of an
Obligor is taken or impaired through condemnation and such taking or impairment could reasonably be
expected to result in a Material Adverse Effect; any Obligor agrees to or commences any
liquidation, dissolution or winding up of its affairs; or any Obligor ceases to be Solvent;



(k) Any Insolvency Proceeding is commenced by any Obligor; an Insolvency Proceeding is
commenced against any Obligor and: such Obligor consents to the institution of the proceeding
against it, the petition commencing the proceeding is not timely controverted by such Obligor, such
petition is not dismissed or stayed within 60 days after its filing, or an order for relief is
entered in the proceeding; a trustee (including an interim trustee) is appointed to take possession
of any substantial Property of or to operate any of the business of any Obligor; or any Obligor
makes an offer of settlement, extension or composition to its unsecured creditors generally;



(l) A Reportable Event occurs that constitutes grounds for termination by the Pension Benefit
Guaranty Corporation of any Multiemployer Plan or appointment of a trustee for any Multiemployer
Plan; any Multiemployer Plan is terminated or any such trustee is requested or appointed; any
Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from any withdrawal therefrom; or any event similar to the foregoing
occurs or exists with respect to a Foreign Plan, in each case, where the liability associated with
the foregoing is reasonably expected to be in excess of $5,000,000;



(m) Any Obligor is criminally indicted or convicted for (i) a felony committed in the conduct
of such Obligor’s business, or (ii) any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could
lead to forfeiture of any material Property or any Collateral; or



(n) A Change of Control occurs.


 


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11.2. Remedies upon Default. If an Event of Default described in Section 11.1(k)
occurs with respect to any Obligor, then to the extent permitted by Applicable Law, all Obligations
shall become automatically due and payable and all Commitments shall terminate, without any action
by Agent or notice of any kind. In addition, or if any other Event of Default exists, Agent may in
its discretion (and shall upon written direction of Required Lenders) do any one or more of the
following from time to time:



(a) declare any Obligations immediately due and payable, whereupon they shall be due and
payable without diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Obligors to the fullest extent permitted by law;



(b) terminate, reduce or condition any of the Commitments, or make any adjustment to the
Tranche A Borrowing Base or to the Tranche A-1 Borrowing Base;



(c) require Obligors to Cash Collateralize LC Obligations, Bank Product Debt and other
Obligations (other than unmatured contingent indemnification obligations) that are contingent or
not yet due and payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent may
(and shall upon the direction of Required Lenders) advance the required Cash Collateral as Tranche
A Revolver Loans (whether or not an Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied); and



(d) exercise any other rights or remedies afforded under any agreement, by law, at equity or
otherwise, including the rights and remedies of a secured party under the UCC. Such rights and
remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to
assemble Collateral, at Borrowers’ expense, and make it available to Agent at a place designated by
Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises
until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for
such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after
any further manufacturing or processing thereof, at public or private sale, with such notice as may
be required by Applicable Law, in lots or in bulk, at such locations, all as Agent, in its
discretion, deems advisable. Each Obligor agrees that 10 days notice of any proposed sale or other
disposition of Collateral by Agent shall be reasonable. Agent shall have the right to conduct such
sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time
in accordance with Applicable Law. Agent shall have the right to sell, lease or otherwise dispose
of any Collateral for cash, credit or any combination thereof, and Agent may purchase any
Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the
purchase price, may set off the amount of such price against the Obligations.



11.3. License. Agent is hereby granted an irrevocable, non-exclusive license or other
right to use, license or sub-license (without payment of royalty or other compensation to any
Person) any or all Intellectual Property (subject, in the case of trademarks owned by any Obligor,
to sufficient rights to quality control and inspection in favor of such Obligor to avoid the risk
of invalidation of said trademarks), computer hardware and software, trade secrets, brochures,
customer lists, promotional and advertising materials, labels, packaging materials and other
Property owned by any Obligor, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral in
each case after the occurrence, and during the continuance, of an Event of Default.



11.4. Setoff. Agent, Lenders and their Affiliates are each authorized by Obligors at
any time during an Event of Default, without notice to Obligors or any other Person, to set off and
to appropriate and apply any deposits (general or special), funds, claims, obligations, liabilities
or other Debt at any time held or owing by Agent, any Lender or any such Affiliate to or for the
account of any Obligor against any Obligations, whether or not demand for payment of such
Obligation has been made, any Obligations have been declared due and payable, are then due, or are
contingent or unmatured, or the Collateral or any guaranty or other security for the Obligations is
adequate.


 


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11.5. Remedies Cumulative; No Waiver.



11.5.1. Cumulative Rights. All covenants, conditions, provisions, warranties,
guaranties, indemnities and other undertakings of Borrowers contained in the Loan Documents are
cumulative and not in derogation or substitution of each other. In particular, the rights and
remedies of Agent and Lenders are cumulative, may be exercised at any time and from time to time,
concurrently or in any order, and shall not be exclusive of any other rights or remedies that Agent
and Lenders may have, whether under any agreement, by law, at equity or otherwise.



11.5.2. Waivers. The failure or delay of any party hereto to require strict
performance by any other party thereto with any terms of the Loan Documents, or to exercise any
rights or remedies with respect to Collateral or otherwise, shall not operate as a waiver thereof
nor as establishment of a course of dealing. All rights and remedies shall continue in full force
and effect until the payment in full, in cash of all Obligations (other than contingent
indemnification obligations) and the occurrence of the Commitment Termination Date. No
modification of any terms of any Loan Documents (including any waiver thereof) shall be effective,
unless such modification is specifically provided in a writing directed to Borrowers and executed
by Borrowers and Agent or the requisite Lenders, and such modification shall be applicable only to
the matter specified. No waiver of any Default or Event of Default shall constitute a waiver of
any other Default or Event of Default that may exist at such time, unless expressly stated. If
Agent or any Lender accepts performance by any Obligor under any Loan Documents in a manner other
than that specified therein, or during any Default or Event of Default, or if Agent or any Lender
shall delay or exercise any right or remedy under any Loan Documents, such acceptance, delay or
exercise shall not operate to waive any Default or Event of Default nor to preclude exercise of any
other right or remedy. It is expressly acknowledged by Obligors that any failure to satisfy a
financial covenant on a measurement date shall not be cured or remedied by satisfaction of such
covenant on a subsequent date.



SECTION 12. AGENT





12.1. Appointment, Authority and Duties of Agent.



12.1.1. Appointment and Authority. Each Lender appoints and designates Bank of
America as Agent hereunder. Agent may, and each Lender authorizes Agent to, enter into all Loan
Documents to which Agent is intended to be a party and accept all Security Documents, for Agent’s
benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any action taken by Agent or
Required Lenders, in accordance with the provisions of the Loan Documents, and the exercise by
Agent or Required Lenders of any rights or remedies set forth therein, together with all other
powers reasonably incidental thereto, shall be authorized and binding upon all Lenders. Without
limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a)
act as the disbursing and collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document,
including any intercreditor or subordination agreement, and accept delivery of each Loan Document
from any Obligor or other Person; (c) act as collateral agent for Secured Parties for purposes of
perfecting and administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e) exercise all rights and
remedies given to Agent with respect to any Collateral under the Loan Documents, Applicable Law or
otherwise. The duties of Agent shall be ministerial and administrative in nature, and Agent shall
not have a fiduciary relationship with any Lender, Secured Party, Participant or other Person, by
reason of any Loan Document or any transaction relating thereto. Agent alone shall be authorized
to determine whether any fixtures, Real Estate or Inventory constitute Eligible Real Estate or
Eligible Inventory, as the case may be, or whether to impose or release any reserve, which
determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to
any Lender or other Person for any error in judgment.


 


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12.1.2. Duties. Agent shall not have any duties except those expressly set forth in
the Loan Documents, nor be required to initiate or conduct any Enforcement Action except to the
extent directed to do so by Required Lenders while an Event of Default exists. The conferral upon
Agent of any right shall not imply a duty on Agent’s part to exercise such right, unless instructed
to do so by Required Lenders in accordance with this Loan Agreement.



12.1.3. Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance upon, any advice
given by an Agent Professional. Agent shall not be responsible for the negligence or misconduct of
any agents, employees or Agent Professionals selected by it with reasonable care.



12.1.4. Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder of any other
party, unless required by Applicable Law. Agent may request instructions from Required Lenders
with respect to any act (including the failure to act) in connection with any Loan Documents, and
may seek assurances to its satisfaction from Lenders of their indemnification obligations under
Section 12.6 against all Claims that could be incurred by Agent in connection with any act. Agent
shall be entitled to refrain from any act until it has received such instructions or assurances,
and Agent shall not incur liability to any Person by reason of so refraining. Instructions of
Required Lenders shall be binding upon all Lenders, and no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting in accordance with
the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent
of all Lenders shall be required in the circumstances described in Section 14.1.1, and in no event
shall, and in no event shall Required Lenders, without the prior written consent of each Lender,
direct Agent to accelerate and demand payment of Loans held by one Lender without accelerating and
demanding payment of all other Loans, nor to terminate the Commitments of one Lender without
terminating the Commitments of all Lenders. In no event shall Agent be required to take any action
that, in its opinion, is contrary to Applicable Law or any Loan Documents or could subject any
Agent Indemnitee to personal liability.



12.1.5. Co-Collateral Agents. Each Lender appoints and designates each of Bank of
America, General Electric Capital Corporation and Wells Fargo as a Co-Collateral Agent hereunder.
The rights of the Co-Collateral Agents are set forth in the Co-Collateral Agent Rights Agreement.



12.1.6. No Fiduciary Relationship. The relationship between Agent and each of the
Lenders is that of an independent contractor. The use of the term “Agent” is for
convenience only and is used to describe, as a form of convention, the independent contractual
relationship between Agent and each of the Lenders. Nothing contained in this Loan Agreement nor
the other Loan Documents shall be construed to create an agency, trust or other fiduciary
relationship between Agent and any of the Lenders.




12.2. Agreements Regarding Collateral and Field Examination Reports.



12.2.1. Lien Releases; Care of Collateral. Lenders authorize Agent to release any
Lien with respect to any Collateral (a) upon the occurrence of both payment, in full, in cash of
the Obligations (other than unmatured Contingent Obligations) and the occurrence of the Commitment
Termination Date, (b) that is the subject of an Asset Disposition which Borrowers certify in
writing to Agent is a Permitted Asset Disposition (and Agent may rely conclusively on any such
certificate without further inquiry), (c) that does not constitute a material part of the
Collateral, or (d) with the written consent of all Lenders. Agent shall have no obligation
whatsoever to any Lenders to assure that any Collateral exists or is owned by an Obligor, or is
cared for, protected, insured or encumbered, nor to assure that Agent’s Liens have been properly
created, perfected or enforced, or are entitled to any particular priority, nor to exercise any
duty of care with respect to any Collateral.


 


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12.2.2. Possession of Collateral. Agent and Lenders appoint each other Lender as
agent for the purpose of perfecting Liens (for the benefit of Secured Parties) in any Collateral
that, under the UCC or other Applicable Law, can be perfected by possession. If any Lender obtains
possession of any such Collateral, it shall notify Agent thereof and, promptly upon Agent’s
request, deliver such Collateral to Agent or otherwise deal with such Collateral in accordance with
Agent’s instructions.



12.2.3. Reports. Agent shall promptly, upon receipt thereof, forward to each Lender
copies of the results of any field audit or other examination or any appraisal prepared by or on
behalf of Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees
(a) that neither Bank of America nor Agent makes any representation or warranty as to the accuracy
or completeness of any Report, and shall not be liable for any information contained in or omitted
from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations,
and that Agent or any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly upon Obligors’
books and records as well as upon representations of Obligors’ officers and employees; and (c) to
keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute
any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys
and accountants) or use any Report in any manner other than administration of the Loans and other
Obligations. Each Lender agrees to indemnify and hold harmless Agent and any other Person
preparing a Report from any action such Lender may take as a result of or any conclusion it may
draw from any Report, as well as any Claims arising in connection with any third parties that
obtain all or any part of a Report through such Lender.



12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication (including those by
telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person, and upon the advice and statements of Agent
Professionals.



12.4. Action Upon Default. Agent shall not be deemed to have knowledge of any Default
or Event of Default unless it has received written notice from a Lender or Borrower specifying the
occurrence and nature thereof. If any Lender acquires knowledge of a Default or Event of Default,
it shall promptly notify Agent and the other Lenders thereof in writing. Each Lender agrees that,
except as otherwise provided in any Loan Documents or with the written consent of Agent and
Required Lenders, it will not take any Enforcement Action, accelerate its Obligations, or exercise
any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral. Notwithstanding the foregoing, however, a
Lender may take action to preserve or enforce its rights against an Obligor where a deadline or
limitation period is applicable that would, absent such action, bar enforcement of Obligations held
by such Lender, including the filing of proofs of claim in an Insolvency Proceeding.



12.5. Ratable Sharing. If any Lender shall obtain any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its share of such Obligation,
determined on a Pro Rata basis or in accordance with Section 5.5, as applicable, such Lender shall
forthwith purchase from Agent, Issuing Bank and the other Lenders such participations in the
affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 5.5, as applicable. If any of such
payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but without interest.


 


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12.6. Indemnification of Agent Indemnitees.



12.6.1. INDEMNIFICATION. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE INDEMNIFICATION
OBLIGATIONS OF OBLIGORS UNDER
ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR
ASSERTED AGAINST ANY AGENT INDEMNITEE; PROVIDED THAT NO LENDER SHALL HAVE ANY OBLIGATION TO
INDEMNIFY OR HOLD HARMLESS THE AGENT INDEMNITEES FOR ANY CLAIM THAT IS DETERMINED IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY AGENT INDEMNITEE. If Agent is sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person for any alleged preference from an Obligor or
fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in
the defense of same, shall be promptly reimbursed to Agent by Lenders to the extent of each
Lender’s Pro Rata share.



12.6.2. Proceedings. Without limiting the generality of the foregoing, if at any time
(whether prior to or after the Commitment Termination Date) any proceeding is brought against any
Agent Indemnitees by an Obligor, or any Person claiming through an Obligor, to recover damages for
any act taken or omitted by Agent in connection with any Obligations, Collateral, Loan Documents or
matters relating thereto, or otherwise to obtain any other relief of any kind on account of any
transaction relating to any Loan Documents, each Lender agrees to indemnify and hold harmless Agent
Indemnitees with respect thereto and to pay to Agent Indemnitees such Lender’s Pro Rata share of
any amount that any Agent Indemnitee is required to pay under any judgment or other order entered
in such proceeding or by reason of any settlement, including all interest, costs and expenses
(including attorneys’ fees) incurred in defending same; provided that no Lender
shall be liable for payment of any such amount to the extent that is determined in a final,
non-appealable judgment by a court of competent jurisdiction that such judgment, order or
settlement resulted from any Agent Indemnitees’ gross negligence or willful misconduct. In Agent’s
discretion, Agent may reserve for any such proceeding, and may satisfy any judgment, order or
settlement, from proceeds of Collateral prior to making any distributions of Collateral proceeds to
Lenders provided that it has not been determined in a final, non-appealable
judgment by a court of competent jurisdiction that such judgment, order or settlement resulted from
any Agent Indemnitees’ gross negligence or willful misconduct.



12.7. Limitation on Responsibilities of Agent. Agent shall not be liable to Lenders
for any action taken or omitted to be taken under the Loan Documents, except for losses directly
and solely caused by Agent’s gross negligence or willful misconduct. Agent does not assume any
responsibility for any failure or delay in performance or any breach by any Obligor or Lender of
any obligations under the Loan Documents. Agent does not make to Lenders any express or implied
warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents
or Obligor. No Agent Indemnitee shall be responsible to Lenders for any recitals, statements,
information, representations or warranties contained in any Loan Documents; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness,
enforceability, collectibility, value, sufficiency, location or existence of any Collateral, or the
validity, extent, perfection or priority of any Lien therein; the validity, enforceability or
collectibility of any Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent
Indemnitee shall have any obligation to any Lender to ascertain or inquire into the existence of
any Default or Event of Default, the observance or performance by any Obligor of any terms of the
Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.


 


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12.8. Successor Agent.



12.8.1. Resignation; Successor Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time by giving at least 30 days written
notice thereof to Lenders and Borrowers. Upon receipt of such notice, Required Lenders shall have
the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or
(b) a commercial bank that is organized under the laws of the United States or any state or
district thereof, has
a combined capital surplus of at least $200,000,000 and (provided no Default or Event of
Default exists) is reasonably acceptable to Borrowers. If no successor agent is appointed prior to
the effective date of the resignation of Agent, then Agent may appoint a successor agent from among
Lenders. Upon acceptance by a successor Agent of an appointment to serve as Agent hereunder, such
successor Agent shall thereupon succeed to and become vested with all the powers and duties of the
retiring Agent without further act, and the retiring Agent shall be discharged from its duties and
obligations hereunder but shall continue to have the benefits of the indemnification set forth in
Sections 12.6 and 14.2. Notwithstanding any Agent’s resignation, the provisions of this Section 12
shall continue in effect for its benefit with respect to any actions taken or omitted to be taken
by it while Agent. Any successor by merger or acquisition of the stock or assets of Bank of
America shall continue to be Agent hereunder without further act on the part of the parties hereto,
unless such successor resigns as provided above.



12.8.2. Separate Collateral Agent. It is the intent of the parties that there shall
be no violation of any Applicable Law denying or restricting the right of financial institutions to
transact business in any jurisdiction. If Agent believes that it may be limited in the exercise of
any rights or remedies under the Loan Documents due to any Applicable Law, Agent may appoint an
additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If
Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be
available to Agent under the Loan Documents shall also be vested in such separate agent. Every
covenant and obligation necessary to the exercise thereof by such agent shall run to and be
enforceable by it as well as Agent. Lenders shall execute and deliver such documents as Agent
deems appropriate to vest any rights or remedies in such agent. If any collateral agent or
co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then
all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new agent.



12.9. Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and based upon such
documents, information and analyses as it has deemed appropriate, made its own credit analysis of
each Obligor and its own decision to enter into this Loan Agreement and to fund Loans and
participate in LC Obligations hereunder. Each Lender has made such inquiries concerning the Loan
Documents, the Collateral and each Obligor as such Lender feels necessary. Each Lender further
acknowledges and agrees that the other Lenders and Agent have made no representations or warranties
concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of
any Loan Documents or Obligations. Each Lender will, independently and without reliance upon the
other Lenders or Agent, and based upon such financial statements, documents and information as it
deems appropriate at the time, continue to make and rely upon its own credit decisions in making
Loans and participating in LC Obligations, and in taking or refraining from any action under any
Loan Documents. Except for notices, reports and other information expressly requested by a Lender,
Agent shall have no duty or responsibility to provide any Lender with any notices, reports or
certificates furnished to Agent by any Obligor or any credit or other information concerning the
affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates)
which may come into possession of Agent or any of Agent’s Affiliates.


 


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12.10. Replacement of Certain Lenders. In the event that (a) any Lender is a
Defaulting Lender, (b) if a Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 5.8 or 5.9, or (c) any
Lender fails to give its consent to any amendment, waiver or action for which consent of all
Lenders or all affected Lenders was required and Required Lenders have consented thereto, then, in
addition to any other rights and remedies that any Person may have, then the Borrower Agent may, at
its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 13.2), all of its interests, rights and obligations under
this Loan Agreement and the related Loan Documents to an Eligible Assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided
that:




(a) the Borrowers shall have paid to the Agent any applicable assignment fee specified
in Section 13.2 (unless such fee has been waived by Agent);




(b) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, participations purchased in Letters of Credit, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.9) from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrowers (in the case
of all other amounts);




(c) in the case of any such assignment resulting from a claim for compensation under
Section 3.6 or payments required to be made pursuant to Section 5.8 or 5.9, such assignment
will result in a reduction in such compensation or payments thereafter; and




(d) such assignment does not conflict with applicable laws.



A Lender shall not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to
require such assignment and delegation cease to apply.




12.11. Remittance of Payments and Collections.



12.11.1. Remittances Generally. All payments by any Lender to Agent shall be made by
the time and on the day set forth in this Loan Agreement, in immediately available funds. If no
time for payment is specified or if payment is due on demand by Agent and request for payment is
made by Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender not later than 2:00
p.m. on such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m.
on the next Business Day. Payment by Agent to any Lender shall be made by wire transfer, in the
type of funds received by Agent. Any such payment shall be subject to Agent’s right of offset for
any amounts due from such Lender under the Loan Documents.



12.11.2. Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid at
the rate determined by Agent as customary in the banking industry for interbank compensation. In
no event shall Borrowers be entitled to receive credit for any interest paid by a Lender to Agent.



12.11.3. Recovery of Payments. If Agent pays any amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor and such related
payment is not received, then Agent may recover such amount from each Lender that received it. If
Agent determines at any time that an amount received under any Loan Document must be returned to an
Obligor or paid to any other Person pursuant to Applicable Law or otherwise, then, notwithstanding
any other term of any Loan Document, Agent shall not be required to distribute such amount to any
Lender. If any amounts received and applied by Agent to any Obligations are later required to be
returned by Agent pursuant to Applicable Law, Lenders shall pay to Agent, on demand, such Lender’s
Pro Rata share of the amounts required to be returned.



12.12. Agent in its Individual Capacity. As a Lender, Bank of America shall have the
same rights and remedies under the other Loan Documents as any other Lender, and the terms
“Lenders,” and “Required Lenders” or any similar term shall include Bank of America in its capacity
as a Lender. Each of Bank of America and its Affiliates may accept deposits from, maintain
deposits or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee
under indentures of, serve as financial or other advisor to, and generally engage in any kind of
business with, Obligors and their Affiliates, as if Bank of America were any other bank, without
any duty to account therefor (including any fees or other consideration received in connection
therewith) to the other Lenders. In their individual capacity, Bank
of America and its Affiliates may receive information regarding Obligors, their Affiliates and
their Account Debtors (including information subject to confidentiality obligations), and each
Lender agrees that Bank of America and its Affiliates shall be under no obligation to provide such
information to Lenders, if acquired in such individual capacity and not as Agent hereunder.


 


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12.13. Agent Titles. Each Lender, other than Bank of America, that is designated (on
the cover page of this Loan Agreement or otherwise) by Bank of America as an “Agent” or “Arranger”
of any type shall not have any right, power, responsibility or duty under any Loan Documents other
than those applicable to all Lenders (or, with respect to the Co-Collateral Agents, the rights set
forth in the Co-Collateral Agent Letter Agreement), and shall in no event be deemed to have any
fiduciary relationship with any other Lender.



12.14. No Third Party Beneficiaries. This Section 12 is an agreement solely among
Lenders and Agent, and does not confer any rights or benefits upon Obligors or any other Person.
As between Obligors and Agent, any action that Agent may take under any Loan Documents shall be
conclusively presumed to have been authorized and directed by Lenders as herein provided.



12.15. Mortgage Intercreditor Agreement. The Lenders hereby irrevocably authorize the
Agent to enter into any acknowledgements to the Mortgage Intercreditor Agreement (if any), and
agree to be bound by the provisions of the Mortgage Intercreditor Agreement.



12.16. Intercreditor Agreement. The Lenders hereby irrevocably authorize the Agent to
enter into the Intercreditor Agreement, and agree to be bound by the provisions thereof.



12.17. Post-Closing Agreement. The Lenders hereby irrevocably authorize the Agent to
enter into the Post-Closing Agreement, and agree to and acknowledge the terms and provisions
thereof.



SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS




13.1. Successors and Assigns. The provisions of this Loan Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Obligor may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of Agent and each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of Section 13.2, (ii) by way of participation in
accordance with the provisions of Section 13.3 or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Sections 13.2.3 and 13.2.4 (and any other
attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Loan
Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby,
the Related Parties of each of Agent, the Issuing Bank and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Loan Agreement.


 


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13.2. Assignments.



13.2.1. Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this Loan Agreement
(including all or a portion of its Commitment and the Loans (including for purposes of this Section
13.2.1, participations in LC Obligations and in Swingline Loans) at the time owing to it); provided
that:




(i) except in the case of an assignment of the entire remaining amount of the assigning
Lender’s (a) Tranche A Revolver Commitment and Tranche A Revolver Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, the aggregate amount of the Tranche A Revolver
Commitment (which for this purpose includes Tranche A Revolver Loans outstanding
thereunder) or, if the Tranche A Revolver Commitment is not then in effect, the principal
outstanding balance of the Tranche A Revolver Loans of the assigning Tranche A Lender
subject to each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to Agent or, if “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less than $10,000,000
unless each of the Agent and, so long as no Event of Default has occurred and is continuing,
the Borrowers otherwise consent (each such consent not to be unreasonably withheld or
delayed) and (b) Tranche A-1 Revolver Commitment and Tranche A-1 Revolver Loans at the time
owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund with respect to a Lender, the aggregate amount of the Tranche A-1 Revolver
Commitment (which for this purpose includes Tranche A-1 Revolver Loans outstanding
thereunder) or, if the Tranche A-1 Revolver Commitment is not then in effect, the principal
outstanding balance of the Tranche A-1 Revolver Loans of the assigning Tranche A-1 Lender
subject to each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to Agent or, if “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less than (x) with respect
to each Tranche A-1 Lender party to this Loan Agreement as of the Closing Date, $1,000,000
and (y) with respect to all other Tranche A-1 Lenders, $5,000,000, unless each of the Agent
and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise
consent (each such consent not to be unreasonably withheld or delayed); provided,
however that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such applicable minimum amount has been met
under this Section 13.2.1(i);




(ii) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Loan Agreement with respect to
the Loans or the Commitment assigned, except that this clause (ii) shall not apply to rights
in respect of Swingline Loans;




(iii) any assignment of a Commitment must be approved by Agent, the Issuing Bank and
the provider of Swingline Loans (with each such approval not to be unreasonably withheld or
delayed) unless the Person that is the proposed assignee is itself a Lender (whether or not
the proposed assignee would otherwise qualify as an Eligible Assignee); and




(iv) the parties to each assignment shall execute and deliver to Agent an Assignment
and Assumption and a processing and recordation fee of $5,000.



Subject to acceptance and recording thereof by Agent pursuant to Section 13.2, from and after
the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Loan Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Loan Agreement
(provided, however, that notwithstanding the foregoing, any Second Lien Agent,
Second Lien Lender or Second Lien Affiliate who is an assignee shall be subject to Section 14.1.4)
and shall not be deemed to be a “Lender” for any such purpose), and the assigning Lender thereunder
shall, to the extent of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Loan Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender’s rights and obligations under this Loan Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of
Sections 3.4, 3.6, 3.7, 3.9, 5.8, 5.9 and 14.2 with respect to facts and circumstances occurring
prior to the effective date of such assignment. Upon request, the Borrowers (at the Borrowers’
expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a
Lender of rights or obligations under this Loan Agreement that does not comply with this subsection
shall be
treated for purposes of this Loan Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with Section 13.3.


 


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13.2.2. Register. Agent, acting solely for this purpose as an agent of the Borrowers,
shall maintain at Agent’s office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitments of, and
principal amounts of the Loans and LC Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and
the Borrowers, Agent and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Loan Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by each of
the Borrowers and the Issuing Bank at any reasonable time and from time to time upon reasonable
prior notice. In addition, at any time that a request for a consent for a material or substantive
change to the Loan Documents is pending, any Lender may request and receive from Agent a copy of
the Register.



13.2.3. Certain Pledges. Nothing herein shall limit the right of a Lender to pledge
or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of Governors and any
Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements
relating to any Loans; provided that any payment by Borrowers to the assigning Lender in respect of
any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations
hereunder to the extent of such payment, and no such assignment shall release the assigning Lender
from its obligations hereunder.



13.2.4. Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.




13.3. Participations.



13.3.1. Participations. Any Lender may at any time, without the consent of, or notice
to, the Borrowers or Agent, sell participations to any Person (other than a natural person or any
Obligor or any Affiliate or Subsidiary of any Obligor) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Loan Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s participations in LC
Obligations and/or Swingline Loans) owing to it); provided that (i) such Lender’s obligations under
this Loan Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the Borrowers, Agent, the
Lenders and the Issuing Bank shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Loan Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Loan Agreement and to approve any amendment,
modification or waiver of any provision of this Loan Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described Section 14.1.1 that
affects such Participant (provided, however, that notwithstanding the foregoing,
any Second Lien Agent, Second Lien Lender or Second Lien Affiliate who is a Participant shall be
subject to Section 14.1.4). Subject to Section 13.3.2, the Obligors agree that each Participant
shall be entitled to the benefits of Sections 3.6, 3.9, 5.8 and 5.9 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to Section 13.2. To the extent
permitted by law, each Participant also shall be entitled to the
benefits of Section 11.4 as though it were a Lender, provided such Participant agrees to be
subject to Section 5.5 as though it were a Lender.


 


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13.3.2. Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.6, 5.8 or 5.9 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrowers’ prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.9 unless the Borrowers are notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section
5.9 as though it were a Lender.



13.4. Tax Treatment. If any interest in a Loan Document is transferred to a
Transferee that is organized under the laws of any jurisdiction other than the United States or any
state or district thereof, the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 5.9.



13.5. Representation of Lenders. Each Lender represents and warrants to each
Borrower, Agent and other Lenders that none of the consideration used by it to fund its Loans or to
participate in any other transactions under this Loan Agreement constitutes for any purpose of
ERISA or Section 4975 of the Internal Revenue Code assets of any “plan” as defined in Section 3(3)
of ERISA or Section 4975 of the Internal Revenue Code and the interests of such Lender in and under
the Loan Documents shall not constitute plan assets under ERISA.



SECTION 14. MISCELLANEOUS





14.1. Consents, Amendments and Waivers.



14.1.1. Amendment. No modification of any Loan Document, including any extension or
amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective
without the prior written agreement of Agent, the Required Lenders (or the Agent acting at the
direction of the Required Lenders) and each Obligor party to such Loan Document; provided
that:



(a) without the prior written consent of (i) Agent, no modification shall be effective with
respect to any provision in a Loan Document that relates to any rights, duties or discretion of
Agent and (ii) an affected Co-Collateral Agent, no modification shall be effective with respect to
any provision in a Loan Document that relates to any rights, duties or discretion of such
Co-Collateral Agent;



(b) without the prior written consent of Issuing Bank, no modification shall be effective with
respect to any LC Obligations or Section 2.3;



(c) without the prior written consent of each affected Lender, no modification shall be
effective that would (i) increase the Commitment of such Lender (except as set forth in Section
2.5, it being understood that the increase of the Tranche A Commitment set forth therein shall be
effective automatically and without the requirement of the approval of any Lender); (ii) reduce the
amount of, or waive or delay any scheduled payment of, any principal, interest, fees or other
amounts payable to such Lender or (iii) extend the Termination Date;



(d) without the prior written consent of the Supermajority Lenders, no modification shall be
effective that would amend the definitions of Tranche A Borrowing Base or Tranche A-1 Borrowing
Base (or the defined terms used, directly or indirectly, in such definitions), in each case, in a
manner that would result in more credit being made available; and


 


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(e) without the prior written consent of all Lenders (except a Defaulting Lender as provided
in Section 4.2), no modification shall be effective that would (i) alter Section 2.1.5, Section
5.5,
Section 7.1 (except to add Collateral), or Section 14.1.1; (ii) amend the definitions of Pro
Rata or Required Lenders; (iii) release all or substantially all of the Collateral (excluding, if
any Obligor or any Subsidiary of any Obligor becomes a debtor under the federal Bankruptcy code,
the release of “cash collateral”, as defined in Section 363(a) of the federal Bankruptcy Code
pursuant to a cash collateral stipulation with the debtor approved by Required Lenders); (iv)
release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of
the release or (v) increase any advance rate.



14.1.2. Limitations. The agreement of Borrowers shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the rights and duties
of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the parties to the
Fee Letter or any agreement relating to a Bank Product shall be required for any modification of
such agreement, and no Affiliate of a Lender that is party to a Bank Product agreement shall have
any other right to consent to or participate in any manner in modification of any other Loan
Document. The making of any Loans during the existence of a Default or Event of Default shall not
be deemed to constitute a waiver of such Default or Event of Default, nor to establish a course of
dealing. Any waiver or consent granted by Lenders hereunder shall be effective only if in writing,
and then only in the specific instance and for the specific purpose for which it is given.



14.1.3. Payment for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to
any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender
with any modification of any Loan Documents, unless such remuneration or value is concurrently
paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent (it being
understood and agreed that the payment of any amounts agreed among the Borrowers, BAS, the Agent
and any Lender or Increasing Lender participating in connection with an increase in the Tranche A
Revolver Commitments or the Tranche A Revolver Commitments under Section 2.4 shall not be subject
to this Section 14.1.3).



14.1.4. Generally. Notwithstanding anything to the contrary herein, (i) no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended without the consent of
such Lender and (ii) no Second Lien Agent, Second Lien Lender or Second Lien Affiliate who is an
assignee of any rights and obligations under this Loan Agreement or a Participant shall have any
right to approve or disapprove any amendment, waiver or consent hereunder or shall be entitled to
vote on matters relating to the Loan Documents (including during any Insolvency Proceeding of any
Obligor) and shall not be deemed to be a “Lender” for any such purpose, except that the Commitment
of such Person may not be increased or extended without the consent of such Person.



14.2. Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
PROCEEDINGS, COSTS AND EXPENSES OF ANY KIND (INCLUDING REMEDIAL RESPONSE COSTS, REASONABLE AND
DOCUMENTED ATTORNEYS’ FEES AND EXTRAORDINARY EXPENSES OF ONE OUTSIDE COUNSEL, ONE LOCAL COUNSEL IN
EACH RELEVANT JURISDICTION (AS DETERMINED BY THE AGENT IN ITS REASONABLE DISCRETION), ONE SPECIAL
OR REGULATORY COUNSEL IN RESPECT OF EACH MATTER (AS REASONABLY REQUIRED BY THE AGENT) AND CONFLICT
OF INTEREST COUNSEL (AS DETERMINED BY THE AGENT IN ITS REASONABLE DISCRETION)) AT ANY TIME
(INCLUDING AFTER FULL PAYMENT OF THE OBLIGATIONS, RESIGNATION OR REPLACEMENT OF AGENT, OR
REPLACEMENT OF ANY LENDER) INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE IN ANY WAY RELATING TO
(A) ANY LOAN DOCUMENTS OR TRANSACTIONS RELATING THERETO OR THE ADMINISTRATION OF THE LOAN
DOCUMENTS, (B) ANY ACTION TAKEN OR OMITTED TO BE TAKEN 


 


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BY ANY INDEMNITEE IN CONNECTION WITH ANY
LOAN DOCUMENTS, (C) THE EXISTENCE OR PERFECTION OF ANY LIENS, OR REALIZATION UPON ANY COLLATERAL, (D) EXERCISE OF ANY RIGHTS OR
REMEDIES UNDER ANY LOAN DOCUMENTS OR APPLICABLE LAW, (E) FAILURE BY ANY OBLIGOR TO PERFORM OR
OBSERVE ANY TERMS OF ANY LOAN DOCUMENT, IN EACH CASE INCLUDING ALL REASONABLE AND DOCUMENTED
OUT-OF-POCKET COSTS AND EXPENSES RELATING TO ANY INVESTIGATION, LITIGATION, ARBITRATION OR OTHER
PROCEEDING (INCLUDING AN INSOLVENCY PROCEEDING OR APPELLATE PROCEEDINGS), WHETHER OR NOT THE
APPLICABLE INDEMNITEE IS A PARTY THERETO, (F) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED
USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR
PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT
STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (G) ANY ACTUAL OR ALLEGED ENVIRONMENTAL
RELEASE ON OR FROM ANY PROPERTY OWNED OR OPERATED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES, OR
ANY LIABILITY IN CONNECTION WITH ANY ACTUAL OR ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAW RELATED
IN ANY WAY TO ANY BORROWER OR ANY OF ITS SUBSIDIARIES, OR (H) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY A BORROWER OR ANY OTHER
OBLIGOR (HEREINAFTER, “CLAIMS”) THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE,
INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a
Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with
respect to a Claim that is determined in a final, non-appealable judgment by a court of competent
jurisdiction to result from the bad faith, gross negligence or willful misconduct of such
Indemnitee. If any claim is made against any Indemnitee which may result in a claim under this
Section 14.2 against Borrowers, such Indemnitee or Agent shall promptly send to Borrower Agent
written notice thereof, and Borrower Agent shall have the right, at its expense and with counsel
reasonably satisfactory to Agent, to defend such claim. Neither any Indemnitee nor any Borrower
shall settle any such claim without the consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the failure of such prompt notice shall not
negate or impair the obligation of the Borrowers under this Section 14.2, but shall give Borrowers
the right to withhold against any indemnity payment the amount of any actual damages incurred by
Borrowers as a result of the failure to give such prompt notice.




14.3. Notices and Communications.



14.3.1. Notice Address. Subject to Section 4.1.4, all notices, requests and other
communications by or to a party hereto shall be in writing and shall be given to any Borrower, at
Borrower Agent’s address shown on the signature pages hereof, and to any other Person at its
address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after
the Closing Date, at the address shown on its Assignment and Assumption Agreement), or at such
other address as a party may hereafter specify by notice in accordance with this Section 14.3.
Each such notice, request or other communication shall be effective only (a) if given by facsimile
transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is
received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with
first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the
foregoing, no notice to Agent pursuant to Section 2.2, 2.3, 3.1.2 or 4.1.1 shall be effective until
actually received by the individual to whose attention at Agent such notice is required to be sent.
Any written notice, request or other communication that is not sent in conformity with the
foregoing provisions shall nevertheless be effective on the date actually received by the noticed
party. Any notice received by Borrower Agent shall be deemed received by all Borrowers.


 


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14.3.2. Electronic Communications; Voice Mail. Electronic mail and internet websites
may be used only for routine communications, such as financial statements, Borrowing Base
Certificates and other information required by Section 10.1.2, administrative matters, distribution
of Loan Documents for execution, and matters permitted under Section 4.1.4. Agent and Lenders make
no assurances as to the privacy and security of electronic communications. Electronic and voice
mail may not be used as effective notice under the Loan Documents.



14.3.3. Non-Conforming Communications. Agent and Lenders may rely upon any notices
purportedly given by or on behalf of any Borrower even if such notices were not made in a manner
specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by
the recipient, varied from a later confirmation. Each Borrower shall indemnify and hold harmless
each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of a Borrower.



14.4. Performance of Borrowers’ Obligations. Agent may, in its discretion at any time
and from time to time after the occurrence, and during the continuance, of an Event of Default, at
Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or
otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations;
(b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the
validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment,
insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any
discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Agent
under this Section 14.4 shall be reimbursed to Agent by Borrowers, on demand, with interest from
the date incurred to the date of payment thereof at the Default Rate applicable to Base Rate
Tranche A-1 Revolver Loans. Any payment made or action taken by Agent under this Section 14.4
shall be without prejudice to any right to assert an Event of Default or to exercise any other
rights or remedies under the Loan Documents.



14.5. Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but they
shall have no obligation) to respond to usual and customary credit inquiries from third parties
concerning any Obligor or Subsidiary.



14.6. Severability. Wherever possible, each provision of the Loan Documents shall be
interpreted in such manner as to be valid under Applicable Law. If any provision is found to be
invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the
remaining provisions of the Loan Documents shall remain in full force and effect.



14.7. Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents are
cumulative. The parties acknowledge that the Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, and they agree that these are
cumulative and that each must be performed as provided. Except as otherwise specifically provided
in another Loan Document (by specific reference to the applicable provision of this Loan
Agreement), if any provision contained herein is in direct conflict with any provision in another
Loan Document, the provision herein shall govern and control.



14.8. Counterparts; Facsimile Signatures. Any Loan Document may be executed in
counterparts, each of which taken together shall constitute one instrument. Loan Documents may be
executed and delivered by facsimile, and they shall have the same force and effect as manually
signed originals. Agent may require confirmation by a manually-signed original, but failure to
request or deliver same shall not limit the effectiveness of any facsimile signature.



14.9. Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents embody the entire understanding of the parties with respect to the subject matter thereof
and supersede all prior understandings regarding the same subject matter.


 


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14.10. Obligations of Lenders. The obligations of each Lender hereunder are several,
and no Lender shall be responsible for the obligations or Commitments of any other Lender. Amounts
payable hereunder to each Lender shall be a separate and independent debt, and each Lender shall be
entitled, to the extent not otherwise restricted hereunder, to protect and enforce its rights
arising out of the Loan Documents. It shall not be necessary for Agent or any other Lender to be
joined as an additional party in any proceeding for such purposes. Nothing in this Loan Agreement
and no action of Agent or Lenders pursuant to the Loan Documents shall be deemed to constitute
Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor
to constitute control of any Obligor. Each Obligor acknowledges and agrees that in connection with
all aspects of any transaction contemplated by the Loan Documents, Obligors, Agent, Issuing Bank
and Lenders have an arms-length business relationship that creates no fiduciary duty on the part of
Agent, Issuing Bank or any Lender, and each Obligor, Agent, Issuing Bank and Lender expressly
disclaims any fiduciary relationship.



14.11. Confidentiality. During the term of this Loan Agreement and for 12 months
thereafter, Agent and Lenders agree to take reasonable precautions to maintain the confidentiality
of any information that Obligors deliver to Agent and Lenders and identify as confidential at the
time of delivery, except that Agent and any Lender may disclose such information (a) to their
respective officers, directors, employees, Affiliates and agents, including legal counsel, auditors
and other professional advisors; (b) to any party to the Loan Documents from time to time; (c)
pursuant to the order of any court or administrative agency; (d) upon the request of any
Governmental Authority exercising regulatory authority over Agent or such Lender; (e) which ceases
to be confidential, other than by an act or omission of Agent or any Lender, or which becomes
available to Agent or any Lender on a nonconfidential basis; (f) to the extent reasonably required
in connection with any litigation relating to any Loan Documents or transactions contemplated
thereby, or otherwise as required by Applicable Law; (g) to the extent reasonably required for the
exercise of any rights or remedies under the Loan Documents; (h) to any actual or proposed party to
a Bank Product or to any Transferee, as long as such Person agrees to be bound by the provisions of
this Section 14.11; (i) to the National Association of Insurance Commissioners or any similar
organization, or to any nationally recognized rating agency that requires access to information
about a Lender’s portfolio in connection with ratings issued with respect to such Lender; (j) to
any investor or potential investor in an Approved Fund that is a Lender or Transferee, but solely
for use by such investor to evaluate an investment in such Approved Fund, or to any manager,
servicer or other Person in connection with its administration of any such Approved Fund; or (k)
with the consent of Borrowers. Notwithstanding the foregoing, Agent and Lenders may issue and
disseminate to the public general information describing this credit facility, including the names
and addresses of Obligors and a general description of Obligors’ businesses, and may (so long as
the Borrower Agent has previously reviewed and approved the form of such advertisement or
promotional materials) use Obligors’ names in advertising and other promotional materials.



14.12. GOVERNING LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402 (BUT GIVING EFFECT TO
FEDERAL LAWS RELATING TO NATIONAL BANKS).




14.13. Consent to Forum.



14.13.1. Forum. EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY FEDERAL COURT SITTING IN OR WITH JURISDICTION OVER THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
STATE COURT OF THE STATE OF NEW YORK SITTING IN THE COUNTY OF MANHATTAN, IN ANY PROCEEDING OR
DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE
BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS,
OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of Agent or any
Lender to bring proceedings against any Obligor in any other court. Nothing in this Loan Agreement
shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or
jurisdiction.


 


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14.14. Waivers by Borrowers. To the fullest extent permitted by Applicable Law, each
Borrower waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in
any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents,
Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default,
non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial
paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time
held by Agent on which a Borrower may in any way be liable, and hereby ratifies anything Agent may
do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond
or security that might be required by a court prior to allowing Agent to exercise any rights or
remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against
Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or
punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement
Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance
hereof. Each Borrower acknowledges that the foregoing waivers are a material inducement to Agent
and Lenders entering into this Loan Agreement and that Agent and Lenders are relying upon the
foregoing in their dealings with Borrowers. Each Borrower has reviewed the foregoing waivers with
its legal counsel and has knowingly and voluntarily waived its jury trial and other rights
following consultation with legal counsel. In the event of litigation, this Loan Agreement may be
filed as a written consent to a trial by the court.



14.15. Patriot Act Notice. Agent and Lenders hereby notify Borrowers that pursuant to
the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record
information that identifies each Borrower, including its legal name, address, tax ID number and
other information that will allow Agent and Lenders to identify it in accordance with the Patriot
Act. Agent and Lenders will also require information regarding each personal guarantor, if any,
and may require information regarding Borrowers’ management and owners, such as legal name,
address, social security number and date of birth.



14.16. Survival of Representations and Warranties. All representations and warranties
made hereunder and in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by the Agent and
each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf and
notwithstanding that the Agent or any Lender may have had notice or knowledge of any Default at the
time of any extension of credit hereunder, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of
Credit shall remain outstanding.


 


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14.17. No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), each Borrower and each Guarantor acknowledges
and agrees that: (i) (A) the arranging and other services regarding this Loan Agreement provided by
the Agent and the Joint Lead Arrangers are arm’s-length commercial transactions between the
Borrowers and the Guarantors and their respective Affiliates, on the one hand, and the Agent and
the Joint Lead Arrangers, on the other hand, (B) each Borrower each Guarantor has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C)
each Borrowers and each Guarantor is capable of evaluating, and understands and accepts, the terms,
risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)
(A) the Agent and the Joint Lead
Arrangers each is and has been acting solely as a principal and, except as expressly agreed
in writing by the relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary for any Borrower, any Guarantor or any of their respective Affiliates, or any
other Person and (B) neither the Agent nor any Joint Lead Arranger has any obligation to any
Borrower, any Guarantor or any of their respective Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in the other Loan
Documents; and (iii) the Joint Lead Arrangers and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the Borrowers, the
Guarantors and their respective Affiliates, and neither the Agent nor any Joint Lead Arranger has
any obligation to disclose any of such interests to the Borrowers, the Guarantors or any of their
respective Affiliates. To the fullest extent permitted by law, each Borrower and each Guarantor
hereby waives and releases any claims that it may have against the Agent and the Joint Lead
Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection
with any aspect of any transaction contemplated hereby.



14.18. Resignation as Issuing Bank or Provider of Swingline Loans after Assignment.
Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns
all of its Tranche A Revolver Commitment and Tranche A Loans, Bank of America may, (i) upon 30
days’ notice to the Borrower and the Lenders, resign as Issuing Bank and/or (ii) upon 30 days’
notice to the Borrower, resign as provider of Swingline Loans. In the event of any such
resignation as Issuing Bank or provider of Swingline Loans, the Borrower shall be entitled to
appoint from among the Lenders a successor Issuing Bank or provider of Swingline Loans;
provided, however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of Bank of America Issuing Bank or provider of Swingline Loans, as the
case may be. If Bank of America resigns as Issuing Bank, it shall retain all the rights, powers,
privileges and duties of Issuing Bank hereunder with respect to all Letters of Credit outstanding
as of the effective date of its resignation as Issuing Bank and all LC Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Tranche A Revolver Loans or
fund risk participations in unreimbursed drawings of Letters of Credit. If Bank of America resigns
as provider of Swingline Loans, it shall retain all the rights of provider of Swingline Loans
provided for hereunder with respect to Swingline Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders to make Base Rate
Tranche A Revolver Loans or fund risk participations in outstanding Swingline Loans. Upon the
appointment of a successor Issuing Bank and/or provider of Swingline Loans, (a) such successor
shall succeed to and become vested with all of the rights, powers, privileges and duties of the
retiring Issuing Bank or provider of Swingline Loans, as the case may be, and (b) the successor
Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements satisfactory to Bank of
America to effectively assume the obligations of Bank of America with respect to such Letters of
Credit.


 


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14.19. Amendment and Restatement of Existing Loan Agreement. On the Closing Date,
this Loan Agreement shall amend, restate and supersede the Existing Credit Agreement in its
entirety, except as provided in this Section 14.19. On the Closing Date, the rights and
obligations of the parties evidenced by the Existing Credit Agreement shall be evidenced by this
Loan Agreement and the other Loan Documents and the grant of security interest in the Collateral by
the relevant Credit Parties under the Existing Credit Agreement and the other “Loan Documents” (as
defined in the Existing Credit Agreement) shall continue under but as amended by this Loan
Agreement and the other Loan Documents, and shall not in any event be terminated, extinguished or
annulled but shall hereafter be governed by this Loan Agreement and the other Loan Documents. All
references to the Existing Credit Agreement in any Loan Document or other document or instrument
delivered in connection therewith shall be deemed to refer to this Loan Agreement and the
provisions hereof. Without limiting the generality of the foregoing and to the extent necessary,
the existing lenders, the Lenders and the Agents reserve all of their rights under the Existing
Credit Agreement and the other “Loan Documents” (as defined in the Existing Credit Agreement) which
by their express terms survive the termination of the Existing Credit Agreement and each of the
Guarantors hereby obligates itself again in respect of all such present and future “Obligations”
(as defined in the Existing Credit Agreement). Nothing contained herein shall be construed as
a novation of the “Obligations” outstanding under and as defined in the Existing Loan Agreement,
which shall remain in full force and effect, except as modified hereby.



14.20. Intercreditor Agreement Prevails. Notwithstanding anything to the contrary
contained herein, all representations, warranties and covenants of the Obligors hereunder, and the
security interest granted to the Agent and the other Secured Parties and all other rights and
benefits granted to the Agent and the other Secured Parties hereunder, are expressly subject to the
terms and conditions of the Intercreditor Agreement.



[Remainder of page intentionally left blank; signatures begin on following page]



 


-110-









 





IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered as of the date set
forth above.



	 	 	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE BON-TON DEPARTMENT STORES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Keith E. Plowman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Keith E. Plowman	 	 
	 

	 	 	 	Title:
	 	Executive Vice President, 

Chief Financial Officer and 

Principal
Accounting Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE ELDER-BEERMAN STORES CORP.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ H. Todd Dissinger	 	 
	 	 	 	 	 	 	 
	 	 	 	 	H. Todd Dissinger	 	 
	 

	 	 	 	Title:
	 	Vice President — Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 






Signature Page to Amended and Restated Loan Agreement




 


 









 





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



	 	 	 	 	 	 	 	 	 
	 	 	OBLIGORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE BON-TON STORES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Keith E. Plowman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Keith E. Plowman	 	 
	 

	 	 	 	Title:
	 	Executive Vice President, Chief Financial Officer and Principal
Accounting Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE BON-TON TRADE, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Keith E. Plowman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Keith E. Plowman	 	 
	 

	 	 	 	Title:
	 	Treasurer and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	300 Delaware Avenue, Suite 12122,
Wilmington, DE 19801	 	 
	 

	 	 	 	Attn:
	 	Keith E. Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(302) 652-3196	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







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

	 	 	 	Title:
	 	Secretary and Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE BON-TON GIFTCO, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Keith E. Plowman	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Keith E. Plowman	 	 
	 

	 	 	 	Title:
	 	President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CARSON PIRIE SCOTT II, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ H. Todd Dissinger	 	 
	 	 	 	 	 	 	 
	 	 	 	 	H. Todd Dissinger	 	 
	 

	 	 	 	Title:
	 	Vice President — Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 	 	 	 	 
	 	 	BON-TON DISTRIBUTION, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ H. Todd Dissinger	 	 
	 	 	 	 	 	 	 
	 	 	 	 	H. Todd Dissinger	 	 
	 

	 	 	 	Title:
	 	Vice President — Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MCRIL, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ H. Todd Dissinger	 	 
	 	 	 	 	 	 	 
	 	 	 	 	H. Todd Dissinger	 	 
	 

	 	 	 	Title:
	 	Vice President — Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2801 East Market Street, York, PA 17402	 	 
	 

	 	 	 	Attn:
	 	Keith Plowman	 	 
	 

	 	 	 	Telecopy:
	 	(717) 751-3196	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 	 	 	 	 
	 	 	AGENT AND LENDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as Agent and Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Andrew Cerussi	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Andrew Cerussi	 	 
	 

	 	 	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	100 Federal Street

Boston, Massachusetts 02110	 	 
	 

	 	 	 	Attn:
	 	Andrew Cerussi	 	 
	 

	 	 	 	Telecopy:	 	 	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Charles Chiodo	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Charles Chiodo	 	 
	 

	 	 	 	Title:
	 	Duly Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	10 Riverview Drive

Danbury, Connecticut 06810	 	 
	 

	 	 	 	Attn:
	 	Bon-Ton Department Stores Manager	 	 
	 

	 	 	 	Telecopy:
	 	203-749-4666	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	WELLS FARGO RETAIL FINANCE, LLC,

as a Lender

 	 
	 	By:  	/s/  Connie Liu
 	 
	 	 	Name:  	Connie Liu 	 
	 	 	Title:  	Assistant VP 	 



Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as a Lender


	 
	 	By:  	/s/  Robert Orzechowski
 	 
	 	 	Name:  	Robert Orzechowski 	 
	 	 	Title:  	Vice President 	 



Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 	 	 	 	 
	 	 	CITIZENS BANK OF PENNSYLVANIA,

as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Don Cmar	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Don Cmar	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	525 William Penn Place

M/S 153-2470

Pittsburgh, PA 15219	 	 
	 

	 	 	 	Fax:
	 	412-867-4218	 	 






Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	SUNTRUST BANK, as a Lender

 	 
	 	By:  	/s/  Scott Cowan
 	 
	 	 	Name:  	Scott Cowan 	 
	 	 	Title:  	Director 	 



Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	REGIONS BANK, as a Lender

 	 
	 	By:  	/s/  Richard A. Gere
 	 
	 	 	Name:  	Richard A. Gere 	 
	 	 	Title:  	Attorney-in-Fact 	 



Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as a Lender

 	 
	 	By:  	/s/  Jeffrey D. Patton
 	 
	 	 	Name:  	Jeffrey D. Patton 	 
	 	 	Title:  	Assistant Vice President 	 



Signature Page to Amended and Restated Loan Agreement





 


 









 







	 	 	 	 	 
	 	COLE TAYLOR BANK, as a Lender

 	 
	 	By:  	/s/  Kavian Boots
 	 
	 	 	Name:  	Kavian Boots 	 
	 	 	Title:  	Managing Director 	 



Signature Page to Amended and Restated Loan Agreement