Document:

exv10w2

 

EXHIBIT 10.2

 

THE BON-TON DEPARTMENT STORES, INC.,

HERBERGER’S DEPARTMENT STORES, LLC,

PARISIAN, INC., and

THE ELDER-BEERMAN STORES CORP.,

as Borrowers

LOAN AND SECURITY AGREEMENT

Dated as of March 6, 2006

$1,000,000,000

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders

and

BANK OF AMERICA, N.A.,

as 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

WELLS FARGO RETAIL FINANCE, LLC and

JPMORGAN CHASE BANK, N.A.,

as Co-Documentation Agents

 

 

 

	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.
	 	DEFINITIONS; RULES OF CONSTRUCTION	 	1
	1.1.
	 	Definitions	 	1
	1.2.
	 	Accounting Terms	 	29
	1.3.
	 	Certain Matters of Construction	 	29
	SECTION 2.
	 	CREDIT FACILITIES	 	30
	2.1.
	 	Commitment	 	30
	 
	 	2.1.1. Loans	 	30
	 
	 	2.1.2. Notes	 	30
	 
	 	2.1.3. Use of Proceeds	 	30
	 
	 	2.1.4. Overadvances	 	30
	 
	 	2.1.5. Protective Advances	 	31
	2.2.
	 	Voluntary Reduction or Termination of Commitments	 	31
	 
	 	2.2.1. Voluntary Reduction or Termination of Tranche A Revolver Commitments	 	31
	 
	 	2.2.2. Voluntary Reduction or Termination of Tranche A-1 Revolver Commitments	 	32
	2.3.
	 	Letter of Credit Facility	 	32
	 
	 	2.3.1. Issuance of Letters of Credit	 	32
	 
	 	2.3.2. Reimbursement; Participations	 	34
	 
	 	2.3.3. Cash Collateral	 	35
	SECTION 3.
	 	INTEREST, FEES AND CHARGES	 	35
	3.1.
	 	Interest	 	35
	 
	 	3.1.1. Rates and Payment of Interest	 	35
	 
	 	3.1.2. Application of Adjusted LIBOR to Outstanding Loans	 	36
	 
	 	3.1.3. Interest Periods	 	36
	 
	 	3.1.4. Interest Rate Not Ascertainable	 	36
	3.2.
	 	Fees	 	37
	 
	 	3.2.1. Unused Line Fee	 	37
	 
	 	3.2.2. LC Facility Fees	 	37
	 
	 	3.2.3. Agent Fees	 	37
	3.3.
	 	Computation of Interest, Fees, Yield Protection	 	37
	3.4.
	 	Reimbursement Obligations	 	37
	3.5.
	 	Illegality	 	38

i

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	3.6.
	 	Increased Costs	 	38
	3.7.
	 	Capital Adequacy	 	39
	3.8.
	 	Mitigation	 	39
	3.9.
	 	Funding Losses	 	40
	3.10.
	 	Maximum Interest	 	40
	SECTION 4.
	 	LOAN ADMINISTRATION	 	40
	4.1.
	 	Manner of Borrowing and Funding Loans	 	40
	 
	 	4.1.1. Notice of Borrowing	 	40
	 
	 	4.1.2. Fundings by Lenders	 	41
	 
	 	4.1.3. Swingline Loans; Settlement	 	41
	 
	 	4.1.4. Notices	 	42
	4.2.
	 	Defaulting Lender	 	42
	4.3.
	 	Number and Amount of LIBOR Loans; Determination of Rate	 	42
	4.4.
	 	Borrower Agent	 	42
	4.5.
	 	One Obligation	 	43
	4.6.
	 	Effect of Termination	 	43
	SECTION 5.
	 	PAYMENTS	 	43
	5.1.
	 	General Payment Provisions	 	43
	5.2.
	 	Repayment of Loans	 	43
	5.3.
	 	Payment of Other Obligations	 	44
	5.4.
	 	Marshaling; Payments Set Aside	 	44
	5.5.
	 	Allocation of Payments	 	44
	 
	 	5.5.1. Pre-Default Allocation of Payments	 	44
	 
	 	5.5.2. Post-Default Allocation of Payments	 	45
	 
	 	5.5.3. Erroneous Application	 	46
	5.6.
	 	Application of Payments	 	46
	5.7.
	 	Loan Account; Account Stated	 	46
	 
	 	5.7.1. Loan Account	 	46
	 
	 	5.7.2. Entries Binding	 	46
	5.8.
	 	Taxes	 	46
	5.9.
	 	Withholding Tax Exemption	 	47
	5.10.
	 	Nature and Extent of Each Borrower’s Liability	 	47

ii

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	5.10.1. Joint and Several Liability	 	47
	 
	 	5.10.2. Waivers	 	48
	 
	 	5.10.3. Extent of Liability; Contribution	 	48
	 
	 	5.10.4. Joint Enterprise	 	49
	 
	 	5.10.5. Subordination	 	49
	SECTION 6.
	 	CONDITIONS PRECEDENT	 	49
	6.1.
	 	Conditions Precedent to Initial Loans	 	49
	6.2.
	 	Conditions Precedent to All Credit Extensions	 	53
	6.3.
	 	Limited Waiver of Conditions Precedent	 	53
	SECTION 7.
	 	COLLATERAL	 	53
	7.1.
	 	Grant of Security Interest	 	53
	7.2.
	 	Lien on Deposit Accounts; Cash Collateral	 	54
	 
	 	7.2.1. Deposit Accounts	 	54
	 
	 	7.2.2. Cash Collateral	 	55
	 
	 	7.2.3. Credit Card Notifications	 	55
	7.3.
	 	Real Estate Collateral	 	55
	7.4.
	 	Other Collateral	 	55
	 
	 	7.4.1. Commercial Tort Claims	 	55
	 
	 	7.4.2. Certain After-Acquired Collateral	 	56
	7.5.
	 	No Assumption of Liability	 	56
	7.6.
	 	Further Assurances	 	56
	7.7.
	 	Foreign Subsidiary Stock	 	56
	SECTION 8.
	 	COLLATERAL ADMINISTRATION	 	56
	8.1.
	 	Borrowing Base Certificates	 	56
	8.2.
	 	Administration of Accounts	 	56
	 
	 	8.2.1. Intentionally Omitted	 	56
	 
	 	8.2.2. Account Verification	 	56
	 
	 	8.2.3. Maintenance of Dominion Account	 	57
	 
	 	8.2.4. Proceeds of Collateral	 	57
	8.3.
	 	Administration of Inventory	 	57
	 
	 	8.3.1. Records and Reports of Inventory	 	57
	 
	 	8.3.2. Returns of Inventory	 	57

iii

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	8.3.3. Acquisition, Sale and Maintenance	 	57
	8.4.
	 	Administration of Equipment	 	57
	 
	 	8.4.1. Records and Schedules of Equipment	 	57
	 
	 	8.4.2. Dispositions of Equipment	 	58
	 
	 	8.4.3. Condition of Equipment	 	58
	8.5.
	 	Administration of Deposit Accounts	 	58
	8.6.
	 	General Provisions	 	58
	 
	 	8.6.1. Location of Collateral	 	58
	 
	 	8.6.2. Insurance of Collateral; Condemnation Proceeds	 	58
	 
	 	8.6.3. Protection of Collateral	 	59
	 
	 	8.6.4. Defense of Title to Collateral	 	59
	8.7.
	 	Power of Attorney	 	59
	SECTION 9.
	 	REPRESENTATIONS AND WARRANTIES	 	60
	9.1.
	 	General Representations and Warranties	 	60
	 
	 	9.1.1. Organization and Qualification	 	60
	 
	 	9.1.2. Power and Authority	 	60
	 
	 	9.1.3. Enforceability	 	60
	 
	 	9.1.4. Capital Structure	 	60
	 
	 	9.1.5. Corporate Names; Locations	 	60
	 
	 	9.1.6. Title to Properties; Priority of Liens	 	60
	 
	 	9.1.7. Security Documents	 	61
	 
	 	9.1.8. Financial Statements	 	61
	 
	 	9.1.9. Surety Obligations	 	61
	 
	 	9.1.10. Taxes	 	61
	 
	 	9.1.11. Brokers	 	61
	 
	 	9.1.12. Intellectual Property	 	61
	 
	 	9.1.13. Governmental Approvals	 	61
	 
	 	9.1.14. Compliance with Laws	 	61
	 
	 	9.1.15. Compliance with Environmental Laws	 	62
	 
	 	9.1.16. Burdensome Contracts	 	62
	 
	 	9.1.17. Litigation	 	62
	 
	 	9.1.18. Insurance	 	62

iv

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	9.1.19. No Defaults	 	62
	 
	 	9.1.20. ERISA	 	62
	 
	 	9.1.21. Trade Relations	 	62
	 
	 	9.1.22. Labor Relations	 	62
	 
	 	9.1.23. Intentionally Omitted	 	62
	 
	 	9.1.24. Margin Stock	 	63
	 
	 	9.1.25. Plan Assets	 	63
	 
	 	9.1.26. Complete Disclosure	 	63
	SECTION 10.
	 	COVENANTS AND CONTINUING AGREEMENTS	 	63
	10.1.
	 	Affirmative Covenants	 	63
	 
	 	10.1.1. Inspections; Appraisals	 	63
	 
	 	10.1.2. Financial and Other Information	 	64
	 
	 	10.1.3. Notices	 	66
	 
	 	10.1.4. Landlord and Storage Agreements	 	66
	 
	 	10.1.5. Compliance with Laws; Organic Documents; Material Contracts	 	66
	 
	 	10.1.6. Taxes	 	67
	 
	 	10.1.7. Insurance	 	67
	 
	 	10.1.8. Licenses	 	67
	 
	 	10.1.9. Future Subsidiaries	 	67
	 
	 	10.1.10. Intentionally Omitted	 	67
	 
	 	10.1.11. Preservation of Existence	 	67
	 
	 	10.1.12. Maintenance of Properties	 	67
	 
	 	10.1.13. Books and Records	 	67
	 
	 	10.1.14. Operation and Maintenance Plan	 	67
	10.2.
	 	Negative Covenants	 	68
	 
	 	10.2.1. Permitted Debt	 	68
	 
	 	10.2.2. Permitted Liens	 	69
	 
	 	10.2.3. Capital Expenditures	 	70
	 
	 	10.2.4. Distributions; Upstream Payments	 	71
	 
	 	10.2.5. Restricted Investments	 	71
	 
	 	10.2.6. Disposition of Assets	 	71
	 
	 	10.2.7. Loans	 	71

v

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	10.2.8. Restrictions on Payment of Certain Debt	 	71
	 
	 	10.2.9. Fundamental Changes	 	71
	 
	 	10.2.10. Subsidiaries	 	72
	 
	 	10.2.11. Organic Documents	 	72
	 
	 	10.2.12. Tax Consolidation	 	72
	 
	 	10.2.13. Accounting Changes	 	72
	 
	 	10.2.14. Restrictive Agreements	 	72
	 
	 	10.2.15. Hedging Agreements	 	72
	 
	 	10.2.16. Conduct of Business	 	72
	 
	 	10.2.17. Affiliate Transactions	 	72
	 
	 	10.2.18. Plans	 	72
	 
	 	10.2.19. Amendments to Certain Material Contracts	 	72
	 
	 	10.2.20. No Speculative Transactions	 	73
	 
	 	10.2.21. Passive Company Status	 	73
	 
	 	10.2.22. General Partner	 	73
	 
	 	10.2.23. Sale-Leaseback Transactions	 	73
	 
	 	10.2.24. Indebtedness under Senior Note Debt Documents	 	73
	10.3.
	 	Financial Covenants	 	73
	 
	 	10.3.1. Excess Availability	 	73
	SECTION 11.
	 	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	 	73
	11.1.
	 	Events of Default	 	73
	11.2.
	 	Remedies upon Default	 	75
	11.3.
	 	License	 	76
	11.4.
	 	Setoff	 	76
	11.5.
	 	Remedies Cumulative; No Waiver	 	76
	 
	 	11.5.1. Cumulative Rights	 	76
	 
	 	11.5.2. Waivers	 	76
	SECTION 12.
	 	AGENT	 	76
	 
	 	12.1. Appointment, Authority and Duties of Agent	 	76
	 
	 	12.1.2. Duties	 	77
	 
	 	12.1.3. Agent Professionals	 	77
	 
	 	12.1.4. Instructions of Required Lenders	 	77

vi

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	12.2.
	 	Agreements Regarding Collateral and Field Examination Reports	 	77
	 
	 	12.2.1. Lien Releases; Care of Collateral	 	78
	 
	 	12.2.2. Possession of Collateral	 	78
	 
	 	12.2.3. Reports	 	78
	12.3.
	 	Reliance By Agent	 	78
	12.4.
	 	Action Upon Default	 	78
	12.5.
	 	Ratable Sharing	 	78
	12.6.
	 	Indemnification of Agent Indemnitees	 	79
	 
	 	12.6.1. INDEMNIFICATION	 	79
	 
	 	12.6.2. Proceedings	 	79
	12.7.
	 	Limitation on Responsibilities of Agent	 	79
	12.8.
	 	Successor Agent and Co-Agents	 	80
	 
	 	12.8.1. Resignation; Successor Agent	 	80
	 
	 	12.8.2. Separate Collateral Agent	 	80
	12.9.
	 	Due Diligence and Non-Reliance	 	80
	12.10.
	 	Replacement of Certain Lenders	 	81
	12.11.
	 	Remittance of Payments and Collections	 	81
	 
	 	12.11.1. Remittances Generally	 	81
	 
	 	12.11.2. Failure to Pay	 	81
	 
	 	12.11.3. Recovery of Payments	 	81
	12.12.
	 	Agent in its Individual Capacity	 	81
	12.13.
	 	Agent Titles	 	82
	12.14.
	 	No Third Party Beneficiaries	 	82
	12.15.
	 	Mortgage Intercreditor Agreement	 	82
	SECTION 13.
	 	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	 	82
	13.1.
	 	Successors and Assigns	 	82
	13.2.
	 	Assignments	 	82
	 
	 	13.2.1. Assignments by Lenders	 	82
	 
	 	13.2.2. Register	 	83
	 
	 	13.2.3. Certain Pledges	 	84
	 
	 	13.2.4. Electronic Execution of Assignments	 	84
	 
	 	13.3. Participations	 	84

vii

 

TABLE OF
CONTENTS
(continued)

	 	 	 	 	 
	 	 	 	 	Page
	 
	 	13.3.2. Limitations upon Participant Rights	 	84
	13.4.
	 	Tax Treatment	 	84
	13.5.
	 	Representation of Lenders	 	85
	SECTION 14.
	 	MISCELLANEOUS	 	85
	14.1.
	 	Consents, Amendments and Waivers	 	85
	 
	 	14.1.1. Amendment	 	85
	 
	 	14.1.2. Limitations	 	85
	 
	 	14.1.3. Payment for Consents	 	85
	14.2.
	 	Indemnity	 	86
	14.3.
	 	Notices and Communications	 	86
	 
	 	14.3.1. Notice Address	 	86
	 
	 	14.3.2. Electronic Communications; Voice Mail	 	87
	 
	 	14.3.3. Non-Conforming Communications	 	87
	14.4.
	 	Performance of Borrowers’ Obligations	 	87
	14.5.
	 	Credit Inquiries	 	87
	14.6.
	 	Severability	 	87
	14.7.
	 	Cumulative Effect; Conflict of Terms	 	87
	14.8.
	 	Counterparts; Facsimile Signatures	 	88
	14.9.
	 	Entire Agreement	 	88
	14.10.
	 	Obligations of Lenders	 	88
	14.11.
	 	Confidentiality	 	88
	14.12.
	 	GOVERNING LAW	 	88
	14.13.
	 	Consent to Forum	 	89
	 
	 	14.13.1. Forum	 	89
	14.14.
	 	Waivers by Borrowers	 	89
	14.15.
	 	Patriot Act Notice	 	89
	14.16.
	 	Resignation as Issuing Bank or Provider of Swingline Loans after Assignment	 	89

viii

 

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

	 	 	 
	Schedule 1.1(a)

	 	Commitments of Lenders
	Schedule 1.1(b)

	 	Leased Properties of the Business as of the Closing Date
	Schedule 1.1(c)

	 	Restricted Investments Existing on the Closing Date
	Schedule 2.3.2

	 	Existing Letters of Credit
	Schedule 6.1(n)

	 	Closing Date Pro Forma Leverage Ratio
	Schedule 7.1

	 	Excluded Real Estate
	Schedule 7.3

	 	Mortgaged Real Estate
	Schedule 8.5

	 	Deposit Accounts
	Schedule 8.5(a)

	 	Store Deposit Accounts for Post-Closing Account Control Agreements
	Schedule 8.5(b)

	 	Excluded Deposit Accounts
	Schedule 8.5(c)

	 	Excluded Trust Accounts
	Schedule 8.6.1

	 	Business Locations
	Schedule 9.1.4

	 	Names and Capital Structure
	Schedule 9.1.5

	 	Former Names and Companies
	Schedule 9.1.12

	 	Patents, Trademarks, Copyrights and Licenses
	Schedule 9.1.15

	 	Environmental Matters
	Schedule 9.1.16

	 	Restrictive Agreements
	Schedule 9.1.17

	 	Litigation
	Schedule 9.1.19

	 	Pension Plans
	Schedule 9.1.22

	 	Labor Contracts
	Schedule 10.2.1

	 	Existing Debt
	Schedule 10.2.2

	 	Existing Liens
	Schedule 10.2.17

	 	Existing Affiliate Transactions

 

 

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (the “Loan Agreement”) is dated as of March 6, 2006,
among THE BON-TON DEPARTMENT STORES, INC. (“Bon-Ton”), a Pennsylvania corporation,
HERBERGER’S DEPARTMENT STORES, LLC, (“Herberger’s”), a Minnesota limited liability company,
PARISIAN, INC. (“Parisian”), an Alabama corporation, and THE ELDER-BEERMAN STORES CORP.
(“Elder-Beerman” and together with Bon-Ton, Herberger’s and Parisian, collectively, the
“Borrowers”), an Ohio corporation, the financial institutions party to this 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”).

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 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.

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

     Acquisition — the purchase by the Parent from Saks Incorporated of 100% of the
equity interests in Herberger’s and Parisian, and of the Business, pursuant to the Purchase
Agreement.

     Acquisition Documents - the Purchase Agreement and all other material documents
executed between or among the Obligors and Saks Incorporated in connection with the
Acquisition, including, without limitation each of the following documents, each of which is
dated as of the date hereof unless otherwise indicated (a) the “including, without
limitation, that certain Amended and Restated Plan of Reorganization, dated as of February
23, 2006, among Saks Incorporated, Carson Pirie Holdings, Inc., CP Holdings Virginia, LLC,
Parisian Virginia, LLC, McRae’s, Inc., McRae’s of Alabama, Inc., McRae’s Stores Services,
Inc., Saks Distribution Centers, Inc., McRIL, LLC, North Park Fixtures, Inc. and Parisian,
Inc. and all exhibits thereto, (b) the Agreement and Plan of Merger between Parisian, Inc.
and Parisian Virginia, LLC, (c) the Agreement and Plan of Merger between Carson Pirie
Holdings, Inc. and CP Holdings Virginia, LLC, (d) the Agreement and Plan of Merger between
Parisian, Inc. and Carson Pirie Holdings, Inc., (e) the Distribution Agreement between
McRae’s of Alabama, Inc. and McRae’s Inc., (f) the Distribution Agreement between North Park
Fixtures, Inc. and McRae’s Inc., (g) the Distribution Agreement between McRIL, LLC and
McRae’s Inc., (h) the Contribution Agreement between McRae’s Inc. and McRae’s of Alabama,
Inc., (i) the Contribution Agreement between McRae’s Inc. and McRae’s Stores Services, Inc.,
(j) the Contribution Agreement between McRae’s Inc. and North Park Fixtures, Inc., (k) the
Plan of Liquidation among Saks Incorporated, Parisian, Inc.

 

 

and McRae’s Inc., (l) the Contribution Agreement between Parisian, Inc. and McRae’s of Alabama, Inc. and (m) the
Contribution Agreement between Parisian, Inc. and McRae’s Stores Services, Inc.

     Adjusted LIBOR — for any Interest Period, with respect to LIBOR Loans, the per
annum rate of interest (rounded upward, if necessary, to the nearest 1/8th of 1%) appearing
on Telerate Page 3750, or if such page is unavailable, the Reuters Screen LIBO Page (or any
successor page of either, as applicable), as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period; provided,
however, if the Reuters Screen LIBO Page is used and more than one rate is shown on such
page, the applicable rate shall be the arithmetic mean thereof. If for any reason none of
the foregoing rates is available, the Offshore Base Rate shall be the rate per annum
determined by Agent as the rate of interest at which Dollar deposits in the approximate
amount of the applicable LIBOR Loan would be offered to major banks in the offshore Dollar
market at or about 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. 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 Indemnitees — Agent and its officers, directors, employees, Affiliates,
agents, advisors and attorneys.

     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:

-2-

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	LIBOR	 	LIBOR	 	Base Rate	 	Base Rate	 	 
	 	 	 	 	 	 	Tranche A	 	Tranche A-1	 	Tranche A	 	Tranche A-1	 	 
	 	 	Average Excess	 	Revolver	 	Revolver	 	Revolver	 	Revolver	 	Unused Line
	Level	 	Availability	 	Loans	 	Loans	 	Loans	 	Loans	 	Fee
	I
	 	 	> $400,000,000	 	 	 	1.00	%	 	 	2.75	%	 	 	0	%	 	 	1.25	%	 	 	0.30	%
	II
	 	 	£ $400,000,000	 	 	 	1.25	%	 	 	3.00	%	 	 	0	%	 	 	1.50	%	 	 	0.25	%
	 
	 	but
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	> $250,000,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	III
	 	 	£ $250,000,000	 	 	 	1.50	%	 	 	3.25	%	 	 	0	%	 	 	1.75	%	 	 	0.25	%
	 
	 	but
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	> $100,000,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IV
	 	 	£ $100,000,000	 	 	 	1.75	%	 	 	3.50	%	 	 	0.25	%	 	 	2.00	%	 	 	0.25	%

Until October 31, 2006, margins shall be determined as if Level III 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, the Agent shall
determine the Applicable Rate 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 —  with respect to any Eligible Real Estate the fair market
value of such Eligible Real Estate as determined pursuant to the most recent appraisal
received by Agent from an independent third-party appraiser acceptable to Required Lenders,
pursuant to Section 10.1.1(b).

     Approved Fund — any Person (other than a natural person) that is engaged in
making, holding or investing in extensions of credit in its ordinary course of business and
is administered or managed by a Lender, an entity that administers or manages a Lender, or
an Affiliate of either.

     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.

     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, in the form of Exhibit C.

     Availability Reserve — the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the aggregate
amount of liabilities secured by Liens upon Collateral that are senior to Agent’s Liens (but
imposition of any such reserve shall not waive an Event of Default arising therefrom); and
(e) 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 the Agent’s
ability to realize the full value of the Collateral in a liquidation) as Agent in its
reasonable exercise of its credit judgment discretion may elect to impose from time to time.

-3-

 

     Bank of America — Bank of America, N.A., a national banking association, and
its successors and 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 merchant
card services extended to Parent or such Subsidiary; and (d) leases and other banking
products or services as may be requested by Parent or any Subsidiary, other than Letters of
Credit; provided, however, that for any of the foregoing to be included as
an “Obligation” for purposes of a distribution under Section 5.5.1 or Section 5.5.2, 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
from time to time, in consultation with the Borrower Agent, in respect of Bank Product Debt.

     Bankruptcy Code — Title 11 of the United States Code.

     Base Rate — the rate of interest announced by Bank of America from time to time
as its prime rate. Such rate is a reference rate only and Bank of America may make loans or
other extensions of credit at, above or below it. Any change in the prime rate announced by
Bank of America shall take effect at the opening of business on the effective date specified
in the public announcement of the 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 Existing Lender — General Electric Capital Corporation, as
administrative agent and L/C issuer.

-4-

 

     Bon-Ton Payoff Letter — a letter, in form and substance reasonably satisfactory
to Agent, from the Bon-Ton Existing Lender to Agent respecting the amount necessary to repay
in full all of the obligations of the Obligors owing to the Bon-Ton Existing Lender and
obtain a release of all of the Liens existing in favor of the Bon-Ton Existing Lender in and
to the assets of the Obligors and stating that such Liens shall be released upon receipt of
such amount.

     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, Wachovia Bank, N.A. 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.

     Business — the retail store business conducted by Herberger’s and Parisian
under the tradenames Carson Pirie Scott, Younkers, Herberger’s, Boston Store and Bergner’s.

     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.

     Business Existing Lender —  Bank of America.

     Business Payoff Letter — a letter, in form and substance reasonably
satisfactory to Agent, from the Business Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of the Business owing to the Business
Existing Lender and obtain a release of all of the Liens existing in favor of the Business
Existing Lender in and to the assets of the Business and stating that such Liens shall be
released upon receipt of such amount.

     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 with a useful
life of more than one year, including the principal portion of Capital Leases.

     Capital Lease — any lease that is required to be capitalized for financial
reporting purposes

-5-

 

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, 105% 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.

     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

-6-

 

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 of 50% or more of the voting power of the Voting Stock of
the surviving or transferee Person or (f) the failure of (x) Bon-Ton to be a wholly-owned
direct Subsidiary of the Parent or (y) the failure of any other Borrower to be a
wholly-owned indirect Subsidiary of the Parent.

     Chattel Paper — as defined in the UCC.

     Claims — as defined in Section 14.2.

     Closing Date — as defined in Section 6.1.

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

     Commercial Tort Claim — as defined in the UCC.

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

     Commitment Letter — that certain commitment letter, dated October 29, 2005
between the Parent, the Agent, Banc of America Bridge LLC and Banc of America Securities
LLC.

     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, 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.

-7-

 

     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 payable by the Parent and its Subsidiaries for such period, (iii)
depreciation and amortization expense and (iv) other non-recurring expenses of the Borrower
and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash
item in such period or any future period 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 and (ii) all non-cash
items increasing Consolidated Net Income for such period.

     Consolidated Fixed Charges — for any period, for the Parent and its
Subsidiaries on a consolidated basis, the sum of (a) all scheduled permanent principal
payments, interest, premium payments, debt discount, fees, 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 to the
extent treated as interest 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 that is
treated as interest in accordance with GAAP.

     Consolidated Fixed Charge Coverage Ratio — as of any date of determination, the
ratio of (a) Consolidated EBITDA for the period of the four prior fiscal quarters ending on
such date to (b) Consolidated Fixed Charges for such period.

     Consolidated Funded Indebtedness means, as of any date of determination, for
the Parent and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding
principal amount of all obligations, whether current or long-term, for borrowed money
(including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes,
loan agreements or other similar instruments, (b) all purchase money Indebtedness, (c) all
direct obligations arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business), (e) attributable indebtedness in
respect of capital leases and synthetic lease obligations, (f) without duplication, all
Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a)
through (e) above of Persons other than the Borrower or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or
joint venture (other than a joint venture that is itself a corporation or limited liability
company) in which the Borrower or a Subsidiary is a general partner or joint venturer,
unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.

     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

-8-

 

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. The amount of any Contingent Obligation shall be deemed to be the stated
or determinable amount of the primary obligation (or, if less, the maximum amount for which
such Person may be liable under the instrument evidencing the Contingent Obligation) or, if
not stated or determinable, the maximum reasonably anticipated liability with respect
thereto.

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

     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 Notification — as defined in Section 6.1(p).

     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 to purchase,
redeem, retire, defease or otherwise make any payment in respect of any equity interest in
such Person or any other Person, valued, in the case of a redeemable preferred interest, at
the greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and (h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness 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 Indebtedness is expressly made non-recourse to such Person.

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

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

     Deposit Account — as defined in the UCC.

     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

-9-

 

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 one
year 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 one year 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.

     Distribution Center — the warehouse and distribution facilities operated by the
Borrowers and located at 3585 S. Church Street, Whitehall, Pennsylvania, 1340 East
Dayton-Yellow Springs Road, Fairborn, Ohio, 210 S.E. Shurfine Drive, Ankey, Iowa, 1300 N.
Quincy Street, Green Bay, Wisconsin, 4650 Shepard Trial, Rockford, Illinois and 1835
Jefferson Avenue, Naperville, Illinois.

     Document — as defined in the UCC.

     Dollars — lawful money of the United States.

     Dominion Account — a special account established by Borrowers at Bank of
America or another bank 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;
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 any Obligor or any Affiliate or Subsidiary
of any Obligor.

     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 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,

-10-

 

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) — (x) of
Section 10.2.2, so long as (other than with respect to Liens permitted pursuant to clauses
(u) or (x) of Section 10.2.2) such Liens 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 or in the possession of a warehouseman, processor,
repairman, mechanic, shipper, freight forwarder or other Person unless the lessor or such
Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been
established; provided that, with respect to the properties listed on
Schedule 1.1(b), no Lien Waiver shall be required and no Rent and Charges Reserve shall be
established until the date that is ninety (90) days after the Closing Date; (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 Agreement and
the other Loan Documents are true 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 — 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 is in transit to one of the
Borrower’s facilities and which Inventory (a) is owned by a Borrower and either (i) has been
paid for with a draw of an Eligible Trade L/C by a Borrower or (ii) 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; (b) is fully insured; (c) 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);
(d) is evidenced or deliverable pursuant to Documents that have been delivered to Agent or
an agent acting on its behalf or designating Agent as consignee; and (e) is otherwise
“Eligible Inventory” hereunder.

     Eligible L/C Inventory — 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 and (b) will be Eligible In-Transit Inventory upon a
draw of the subject Eligible Trade Letter of Credit.

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     Eligible Machinery and Equipment — Equipment, Fixtures and owned furniture as
determined from time to time pursuant to an appraisal acceptable to Agent or which is
otherwise deemed eligible by the Agent, in its reasonable credit judgment. Without limiting
the foregoing, no Equipment, Fixtures or owned furniture shall be Eligible Machinery and
Equipment unless (a) such asset is subject to Agent’s duly perfected, first priority Lien,
and no other Lien except Liens permitted pursuant to clauses (c) — (x) of Section 10.2.2, so
long as (other than with respect to Liens permitted pursuant to clauses (u) or (x) of
Section 10.2.2) such Liens are junior to the Liens granted to Agent and the Lenders; (b)
such asset is located on premises leased, owned or operated by a Borrower referenced on
Schedule 8.6.1; (c) such asset is not located on leased premises or in the possession of a
warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person,
unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and
Charges Reserve has been established provided that, with respect to the
properties listed on Schedule 1.1(b), no Lien Waiver shall be required and no Rent and
Charges Reserve shall be established until the date that is ninety (90) days after the
Closing Date; and (d) such asset is Equipment, Fixtures or furniture which does not in any
way fail to meet or violates in any material respect any warranty, representation or
covenant contained in this Agreement or any other Loan Document.

     Eligible Real Estate — Real Estate owned by a Borrower described on Schedule
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 (other than Liens permitted pursuant to
clause (b), (i) and clause (y) of Section 10.2.2); (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.

     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 Borrowers with respect to any Real
Estate subject to a Mortgage, pursuant to which Borrowers 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

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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.

     Excess Cash Flow — without duplication, with respect to any Fiscal Year of the
Parent and its Subsidiaries, Consolidated Net Income plus (a) depreciation, amortization and
other non-cash charges and Interest Expense to the extent deducted in determining
Consolidated Net Income, minus (b) Capital Expenditures during such Fiscal Year (excluding
the financed portion thereof), minus (c) Interest Expense paid or accrued (excluding any
original issue discount, interest paid in kind or amortized debt discount, to the extent
included in determining Interest Expense) and scheduled principal payments paid or payable
in respect of Consolidated Funded Debt, plus or minus (as the case may be), (d)
extraordinary gains or losses which are cash items not included in the calculation of
Consolidated Net Income, minus (e) mandatory permanent prepayments of the Loans pursuant to
Section 5.2, plus (f) taxes deducted in determining Consolidated Net Income to the extent
not paid for in cash.

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

     Extraordinary Expenses — all reasonable costs, expenses or advances that 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,

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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, 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.

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

     Fiscal Quarter — each successive period of three months, commencing on the
first day of a 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 Borrower located at a parcel of Real Estate subject to a Mortgage.

     FLSA — the Fair Labor Standards Act of 1938.

     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 Borrowers.

     Full Payment — with respect to any Obligations, (a) the full and indefeasible
cash payment thereof, including any interest, fees and other charges accruing during an
Insolvency Proceeding (whether or not allowed in the proceeding); (b) if such Obligations
are LC Obligations or inchoate or contingent in nature, Cash Collateralization thereof (or
delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount
of required Cash Collateral); and (c) a release of any Claims of Obligors against Agent,
Lenders and Issuing Bank arising on or before the payment date. No Loans shall be deemed to
have been paid in full until all Commitments related to such Loans have expired or been
terminated.

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

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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, 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) Holdings, (c) the Bon-Ton Giftco,
Inc., (d) The Bon-Ton Stores of Lancaster, Inc., (e) The Bon-Ton Trade Corp., (f) McRae’s,
Inc., (g) Saks Distribution Centers, Inc., (h) McRIL, LLC, (i) Elder-Beerman West Virginia,
Inc., (j) Elder-Beerman Holdings, Inc., (k) Elder-Beerman Operations, 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.

     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.

     Holdings — The Bon-Ton Corp., a Delaware corporation and parent company of
Bon-Ton.

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

     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

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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.

     Interest Expense — with respect to any Person for any fiscal period, interest
expense (whether cash or non-cash) of such Person determined in accordance with GAAP for the
relevant period ended on such date, including, in any event, interest expense with respect
to any Consolidated Funded Indebtedness of such Person.

     Interest Period — as defined in Section 3.1.3.

     Interest Rate Contract — any interest rate swap, collar or cap agreement, or
other agreement or arrangement by Parent or any Subsidiary with a Lender that is designed to
protect against fluctuations in interest rates.

     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.

     Investment Property — as defined in the UCC.

     Issuing Bank — (a) Bank of America or an Affiliate of Bank of America, 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, Wachovia Bank, N.A. or the Business Existing Lender, as the case may be.

     Issuing Bank Indemnitees — Issuing Bank and its officers, directors, employees,
Affiliates,

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agents, advisors and attorneys.

     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 20 Business Days prior to the Termination Date; (d) the Letter of
Credit and payments thereunder are denominated in Dollars; and (e) the form of the proposed
Letter of Credit is reasonably satisfactory to Agent and Issuing Bank in their discretion.

     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); (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.

     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 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.

     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.

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     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.

     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 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 Documents — this Agreement, Other Agreements and Security Documents.

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

     Machinery and Equipment Amount — on any date of determination, an amount equal
to 75% of the NRV Percentage of Eligible Machinery and Equipment.

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

     Master Lease Agreement — collectively, (i) Master Lease dated as of March 6,
2006 between Bonstores Realty One, LLC, a Delaware limited liability company, as landlord,
and Herberger’s Department Stores, LLC, a Minnesota limited liability company, as tenant,
(ii) Master Lease dated as of March 6, 2006 between Bonstores Realty One, LLC, a Delaware
limited liability company, as landlord, and McRae’s, Inc., a Mississippi corporation, as
tenant, (iii)

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Master Lease dated as of March 6, 2006 between Bonstores Realty One, LLC, a
Delaware limited liability company, as landlord, and McRIL, LLC, a Virginia limited
liability company, as tenant, (iv) Master Lease dated as of March 6, 2006 between Bonstores
Realty One, LLC, a Delaware limited liability company, as landlord, and Parisian, Inc., an
Alabama corporation, as tenant, (v) Master Lease dated as of March 6, 2006 between Bonstores
Realty One, LLC, a Delaware limited liability company, as landlord, and Saks Distribution
Centers, Inc., an Illinois corporation, as tenant, (vi) Master Lease dated as of March 6,
2006 between Bonstores Realty One, LLC, a Delaware limited liability company, as landlord,
and The Elder-Beerman Stores, Corp., an Ohio corporation, as tenant, (vii) Master Lease
dated as of March 6, 2006 between Bonstores Realty Two, LLC, a Delaware limited liability
company, as landlord, and McRae’s, Inc., a Mississippi corporation, as tenant, (viii) Master
Lease dated as of March 6, 2006 between Bonstores Realty Two, LLC, a Delaware limited
liability company, as landlord, and McRIL, LLC, a Virginia limited liability company, as
tenant, (ix) Master Lease dated as of March 6, 2006 between Bonstores Realty Two, LLC, a
Delaware limited liability company, as landlord, and Parisian, Inc., an Alabama corporation,
as tenant, and (x) such other leases and subleases as may be entered into between an SPE and
an Obligor from time to time.

     Material Adverse Effect — the effect of any event or circumstance occurring
after October 29, 2005 (except for general economic or political conditions or conditions
generally applicable to the department store industry, or terrorist events or wars) that,
taken alone or in conjunction with other events or circumstances, has or could be reasonably
expected to have a material adverse effect on: (a) the business, operations, liabilities
(actual or contingent), Properties, or condition (financial or otherwise) of the Borrowers
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 ability 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, (c) that is an Acquisition Document, (d) that relates to the Mortgage Loan Debt, the
Senior Note Debt, or other Debt in an aggregate 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 the
date hereof, by and among the Mortgage Loan Lender and Agent.

     Mortgage Loan Debt — (a) the Debt of SPE 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, executed by the Parent in favor of the
Mortgage Loan Lender, as in effect on the date hereof and (c) the Debt evidenced by each
Exceptions to Non-Recourse Guaranty, entered into on the date hereof, by the Parent in favor
of the Mortgage Loan Lender, as in effect on the date hereof.

     Mortgage Loan Debt Documents — the (a) Loan Agreement (the “Bonstores One

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Agreement”), dated as of the date hereof, between Bonstores Realty One, LLC and the Mortgage
Loan Lender, (b) the Loan Agreement (the “Bonstores Two Agreement”), dated as of the date
hereof, 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 and (f) each guaranty of a
Master Lease by the Parent in favor of the Mortgage Loan Lender.

     Mortgage Loan Lender — Bank of America, N.A., in its capacity as indenture
trustee 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 senior to Agent’s Liens on Collateral sold;
(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 satisfactory to Agent.

     NRV Percentage — the net recovery value of Inventory, Equipment, Fixtures or
owned furniture, as the case may be of each Borrower, expressed as a percentage (which in
the case of Inventory shall be a 12 month average recovery value), 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,
Equipment, Fixtures and owned furniture 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.

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

     OSHA — the Occupational Safety and Hazard Act of 1970.

     Other Agreement — each Note, LC Document, LC Guaranty, Fee Letter, Lien Waiver,
Real Estate Related Document, Borrowing Base Certificate, Compliance Certificate, financial
statement or report delivered hereunder, or other document, instrument or agreement (other
than this 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 Holdings.

     Participant — as defined in Section 13.3.1.

     Passive Company — collectively, The Bon-Ton Properties-Irondequoit G.P., Inc.,
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., Capital City Commons Realty, Inc., The
Bon-Ton Properties- Irondequoit L.P., 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 a
Borrower, including those constituting proceeds of any Collateral.

     Permitted Asset Disposition — as long as no Default or Event of Default exists
and, if so required pursuant to Section 5.2, all Net Proceeds are remitted to Agent, 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 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 Obligor, (e) the sale or
other disposition of Cash Equivalents, (f) dispositions of accounts receivable in connection
with the compromise, settlement or collection thereof in the ordinary course of business or
in bankruptcy or similar proceedings, (g) any Permitted Distribution, (h) any Investment
which is not a Restricted Investment, (i) the unwinding of any Hedging Agreements, (j)
subleases entered into in the ordinary course of business of any Obligor, (k) the
disposition of any Real Estate which, pursuant to Section 7.3, is not required to be subject
to a Mortgage hereunder, (l) the disposition of any

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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, (y) the Obligors receive, at the consummation
of such Asset Disposition, gross proceeds, in cash, from such sale in an amount not less
than the appraised value of such Real Estate, as set forth in the most recent appraisal
provided to the Agent and (z) contemporaneously with the closing of such Asset Disposition,
100% of the cash Net Proceeds therefrom are applied to prepay the Loans, (m) the disposition
by Borrower Agent of 100% of the membership interests in Bonstores Realty One, LLC to
Bonstores Holdings One, LLC and (n) the disposition by Borrower Agent of 100% of the
membership interests in Bonstores Realty Two, LLC to Bonstores Holdings Two, LLC.

     Permitted Business — any business conducted or proposed to be conducted (as
described in that certain offering memorandum, dated March 2, 2006, and relating to the
Senior Note Debt) 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
payment, (ii) Excess Availability on the date of the making of (and after giving effect to)
such dividend, redemption or repurchase is greater than or equal to $125,000,000, (iii)
Excess Cash Flow for the period of four fiscal quarters then ended is at least $20,000,000,
(iv) the aggregate amount of such Permitted Distributions shall not in the aggregate exceed
fifty percent (50%) Excess Cash Flow for the period of four fiscal quarters then ended, (v)
as of the monthly fiscal period most recently then ended, the Consolidated Fixed Charge
Coverage Ratio (calculated on a pro forma basis giving effect to the making of such
Permitted Distribution) is not less than 1.5:1.0, and (vi) the Borrowers shall have provided
the Agent with a certificate not less than then (10) days prior to the making of such
Permitted Distribution executed by a Senior Officer, evidencing compliance, after giving
effect to such Permitted Distribution, with the requirements set forth in clauses (i), (ii),
(iii), (iv) and (v) above, (b) dividends by the Parent or redemptions or repurchases of
equity securities of the Parent in an aggregate amount not to exceed (x) $4,000,000 in any
fiscal year of the Parent or (y) $15,000,000 during the term of this Agreement, (c) the
purchase, repurchase, redemption, acquisition or retirement for value of any capital stock
of the Parent upon the exercise of warrants, options or similar rights if such capital stock
constitutes all or a portion of the exercise price or is surrendered in connection with
satisfying any federal or state income tax obligation incurred in connection with such
exercise; provided that no cash payment in respect of such purchase, repurchase, redemption,
acquisition, retirement or exercise shall be made by any Obligor and (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 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

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exceed $3,000,000.

     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 and its incurrence does not violate
Section 10.2.3.

     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.

     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

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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 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 satisfaction of Agent; and (f) if the
obligation results from entry of a judgment or other order, such judgment or order is stayed
pending appeal or other judicial review.

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

     Protective Advances — as defined in Section 2.1.5.

     Purchase Agreement — that certain Purchase Agreement, dated as of October 29,
2005, by and between Saks Incorporated and the Parent.

     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; and (c) 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.

     Register — as defined in Section 13.2.2.

     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; (b) it has a final maturity no sooner than, a
weighted average life no less than, and an interest rate no greater than 100 basis points
above the interest rate of the Debt being refinanced, the Debt being extended, renewed or
refinanced; (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 no less favorable to Parent and the Subsidiaries than those applicable
to the Debt being extended, renewed or refinanced; (e) no additional Lien is granted to
secure it; (f) no additional Person is obligated on such Debt; 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, renewal
or refinancing of Debt permitted under Section 10.2.1 (b), (c), (d), or (e).

     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 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.

     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”).

     Restricted Investment — any Investment by Parent or Subsidiary, other than (a)
Investments in Subsidiaries to the extent existing on the Closing Date and 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 Borrowers
comprised of notes payable, or stock or other securities issued by Account Debtors to any
Borrower 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,

-25-

 

(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) Investments of up to $2,000,000 in The Bon-Ton Properties Irondequoit, L.P.
so long as the proceeds of such Investments are applied to repay the Debt secured by the
owned Real Property of such entity, (l) Investments described on Schedule 1.1(c) and (m) the
Investments on the Closing Date of certain Real Property by the Obligors into the SPEs, as
such Investments are contemplated by the Mortgage Loan Debt Documents.

     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.

     Royalties — all royalties, fees, expense reimbursement and other amounts
payable by Parent or any Subsidiary under a License.

     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.

     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, Issuing Bank, Lenders and providers of Bank Products.

     Security Documents — this Agreement, the Guaranties, 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.

     Senior Note Indenture — the Senior Note Indenture, dated as of the date hereof,
by and among Bon-Ton and The Bank of New York, as trustee.

     Senior Officer — the chairman of the board, president, chief executive officer,
treasurer 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.

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     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.

     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).

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

     Supporting Obligation — as defined in the UCC.

     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 — March 6, 2011.

     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

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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, minus (iii) the Availability Reserve,
minus (iv) the LC Reserve.

     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) $75,000,000
minus the Tranche A-1 Real Estate Amount and (y) the Machinery and Equipment Amount
plus the Tranche A Real Estate Amount.

     Tranche A Inventory Formula Amount — (a) at all times on or prior to the first
anniversary of the Closing Date, 90% of the NRV Percentage of the Value of Eligible
Inventory, (b) at all times after the first anniversary of the Closing Date but on or prior
to August 31, 2007, 87.5% of the NRV Percentage of the Value of Eligible Inventory and (c)
at all times after August 31, 2007, 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.

     Tranche A Overadvance — as defined in Section 2.1.4.

     Tranche A Real Estate Amount — at any date of determination, 50% 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.

     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 lesser of (x)
$75,000,000 and (y) 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.

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     Tranche A-1 Inventory Formula Amount – on any date of determination, 10% of the
NRV Percentage of the Value of Eligible Inventory.

     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.

     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 — as defined in Section 5.6.

     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.

     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.

     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

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change is disclosed to Agent, and Section 10.3 is amended in a manner reasonably satisfactory
to Required Lenders to take into account the effects of the change.

     1.3. Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder” and
other words of similar import refer to this 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 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.

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

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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.

          (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.

          2.1.3. Use of Proceeds. The proceeds of Loans shall be used by Borrowers solely (a)
to satisfy existing Debt; (b) to finance a portion of the Acquisition, (c) to pay fees and
transaction expenses associated with the closing of this credit facility and with the Acquisition;
(d) to pay Obligations in accordance with this Agreement; and (e) for working capital and other
lawful corporate purposes of Borrowers, 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 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

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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.

     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 Agreement. Upon at least 45 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. 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, shall be given at least five
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.

          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 Agreement. Upon at least 45 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. 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 15 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

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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, 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.

     2.3. Letter of Credit Facility.

          2.3.1. Issuance of Letters of Credit. Issuing Bank agrees to issue or cause the
issuance of Letters of Credit from time to time until 30 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 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 Agreement. Prior to receipt of any such notice, Issuing Bank
shall not be deemed to have knowledge of any failure of LC Conditions.

          (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.

          (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

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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 and issued by the Wachovia Bank, N.A. or the Existing Business Lender, as the case may be
shall be deemed to be a Letter of Credit issued pursuant to this Agreement.

          (g) Each Issuing Bank shall promptly notify the Agent of the issuance of, and provide Agent
with a copy of, each Letter of Credit issued hereunder.

          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 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) 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.

          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 all outstanding Letters of Credit. If Borrowers
fail to Cash Collateralize 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).

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 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

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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.

          (b) During any Event of Default 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

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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.

          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 Applicable Margin then in effect for the Unused Line Fee per
annum times the amount by which the Tranche A Revolver Commitments exceed the average daily 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 Applicable Margin then in effect
for the Unused Line Fee per annum times the amount by which the Tranche A-1 Revolver Commitments
exceed the average daily 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, 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.

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     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.

     3.4. Reimbursement Obligations. Borrowers shall reimburse Agent for all Extraordinary
Expenses. Borrowers shall also reimburse Agent for all legal, accounting, appraisal, consulting,
and other fees, costs and expenses incurred by it in connection with (a) 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 during an Event of Default in
connection with the enforcement or preservation of any rights under this Agreement or any of the
other Loan Documents. All amounts reimbursable by Borrowers under this Section 3.4 shall
constitute Obligations secured by the Collateral and shall be payable within ten Business Days
after presentation by Agent to Borrowers of a reasonably detailed itemization of such amounts.

     3.5. Illegality. Notwithstanding anything to the contrary herein, if (a) any change
in any law or interpretation thereof, made after the date hereof, by any Governmental Authority
makes it unlawful for a Lender to make or maintain a LIBOR 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.

     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:

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          (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 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 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, with the consent of Agent, may obtain, at
Borrowers’ expense, a replacement Lender (“Replacement Lender”) for the Affected Lender,
which Replacement Lender must be (i) an Eligible Assignee and (ii) satisfactory to Agent. 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 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

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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.

     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.
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

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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.

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

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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.

          4.1.3. Swingline Loans; Settlement.

          (a) Agent shall (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.

          (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.

     4.2. Defaulting Lender. If a Lender fails to make any payment to Agent that is
required hereunder, 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
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.

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     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 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.

     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 and Section 5.5. If (x) on or prior to the occurrence of any Trigger
Event, any Asset Disposition (other than any Asset Disposition permitted pursuant to Section
10.2.6) is made or (y) after the occurrence of any Trigger Event, any Asset Disposition (other than
any Asset Disposition by the SPE) is made, then the Net Proceeds of such Asset Disposition shall be
transferred to the main Dominion Account and shall be applied by Agent to the Obligations in
accordance with Section 5.5.

     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);

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          (e) fifth, to all Obligations constituting interest 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 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;

          (j) tenth, to Bank Product Debt owing to the Lenders and their Affiliates for which a
Bank Product Reserve has been established; and

          (k) eleventh, to Bank Product Debt owing to the Lenders and their Affiliates for which
a Bank Product Reserve has not been established.

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 on Tranche A Revolver Loans
(excluding amounts relating to Bank Products);

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

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          (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 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
a Bank Product Reserve has been established; and

          (l) twelfth, to Bank Product Debt owing to the Lenders and their Affiliates for which
a Bank Product Reserve has not been established.

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 first date
on which either (a) Excess Availability is below $75,000,000 or (b) any Event of Default occurred
(each, a “Trigger Event”), the ledger balance in the main Dominion Account as of the end of
such Business Day shall be transferred, by the Borrowers, to the Borrower Account at the beginning
of the next Business Day. On each Business Day occurring after the occurrence of a Trigger Event,
the ledger balance in the main Dominion Account as of the end of such Business Day shall be
transferred, by the Agent, to a Borrower Account at Bank of America, in the name of the Agent, and
shall be applied to the Obligations at the beginning of the next Business Day. Each Obligor
irrevocably waives the right at all times after the occurrence of a Trigger Event 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

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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.

          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 manifest 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 an event
(including 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 an event (including 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 Borrower
(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, Borrower 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

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manner as a its predecessor Agent, and shall be required to provide the appropriate IRS Form
W-8BEN or W-8ECI to the Borrower 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, Borrower may withhold taxes from
payments to such successor Agent as required by applicable law.

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

          5.10.1. Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt
payment and performance of, all Obligations and all agreements under the Loan Documents. Each
Borrower agrees that its guaranty 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 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

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pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising
out of an election of remedies, such as nonjudicial foreclosure with respect to any security for
the Obligations, even though that election of remedies destroys such Borrower’s rights of
subrogation against any other Person. If Agent bids at any foreclosure or trustee’s sale or at any
private sale, Agent may bid all or a portion of the Obligations and the amount of such bid need not
be paid by Agent but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively
deemed to be the fair market value of the Collateral, and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 5.10, notwithstanding that any present or future law or
court decision may have the effect of reducing the amount of any deficiency claim to which Agent or
any Lender might otherwise be entitled but for such bidding at any such sale.

          5.10.3. Extent of Liability; Contribution.

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

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

          (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.

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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 other Loan Document shall have been duly executed and delivered to Agent
by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.

          (b) Agent shall be satisfied that the Security Documents shall be effective to create in favor
of the Agent a legal, valid and enforceable first priority 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 (with such evidence to include, without limitation, the
Bon-Ton Payoff Letter and the Business Payoff Letter, together with UCC termination statements and
other documentation evidencing the termination by the Bon-Ton Existing Lender and by the Business
Existing Lender of each of its Liens in and to the properties and assets of the Obligors) that such
Liens are the only Liens upon the Collateral, except Permitted Liens, (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,
(iv) all Lien Waivers deemed necessary or desirable in the commercially reasonable opinion of Agent
with respect to real property interests of the Obligors and their Subsidiaries included in the
Collateral and (v) 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, satisfactory to Agent.

          (e) Agent shall have received a certificate, in form and substance reasonably satisfactory to
it, 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) Each of
Parent, Holdings and the Borrowers 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) the Acquisition has been consummated in accordance with the terms of the Purchase
Agreement and either (x) attaching copies of all governmental, shareholder and third party
consents (including, without limitation, Hart-Scott-Rodino clearance), licenses and
approvals required in connection with the execution, delivery and performance by Parent,
Holdings and each Borrower, and the validity against such Obligor of the Acquisition
Documents to which it is a party, and such consents, licenses and approvals shall be in full
force and effect or (y) stating that no such consents, licenses or approvals are so required
and stating that all waiting

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periods applicable to the transactions contemplated hereby and by the Acquisition
Documents, including, without limitation, the applicable Hart-Scott-Rodino waiting period,
shall have expired or been terminated without any action being taken by any authority that
is reasonably likely to have a material adverse effect on the Obligors, taken as a whole, or
on the Business;

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

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

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

     (vi) Bon-Ton has received not less than $510,000,000 gross cash proceeds, in the
aggregate, of the Senior Notes; and

     (vii) SPE has received not less than $252,000,000 gross cash proceeds, in the
aggregate, from the issuance of the Mortgage Notes and distributed such amount to Bon-Ton.

          (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. Agent may conclusively rely on this certificate until it is otherwise notified
by the applicable Obligor in writing.

          (g) Agent shall have received a written opinion of Wolf, Block, Schorr and Solis-Cohen LLP, as
well as any local counsel to Obligors or Agent, in form and substance reasonably satisfactory to
Agent.

          (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 Lenders, 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.

          (j) Agent shall have completed its business, financial and legal due diligence of Obligors,
with results reasonably satisfactory to Agent and Agent shall be satisfied that (i) all Pre-

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Commitment Information (as defined in the Commitment Letter) shall be complete and correct in
all material respects, and (ii) no Material Adverse Effect shall have occurred since January 29,
2005.

          (k) Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the
Closing Date (including, without limitation, all fees, charges and disbursements of counsel,
including local counsel, to Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrowers and Agent)).

          (l) Agent shall have received copies of the following documents, 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 shall be satisfied (i) with the
terms and conditions and provisions thereof, (ii) that the Acquisition has been consummated
substantially in accordance with the terms of the Purchase Agreement, with the terms of the
Commitment Letter, with the terms described by the Parent and the Borrowers to Agent, in writing,
prior to the consummation of such commitment letter, in compliance with applicable law and
regulatory approvals and otherwise on terms and conditions, including, without limitation, terms
and conditions pertaining to the payment of taxes, satisfactory to Agent, (iii) that Bon-Ton
received not less than $510,000,000 cash proceeds, in the aggregate, from the advance of the Senior
Notes and (iv) that SPE received not less than $252,000,000 from the issuance of the Mortgage Notes
and distributed such amount to Bon-Ton.

     (i) the Acquisition Documents and all certificates, opinions and other material
documents delivered thereunder;

     (ii) the Senior Note Documents and all certificates, opinions and other material
documents delivered thereunder, including, without limitation, evidence of reasonably
acceptable ratings by Moody’s and S&P; and

     (iii) the Mortgage Loan Debt Documents and all certificates, opinions and other
material documents delivered thereunder.

          (m) 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.

          (n) Agent shall have received, in form and substance reasonably satisfactory to it, (i)
audited consolidated income statements of Herberger’s and Parisian and their Subsidiaries for the
three fiscal years ended January 29, 2005, the audited consolidated balance sheets of Herberger’s
and Parisian and their Subsidiaries for the two fiscal years ended January 29, 2005, the unaudited
consolidated financial statements of Herberger’s and Parisian and their Subsidiaries for any
interim quarterly periods that have ended since January 29, 2005 (other than for the fiscal quarter
ending January 28, 2006) and the comparable period for the prior year, each of which financial
statements, in the case of any annual or quarterly periods, shall meet the requirements of
Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and
regulations of the SEC promulgated thereunder applicable to a registration statement under such Act
on Form S-1, (ii) pro forma financial statements as to Bon-Ton and its Subsidiaries, giving effect
to the Acquisition, for the fiscal year ended January 29, 2005 and the period commencing with the
end of the fiscal year ended January 29, 2005 and ending with the most recently completed quarter
(other than the fiscal quarter ending January 28, 2006) and the comparable period for the prior
year, each of which financial statements, in the case of any annual or quarterly periods, shall
meet the requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other
accounting rules and regulations of the SEC promulgated thereunder applicable to a registration

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     statement under such Act on Form S-1, (iii) internal unaudited financial statements of the
Parent and its Subsidiaries, on a consolidated basis for each monthly period beginning with the
month ended October 29, 2005 and the comparable period for the prior year, within twelve business
days of the month then ended, (iv) on a basis substantially consistent with the quarterly format of
the internal income statements provided in Item 15.134 of the virtual data room of Saks
Incorporated, internal income statements of Herberger’s and Parisian with respect to the Business,
including the calculation of Business EBITDA (as defined on Schedule 6.1(n)) (after the allocation
of certain corporate expenses and shared services) and a schedule of working capital of the
Business provided on page 3 of Item 15.098 of the virtual data room of Saks Incorporated on a
consolidated basis for each monthly period beginning with the month ended October 29, 2005 and the
comparable period for the prior year, within twelve business days of the month then ended, (v)
forecasts prepared by management of the Parent and its Subsidiaries of balance sheets, income
statements and cash flow statements for each month for the first twelve months following the
Closing Date; provided that such forecasts shall also include the quarter ending on
the last Saturday of January, 2006, and for each year commencing with the first fiscal year
following the Closing Date and ending with the fiscal year ending January, 2011; and (vi) a
compliance certificate, in form and substance reasonably satisfactory to Agent, evidencing that the
Pro Forma Leverage Ratio (as defined on Schedule 6.1(n)), based on financial statements prepared in
accordance with the provisions of this Section 6.1(n), for the Calculation Period (as defined on
Schedule 6.1(n)) was not greater than 4.75:1.0 and (vii) evidence that all pro forma financial
statements and forecasts were prepared in good faith on the basis of reasonable assumptions.

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

          (p) Agent shall have received copies of notifications, instructing each of Mastercard, Visa,
HSBC and each Obligor’s other credit card clearinghouses and processors required by Agent to
transfer all amounts owing by such processor to an Obligor directly to the Borrower Account or
other Deposit Account acceptable to Agent and subject to control arrangements 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 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 processors.

          (q) Agent shall have received a Borrowing Base Certificate indicating that Excess Availability
as of the Closing Date, after giving effect to the transactions contemplated hereby, is not less
than $160,000,000.

     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 Agreement);

          (c) All conditions precedent in any other Loan Document shall be satisfied;

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          (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.

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 Property of such Obligor (other than the Real Estate
described on Schedule 7.1 and leasehold interests in Real Estate (unless such leasehold interests
are described on Schedule 7.3)), including all of the following Property, whether now owned or
hereafter acquired, and wherever located:

          (a) all Accounts;

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

          (c) all Commercial Tort Claims;

          (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;

          (g) all Goods, including Inventory, Equipment and fixtures, excluding (ii) any motor vehicles
and (ii) any Equipment or Real Estate 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 or Real Estate, as the case may be;

          (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;

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          (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- Irondequoit L.P., 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

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

     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 clause (i) of the parenthetical
set forth in the second sentence of Section 8.5 hereof) 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 occurrence of a Trigger Event, each
Obligor shall direct each bank or other depository to deliver to the Borrower Account, on each
Business Day, all available balances in each Deposit Account maintained by such Obligor with such
depository (except for (a) those referred to in clause (i) of the parenthetical set forth in the
second sentence of Section 8.5 hereof and (b) those described on Schedule 8.5(b) hereto so long as,
the average account balances in such accounts described on Schedule 8.5(b) are in amounts
consistent with the ordinary course of business and past practices of the Obligors). At all times
after the occurrence of a Trigger Event, the Agent shall direct each bank or other depository to
deliver to a Borrower Account at Bank of America, in the name of the Agent, 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. Each Obligor irrevocably appoints, at all times
after the occurrence of a Trigger Event, 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 occurrence of a Trigger Event 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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          7.2.3. Credit Card Notifications. The Obligors shall deliver to Agent Credit Card
Notifications instructing each of Mastercard, Visa, HSBC and each Obligor’s other credit card
clearinghouses and processors required by Agent to transfer all amounts owing by such processor to
an Obligor directly to the Borrower Account or other Deposit Account acceptable to Agent and
subject to control arrangements satisfactory to Agent, with such notifications to be executed by
each relevant Obligor, sent to each such processor and with Agent to be satisfied that the Obligors
have exercised commercially reasonable efforts to obtain acknowledgments of such Credit Card
Notifications from such processors.

     7.3. Real Estate Collateral. The Obligations shall be secured by Mortgages upon all
Real Estate owned by Obligors (other than the Real Estate described on Schedule 7.1 and leasehold
interests in Real Estate (unless such leasehold interests are described on Schedule 7.3)),
including, without limitation, the 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 Real Estate
hereafter (unless such Real Estate is encumbered by Permitted Purchase Money Debt, the terms of
which expressly prohibit a second priority Lien on such Real Estate) such Obligor shall, within 30
days, execute, deliver and record a Mortgage sufficient to create a first priority Lien (or, where
such Real Estate is subject to Permitted Purchase Money Debt and the documents evidencing such Debt
permit Agent to hold a second priority lien on such Real Estate, a second priority Lien) in favor
of Agent on such Real Estate, and shall deliver all Related Real Estate Documents; provided that
this sentence shall not be applicable to any leasehold interests in any Real Estate unless such
leasehold interests are described on Schedule 7.3).

     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 $100,000) and, upon Agent’s request, shall promptly
execute such documents and take such actions as Agent deems appropriate to confer upon Agent (for
the benefit of Secured Parties) a duly perfected, first priority Lien upon such claim.

          7.4.2. Certain After-Acquired Collateral. Obligors shall promptly 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,
Investment Property or Letter-of-Credit Rights and, upon Agent’s request, shall promptly execute
such documents and take such actions as Agent deems appropriate to effect Agent’s duly perfected,
first priority Lien upon such Collateral, including obtaining any appropriate possession, control
agreement or Lien Waiver. If any Collateral is in the possession of a third party, at Agent’s
request, Obligors shall obtain an acknowledgment that such third party holds the Collateral for the
benefit of Agent.

     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 deems appropriate under Applicable Law to evidence or perfect its Lien on any
Collateral, or otherwise to give effect to the intent of this 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 Foreign Subsidiary.

SECTION 8. COLLATERAL ADMINISTRATION

     8.1. Borrowing Base Certificates. The Borrowers shall deliver to the Agent (and Agent
shall promptly deliver same to Lenders) (i) at all times prior to the occurrence of a Trigger
Event, not later than the twelfth Business Day after the immediately preceding fiscal month end,
and at such other times as Agent may 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 after the occurrence of a Trigger Event, not later than the last Business Day of each week,
and at such other times as Agent may request, a Borrowing Base Certificate prepared as of the close
of business of the previous week or such other date so requested by the 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 Account 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 Agreement or does not accurately reflect
the Availability Reserve or the LC Reserve.

     8.2. Administration of Accounts.

          8.2.1. Intentionally Omitted.

          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 Account. 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 lockbox or Dominion
Account, 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 immediately transfer of all available funds in the
Dominion Account to the Borrower Account, and waiving offset rights of such servicer or bank
against any funds in the lockbox or Dominion Account, except offset rights for customary
administrative charges. Neither Agent nor Lenders assume any responsibility to Obligors for any
lockbox arrangement or Dominion Account, 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.

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          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 satisfactory to Agent. Promptly upon request, Obligors shall
deliver to Agent evidence of their ownership or interests in any Equipment.

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

          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. No Obligor shall permit any Equipment to become affixed to real
Property unless any landlord or mortgagee delivers a Lien Waiver or similar instrument.

     8.5. Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit Accounts
maintained by Obligors, including all Dominion Accounts and the Borrower Account. Each Obligor
shall take all actions necessary to establish Agent’s control of each such Deposit Account (other
than (i) an account exclusively used for payroll, payroll taxes or employee benefits, (ii) an
account containing not more that $50,000 at any time; provided that the aggregate
amounts contained in all such accounts permitted by this part (ii) shall not exceed $500,000 at any
time or (iii) the accounts listed on Schedule 8.5(c) maintained at Wachovia Bank, N.A so long as,
the average account balances in such accounts described in this clause (iii) are in amounts
consistent with the ordinary course of business and past practices of the Obligors);
provided that with respect to the Deposit Accounts listed on Schedule 8.5(a)

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such control arrangements shall not be required to be in place until the date that is 90
(ninety) days after the Closing Date. Each Obligor shall be the sole account holder of each
Deposit Account, other than the Borrower Account, and shall not allow any other Person (other than
Agent) to have control over a Deposit Account, other than the Borrower Account, over which the
Obligors may exercise control, or any Property deposited therein. Each Obligor shall promptly
notify Agent of any opening or closing of a Deposit Account and, with the consent of Agent, will
amend Schedule 8.5 to reflect same.

     8.6. General Provisions.

          8.6.1. Location of Collateral. All tangible items of Collateral, other than (i)
tangible inventory having an aggregate value of no more than $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 (rated A or better by A.M. Best Rating Guide) 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 15 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 $2,000,000. 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.

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

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

     8.7. Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) 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,
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) During an Event of Default, (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 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 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.

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

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

          9.1.4. Capital Structure. Schedule 9.1.4 shows, for each Obligor and Subsidiary
(other than the Parent), its name, its jurisdiction of organization, its authorized and 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 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 or Subsidiary (other than the Parent).

          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 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 Liens, subject only to Permitted Liens that are expressly allowed to have priority
over Agent’s Liens.

          9.1.7. Security Documents. The Security Documents are effective to create in favor of
the Agent a legal, valid and enforceable first priority 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 29, 2005
there has been no change in the condition, financial or otherwise, of any Obligor or Subsidiary
that could reasonably be expected to have a Material Adverse Effect. Each Obligor and Subsidiary
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 permitted hereunder.

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

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

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

          9.1.13. Governmental Approvals. Each Obligor and Subsidiary has, is in compliance
with, and is in good standing with respect to, all 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. Except as disclosed on Schedule 9.1.15,
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. No
Obligor or Subsidiary has received any Environmental Notice. 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. 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 against any Obligor or
Subsidiary, or any of their businesses, operations, Properties, prospects or conditions, that (a)
relate to any Loan Documents or transactions contemplated thereby; or (b) 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.

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

          9.1.19. No Defaults. No event or circumstance has occurred or exists as of the date
of this Agreement that constitutes a Default or Event of Default. 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. Intentionally Omitted.

          9.1.24. Not a Regulated Entity. No Obligor is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an investment company” within
the meaning of the Investment Company Act of 1940; (b) a “holding company,” a “subsidiary company”
of a “holding company,” or an “affiliate” of either, within the meaning of the Public Utility
Holding Company Act of 1935; or (c) 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 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 January
2006,

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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.

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.

          (b) Reimburse Agent for all 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, up to (x) at all times prior to the first date on which Excess
Availability is below $125,000,000, twice per Loan Year and (y) at all times thereafter until such
time as such Excess Availability is $125,000,000 or more for thirty consecutive days, four times
per Loan Year; (ii) appraisals of Inventory (x) at all times prior to the first date on which
Excess Availability is below $125,000,000, once per Loan Year, and (y) at all times thereafter,
until such time as such Excess Availability is $125,000,000 or more for thirty consecutive days,
twice per Loan Year; (iii) appraisals of Eligible Machinery and Equipment and Eligible Real Estate,
in form and detail reasonably satisfactory to Agent, once per Loan Year if so requested by Agent or
the Required Lenders; and (iv) environmental assessment reports as Agent deems appropriate in its
reasonable discretion, with respect to the Eligible Real Estate of the Obligors; provided that if
an examination or appraisal is initiated during an Event of Default, all charges, costs and
expenses therefor shall be reimbursed by Obligors without regard to such limits. Subject to the
foregoing, 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, 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
parties for such purposes.

          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 detailed and prepared in accordance with GAAP, audited and accompanied
by (i) a certification (without qualification as to scope, “going concern” or similar items) 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

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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 in a 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 SPE, setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by the Borrower Agent pursuant to
a certificate signed on behalf of Borrower Agent by its chief financial officer (with such
certification to be in such Person’s capacity as chief financial 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 and certified by the chief financial officer (with such
certification to be in such Person’s capacity as chief financial 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 the chief financial officer of Borrower Agent (with such certification to be in such
Person’s capacity as chief financial 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 30 days prior to the end of each Fiscal Year, projections of Obligors’
consolidated balance sheets, results of operations, cash flow and Availability for the next three
Fiscal Years, year by year, and for the next Fiscal Year, month by month;

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

          (h) promptly after the sending or filing thereof, copies of any proxy statements, financial
statements or reports that any Obligor has made generally available to its shareholders; copies of
any regular, periodic and special reports or registration statements or prospectuses that any
Obligor files with the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements made available by an
Obligor to the public concerning material changes to or developments in the business of such
Obligor, if an 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;

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          (j) promptly upon delivery thereof, copies of all documents and materials of a material
financial nature or otherwise provided to any other creditor of any Obligor or any Subsidiary;

          (k) 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

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

     Documents required to be delivered pursuant to Section 10.1.2(a) or Section 10.1.2(b) (to the
extent any such documents are included in materials otherwise filed with the Securities and
Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which the applicable Borrower posts such documents, or provides a
link thereto on such Borrower’s website on the Internet at the website address indicated in writing
to Agent and Lenders by the Borrower Agent; or (ii) on which such documents are posted on the
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.

     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.”

          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 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 labor dispute, strike or walkout, or the expiration of any
material labor contract; (c) any material default

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under or termination of a Material Contract; (d) the existence of any Default or Event of
Default; (e) any judgment in an amount exceeding $1,000,000; (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 Environmental Notice; (i) the discharge of or
any withdrawal or resignation by Obligors’ independent accountants; or (j) any opening of a new
office or place of business where Collateral with a fair market value of $500,000 or more will be
located, at least 30 days prior to such opening.

          10.1.4. Landlord and 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 landlord, warehouseman, processor,
shipper, bailee or other Person 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 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 (rated A or better by Best Rating Guide) 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, unless such Person is a Foreign Subsidiary or SPE, cause it to guaranty the
Obligations in a manner reasonably satisfactory to Agent, and to execute and deliver such
documents, instruments and agreements and to take such other actions as Agent shall require to
evidence and perfect a first priority Lien in favor of Agent (for the benefit of Secured Parties)
on all assets of such Person, including delivery of such legal opinions, in form and substance
reasonably satisfactory to Agent, as it shall deem appropriate.

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          10.1.10. Intentionally Omitted.

          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;

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

          (i) Debt that is not included in any of the preceding clauses of this Section 10.2.1, is not
secured by a Lien and the principal amount thereof does not exceed, in the aggregate at any time
(x) $5,000,000 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) Intentionally Omitted;

          (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 Indebtedness 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; and

          (p) the incurrence by any Obligor and/or any Subsidiary of non-interest bearing Debt in an
aggregate amount not to exceed $12,000,000, with the proceeds of such Debt to be used to construct
and make leasehold improvements to a new store to be located at the Hawthorne Shopping Center in
Vernon Hills, Illinois and leased by one of the Obligors, with the documents evidencing such Debt
to be in form and substance satisfactory to the Agent in its reasonable discretion.

          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;

          (c) Liens for Taxes not yet due or being Properly Contested;

          (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

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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, as long as such Liens are (i) in existence for less
than 20 consecutive days or being Properly Contested, and (ii) at all times junior to Agent’s
Liens;

          (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) Liens on the assets of SPE securing the 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 any property other than the property so acquired by such Obligor;

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

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

          (n) survey exceptions, encumbrances, easements or reservations of, or rights of other 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;

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

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          (s) Liens on the leasehold improvements to the store located at the Hawthorne Shopping Center
in Vernon Hills, Illinois, which Liens shall secure the Debt permitted pursuant to Section
10.2.1(p).

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

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

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

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

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

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

          10.2.3. Capital Expenditures. Make Capital Expenditures (other than Capital
Expenditures made with insurance proceeds) in excess of (a) $125,000,000 plus (b)
$125,000,000 minus the amount of Capital Expenditures (other than Capital Expenditures made
with insurance proceeds) actually made in the Fiscal Year most recently then ended, in the
aggregate during any Fiscal Year.

          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, (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 the SPE), 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 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; and (d) as long as no Default or Event of Default exists, intercompany loans by an
Obligor to another Obligor.

          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

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to the Senior Note Debt, the Mortgage Loan Debt and Refinancing Debt of the Senior Note Debt
and the Mortgage Loan 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, (c) payments of the Senior Note Debt and Mortgage
Loan Debt derived solely from Refinancing Debt which meets the Refinancing Condition and (d) other
payments of Senior Note Debt, Mortgage Loan Debt and Refinancing Debt of the Senior Note Debt and
the Mortgage Loan Debt, so long as (i) where such payment is not made with proceeds of an offering
of the equity securities of the Parent (A) no Default or Event of Default shall have occurred and
be continuing or would result after giving effect to any such payment, (B) Excess Availability on
the date of the making of such payment, and projected Excess Availability for the upcoming twelve
month period is, in each case, greater than or equal to $200,000,000, (C) as of the monthly fiscal
period most recently then ended, the Consolidated Fixed Charge Coverage Ratio (consolidated on a
pro forma basis giving effect to the making of such payment) is not less than 1.5:1.0, and (D) 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)(i)(A),
(d)(i)(B) and (d)(i)(C) above) prior to its due date under the agreements evidencing such Debt as
in effect on the Closing Date (or as amended thereafter with the consent of Agent) and (ii) where
such payment is made with proceeds of an offering of the equity securities of the Parent, (A) no
Default or Event of Default shall have occurred and be continuing or would result after giving
effect to any such payment, (B) Excess Availability on the date of the making of such payment, and
projected Excess Availability for the upcoming twelve month period is, in each case, greater than
or equal to $150,000,000 and (C) 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)(A) and (d)(ii)(B) 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 for (i) mergers or consolidations of an Obligor with
another Obligor or (ii) dissolutions of The Bon-Ton Trade Corp., The Bon-Ton Corp. and/or Capital
City Commons Realty, Inc., 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, notwithstanding the
preceding clause (x), 100% of the Capital Stock or other equity securities held by such dissolving
Subsidiary are transferred to an Obligor; 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.

          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.

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          10.2.14. Restrictive Agreements. 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; and (d) Restrictive Agreements contained in documents evidencing Refinancing
Debt of the Senior Note Debt.

          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 consummated prior to
the Closing Date, as shown on Schedule 10.2.17; (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. Change, waive, refinance or amend
any agreement or arrangement to which Parent or a Subsidiary is party that relates to any Mortgage
Loan Debt Document or any Senior Note Debt Document if such change, waiver, refinancing or
amendment (i) increases the principal balance of such Debt, or increases any required payment of
principal or interest; (ii) accelerates the date on which any installment of principal or any
interest is due, or adds any additional redemption, put or prepayment provisions; (iii) shortens
the final maturity date or otherwise accelerates amortization; (iv) increases the interest rate;
(v) increases or adds any fees or charges; (vi) modifies any covenant in a manner or adds any
representation, covenant or default that is more onerous or restrictive in any material respect for
any Obligor or Subsidiary, or that is otherwise materially adverse to any Obligor, any Subsidiary
or Lenders; or (vii) could reasonably be considered to be materially adverse to the Lenders.

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

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

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

          10.2.23. Sale-Leaseback Transactions. Engage in any sale-leaseback, synthetic lease
or similar transaction involving any of its assets other than (x) any such transaction entered into
by an SPE

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where such transaction involves only the assets of such SPE and (y) such transactions
involving assets of the Obligors with a fair market value of not more than $15,000,000 in the
aggregate; provided that (a) the terms and conditions of any such transaction shall be reasonably
acceptable to Agent; and (b) simultaneously with the consummation of any such transaction the
Obligors shall (i) deliver to Agent a landlord consent 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 a Eligible Real Estate included
therein, if any, and (iii) apply proceeds from such transaction to the repayment of the Loans.

          10.2.24. Indebtedness under Senior Note Debt Documents. Incur any Indebtedness (as
defined in the Senior Note Indenture), other than (i) the Obligations and (ii) the Mortgage Loan
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.

     10.3. 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.

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 Article) payable under
this 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 Section 7.2 (other than
inadvertent breaches of such covenant) or 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), 10.2 or 10.3;

          (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 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

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perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full
force or effect for any reason (other than a waiver or release by Agent and Lenders);

          (f) Any (x) breach or default of an Obligor or any Subsidiary of an Obligor occurs under any
document, instrument or agreement to which it is a party or by which it or any of its Properties is
bound, relating to any Debt (other than the Obligations) 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 (net of any insurance coverage therefor acknowledged in writing by the
insurer), 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 45 days after its issue or levy;

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

          (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; there is
a cessation of any material part of an Obligor’s business for a material period of time; any
material Collateral or Property of an Obligor is taken or impaired through condemnation and such
loss, revocation or termination is reasonably likely 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 45 days after its filing, or an order for relief is
entered in the proceeding; a trustee (including an interim trustee) is appointed to take possession
of any substantial Property of or to operate any of the business of any Obligor; or any Obligor
makes an offer of settlement, extension or composition to its unsecured creditors generally;

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

          (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

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          (n) A Change of Control occurs.

     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 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 of Obligors, computer hardware and software, trade
secrets, brochures, customer lists, promotional and advertising materials, labels, packaging
materials and other Property, 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 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 Equipment, Machinery, fixtures, Real Estate or Inventory constitute
Eligible Machinery and Equipment, 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 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.

     12.2. Agreements Regarding Collateral and Field Examination Reports.

          12.2.1. Lien Releases; Care of Collateral. Lenders authorize Agent to release any
Lien with respect to any Collateral (a) the occurrence of both payment, in full, in cash of the
Obligations 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 or a
Lien which Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens (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.

          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

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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.

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)

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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.

     12.8. Successor Agent and Co-Agents.

          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

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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 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.

     12.10. Replacement of Certain Lenders. In the event that any Lender (a) fails to fund
its Pro Rata share of any Loan or LC Obligation hereunder, and such failure is not cured within two
Business Days, (b) defaults in performing any of its obligations under the Loan Documents, or (c)
fails to give its consent to any amendment, waiver or action for which consent of all Lenders was
required and Required Lenders consented, then, in addition to any other rights and remedies that
any Person may have, Agent may, by notice to such Lender within 120 days after such event, require
such Lender to assign all of its rights and obligations under the Loan Documents to Eligible
Assignee(s) specified by Agent, pursuant to appropriate Assignment and Assumption Agreement(s) and
within 20 days after Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to execute
any such Assignment and Assumption Agreement if the Lender fails to execute same. Such Lender
shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it
under the Loan Documents, including all principal, interest and fees through the date of assignment
(but excluding any prepayment charge).

     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 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

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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.

     12.13. Agent Titles. Each Lender, other than Bank of America, that is designated (on
the cover page of this 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, 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 the Mortgage Intercreditor Agreement and agree to be bound by the provisions thereof.

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

     13.1. Successors and Assigns. The provisions of this 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

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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 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 Agreement.

     13.2. Assignments.

          13.2.1. Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this 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 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 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

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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 Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, 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 Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this 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 Agreement that does not comply with this subsection
shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 13.3.

          13.2.2. Register. Agent, acting solely for this purpose as an agent of the Borrowers,
shall maintain at Agent’s office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitments of, and
principal amounts of the 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 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

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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 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 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 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 Agreement and to approve any amendment, modification or waiver of any
provision of this 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. Subject to Section 13.3.2,
the Obligors agree that each Participant shall be entitled to the benefits of Sections 3.6, 3.9,
5.8 and 5.9 to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to Section 13.2. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 11.4 as though it were a Lender, provided such Participant agrees to be
subject to Section 5.5 as though it were a Lender.

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

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

     13.5. Representation of Lenders. Each Lender represents and warrants to each
Borrower, Agent and other Lenders that none of the consideration used by it to fund its Loans or to
participate in any other transactions under this 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, with the consent of Required Lenders, and each
Obligor party to such Loan Document; provided, however, that

          (a) without the prior written consent of 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;

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

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          (c) without the prior written consent of each affected Lender, no modification shall be
effective that would (i) increase the Commitment of such Lender; or (ii) reduce the amount of, or
waive or delay payment of, any principal, interest, fees or other amounts payable to such Lender;
and

          (d) without the prior written consent of all Lenders (except a defaulting Lender as provided
in Section 4.2), no modification shall be effective that would (i) extend the Termination Date;
(ii) alter Section 2.1.5, Section 5.5, Section 7.1 (except to add Collateral), or Section 14.1.1;
(iii) amend the definitions of Tranche A Borrowing Base, Tranche A-1 Borrowing Base (and the
defined terms used, directly or indirectly, in such definitions), Pro Rata or Required Lenders;
(iv) increase any advance rate; (v) release all or substantially all of the Collateral (excluding,
if any Obligor or any Subsidiary of any Obligor becomes a debtor under the federal Bankruptcy code,
the release of “cash collateral”, as defined in Section 363(a) of the federal Bankruptcy Code
pursuant to a cash collateral stipulation with the debtor approved by Required Lenders); or (vi)
release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of
the release.

          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.

     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
ATTORNEYS’ FEES AND EXTRAORDINARY EXPENSES) 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, INCLUDING, WITHOUT LIMITATION, THE ACQUISITION, (B) ANY ACTION TAKEN OR OMITTED
TO BE TAKEN BY ANY INDEMNITEE IN CONNECTION WITH ANY LOAN DOCUMENTS, (C) THE EXISTENCE OR
PERFECTION OF ANY LIENS, OR REALIZATION UPON ANY COLLATERAL, (D) EXERCISE OF ANY RIGHTS OR REMEDIES
UNDER ANY LOAN DOCUMENTS OR APPLICABLE LAW, (E) FAILURE BY ANY OBLIGOR TO PERFORM OR OBSERVE ANY
TERMS OF ANY LOAN DOCUMENT, IN EACH CASE INCLUDING ALL 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

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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 gross negligence or
willful misconduct of such Indemnitee. If any claim is made against any Indemnitee which may
result in a claim under this Section 14.2 against Borrowers, such Indemnitee or Agent shall
promptly send to Borrower Agent written notice thereof, and Borrower Agent shall have the right, at
its expense and with counsel reasonably satisfactory to Agent, to defend such claim. Neither any
Indemnitee nor any Borrower shall settle any such claim without the consent of the other party,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the failure of
such prompt notice shall not negate or impair the obligation of the Borrowers under this Section
14.2, but shall give Borrowers the right to withhold against any indemnity payment the amount of
any actual damages incurred by Borrowers as a result of the failure to give such prompt notice.

14.3. Notices and Communications.

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

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

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

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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 Agreement), if
any provision contained herein is in direct conflict with any provision in another Loan Document,
the provision herein shall govern and control.

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

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

     14.10. Obligations of Lenders. The obligations of each Lender hereunder are several,
and no Lender shall be responsible for the obligations or Commitments of any other Lender. Amounts
payable hereunder to each Lender shall be a separate and independent debt, and each Lender shall be
entitled, to the extent not otherwise restricted hereunder, to protect and enforce its rights
arising out of the Loan Documents. It shall not be necessary for Agent or any other Lender to be
joined as an additional party in any proceeding for such purposes. Nothing in this 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

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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 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 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 Agreement shall be deemed to
preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.

     14.14. Waivers by Borrowers. To the fullest extent permitted by Applicable Law, each
Borrower waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in
any proceeding, claim or counterclaim of any kind relating in any way to any Loan Documents,
Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-

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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 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 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. 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.

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

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

	 	 	 
	 

	 	BORROWERS:
	 
	 	 
	 

	 	THE BON-TON DEPARTMENT STORES, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice Chairman and Chief Administrative Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	HERBERGER’S DEPARTMENT STORES, LLC
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Senior Vice President and Chief Administrative Officer
	 

	 	Address: 331 West Wisconsin Avenue, Milwaukee, WI 53203
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	PARISIAN, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Senior Vice President and Chief Administrative Officer
	 

	 	Address: 331 West Wisconsin Avenue, Milwaukee, WI 53203
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240

Signature Page to Loan and Security Agreement

 

 

	 	 	 
	 

	 	THE ELDER-BEERMAN STORES CORP.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice Chairman and Chief Administrative Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240

Signature Page to Loan and Security Agreement

 

 

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

	 	 	 
	 

	 	OBLIGORS:
	 
	 	 
	 

	 	THE BON-TON STORES, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice Chairman and Chief Administrative Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	THE BON-TON CORP.
	 
	 	 
	 

	 	     /S/ ROBERT E. STERN
	 

	 	 
	 
	 	 
	 

	 	By: Robert E. Stern
	 

	 	Title: President and Secretary
	 

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

	 	          Attn: President
	 

	 	          Telecopy:(302) 652-8667
	 
	 	 
	 

	 	THE BON-TON TRADE CORP.
	 
	 	 
	 

	 	     /S/ ROBERT E. STERN
	 

	 	 
	 
	 	 
	 

	 	By: Robert E. Stern
	 

	 	Title: President and Secretary
	 

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

	 	          Attn: President
	 

	 	          Telecopy: (302) 652-8667

Signature Page to Loan and Security Agreement

 

 

	 	 	 
	 

	 	THE BON-TON STORES OF LANCASTER, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice President and Chief Financial Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	THE BON-TON GIFTCO, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice President and Assistant Secretary
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	ELDER-BEERMAN WEST VIRGINIA, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice Chairman and Chief Administrative Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240

Signature Page to Loan and Security Agreement

 

 

	 	 	 
	 

	 	ELDER-BEERMAN HOLDINGS, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice President
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	ELDER-BEERMAN OPERATIONS, LLC
	 

	 	BY: The Elder-Beerman Stores Corp., its managing member
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Vice Chairman and Chief Administrative Officer
	 

	 	Address: 2801 East Market Street, York, PA 17402
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	SAKS DISTRIBUTION CENTERS, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Senior Vice President and Chief Administrative Officer
	 

	 	Address: 331 West Wisconsin Avenue, Milwaukee, WI 53203
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240

Signature Page to Loan and Security Agreement

 

 

	 	 	 
	 

	 	MCRIL, LLC
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Senior Vice President and Chief Administrative Officer
	 

	 	Address: 331 West Wisconsin Avenue, Milwaukee, WI 53203
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240
	 
	 	 
	 

	 	MCRAE’S, INC.
	 
	 	 
	 

	 	     /S/ JAMES H. BAIREUTHER
	 

	 	 
	 
	 	 
	 

	 	By: James H. Baireuther
	 

	 	Title: Senior Vice President and Chief Administrative Officer
	 

	 	Address: 331 West Wisconsin Avenue, Milwaukee, WI 53203
	 
	 	 
	 

	 	          Attn: Treasurer
	 

	 	          Telecopy: (717) 751-3240

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 
	 	 	AGENT AND LENDERS:
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,
	 	 	as Agent and Lender
	 
	 	 	 	 	 	 
	 	 	By:	 	     /S/ EDMUNDO KAHN
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Name: Edmundo Kahn
	 	 	 	 	Title: Vice President
	 
	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	335 Madison Avenue, 6th Floor
	 

	 	 	 	 	 	New York, New York 10017
	 

	 	 	 	Attn:
	 	Edmundo Kahn
	 

	 	 	 	Telecopy:
	 	212-503-7340

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION
	 
	 	 	 	 	 	 
	 	 	By:	 	     /S/ CHARLES CHIODO
	 	 	 	 	 
	 	 	 	 	Name: Charles Chiodo
	 	 	 	 	Title: Duly Authorized Signatory
	 
	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	201 Merritt 7
	 

	 	 	 	 	 	Norwalk, Connecticut 06851
	 

	 	 	 	Attn:
	 	Charles Chiodo
	 

	 	 	 	Telecopy:
	 	203-956-4002

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	CITICORP NORTH AMERICA	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ MICHAEL M. SCHADT	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Michael M. Schadt	 	 
	 

	 	 	 	Title:
	 	Director, Asset Based Finance	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	2 Penn’s Way, Suite 200	 	 
	 

	 	 	 	 	 	New Castle, Delaware 19720	 	 
	 

	 	 	 	Attn:
	 	Timothy Singles	 	 
	 

	 	 	 	Telecopy:
	 	212-994-0849	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ JAMES M. BARBATO	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	James M. Barbato	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	1 Chase Square, 25th Floor	 	 
	 

	 	 	 	 	 	Rochester, New York 14643	 	 
	 

	 	 	 	Attn:
	 	James Barbato	 	 
	 

	 	 	 	Telecopy:
	 	585-258-7440	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	WELLS FARGO RETAIL FINANCE, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ TIMOTHY R. TOBIN	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Timothy R. Tobin	 	 
	 

	 	 	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	One Boston Place, Suite 1800	 	 
	 

	 	 	 	 	 	Boston, Massachusetts 02108	 	 
	 

	 	 	 	Attn:
	 	Cory Loftus	 	 
	 

	 	 	 	Telecopy:
	 	617-523-4029	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ KEVIN R. MARCHETTI	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Kevin R. Marchetti	 	 
	 

	 	 	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	1211 Avenue of the Americas	 	 
	 

	 	 	 	 	 	New York, New York 10036	 	 
	 

	 	 	 	Attn:
	 	Matthew DeFranco	 	 
	 

	 	 	 	Telecopy:
	 	212-536-1297	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ EDWARD SHUSTER	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward Shuster	 	 
	 

	 	 	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	225 Liberty Street, 5th Floor	 	 
	 

	 	 	 	 	 	New York, New York 10281	 	 
	 

	 	 	 	Attn:
	 	Edward Shuster	 	 
	 

	 	 	 	Telecopy:
	 	212-236-0048	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ LAURA DIXON	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Laura Dixon	 	 
	 

	 	 	 	Title:
	 	VP	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	150 S. Wacker Dr., Suite 2200	 	 
	 

	 	 	 	 	 	Chicago, Illinois 60606	 	 
	 

	 	 	 	Attn:
	 	Laura Dixon	 	 
	 

	 	 	 	Telecopy:
	 	312-332-0424	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	LASALLE RETAIL FINANCE,A DIVISION OF LASALLE BUSINESS CREDIT,LLC,AS

AGENT FOR LASALLE BANK MIDWEST NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ CRAIG G. NUTBROWN	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Craig G. Nutbrown	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	25 Braintree Hill Office Park,	 	 
	 

	 	 	 	 	 	Suite 205	 	 
	 

	 	 	 	 	 	Braintree, Massachusetts 02184	 	 
	 

	 	 	 	Attn:
	 	Daniel O’Rourke	 	 
	 

	 	 	 	Telecopy:
	 	781-353-6101	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	CITIZENS BANK OF PENNSYLVANIA	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ DON CMAR	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Don Cmar	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	Six PPG Place, Suite 820	 	 
	 

	 	 	 	 	 	Pittsburgh, Pennsylvania 15222	 	 
	 

	 	 	 	Attn:
	 	Don Cmar	 	 
	 

	 	 	 	Telecopy:
	 	412-391-2580	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	SIEMENS FINANCIAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ FRANK AMODIO	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Frank Amodio	 	 
	 

	 	 	 	Title:
	 	Vice President — Credit	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	170 Wood Ave South	 	 
	 

	 	 	 	 	 	Iselin, New Jersey 08830	 	 
	 

	 	 	 	Attn:
	 	Sharon Rooney	 	 
	 

	 	 	 	Telecopy:
	 	732-590-6648	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	GMAC COMMERCIAL FINANCE LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ DAVID GRABASKY	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David Grabosky	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	444 s. Flower St., Suite 1300	 	 
	 

	 	 	 	 	 	Los Angeles, California 90071	 	 
	 

	 	 	 	Attn:
	 	David Grabosky	 	 
	 

	 	 	 	Telecopy:
	 	213-284-3612	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ JOE KWASNY	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Joe Kwasny	 	 
	 

	 	 	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	1965 E. 6th Street, Suite 400	 	 
	 

	 	 	 	 	 	Locator #01-3049	 	 
	 

	 	 	 	 	 	Cleveland, Ohio 44114	 	 
	 

	 	 	 	Attn:
	 	Katie DeGennaro	 	 
	 

	 	 	 	Telecopy:
	 	216-222-9555	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	M & T BANK	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ PAMELA M.PASQUALINI	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Pamela M. Pasqualini	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	25 South Charles St.	 	 
	 

	 	 	 	 	 	Baltimore, Maryland 21201	 	 
	 

	 	 	 	Attn:
	 	Pamela Pasqualini	 	 
	 

	 	 	 	Telecopy:
	 	410-244-4960	 	 

Signature Page to Loan and Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	UBS LOAN FINANCE LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ PAMELA OH	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Pamela Oh	 	 
	 

	 	 	 	Title:
	 	Associate Director — Banking Products Services, US	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ JANICE L RANDOLPH	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Janice L. Randolph	 	 
	 

	 	 	 	Title:
	 	Associate Director — Banking Products Services, US	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	677 Washington Blvd.	 	 
	 

	 	 	 	 	 	Stamford, Connecticut 06901	 	 
	 

	 	 	 	Attn:
	 	Michael Reilly	 	 
	 

	 	 	 	Telecopy:
	 	203-719-5259	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	SOVEREIGN BANK	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ JUDITH C.E. KELLY	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Judith C.E. Kelly	 	 
	 

	 	 	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	75 State Street	 	 
	 

	 	 	 	 	 	Boston, Massachusetts 02109	 	 
	 

	 	 	 	Attn:
	 	Judith Kelly	 	 
	 

	 	 	 	Telecopy:
	 	617-346-7330	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	HSBC BUSINESS CREDIT (USA) INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ MATTHEW W. RICKERT	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Matthew W. Rickert	 	 
	 

	 	 	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	452 5th Avenue	 	 
	 

	 	 	 	 	 	New York, New York 10018	 	 
	 

	 	 	 	Attn:
	 	Matthew W. Rickert	 	 
	 

	 	 	 	Telecopy:
	 	212-525-2520	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	      /S/ DIANE M. SHAAK	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Diane M. Shaak	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	Two Tower Center Blvd. 21st Floor	 	 
	 

	 	 	 	 	 	East Brunswick, New Jersey 08816	 	 
	 

	 	 	 	Attn:
	 	Gurdatt Jagnanan	 	 
	 

	 	 	 	Telecopy:
	 	732-220-3268	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	NORTH FORK BUSINESS CAPITAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	     /S/ MICHAEL S. BURNS	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Michael S. Burns	 	 
	 

	 	 	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	275 Broadhollow Road	 	 
	 

	 	 	 	 	 	PO Box 8914	 	 
	 

	 	 	 	 	 	Melville, New York 11747	 	 
	 

	 	 	 	Attn:
	 	Jason Rosenberg	 	 
	 

	 	 	 	Telecopy:
	 	631-501-5524exv10w3

 

EXHIBIT 10.3

LOAN AGREEMENT

Dated as of March 6, 2006

Between

BONSTORES REALTY ONE, LLC,

as Borrower

and

BANK OF AMERICA, N.A.,

as Lender

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	ARTICLE I	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	DEFINITIONS; PRINCIPLES OF CONSTRUCTION	 	 	 	 
	Section 1.01

	 	Definitions
	 	 	1	 
	Section 1.02

	 	Principles of Construction
	 	 	18	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE II	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	GENERAL TERMS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01

	 	Loan Commitment; Disbursement to Borrower
	 	 	19	 
	Section 2.02

	 	Interest Rate
	 	 	19	 
	Section 2.03

	 	Loan Payments
	 	 	20	 
	Section 2.04

	 	Prepayments
	 	 	21	 
	Section 2.05

	 	Property Releases
	 	 	23	 
	Section 2.06

	 	Substitution of Properties
	 	 	24	 
	Section 2.07

	 	Holdback For Individual Property Located in St. Paul, Minnesota
	 	 	31	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE III	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CONDITIONS PRECEDENT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01

	 	Representations and Warranties; Compliance with Conditions
	 	 	33	 
	Section 3.02

	 	Delivery of Loan Documents; Title Insurance; Reports; Leases
	 	 	34	 
	Section 3.03

	 	Related Documents
	 	 	35	 
	Section 3.04

	 	Organizational Documents
	 	 	35	 
	Section 3.05

	 	Opinions of Borrower’s Counsel
	 	 	35	 
	Section 3.06

	 	Annual Budget
	 	 	35	 
	Section 3.07

	 	Taxes and Other Charges
	 	 	36	 
	Section 3.08

	 	Completion of Proceedings
	 	 	36	 
	Section 3.09

	 	Payments
	 	 	36	 
	Section 3.10

	 	Transaction Costs
	 	 	36	 
	Section 3.11

	 	No Material Adverse Change
	 	 	36	 
	Section 3.12

	 	Leases and Rent Roll
	 	 	37	 
	Section 3.13

	 	Tenant Estoppels
	 	 	37	 
	Section 3.14

	 	REA Estoppels
	 	 	37	 
	Section 3.15

	 	Subordination and Attornment
	 	 	37	 
	Section 3.16

	 	Tax Lot
	 	 	37	 
	Section 3.17

	 	Physical Conditions Report
	 	 	37	 
	Section 3.18

	 	Appraisal
	 	 	37	 

-i-

 

 

	 	 	 	 	 	 	 
	Section 3.19

	 	Financial Statements
	 	 	38	 
	Section 3.20

	 	Intentionally Deleted
	 	 	38	 
	Section 3.21

	 	Purchase Agreement
	 	 	38	 
	Section 3.22

	 	Further Documents
	 	 	38	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01

	 	Organization
	 	 	38	 
	Section 4.02

	 	Status of Borrower
	 	 	39	 
	Section 4.03

	 	Validity of Documents
	 	 	39	 
	Section 4.04

	 	No Conflicts
	 	 	39	 
	Section 4.05

	 	Litigation
	 	 	40	 
	Section 4.06

	 	Agreements
	 	 	40	 
	Section 4.07

	 	Solvency
	 	 	40	 
	Section 4.08

	 	Intentionally Deleted
	 	 	40	 
	Section 4.09

	 	No Plan Assets
	 	 	40	 
	Section 4.10

	 	Not a Foreign Person
	 	 	41	 
	Section 4.11

	 	Enforceability
	 	 	41	 
	Section 4.12

	 	Business Purposes
	 	 	41	 
	Section 4.13

	 	Compliance
	 	 	41	 
	Section 4.14

	 	Financial Information
	 	 	41	 
	Section 4.15

	 	Condemnation
	 	 	42	 
	Section 4.16

	 	Utilities and Public Access; Parking
	 	 	42	 
	Section 4.17

	 	Separate Lots
	 	 	42	 
	Section 4.18

	 	Assessments
	 	 	42	 
	Section 4.19

	 	Insurance
	 	 	43	 
	Section 4.20

	 	Use of Property
	 	 	43	 
	Section 4.21

	 	Certificate of Occupancy; Licenses
	 	 	43	 
	Section 4.22

	 	Flood Zone
	 	 	43	 
	Section 4.23

	 	Physical Condition
	 	 	43	 
	Section 4.24

	 	Boundaries
	 	 	44	 
	Section 4.25

	 	Leases and Rent Roll
	 	 	44	 
	Section 4.26

	 	Filing and Recording Taxes
	 	 	45	 
	Section 4.27

	 	Management Agreement
	 	 	45	 
	Section 4.28

	 	Illegal Activity
	 	 	45	 
	Section 4.29

	 	Construction Expenses
	 	 	45	 
	Section 4.30

	 	Collateral Property
	 	 	45	 
	Section 4.31

	 	Taxes
	 	 	45	 
	Section 4.32

	 	Permitted Encumbrances
	 	 	45	 
	Section 4.33

	 	Federal Reserve Regulations
	 	 	46	 
	Section 4.34

	 	Investment Company Act
	 	 	46	 
	Section 4.35

	 	Reciprocal Easement Agreements
	 	 	46	 
	Section 4.36

	 	No Change in Facts or Circumstances; Disclosure
	 	 	46	 
	Section 4.37

	 	Intellectual Property
	 	 	46	 

-ii-

 

 

	 	 	 	 	 	 	 
	Section 4.38

	 	Survey
	 	 	47	 
	Section 4.39

	 	Intentionally omitted
	 	 	47	 
	Section 4.40

	 	Patriot Act
	 	 	47	 
	Section 4.41

	 	Assumptions
	 	 	48	 
	Section 4.42

	 	Survival
	 	 	48	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE V	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	BORROWER COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01

	 	Existence; Compliance with Legal Requirements
	 	 	48	 
	Section 5.02

	 	Maintenance and Use of Property
	 	 	49	 
	Section 5.03

	 	Waste
	 	 	49	 
	Section 5.04

	 	Taxes and Other Charges; Contests
	 	 	49	 
	Section 5.05

	 	Litigation
	 	 	50	 
	Section 5.06

	 	Access to Property
	 	 	50	 
	Section 5.07

	 	Notice of Default
	 	 	51	 
	Section 5.08

	 	Cooperate in Legal Proceedings
	 	 	51	 
	Section 5.09

	 	Performance by Borrower
	 	 	51	 
	Section 5.10

	 	Awards; Insurance Proceeds
	 	 	51	 
	Section 5.11

	 	Financial Reporting
	 	 	51	 
	Section 5.12

	 	Estoppel Statement
	 	 	55	 
	Section 5.13

	 	Leasing Matters
	 	 	55	 
	Section 5.14

	 	Property Management
	 	 	57	 
	Section 5.15

	 	Liens
	 	 	58	 
	Section 5.16

	 	Debt Cancellation
	 	 	58	 
	Section 5.17

	 	Zoning
	 	 	58	 
	Section 5.18

	 	ERISA
	 	 	58	 
	Section 5.19

	 	No Joint Assessment
	 	 	59	 
	Section 5.20

	 	Reciprocal Easement Agreements
	 	 	59	 
	Section 5.21

	 	Alterations
	 	 	59	 
	Section 5.22

	 	Operating Leases
	 	 	60	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VI	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ENTITY COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01

	 	Single Purpose Entity/Separateness
	 	 	61	 
	Section 6.02

	 	Change of Name, Identity or Structure
	 	 	65	 
	Section 6.03

	 	Business and Operations
	 	 	65	 
	Section 6.04

	 	Independent Director
	 	 	65	 

-iii-

 

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	NO SALE OR ENCUMBRANCE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01

	 	Transfer Definitions
	 	 	66	 
	Section 7.02

	 	No Sale/Encumbrance
	 	 	67	 
	Section 7.03

	 	Permitted Transfers
	 	 	68	 
	Section 7.04

	 	Lender’s Rights
	 	 	68	 
	Section 7.05

	 	Assumption
	 	 	69	 
	Section 7.06

	 	Immaterial Transfers
	 	 	71	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE VIII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	INSURANCE; CASUALTY; CONDEMNATION; RESTORATION	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01

	 	Insurance
	 	 	72	 
	Section 8.02

	 	Casualty
	 	 	75	 
	Section 8.03

	 	Condemnation
	 	 	76	 
	Section 8.04

	 	Restoration
	 	 	77	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE IX	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	RESERVE FUNDS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01

	 	Required Repairs
	 	 	80	 
	Section 9.02

	 	Replacements
	 	 	80	 
	Section 9.03

	 	Lease Shortfall Reserve Account
	 	 	81	 
	Section 9.04

	 	Required Work
	 	 	82	 
	Section 9.05

	 	Release of Reserve Funds
	 	 	84	 
	Section 9.06

	 	Tax and Insurance Reserve Funds
	 	 	87	 
	Section 9.07

	 	Excess Cash Reserve Account
	 	 	88	 
	Section 9.08

	 	Reserve Funds Generally
	 	 	88	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE X	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	CASH MANAGEMENT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01

	 	Cash Management Account
	 	 	91	 
	Section 10.02

	 	Deposits and Withdrawals
	 	 	92	 
	Section 10.03

	 	Security Interest
	 	 	94	 
	Section 10.04

	 	Definitions
	 	 	95	 

-iv-

 

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XI	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	EVENTS OF DEFAULT; REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01

	 	Event of Default
	 	 	95	 
	Section 11.02

	 	Remedies
	 	 	98	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ENVIRONMENTAL PROVISIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01

	 	Environmental Representations and Warranties
	 	 	99	 
	Section 12.02

	 	Environmental Covenants
	 	 	99	 
	Section 12.03

	 	Lender’s Rights
	 	 	100	 
	Section 12.04

	 	Operations and Maintenance Programs
	 	 	100	 
	Section 12.05

	 	Environmental Definitions
	 	 	101	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XIII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	SECONDARY MARKET	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.01

	 	Transfer of Loan
	 	 	101	 
	Section 13.02

	 	Delegation of Servicing
	 	 	102	 
	Section 13.03

	 	Dissemination of Information
	 	 	102	 
	Section 13.04

	 	Regulation AB Information
	 	 	102	 
	Section 13.05

	 	Cooperation
	 	 	103	 
	Section 13.06

	 	Securitization Indemnification
	 	 	106	 
	Section 13.07

	 	Servicer
	 	 	108	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XIV	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	INDEMNIFICATIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 14.01

	 	General Indemnification
	 	 	109	 
	Section 14.02

	 	Mortgage and Intangible Tax Indemnification
	 	 	109	 
	Section 14.03

	 	ERISA Indemnification
	 	 	110	 
	Section 14.04

	 	Provided Information Indemnification
	 	 	110	 
	Section 14.05

	 	Survival
	 	 	110	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XV	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	EXCULPATION	 	 	 	 
	 
	 	 	 	 	 	 
	Section 15.01

	 	Exculpation
	 	 	110	 

-v-

 

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XVI	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	NOTICES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 16.01

	 	Notices
	 	 	112	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XVII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	FURTHER ASSURANCES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 17.01

	 	Replacement Documents
	 	 	114	 
	Section 17.02

	 	Recording of Mortgage, Etc
	 	 	114	 
	Section 17.03

	 	Further Acts, Etc
	 	 	114	 
	Section 17.04

	 	Changes in Tax, Debt, Credit and Documentary Stamp Laws
	 	 	115	 
	Section 17.05

	 	Expenses
	 	 	115	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XVIII	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	WAIVERS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 18.01

	 	Remedies Cumulative; Waivers
	 	 	116	 
	Section 18.02

	 	Modification, Waiver in Writing
	 	 	116	 
	Section 18.03

	 	Delay Not a Waiver
	 	 	117	 
	Section 18.04

	 	Trial by Jury
	 	 	117	 
	Section 18.05

	 	Waiver of Notice
	 	 	117	 
	Section 18.06

	 	Remedies of Borrower
	 	 	118	 
	Section 18.07

	 	Waiver of Marshalling of Assets
	 	 	118	 
	Section 18.08

	 	Waiver of Statute of Limitations
	 	 	118	 
	Section 18.09

	 	Waiver of Counterclaim
	 	 	118	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XIX	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	GOVERNING LAW	 	 	 	 
	Section 19.01

	 	Choice of Law
	 	 	118	 
	Section 19.02

	 	Severability
	 	 	119	 
	Section 19.03

	 	Preferences
	 	 	119	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE XX	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	MISCELLANEOUS	 	 	 	 
	Section 20.01

	 	Survival
	 	 	119	 
	Section 20.02

	 	Lender’s Discretion
	 	 	119	 
	Section 20.03

	 	Headings
	 	 	120	 
	Section 20.04

	 	Cost of Enforcement
	 	 	120	 

-vi-

 

 

	 	 	 	 	 	 	 
	Section 20.05

	 	Schedules Incorporated
	 	 	120	 
	Section 20.06

	 	Offsets, Counterclaims and Defenses
	 	 	120	 
	Section 20.07

	 	No Joint Venture or Partnership; No Third Party Beneficiaries
	 	 	120	 
	Section 20.08

	 	Publicity
	 	 	121	 
	Section 20.09

	 	Conflict; Construction of Documents; Reliance
	 	 	122	 
	Section 20.10

	 	Entire Agreement
	 	 	122	 
	 
	 	 	 	 	 	 
	EXHIBITS
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit A

	 	Form of Tenant Estoppel Certificate	 	 	 	 
	Exhibit B

	 	Organizational Chart	 	 	 	 
	Exhibit C

	 	Non-Consolidation Opinion	 	 	 	 
	Exhibit D

	 	Form of Assignment of Management Agreement	 	 	 	 
	Exhibit E

	 	Form of Financial Statements for EBITDA Definition	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULES
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Schedule I

	 	Required Repairs	 	 	 	 
	Schedule II

	 	Intentionally Deleted	 	 	 	 
	Schedule III

	 	Individual Properties and Allocated Loan Amounts	 	 	 	 
	Schedule 1.01

	 	Operating Leases and Operating Lessees	 	 	 	 

-vii-

 

 

LOAN AGREEMENT

          THIS LOAN AGREEMENT, dated as of March 6, 2006 (as amended, restated, replaced, supplemented or otherwise modified
from time to time, this “Agreement”), between BANK OF AMERICA, N.A., a national banking association, having an address at 214 North Tryon Street, Charlotte, North Carolina 28255 (together with its successors and/or assigns, “Lender”) and BONSTORES REALTY ONE, LLC, a Delaware limited liability company, having an address at 2801 E. Market Street, York, Pennsylvania 17402 (together with its successors and/or assigns, “Borrower”).

RECITALS:

          WHEREAS, Borrower is the fee owner of the Property (defined below);

          WHEREAS, Borrower desires to obtain the Loan (defined below) from Lender; and

          WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the
terms of this Agreement and the other Loan Documents (defined below).

          NOW, THEREFORE, in consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:

ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

          Section 1.01 Definitions.

          For all purposes of this Agreement, except as otherwise expressly required or unless the
context clearly indicates a contrary intent:

          “Acceptable Accountant” shall mean a “Big Four” accounting firm or other independent
certified public accountant reasonably acceptable to Lender.

          “Act” shall have the meaning set forth in Section 6.01.

          “Additional Replacement” shall have the meaning set forth in Section 9.05(g)
hereof.

          “Additional Required Repair” shall have the meaning set forth in Section
9.05(f) hereof.

 

 

          “Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with such Person or is a
director or officer of such Person or of an Affiliate of such Person.

          “Affiliated Loans” shall mean a loan made by Lender to a parent, subsidiary or such
other entity affiliated with Borrower or Borrower Principal.

          “Affiliated Manager” shall have the meaning set forth in Section 7.01 hereof.

          “ALTA” shall mean American Land Title Association, or any successor thereto.

          “Alteration Threshold” means $500,000.00.

          “Allocated Loan Amount” shall mean, with respect to any Individual Property, the
portion of the Loan allocated to each such Individual Property as set forth on Schedule III
hereto.

          “Annual Budget” shall mean the operating budget of Borrower, including all planned
capital expenditures, for the Property reasonably approved by Lender in accordance with Section
5.11(a)(iv) hereof for the applicable calendar year or other period.

          “Award” shall mean any compensation paid by any Governmental Authority in connection
with a Condemnation in respect of all or any part of any Individual Property.

          “Borrower” shall mean Bonstores Realty One, LLC.

          “Borrower Misstatement” shall have the meaning set forth in Section 13.06(b)
hereof.

          “Borrower Principal” shall mean Bonstores Holdings One, LLC.

          “BTDS” shall mean The Bon-Ton Department Stores, Inc.

          “Business Day” shall mean any day other than (i) a Saturday or a Sunday or (ii) a day
on which federally insured depository institutions in the States of New York or North Carolina or
the state in which the offices of the Servicer and the trustee in the Securitization are located
are authorized or obligated by law, governmental decree or executive order to be closed.

          “Cash Management Account” shall have the meaning set forth in Section 10.01(a)
hereof.

          “Casualty” shall have the meaning set forth in Section 8.02.

          “Change of Control” shall having the meaning set forth in the Operating Lease
Guaranty.

          “Closing Date” shall mean the date of this Agreement.

-2-

 

          “Closing Date EBITDA” shall mean EBITDA for the Property, as determined by Lender, on
the Closing Date.

          “Collateral Property” shall have the meaning set forth in the granting clause of each
Mortgage.

          “Control” shall have the meaning set forth in Section 7.01 hereof.

          “Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result, in lieu or in anticipation, of the exercise of the right of condemnation
or eminent domain, of all or any part of any Individual Property, or any interest therein or right
accruing thereto, including any right of access thereto or any change of grade affecting any
Individual Property or any part thereof.

          “Condemnation Proceeds” shall have the meaning set forth in Section 8.04(b).

          “Credit Facility Pledge” shall have the meaning set forth in Section 7.02
hereof.

          “Creditors Rights Laws” shall mean with respect to any Person any existing or future
law of any applicable jurisdiction relating to bankruptcy, insolvency, reorganization,
conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to its debts or debtors.

          “Debt” shall mean the outstanding principal amount of the Loan, together with all
interest accrued and unpaid thereon and all other sums due to Lender under the Note, this
Agreement, the Mortgage and the other Loan Documents.

          “Debt Service” shall mean, with respect to any particular period of time, scheduled
principal and/or interest payments under the Note and under the New Mezzanine Loan, if any.

          “Debt Service Coverage Ratio” shall mean, as of any date of determination, for the
twelve (12) full calendar month period immediately preceding such date of determination, the ratio,
as reasonably determined by Lender, of (i) Net Operating Income to (ii) the aggregate amount of
Debt Service which would be due for the same period assuming the principal amount of the Loan and
the New Mezzanine Loan, if any, following the application of any Release Amount, respectively, is
outstanding and calculated at a mortgage constant equal to 7.8882%.

          “Default” shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would be an Event of
Default.

          “Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) four percent (4%) above the Note
Rate.

          “Disbursement Funding Date” shall have the meaning set forth in Section
2.07(a) hereof.

-3-

 

          “Disbursement Request” shall have the meaning set forth in Section 2.07(a)
hereof.

          “Disclosure Document” shall have the meaning set forth in Section 13.04(a)
hereof.

          “EBITDA” shall mean, with respect to each Individual Property and the Property in the
aggregate, store level “Gross Margin” (which shall be determined in the same manner as set forth in
the financial statements delivered to Lender in connection with its underwriting of the Loan, an
example of which is attached hereto as Exhibit E, less the total of all operating expenses actually
paid or payable by each Operating Lessee with respect to Individual Property and the Property in
the aggregate, as applicable, and which relate to the operation, maintenance and management of each
Individual Property or the Property in the aggregate, as applicable, but specifically excluding:
Operating Lease Rent, depreciation, amortization, capitalized expenses and income taxes, all as
determined in accordance with GAAP consistently applied.

          “Eligible Account” shall mean a separate and identifiable account from all other funds
held by the holding institution that is either (a) an account or accounts maintained with a federal
or state chartered depository institution or trust company which complies with the definition of
Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary capacity which, in
the case of a state chartered depository institution or trust company, is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and state authority.
An Eligible Account will not be evidenced by a certificate of deposit, passbook or other
instrument.

          “Eligible Institution” shall mean Bank of America, N.A. or a depository institution or
trust company insured by the Federal Deposit Insurance Corporation, the short term unsecured debt
obligations or commercial paper of which are rated at least “A-1+” by S&P, “P-1” by Moody’s and
“F-1+” by Fitch in the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of accounts in which funds are held for more than thirty (30) days, the long term
unsecured debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s).

          “Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement,
dated as of the date hereof, executed by Borrower and Borrower Principal in connection with the
Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

          “Environmental Law” shall have the meaning set forth in Section 12.05 hereof.

          “Environmental Liens” shall have the meaning set forth in Section 12.05
hereof.

          “Environmental Report” shall have the meaning set forth in Section 12.05
hereof.

-4-

 

          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and any successor statutes thereto and applicable regulations issued pursuant
thereto in temporary or final form.

          “Event of Default” shall have the meaning set forth in Section 11.01 hereof.

          “Exceptions to Non-Recourse Guaranty” shall mean that certain Exceptions to
Non-Recourse Guaranty dated of even date herewith from Borrower Principal in favor of Lender.

          “Excess Cash” shall mean an amount equal to all funds remaining in the Cash Management
Account on each Payment Date following the disbursements and application of funds pursuant to
Section 10.02(c)(i)-(vii) hereof.

          “Excess Cash After Lease Shortfall Deposits” shall mean an amount equal to all funds
remaining in the Cash Management Account on each Payment Date following the disbursements and
application of funds pursuant to Section 10.02(c)(i)-(viii) hereof.

          “Excess Cash Reserve Account” shall have the meaning set forth in Section 9.07
hereof.

          “Excess Cash Reserve Funds” shall have the meaning set forth in Section 9.07
hereof.

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          “Exchange Act Filing” shall have the meaning set forth in Section 5.11(c)(iv)
hereof.

          “Excusable Delay” shall mean a delay solely due to acts of God, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty,
strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable
control of Borrower, but Borrower’s lack of funds in and of itself shall not be deemed a cause
beyond the control of Borrower.

          “Fitch” shall mean Fitch, Inc.

          “Funding Conditions” shall have the meaning set forth in Section 2.07 hereof.

          “GAAP” shall mean generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.

          “Governmental Authority” shall mean any court, board, agency, department, commission,
office or other authority of any nature whatsoever for any governmental unit (federal, state,
county, municipal, city, town, special district or otherwise) whether now or hereafter in
existence.

          “Hazardous Materials” shall have the meaning set forth in Section 12.05
hereof.

-5-

 

          “Holdback Amount” shall have the meaning set forth in Section 2.07 hereof.

          “Holdback Disbursement” shall have the meaning set forth in Section 2.07
hereof.

          “Holdback Notice” shall have the meaning set forth in Section 2.07 hereof.

          “Holdback Property” shall have the meaning set forth in Section 2.07 hereof.

          “Improvements” shall have the meaning set forth in the granting clause of the
Mortgage.

          “Indemnified Parties” shall mean (a) Lender, (b) any prior Borrower or holder of the
Loan or Participations in the Loan, (c) any servicer or prior servicer of the Loan, (d) any
Investor or any prior Investor in any Securities, (e) any trustees, custodians or other fiduciaries
who hold or who have held a full or partial interest in the Loan for the benefit of any Investor or
other third party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders, partners, members,
employees, agents, servants, representatives, contractors, subcontractors, affiliates or
subsidiaries of any and all of the foregoing, and (h) the heirs, legal representatives, successors
and assigns of any and all of the foregoing (including, without limitation, any successors by
merger, consolidation or acquisition of all or a substantial portion of the Indemnified Parties’
assets and business), in all cases whether during the term of the Loan or as part of or following a
foreclosure of the Mortgage.

          “Independent Director” shall have the meaning set forth in Section 6.04.

          “Individual Property” shall mean each parcel of real property listed on Schedule
III attached hereto, the Improvements thereon and all Collateral Property owned by Borrower and
encumbered by a Mortgage, together with all rights pertaining to such property and improvements as
more particular described in the granting clauses of such Mortgage.

          “Insurance Premiums” shall have the meaning set forth in Section 8.01(b)
hereof.

          “Insurance Proceeds” shall have the meaning set forth in Section 8.04(b)
hereof.

          “Interest Period” shall mean the calendar month preceding each Payment Date.

          “Interim Interest Period” shall mean the period from and including the Closing Date
through but excluding the Payment Date first occurring after the Closing Date, provided, however,
there shall be no “Interim Interest Period” in the event the Closing Date occurs on a Payment Date.

          “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended, as
it may be further amended from time to time, and any successor statutes thereto, and applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

          “Investor” shall have the meaning set forth in Section 13.03 hereof.

-6-

 

          “Issuer Group” shall have the meaning set forth in Section 13.06(b) hereof.

          “Issuer Person” shall have the meaning set forth in Section 13.06(b) hereof.

          “Late Payment Charge” shall have the meaning set forth in Section 2.03(c).

          “Lease” shall mean each Operating Lease and each other lease, occupancy agreement or
other similar agreement entered into by Operating Lessee or Borrower, as landlord or lessor, with
respect to any Individual Property (or any portion thereof).

          “Lease Guarantor” shall mean The Bon-Ton Stores, Inc.

          “Lease Shortfall Reserve Account” shall have the meaning set forth in Section
9.03.

          “Lease Shortfall Reserve Funds” shall have the meaning set forth in Section
9.03.

          “Legal Requirements” shall mean all statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities affecting each
Individual Property or any part thereof, or the construction, use, alteration or operation thereof,
whether now or hereafter enacted and in force, and all permits, licenses, authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any material instruments, either of record or known to Borrower, at any time in force
affecting each Individual Property or any part thereof, including, without limitation, any which
may (a) require repairs, modifications or alterations in or to any Individual Property or any part
thereof, or (b) in any way limit the use and enjoyment thereof.

          “Letter of Credit” shall mean (a) an irrevocable, unconditional, transferable, clean
sight draft letter of credit (either an evergreen letter of credit or a letter of credit which does
not expire until at least five (5) Business Days after the Maturity Date or such other date
reasonably acceptable to Lender) in favor of Lender and entitling Lender to draw thereon based
solely on a statement executed by an officer of Lender stating that it has the right to draw
thereon, and issued by a domestic Eligible Institution or the U.S. agency or branch of a foreign
Eligible Institution, or if there are no domestic Eligible Institutions or U.S. agencies or
branches of a foreign Eligible Institution then issuing letters of credit, then such letter of
credit may be issued by a domestic bank, the long term unsecured debt rating of which is the
highest such rating then given by the Rating Agency or Rating Agencies, as applicable, to a
domestic commercial bank or (b) a letter of credit (i) in form, scope and substance and (ii) issued
by an issuer, in each case acceptable to Lender in its sole and absolute discretion.

          “Level 1 EBITDA Period” shall mean the period commencing on the date that EBITDA (as
set forth in the statements required pursuant to Section 5.11(a)(iii) of this Agreement)
for any trailing twelve (12) month period (tested quarterly) is less than eighty percent (80%) (but
greater than 60%) of the Closing Date EBITDA and ending on the date that EBITDA for the trailing
twelve (12) month period (tested quarterly) is greater than eighty percent (80%) of the Closing
Date EBITDA for two (2) consecutive calendar quarters.

-7-

 

          “Level 2 EBITDA Period” shall mean the period commencing on the date that EBITDA
(as set forth in the statements required pursuant to Section 5.11(a)(iii) of this
Agreement) for any trailing twelve (12) month period (tested quarterly) is sixty percent (60%) or
less of the Closing Date EBITDA and ending on the date that EBITDA for the trailing twelve (12)
month period (tested quarterly) is greater than eighty percent (80%) of the Closing Date EBITDA for
two (2) consecutive calendar quarters.

          “Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting
Borrower, any Individual Property, any portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.

          “LLC Agreement” shall have the meaning set forth in Section 6.01.

          “Loan” shall mean the loan in the initial principal amount of One Hundred Thirty
Million and No/100 Dollars ($130,000,000.00) made by Lender to Borrower pursuant to this Agreement.

          “Loan Documents” shall mean, collectively, this Agreement, the Note, the Mortgage, the
Environmental Indemnity, the Exceptions to Non-Recourse Guaranty and any and all other documents,
agreements and certificates executed and/or delivered in connection with the Loan, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to time.

          “Lockout Period” shall mean the period commencing on the date hereof and ending after
the Payment Date occurring in April, 2008.

          “Lockout Yield Maintenance Premium” shall mean an amount equal to five percent (5%) of
the then outstanding principal amount of the Loan.

          “Losses” shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs,
expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement of
whatever kind or nature (including but not limited to reasonable legal fees and other costs of
defense) actually incurred.

          “Low EBITDA Period” shall mean individually or collectively, a Level 1 EBITDA Period
or a Level 2 EBITDA Period.

          “MAE” means any material adverse effect upon (i) the business operations or financial
condition of the Borrower, (ii) the ability of the Borrower to repay the principal and interest of
the Loan as it becomes due, or (iii) the value of the Property taken as a whole.

          “Management Agreement” shall mean any management or operating agreement entered into
by and between Borrower and Manager pursuant to which Manager is to provide
management and other services with respect to the Property, as the same may be amended,

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restated, replaced, supplemented or otherwise modified in accordance with the terms of this
Agreement.

          “Manager” shall mean such entity, if any, selected as the manager of the Property in
accordance with the terms of this Agreement.

          “Maturity Date” shall mean the Payment Date occurring in April, 2016.

          “Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at
any time or from time to time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under
the laws of such state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.

          “Member” shall have the meaning set forth in Section 6.01(d).

          “Mold” shall have the meaning set forth in Section 12.5 hereof.

          “Moody’s” shall mean Moody’s Investor Services, Inc.

          “Monthly Payment Amount” shall have the meaning set forth in Section
2.03(a)(ii).

          “Mortgage” or “Mortgages” shall mean each Mortgage, Assignment of Leases and
Rents and Security Agreement or each Deed of Trust, Assignment of Leases and Rents and Security
Agreement, dated as of the date hereof, executed and delivered by Borrower as security for the Loan
and encumbering the related Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

          “Net Operating Income” shall mean, with respect to any period of time, the amount
obtained by subtracting Operating Expenses from Operating Income.

          “Net Proceeds” shall have the meaning set forth in Section 8.04(b) hereof.

          “Net Proceeds Deficiency” shall have the meaning set forth in Section
8.04(b)(vi) hereof.

          “New Mezzanine Lender” shall mean the lender of any New Mezzanine Loan.

          “New Mezzanine Loan” shall have the meaning set forth in Section 13.05 hereof.

          “New Mezzanine Borrower” shall have the meaning set forth in Section 13.05
hereof.

          “New Mezzanine Loan Documents” shall have the meaning set forth in Section
13.05 hereof.

          “Nonconsolidation Opinion” shall have the meaning set forth in Section 4.41
hereof.

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          “Note” shall mean that certain promissory note of even date herewith in the principal
amount of One Hundred Thirty Million and No/100 Dollars ($130,000,000.00), made by Borrower in
favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

          “Note Rate” shall mean 6.2125% per annum.

          “OFAC List” means the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of
Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.

          “Officer’s Certificate” means a certificate delivered to Lender and signed by a duly
authorized officer of Borrower.

          “Operating Expenses” shall mean, with respect to any period of time, the total of all
expenses actually paid or payable, computed in accordance with GAAP, of whatever kind relating to
the operation, maintenance and management of each Individual Property, including without
limitation, utilities, ordinary repairs and maintenance, Insurance Premiums, license fees, Taxes
and Other Charges, advertising expenses, payroll and related taxes, computer processing charges,
management fees equal to one-half of one percent (0.5%) of the rent paid by Operating Lessee to
Borrower, operational equipment or other lease payments as approved by Lender, normalized capital
expenditures equal to $341,264 per annum, and normalized tenant improvement and leasing commissions
costs equal to $400,000 per annum but specifically excluding depreciation and amortization, income
taxes, Debt Service, any incentive fees due under the Management Agreement, any item of expense
that in accordance with GAAP should be capitalized but only to the extent the same would qualify
for funding from the Reserve Accounts, any item of expense that would otherwise be covered by the
provisions hereof but which is paid by any Tenant under such Tenant’s Lease or other agreement, and
deposits into the Reserve Accounts.

          “Operating Income” shall mean, with respect to any period of time, all income of
Borrower, computed in accordance with GAAP, derived from the ownership and operation of each
Individual Property from whatever source, including, but not limited to, Rents, utility charges,
escalations, forfeited security deposits, interest on credit accounts, service fees or charges,
license fees, parking fees, rent concessions or credits, and other required pass-throughs but
excluding sales, use and occupancy or other taxes on receipts required to be accounted for by
Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, interest income from any source other than the escrow accounts, Reserve
Accounts or other accounts required pursuant to the Loan Documents, Insurance Proceeds (other than
business interruption or other loss of income insurance), Awards, percentage rents, unforfeited
security deposits, utility and other similar deposits, income from Tenants not paying rent, income
from Tenants in bankruptcy, non-recurring or extraordinary income, including,
without limitation lease termination payments, and any disbursements to Borrower from the
Reserve Funds.

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          “Operating Leases” shall mean collectively those certain Master Lease Agreements
identified on Schedule 1.01 hereof.

          “Operating Lease Guaranty” shall mean collectively, each Guaranty of Lease executed
and delivered by Lease Guarantor for the benefit of Borrower with respect to each Operating Lease
pursuant to which Lease Guarantor guarantees the payment and performance obligations of the
Operating Lessee under each Operating Lease and identified on Schedule 1.01 hereof.

          “Operating Lease Rent” shall mean all rent owed by Operating Lessee to Borrower under
the Operating Lease.

          “Operating Lessee” shall mean the lessee under the applicable Operating Lease as
identified on Schedule 1.01 hereof or any replacement lessee approved by Lender and the
Rating Agencies.

          “Other Charges” shall mean all ground rents, maintenance charges, impositions other
than Taxes, and any other charges now or hereafter levied or assessed or imposed against any
Individual Property or any part thereof.

          “Outside Disbursement Date” shall have the meaning set forth in Section 2.07
hereof.

          “Participations” shall have the meaning set forth in Section 13.01 hereof.

          “Payment Date” shall mean the first day of each calendar month.

          “Permitted Encumbrances” shall mean collectively (a) the Lien and security interests
created by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the
applicable Title Insurance Policy, (c) Liens, if any, for Taxes or other impositions imposed by any
Governmental Authority not yet due and delinquent, (d) Liens arising after the date hereof which
are being contested in good faith by appropriate proceedings promptly instituted and diligently
conducted in accordance with Section 5.04(b) hereof; (e) in the case of Liens arising after
the date hereof, statutory Liens of carriers, warehousemen, mechanics, materialmen and other
similar Liens arising by operation of law, which are incurred in the ordinary course of business
for sums which are not yet due or are being contested in good faith in accordance with Section
5.04(b) hereof; (f) easements, rights-of-way, REAs, restrictions and other similar charges or
non-monetary encumbrances against real property which would not individually or in the aggregate be
reasonably likely to cause a MAE with respect to an Individual Property; (g) any judgment Lien
provided that the judgment it secures shall have been discharged of record or the execution thereof
stayed pending appeal within 30 days after the entry thereof or within 30 days after the expiration
of any stay, as applicable; (h) any matters disclosed by the surveys (which are required to be
delivered to Lender pursuant to Section 3.02(c) hereof) provided that survey-related
coverage reasonable acceptable to Lender is
included under the Title Insurance Policy; and (i) such other title and survey exceptions or
other Liens as Lender may approve in writing in Lender’s sole discretion.

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          “Permitted Investments” shall mean to the extent available from Lender or Lender’s
servicer for deposits in the Reserve Accounts, any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, including those issued by a
servicer of the Loan, the trustee under any securitization or any of their respective Affiliates,
payable on demand or having a maturity date not later than the Business Day immediately prior to
the date on which the funds used to acquire such investment are required to be used under this
Agreement and meeting one of the appropriate standards set forth below:

     (a) obligations of, or obligations fully guaranteed as to payment of principal and
interest by, the United States of America or any agency or instrumentality thereof provided
such obligations are backed by the full faith and credit of the United States of America
including, without limitation, obligations of: the U.S. Treasury (all direct or fully
guaranteed obligations), the Farmers Home Administration (certificates of beneficial
ownership), the General Services Administration (participation certificates), the U.S.
Maritime Administration (guaranteed Title XI financing), the Small Business Administration
(guaranteed participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed transit bonds); provided, however, that the
investments described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) be rated “AAA” or the equivalent by each of
the Rating Agencies, (iii) if rated by S&P, must not have an “r” highlighter affixed to
their rating, (iv) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (v) such investments must not be subject to liquidation
prior to their maturity;

     (b) Federal Housing Administration debentures;

     (c) obligations of the following United States government sponsored agencies: Federal
Home Loan Mortgage Corp. (debt obligations), the Farm Credit System (consolidated systemwide
bonds and notes), the Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Financing Corp. (debt obligations),
and the Resolution Funding Corp. (debt obligations); provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an “r” highlighter
affixed to their rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (iv) such investments must not be subject to
liquidation prior to their maturity;

     (d) federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days of any bank,
the short term obligations of which at all times are rated in the highest short term rating
category by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the

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initial,
or, if higher, then current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (iv) such investments
must not be subject to liquidation prior to their maturity;

(e) fully Federal Deposit Insurance Corporation-insured demand and time deposits in, or
certificates of deposit of, or bankers’ acceptances issued by, any bank or trust company,
savings and loan association or savings bank, the short term obligations of which at all
times are rated in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest short term
rating category and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings assigned to
the Securities); provided, however, that the investments described in this clause must (i)
have a predetermined fixed dollar of principal due at maturity that cannot vary or change,
(ii) if rated by S&P, must not have an “r” highlighter affixed to their rating, (iii) if
such investments have a variable rate of interest, such interest rate must be tied to a
single interest rate index plus a fixed spread (if any) and must move proportionately with
that index, and (iv) such investments must not be subject to liquidation prior to their
maturity;

(f) debt obligations with maturities of not more than 365 days and at all times rated
by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating
Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the Securities)
in its highest long-term unsecured rating category; provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an “r” highlighter
affixed to their rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (iv) such investments must not be subject to
liquidation prior to their maturity;

(g) commercial paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more than one year
after the date of issuance thereof) with maturities of not more than 365 days and that at
all times is rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term unsecured debt
rating; provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or change, (ii) if

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rated by S&P, must not have an “r” highlighter affixed to their rating, (iii) if such
investments have a variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to their maturity;

     (h) units of taxable money market funds, which funds are regulated investment
companies, seek to maintain a constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the United States, which funds have the
highest rating available from each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds; and

     (i) any other security, obligation or investment which has been approved as a Permitted
Investment in writing by (i) Lender and (ii) each Rating Agency, as evidenced by a written
confirmation that the designation of such security, obligation or investment as a Permitted
Investment will not, in and of itself, result in a downgrade, qualification or withdrawal of
the initial, or, if higher, then current ratings assigned to the Securities by such Rating
Agency;

provided, however, that no obligation or security shall be a Permitted Investment
if (A) such obligation or security evidences a right to receive only interest payments, (B) the
right to receive principal and interest payments on such obligation or security are derived from an
underlying investment that provides a yield to maturity in excess of one hundred twenty percent
(120%) of the yield to maturity at par of such underlying investment or (C) such obligation or
security has a remaining term to maturity in excess of one (1) year.

          “Person” shall mean any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.

          “Physical Conditions Report” shall mean, the reports prepared in connection with the
Loan and upon which the Lender is entitled to rely, regarding the physical condition of such
Individual Property, satisfactory in form and substance to Lender in its sole discretion.

          “Policies” shall have the meaning specified in Section 8.01(b) hereof.

          “Prepayment Calculation Date” shall mean, as applicable, the date on which (a) Lender
applies any prepayment to the reduction of the outstanding principal amount of the Note, (b) Lender
accelerates the Loan, in the case of a prepayment resulting from acceleration, or (c) Lender
applies funds held under any Reserve Account upon the occurrence of an Event of
Default, in the case of a prepayment resulting from such an application (other than in
connection with acceleration of the Loan).

          “Prepayment Premium” shall mean an amount equal to the greater of (a) 1% of the
portion of the Loan being prepaid, and (b) the present value as of the Prepayment Calculation

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Date
of a series of monthly payments over the remaining term of the Loan each equal to the amount of
interest which would be due on the portion of the Loan being prepaid assuming a per annum interest
rate equal to the excess of the Note Rate over the Reinvestment Yield, and discounted at the
Reinvestment Yield.

          “Prohibited Person” means any Person identified on the OFAC List or any other Person
with whom a U.S. Person may not conduct business or transactions by prohibition of Federal law or
Executive Order of the President of the United States or America.

          “Prohibited Transfer” shall have the meaning set forth in Section 7.02 hereof.

          “Property” shall mean, collectively, each Individual Property.

          “Property Release” shall have the meaning set forth in Section 2.05(a) hereof.

          “Provided Information” shall have the meaning set forth in Section 13.05(a)
hereof.

          “Purchase Agreement” shall mean that certain Purchase Agreement dated on or about
October 29, 2005, between The Bon-Ton Stores, Inc. and Saks Incorporated, as amended.

          “Qualified Manager” shall mean a company approved by Lender, which approval shall not
have been unreasonably withheld, conditioned or delayed and for which Lender shall have received
(i) written confirmation from the Rating Agencies that the employment of such manager will not
result in a downgrade of the initial, or if higher, then current ratings issued in connection with
a Securitization, or if a Securitization has not occurred, any ratings to be assigned in connection
with a Securitization, and (ii) with respect to any Affiliated Manager, a revised substantive
non-consolidation opinion if one was delivered in connection with the closing of the Loan.

          “Rating Agencies” shall mean each of S&P, Moody’s and Fitch, or any other
nationally-recognized statistical rating agency which has been approved by Lender.

          “REA” shall mean any “construction, operation and reciprocal easement agreement” or
similar agreement (including any “separate agreement” or other agreement between Borrower and one
or more other parties to an REA with respect to such REA) affecting any Individual Property or
portion thereof which by its terms in the event of a breach thereof by Borrower permits a lien to
be placed upon an Individual Property which primes the Mortgage and such lien is greater than
$50,000 or which grants to any other Person an option to purchase the applicable Individual
Property or grants a right of first refusal to any other Person with respect to the applicable
Individual Property.

          “Reinvestment Yield” shall mean the yield calculated by the linear interpolation of
the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates
under the heading “U.S. government securities” and the sub-heading “Treasury constant maturities”
for the week ending prior to the Prepayment Calculation Date, of the U.S. Treasury constant
maturities with maturity dates (one longer and one equal to or shorter) most nearly approximating
the Maturity Date, and converted to a monthly compounded nominal yield. In the

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event Release H.15
is no longer published, Lender shall select a comparable publication to determine the Reinvestment
Yield.

          “Related Loan” shall have the meaning set forth in Section 13.04 hereof.

          “Related Property” shall have the meaning set forth in Section 13.04 hereof.

          “Release” shall have the meaning set forth in Section 12.05 hereof.

          “Release Amount” shall mean with respect to any Individual Property as of the date of
the proposed Property Release of such Individual Property pursuant to Section 2.05(a) hereof, the
product of the Allocated Loan Amount and (a) one hundred and ten percent (110%) if the applicable
Allocated Loan Amount of such Individual Property when added to the Allocated Loan Amounts of all
Properties released prior to or simultaneously with such Individual Property is equal to
twenty-five percent (25%) or less of the original principal amount of the Loan as of the Closing
Date and (b) one hundred and fifteen percent (115%) if the applicable Allocated Loan Amount when
added to the Allocated Loan Amounts of all Properties released prior to or simultaneously with such
Individual Property is greater than twenty-five percent (25%) and less than or equal to fifty
percent (50%) inclusively of the original principal amount of the Loan as of the Closing Date. If
the applicable Allocated Loan Amount when added to the Allocated Loan Amounts of all Properties
released prior to or simultaneously with such Individual Property is greater than fifty percent
(50%) inclusively of the original principal amount of the Loan as of the Closing Date, no Property
Release shall be permitted.

          “REMIC Trust” shall mean a “real estate mortgage investment conduit” (within the
meaning of Section 860D, or applicable successor provisions, of the Code) that holds the Note.

          “Rent Roll” shall have the meaning set forth in Section 4.25 hereof.

          “Rents” shall mean the Operating Lease Rent and any rents due under any Lease.

          “Replacement Reserve Account” shall have the meaning set forth in Section
9.02(b) hereof.

          “Replacement Reserve Funds” shall have the meaning set forth in Section
9.02(b) hereof.

          “Replacement Reserve L/C” shall have the meaning set forth in Section 9.02(c)
hereof.

          “Replacement Reserve Monthly Deposit” shall have the meaning set forth in Section
9.02(b) hereof.

          “Replacements” shall have the meaning set forth in Section 9.02(a) hereof.

          “Required Repairs” shall have the meaning set forth in Section 9.01(a) hereof.

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          “Required Work” shall have the meaning set forth in Section 9.04 hereof.

          “Reserve Accounts” shall mean the Tax and Insurance Reserve Account, the Replacement
Reserve Account, the Required Repair Account, the Excess Cash Reserve Account, the Lease Shortfall
Reserve Account or any other escrow account established by the Loan Documents. The Reserve Accounts
are sub-accounts of the Cash Management Account.

          “Reserve Funds” shall mean the Tax and Insurance Reserve Funds, the Replacement
Reserve Funds, the Required Repair Funds, the Excess Cash Reserve Funds, the Lease Shortfall
Reserve or any other escrow funds established by the Loan Documents.

          “Restoration” shall mean, following the occurrence of a Casualty or a Condemnation
which is of a type necessitating the repair of an Individual Property, the completion of the repair
and restoration of the Property as nearly as possible to the condition of such Individual Property
was in immediately prior to such Casualty or Condemnation, with such alterations as may be
reasonably approved by Lender.

          “Restoration Consultant” shall have the meaning set forth in Section
8.04(b)(iii) hereof.

          “Restoration Retainage” shall have the meaning set forth in Section
8.04(b)(iv) hereof.

          “Restricted Party” shall have the meaning set forth in Section 7.01 hereof.

          “Sale or Pledge” shall have the meaning set forth in Section 7.01 hereof.

          “Securities” shall have the meaning set forth in Section 13.01 hereof.

          “Securities Act” shall mean the Securities Act of 1933, as amended.

          “Securities Liabilities” shall have the meaning set forth in Section 3.05
hereof.

          “Securitization” shall have the meaning set forth in Section 13.01 hereof.

          “Securitization Closing Date” shall mean a date selected by Lender in its sole
discretion by providing not less than three (3) Business Days’ prior notice to Borrower.

          “Senior Credit Facility” shall mean that certain Loan and Security Agreement dated as
of March 6, 2006 by and among BTDS, Herberger’s Department Stores, LLC, Parisian, Inc., and The
Elder-Beerman Stores Corp. as borrower, certain Lenders thereunder and Bank of America, N.A., as
Agent.

          “Significant Obligor” shall have the meaning set forth in Section 13.04(a)
hereof.

          “SPE Component Entity” shall have the meaning set forth in Section 6.01(b)
hereof.

          “Special Member” shall have the meaning set forth in Section 6.01(d).

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          “S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.

          “State” shall mean the state or states in which the Property or any part thereof is
located.

          “Substitute Property” shall have the meaning set forth in Section 2.06 hereof.

          “Substituted Property” shall have the meaning set forth in Section 2.06
hereof.

          “Tax and Insurance Reserve Funds” shall have the meaning set forth in Section
9.06 hereof.

          “Tax and Insurance Reserve Account” shall have the meaning set forth in Section
9.06 hereof.

          “Taxes” shall mean all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against any Individual
Property or part thereof.

          “Tenant” shall mean any Operating Lessee and/or any other Person leasing or otherwise
occupying any portion of any Individual Property under an agreement with Borrower.

          “TIF Mortgage” shall have the meaning set forth in Section 2.07(c) hereof.

          “TIF Subordination Agreement” shall have the meaning set forth in Section
2.07(c) hereof.

          “Title Insurance Policy” shall mean, with respect to each Individual Property, that
certain ALTA mortgagee title insurance policy issued with respect to such Individual Property and
insuring the lien of the Mortgage.

          “Transferee” shall have the meaning set forth in Section 7.05 hereof.

          “Tribunal” shall mean any state, commonwealth, federal, foreign, territorial or other
court or governmental department, commission, board, bureau, district, authority, agency, central
bank, or instrumentality, or any arbitration authority.

          “UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as
in effect in the State where the applicable Property is located.

          “Underwriter Group” shall have the meaning set forth in Section 13.06(b)
hereof.

          Section 1.01 Principles of Construction.

          All references to sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified. All uses of the word “including” shall mean “including, without
limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words
“hereof,” “herein” and “hereunder” and words of similar import when used in this

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Agreement shall
refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.

ARTICLE II

GENERAL TERMS

          Section 2.01 Loan Commitment; Disbursement to Borrower.

          (a) Subject to and upon the terms and conditions set forth herein and in Section 2.07
below, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing
Date.

          (b) Subject to the provisions of Section 2.07 with respect to the Holdback Amount,
Borrower may request and receive only one borrowing in respect of the Loan and any amount borrowed
and repaid in respect of the Loan may not be reborrowed.

          (c) The Loan shall be evidenced by the Note and secured by the Mortgages and the other Loan
Documents.

          (d) Borrower shall use the proceeds of the Loan to (i) pay costs and expenses in connection
with the financing of the Property and the closing of the Loan, (ii) make deposits into the Reserve
Funds on the Closing Date in the amounts provided herein, and (iii) distribute the balance, if any,
to Borrower’s members.

          Section 2.02 Interest Rate.

          (a) Note Rate. The outstanding principal amount of the Loan shall bear interest at
the Note Rate. Except as otherwise set forth in this Agreement, interest shall be paid in arrears.

          (b) Computations and Determinations. All interest shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed during an Interest Period. Lender
shall determine in good faith each interest rate applicable to the Debt in accordance with this
Agreement and such determination thereof shall be conclusive in the absence of manifest error. The
books and records of Lender shall be prima facie evidence of all sums owing to Lender from time to
time under this Agreement, but the failure to record any such information shall not limit or affect
the obligations of Borrower under the Loan Documents.

          (c) Default Rate. Any principal of, and to the extent permitted by applicable law,
any interest on the Note, and any other sum payable hereunder, which is not paid when due shall
bear interest from the date due and payable until paid, payable on demand, at the Default Rate.

          (d) Usury Savings. This Agreement and the Note are subject to the express condition
that at no time shall Borrower be obligated or required to pay interest on the principal

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balance of
the Loan at a rate which could subject Lender to either civil or criminal liability as a result of
being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the principal balance
due hereunder at a rate in excess of the Maximum Legal Rate or the Default Rate, as the case may
be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments
in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal
and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for
the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account of the Loan does
not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the
Loan for so long as the Loan is outstanding.

          Section 2.03 Loan Payments.

          (a) Payments. Borrower agrees to pay sums under the Note in installments as follows:

     (i) a payment on the Closing Date of all interest that will accrue on the principal
amount of the Note during the Interim Interest Period;

     (ii) a payment on each Payment Date in the amount of $804,994.82 (the “Monthly
Payment Amount”); and

     (iii) the outstanding principal amount of the Loan and all interest thereon shall be
due and payable on the Maturity Date.

          (b) Payments After Default. Upon the occurrence and during the continuance of an
Event of Default, (i) interest on the outstanding principal balance of the Loan and, to the extent
permitted by applicable law, overdue interest and other amounts due in respect of the Loan shall
accrue at the Default Rate, and (ii) Lender shall be entitled to receive and Borrower shall pay or
cause to be paid to Lender all cash flow from the Property, such amount to be applied by Lender to
the payment of the Debt in such order as Lender shall determine in its sole discretion, including,
without limitation, alternating applications thereof between interest and principal. Interest at
the Default Rate shall be computed from the occurrence of the Event of Default until the earlier of
(x) the actual receipt and collection of the Debt (or that portion thereof that is then due) and
(y) the cure of such Event of Default. To the extent permitted by applicable law, interest at the
Default Rate shall be added to the Debt, shall itself accrue interest at the same rate as the Loan
and shall be secured by the Mortgage. This paragraph shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of
any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default;
the acceptance of any payment from Borrower shall not be deemed to cure or constitute a waiver of
any Event of Default; and Lender retains its rights under this Agreement to accelerate and to
continue to demand payment of the Debt upon the happening of and during the continuance of any
Event of Default, despite any payment by Borrower to Lender.

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          (c) Late Payment Charge. If any principal or interest payment is not paid by Borrower
on or before the date on which it is due, Borrower shall pay to Lender upon demand an amount equal
to the lesser of four percent (4%) of such unpaid sum or the maximum amount permitted by applicable
law (in either case, the “Late Payment Charge”) in order to defray the expense incurred by
Lender in handling and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Any such amount shall be secured by the Mortgage and the other
Loan Documents to the extent permitted by applicable law. Notwithstanding the foregoing, the Late
Payment Charge shall not be payable on the outstanding principal due and payable on the Maturity
Date unless and until such final principal payment is ten (10) days delinquent, at which time the
Late Payment Charge shall be due and owing with respect to same (it being understood and agreed to
by Borrower that the foregoing is not limited to, and in no way does, grant to Borrower a grace
period with respect to such final principal and interest payment due and owing on the Maturity Date
and Lender shall be entitled to all of its other rights and remedies (including, without
limitation, the right to charge interest at the Default Rate) in the event that all principal,
interest and other amounts outstanding hereunder and under the other Loan Documents are not paid on
or before the Maturity Date.

          (d) Method and Place of Payment. Each payment by Borrower hereunder or under the Note
shall be payable at Bank of America, P.O. Box 65585, Charlotte, North Carolina 28265-0585, or at
such other place as the Lender may designate from time to time by written notice to Borrower, on
the date such payment is due, to Lender by deposit to such account as Lender may designate by
written notice to Borrower. Each payment by Borrower hereunder or under the Note shall be made in
funds settled through the New York Clearing House Interbank Payments System or other funds
immediately available to Lender by 12:00 p.m., New York City time, on the date such payment is due,
to Lender by deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the first Business Day preceding such scheduled due
date. Notwithstanding anything to the contrary contained in this Agreement or in the other Loan
Documents, Borrower shall not be deemed to be in default hereunder or thereunder in the event funds
sufficient for a required transfer are held in an appropriate Eligible Account and Lender or
servicer fails to timely make any transfer from such Eligible Account as contemplated by this
Agreement unless due to the negligence or willful misconduct of Borrower.

          Section 2.04 Prepayments.

          (a) Voluntary Prepayments. Except as otherwise provided herein, Borrower shall not
have the right to prepay the Loan in whole or in part prior to the Maturity Date. Any partial
prepayment shall be applied to the last payments of principal due under the Loan.

          (b) Lockout. The Loan shall only be prepayable commencing on the day after the
expiration of the Lockout Period.

          (c) Payments After the Lockout Period.

     (i) At any time after the expiration of the Lockout Period, Borrower may prepay the
Loan in whole, but not in part, upon not less than thirty (30) days prior written

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notice to
Lender. Any such prepayment shall include the Prepayment Premium, if any, and all additional
amounts required to be paid by Borrower and all other amounts owing by Borrower to Lender
under the Note and the other Loan Documents.

     (ii) All payments and prepayments of the Loan (in whole but not in part), whether
voluntary, involuntary, at the Maturity Date or otherwise (but exclusive of prepayments made
pursuant to Section 2.04(e) hereof) shall include, without duplication, (x) payment
by Borrower to Lender of the Prepayment Premium (as set forth in subsection (i) above), if
any, and (y) interest on the outstanding principal amount of the Loan through the end of the
Interest Period in which such payment or prepayment occurs. For purposes of this Agreement,
an involuntary prepayment shall be deemed to include, but not limited to, a prepayment of
the Loan in connection with or following the Lender’s acceleration of the outstanding
balance of the Loan, whether or not the Mortgage is satisfied or released by foreclosure
(whether by power of sale or judicial proceeding), deed in lieu of foreclosure or by other
means, including, without limitation, repayment of the Loan by the Borrower or any other
Person pursuant to any statutory or common law right of redemption.

          (d) Prepayments During the Lockout Period. If, during the Lockout Period, payment of
all or any part of the Debt is tendered by Borrower or otherwise recovered by Lender, such tender
or recovery shall be (i) made on the next occurring Payment Date together with the Monthly Debt
Service Payment and (ii) deemed a voluntary prepayment by Borrower in violation of the prohibition
against prepayment set forth in this Section 2.04 and Borrower shall pay, in addition to
the Debt, (x) an amount equal to the Lockout Yield Maintenance Premium to the extent permitted by
applicable law and (y) the accrued and unpaid interest calculated for the full Interest Period in
which such voluntary prepayment occurs.

          (e) Insurance and Condemnation Proceeds; Excess Interest. Notwithstanding any other
provision herein to the contrary, and provided no Event of Default exists, Borrower shall not be
required to pay the Prepayment Premium or Lockout Yield Maintenance Premium in connection with any
prepayment occurring solely as a result of (i) the application of Insurance Proceeds or
Condemnation Proceeds pursuant to the terms of the Loan Documents, or (ii) the application of any
interest in excess of the maximum rate permitted by applicable law to the reduction of the
outstanding principal amount of the Loan. Notwithstanding the foregoing, the Borrower shall pay
interest for the full final Interest Period in which such prepayment occurs.

          (f) Mandatory Prepayment. Notwithstanding anything to the contrary contained herein,
in the event that any Individual Property is subject to a Casualty or Condemnation and as a result
of such Casualty or Condemnation the applicable Operating Lessee terminates the applicable
Operating Lease, Borrower shall be required to effectuate a
Property Release, and Borrower shall comply with the terms and conditions of Section
2.05 hereof with respect to such Individual Property. Borrower shall cause the affected
Individual Property to be released within thirty (30) days of the occurrence of such Casualty or
Condemnation, provided, that, with respect to any such Property Release, the Release Amount shall
be the Allocated Loan Amount for the affected Individual Property without payment of any Prepayment
Premium.

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          (g) Application of Payments. All voluntary and involuntary prepayments on the Note
shall be applied, to the extent thereof, in the following order: (i) to all costs and expenses
then due and payable to Lender hereunder or under the other Loan Documents, (ii) to accrued but
unpaid interest on the outstanding principal amount prepaid, and (iii) to the outstanding principal
amount. Following the occurrence and during the continuance of an Event of Default, any payment
made on the Note shall be applied to accrued but unpaid interest, late charges, accrued fees, the
unpaid principal amount of the Note, and any other sums due and unpaid to Lender in connection with
the Loan, in such manner and order as Lender may elect in its sole and absolute discretion.

          Section 2.05 Property Releases.

          After the Lockout Period and provided no Event of Default exists, Borrower may obtain the
release of an Individual Property from the lien (or at Borrower’s option, an assignment thereof to
one or more third parties) of the Mortgage thereon (and the related Loan Documents) and the release
of the Borrower’s obligations under the Loan Documents with respect to such Individual Property
(other than those expressly stated to survive) (each such release or assignment a “Property
Release”), upon the satisfaction of each of the following conditions in a manner satisfactory
to a prudent mortgage lender:

          (a) Borrower shall pay the Release Amount for the applicable Individual Property, and such
payment shall be deemed a voluntary prepayment of a portion of the Loan for all purposes hereunder;

          (b) Borrower shall pay to Lender any applicable Prepayment Premium plus, without duplication,
interest on such prepaid amount of the Loan through the end of the Interest Period in which such
payment or prepayment occurs;

          (c) Borrower shall submit to Lender, not less than seven (7) Business Days prior to the
Payment Date on which the Property Release shall be made, a release (or assignment) of the lien of
the Mortgage (and related Loan Documents) for such Individual Property for execution by Lender.
Such release (or assignment) shall be in a form appropriate in the jurisdiction in which the
Individual Property is located and that contains standard provisions, if any, protecting the rights
of the releasing lender. In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with the Release, together with a
certificate from an officer of Borrower certifying that such documentation (i) is in compliance
with all Legal Requirements, and (ii) will not impair or otherwise adversely affect the Liens,
security interests and other rights of Lender under the Loan Documents not being released or
assigned (or as to the parties to the Loan Documents and Properties subject to the Loan Documents
not being released);

          (d) After giving effect to such Property Release, the Debt Service Coverage Ratio for the
Properties then remaining subject to the lien of the Mortgage shall be equal to or exceed the
greater of (i) the Debt Service Coverage Ratio as of the Closing Date or (ii) the Debt Service
Coverage Ratio immediately prior to the Property Release;

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          (e) Concurrently with the payment of the Release Amount, New Mezzanine Borrower, if any, shall
make a partial prepayment of the related New Mezzanine Loan, if any, equal to the related release
amount (as defined in the applicable New Mezzanine Loan Documents), if any, applicable to such
Individual Property, together with any related interest, fees, prepayment premiums or other amounts
payable under the related New Mezzanine Loan Documents, if any, in connection with such prepayment,
including, to the extent such prepayment is made on a date other than a Payment Date, interest
which would have accrued on the outstanding principal balance of the related New Mezzanine Loan, if
any, pursuant to the New Mezzanine Loan Documents;

          (f) Borrower shall execute and deliver to Lender any amendments to the Loan Documents
reasonably deemed necessary by Lender to affect the Property Release, including adjustments to
reserve and escrow accounts which lower the amounts required to be held by Lender as a result of
the Property Release;

          (g) All reasonable costs and expenses incurred by Lender in connection with such Property
Release shall be paid by Borrower. Any assignments made by Lender shall be without recourse,
representation or warranty by Lender and shall comply with all applicable law;

          (h) the Allocated Loan Amount for the applicable Individual Property, when combined with the
Allocated Loan Amount attributable to the other Individual Properties that have been released
pursuant to this Section 2.05, shall not represent more than (x) 15% of the original
principal amount of the Loan in any given twelve (12) consecutive month period, and (y) in the
aggregate, 40% of the original principal amount of the Loan over the entire term of the Loan;

          (i) Borrower shall have provided evidence reasonably acceptable to Lender, that it has
terminated the applicable Operating Lease with respect to such Individual Property in accordance
with the terms of such Operating Lease including, without limitation, the payment by Borrower to
the applicable Tenant of any compensation owing by Borrower to such Tenant under such Operating
Lease with respect to the Individual Property being released.

          Section 2.06 Substitution of Properties.

          Subject to the terms and conditions set forth in this Section, Borrower may obtain a release
of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property (a
“Substituted Property”) by substituting therefor its interest in one or more properties of
like kind and quality acquired by Borrower (individually, a “Substitute Property” and
collectively, the “Substitute Properties”), provided that no such substitution may occur
after the date that is three (3) months prior to the Maturity Date. In addition, any such
substitution shall be subject, in each case, to the satisfaction of the following conditions
precedent:

          (a) The Substitute Property must be a property as to which Borrower will hold indefeasible fee
or ground leasehold title free and clear of any lien or other encumbrance except for Permitted
Encumbrances, Leases and easements, restrictive covenants and other title exceptions which do not
have an MAE (as would be determined by a prudent mortgage lender) on the utility or value of such
property for its current use. In the event the Borrower’s interest in

-24-

 

any Substitute Property is a
ground leasehold interest, the ground lease must comply with all then-applicable Rating Agency
requirements and the ground lessor must issue an estoppel certificate satisfying Rating Agency
requirements and otherwise confirming the absence of any defaults under the applicable ground
lease, the term of the ground lease and an acknowledgement of Lender’s lien on the leasehold estate
and its address for notices, in addition to such other commercially reasonable statements required
by prudent mortgage lenders.

          (b) Lender and Rating Agencies shall have received (A) a copy of a deed conveying all of
Borrower’s right, title and interest in and to the Substituted Property (x) to an entity other than
Borrower or its manager, sole member, general partner or managing member (as applicable) in an
arms’ length transaction or (y) to any other Affiliate of Borrower or Borrower Principal and (B) a
letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed
and agreeing to record such deed in the real estate records for the county in which the Substituted
Property is located.

          (c) Lender and the applicable Rating Agencies shall have received an MAI appraisal of the
Substitute Property dated no more than ninety (90) days prior to the substitution by a nationally
recognized and independent appraiser, indicating an appraised value of the Substitute Property that
is at least equal or greater than the appraised value of the Substituted Property determined by
Lender as of the Closing Date.

          (d) Borrower has delivered to Lender historical calculations of EBITDA and proforma
calculations of EBITDA, each of which shall be certified by an officer of Borrower, reflecting that
the proforma annualized EBITDA for the Substitute Property is equal to or greater than the higher
of (i) EBITDA (for the trailing 12 month period) for the Substituted Property as of the Closing
Date and (ii) EBITDA (for the trailing 12 month period) for the Substituted Property immediately
prior to the substitution thereof.

          (e) The Person transferring the Substitute Property is solvent and the Substitute Property was
transferred to Borrower in an arm’s length transaction.

          (f) If the Loan is part of a Securitization, Lender shall have received evidence in writing
from the Rating Agencies to the effect that such substitution will not result in a withdrawal,
qualification or downgrade of the respective ratings in effect immediately prior to such
substitution for the Securities issued in connection with the Securitization that are then
outstanding.

          (g) No Event of Default shall have occurred and be continuing. Lender and the Rating Agencies
shall have received a certificate from Borrower confirming the foregoing.

          (h) Borrower shall have executed, acknowledged and delivered to Lender (A) a Mortgage, and
authorized the filing of UCC financing statements with respect to the Substitute
Property, together with a letter from Borrower countersigned by a title insurance company
acknowledging receipt of such Mortgage and UCC financing statements and agreeing to record or file,
as applicable, such Mortgage and one of the UCC financing statements in the real estate records for
the county in which the Substitute Property is located and to file one of the UCC financing
statements in the office of the Secretary of State of the state in
which the Borrower is

-25-

 

organized,
so as to effectively create upon such recording and filing valid and enforceable liens upon the
Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted Encumbrances and such other liens as are
permitted pursuant to the Loan Documents, (B) an Environmental Indemnity Agreement with respect to
the Substitute Property, (C) an Exceptions to Non-Recourse Guaranty with respect to the Substitute
Property, and (D) written confirmation of indemnity obligations from each indemnitor and Borrower
Principal regarding such substitution. The Mortgage, UCC financing statements, Exceptions to
Non-Recourse Guaranty and Environmental Indemnity Agreement shall be the same in form and substance
as the counterparts of such documents executed and delivered with respect to the related
Substituted Property subject to modifications reflecting the Substitute Property as the Individual
Property that is the subject of such documents and such modifications reflecting the laws of the
state in which the Substitute Property is located as shall be recommended by the counsel admitted
to practice in such state and delivering the opinion as to the enforceability of such documents
required pursuant to clause (n) below. The Mortgage encumbering the Substitute Property shall
secure all amounts evidenced by the Note, provided that in the event that the jurisdiction in which
the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and
does not permit the allocation of indebtedness for the purpose of determining the amount of such
tax payable, the principal amount secured by such Mortgage shall be equal to one hundred twenty
five percent (125%) of the amount of the Loan allocated to the Substitute Property. The amount of
the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the
“Substitute Release Amount”) shall equal the Allocated Loan Amount of the related
Substituted Property.

          (i) Lender shall have received (A) any “tie in” or similar endorsement to each Title Insurance
Policy insuring the lien of an existing Mortgage as of the date of the substitution available with
respect to the Title Insurance Policy insuring the lien of the Mortgage with respect to the
Substitute Property and (B) a Title Insurance Policy (or a marked, signed and redated commitment to
issue such Title Insurance Policy) insuring the lien of the Mortgage encumbering the Substitute
Property, issued by the title company that issued the Title Insurance Policies insuring the lien of
the existing Mortgage and dated as of the date of the substitution, with reinsurance and direct
access agreements that replace such agreements issued in connection with the Title Insurance Policy
insuring the lien of the Mortgage encumbering the Substituted Property, to the extent such
agreements are available in the jurisdiction in which the Substitute Property is located. The
Title Insurance Policy issued with respect to the Substitute Property shall (1) provide coverage in
the amount of the Allocated Loan Amount if the “tie in” or similar endorsement described above is
available or, if such endorsement is not available, in an amount equal to one hundred twenty five
percent (125%) of the Allocated Loan Amount, (2) insure Lender that the relevant Mortgage creates a
valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (3) contain such endorsements and
affirmative coverages as are contained in the Title Insurance Policies insuring the liens of the
existing Mortgage, to the extent available
in the jurisdiction in which the Substitute Property is located and (4) name Lender as the
insured. Lender also shall have received copies of paid receipts showing that all premiums in
respect of such endorsements and Title Insurance Policies have been paid.

-26-

 

          (j) Lender shall have received a current title survey for each Substitute Property, certified
to the title company and Lender and their successors and assigns, in the same form and having the
same content as the certification of the Survey of the Substituted Property prepared by a
professional land surveyor licensed in the state in which the Substitute Property is located and
acceptable to the Rating Agencies in accordance with the 2005 Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys, including items 1, 2, 3, 4, 6, 8, 9, 10, 11(a) (as to utilities,
surface matters only) and 13 from Table A. Such survey shall reflect the same legal description
contained in the Title Insurance Policy relating to such Substitute Property and shall include,
among other things, a metes and bounds description of the real property comprising part of such
Substitute Property. The surveyor’s seal shall be affixed to each survey and each survey shall
certify that the surveyed property is not located in a “one hundred year flood hazard area.”

          (k) Lender shall have received valid certificates of insurance indicating that the
requirements for the Policies of insurance required for an Individual Property hereunder have been
satisfied with respect to the Substitute Property and evidence of the payment of all premiums
payable for the existing policy period.

          (l) Lender shall have received a Phase I environmental report and, if recommended under the
Phase I environmental report, a Phase II environmental report from a nationally recognized
environmental consultant approved by the Rating Agencies (if applicable), not less than forty five
(45) days prior to such release and substitution, which conclude that the Substitute Property does
not contain any Hazardous Materials (except for cleaning and other products used in connection with
the routine maintenance or repair of the Substitute Property or the operation thereof as a hotel,
in full compliance with Environmental Law) and is not subject to any risk of contamination from any
off site Hazardous Materials. If any such report discloses the presence of any Hazardous Materials
(except for cleaning and other products used in connection with the routine maintenance or repair
of the Substitute Property or the operation thereof as a hotel, in full compliance with
Environmental Law) or the risk of contamination from any off site Hazardous Materials, such report
shall include an estimate of the cost of any related remediation and Borrower shall deposit with
Lender an amount equal to one hundred twenty five percent (125%) of such estimated cost, which
deposit shall constitute additional security for the Loan and shall be released to Borrower upon
the delivery to Lender of (i) an update to such report indicating that there is no longer any
Hazardous Materials (except for cleaning and other products used in connection with the routine
maintenance or repair of the Substitute Property or the operation thereof as a hotel, in full
compliance with Environmental Law) on the Substitute Property or any danger of contamination from
any off site Hazardous Materials that has not been fully remediated in accordance with all
applicable laws and (ii) paid receipts indicating that the costs of all such remediation work have
been paid. Such report shall also state the amount of time that will be necessary to complete such
remediation, as may be required by law. Borrower covenants to undertake any repairs, cleanup or
remediation indicated.

          (m) Borrower shall deliver or cause to be delivered to Lender (i) updates certified by
Borrower of all organizational documentation related to Borrower and/or the formation, structure,
existence, good standing and/or qualification to do business delivered to Lender in connection with
the Closing Date; (ii) good standing certificates, certificates of qualification to do business in
the jurisdiction in which the Substitute Property is located (if

-27-

 

required in such jurisdiction) and
(iii) resolutions of the managing member of Borrower authorizing the substitution and any actions
taken in connection with such substitution.

          (n) Lender shall have received the following opinions of Borrower’s counsel (which opinions,
with respect to the opinions set forth in clauses (i), (ii) and (iii) below, shall be in form
similar to the corresponding opinions delivered in connection with the closing of the Loan): (i)
an opinion or opinions of counsel admitted to practice under the laws of the state in which the
Substitute Property is located stating that the Loan Documents delivered with respect to the
Substitute Property pursuant to clause (h) above are valid and enforceable in accordance with their
terms, subject to the laws applicable to creditors’ rights and equitable principles, and that
Borrower is qualified to do business and in good standing under the laws of the jurisdiction where
the Substitute Property is located or that Borrower is not required by applicable law to qualify to
do business in such jurisdiction; (ii) an opinion of counsel stating that the Loan Documents
delivered with respect to the Substitute Property pursuant to clause (h) above were duly
authorized, executed and delivered by Borrower and that, to the best of Borrower’s counsel’s
knowledge, the execution and delivery of such Loan Documents and the performance by Borrower of its
obligations thereunder will not cause a breach of, or a default under, any agreement, document or
instrument to which Borrower is a party or to which it or its properties are bound; (iii) an
opinion of counsel stating that subjecting the Substitute Property to the lien of the related
Mortgage and the execution and delivery of the related Loan Documents does not and will not affect
or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to
realize the benefits of the cross collateralization provided for thereunder; (iv) an update of the
substantive consolidation opinion delivered to Lender on the Closing Date indicating that the
substitution does not affect the opinions set forth therein; (v) an opinion of counsel acceptable
to the applicable Rating Agencies stating that the substitution and the related transactions do not
constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (vi) an
opinion of counsel acceptable to the applicable Rating Agencies that the substitution does not
constitute a “significant modification” of the Loan under Section 1001 of the Code or otherwise
cause a tax to be imposed on a “prohibited transaction” by any REMIC.

          (o) To the extent then currently due and payable, Borrower shall have paid or caused to be
paid all Taxes and Insurance Premiums relating to each of the Individual Properties and the
Substitute Property, including, without limitation, (i) accrued but unpaid i Insurance Premiums
relating to each of the Individual Properties and the Substitute Property, (ii) currently due Taxes
(including any in arrears) relating to each of the Individual Properties and the Substitute
Property and (iii) any other charges relating to each of the Individual Properties and Substitute
Property which are currently due.

          (p) Borrower shall have paid or reimbursed Lender for all third party out of pocket costs and
expenses incurred by Lender (including, without limitation, reasonable attorneys fees and
disbursements) in connection with the substitution and Borrower shall have paid all recording
charges, filing fees, taxes or other expenses (including, without limitation,
mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the
substitution. Borrower shall have paid all costs and expenses of the Rating Agencies incurred in
connection with the substitution.

-28-

 

          (q) Lender shall have received annual operating statements and occupancy statements for the
Substitute Property for the three (3) most recently completed fiscal years and a current operating
statement for the Substituted Property or, if information is not available for a three (3) year
period or if the Substituted Property has been substantially renovated within such three (3) year
period, such lesser period as is available, but in no event less than twelve (12) months. Each of
the statements required under this clause (q) shall be certified to Lender as being true and
correct and a certificate from Borrower certifying that there has been no adverse change in the
financial condition of the Substitute Property since the date of such operating statements.

          (r) Borrower shall have delivered to Lender estoppel certificates from any Operating Lessees
and other tenants of the Substitute Property. All such estoppel certificates shall be in the form
attached hereto as Exhibit A and shall indicate, among other things, that (1) the subject
lease is a valid and binding obligation of the tenant thereunder, (2) there are no defaults under
such lease on the part of the landlord or tenant thereunder, (3) the tenant thereunder has no
defense or offset to the payment of rent under such leases, (4) no rent under such lease has been
paid more than one (1) month in advance, (5) the tenant thereunder has no option or right of first
refusal under such lease to purchase all or any portion of the Substitute Property and (6) all
tenant improvement work required under such lease has been completed and the tenant under such
lease is in actual occupancy of its leased premises. If an estoppel certificate indicates that all
tenant improvement work required under the subject lease has not yet been completed, Borrower
shall, if required by the Rating Agencies, deliver to Lender financial statements indicating that
Borrower has adequate funds to pay all costs related to such tenant improvement work as required
under such lease.

          (s) Lender shall have received copies of all Leases affecting the Substitute Property
certified by Borrower as being true and correct. Lender shall have received a current Rent Roll of
the Substitute Property certified by Borrower as being true and correct.

          (t) Intentionally omitted.

          (u) Lender shall have received (A) an endorsement to the Title Insurance Policy insuring the
lien of the Mortgage encumbering the Substitute Property insuring that the Substitute Property
constitutes a separate tax lot or, if such an endorsement is not available in the state in which
the Substitute Property is located, a letter from the title insurance company issuing such Title
Insurance Policy stating that the Substitute Property constitutes a separate tax lot or (B) a
letter from the appropriate taxing authority stating that the Substitute Property constitutes a
separate tax lot or other reasonable evidence including a copy of the latest tax bill or tax lot
endorsement to Title Insurance Policy.

          (v) Lender shall have received a physical conditions report with respect to the Substitute
Property from a nationally recognized structural consultant approved by the Rating Agencies (if
applicable) in a form recognized and approved by such Rating Agencies not less
than forty-five (45) days prior to such release and substitution stating that the Substitute
Property and its use comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of damage or waste. If compliance with any Legal

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Requirements are not addressed by the physical conditions report, such compliance shall be
confirmed by delivery to Lender of a certificate of an architect licensed in the state in which the
Substitute Property is located, a letter from the municipality in which such Substitute Property is
located, a certificate of a surveyor that is licensed in the state in which the Substitute Property
is located (with respect to zoning and subdivision laws), an ALTA 3.1 zoning endorsement to the
Title Insurance Policy delivered pursuant to clause (i) above (with respect to zoning laws) or a
subdivision endorsement to the Title Insurance Policy delivered pursuant to clause (i) above (with
respect to subdivision laws) to the extent such endorsements are available in the jurisdiction in
which the Substitute Property is located. If the physical conditions report recommends that any
repairs be made with respect to the Substitute Property, such physical conditions report shall
either (i) include an estimate of the cost of such recommended repairs (in which case Borrower
shall deposit into the Required Repair Account an amount equal to one hundred twenty five percent
(125%) of such estimated cost), or (ii) state the specific amounts that need to be reserved over
time in order to meet the requirements of such replacement (in which case Borrower shall deposit
such reserves into the Replacement Reserve Account on a monthly basis to the extent that Borrower
is required to otherwise be making such deposits pursuant to Section 9.02 hereof). Any
such deposits shall constitute additional security for the Loan pursuant to Section 9.08
and shall be released to Borrower pursuant to Section 9.05. Borrower covenants to
undertake any repairs, cleanup or remediation indicated in the physical conditions report before
the earlier of (A) the time required by applicable law or (B) the time recommended in the physical
conditions report.

          (w) Borrower shall (i) have in effect an Operating Lease with respect to the Substitute
Property which is in the same form and substance as the Operating Lease in effect on the date
hereof; (ii) deliver evidence to Lender that the Operating Lease Guaranty applies to, and is in
effect with respect to, the Substitute Property on the same terms and conditions set forth in the
Operating Lease Guaranty as of the date hereof; and (iii) have provided evidence that it has
terminated the applicable Operating Lease with respect to the Substituted Property including,
without limitation, the payment by Borrower to the applicable Tenant of any compensation owing by
Borrower to such Tenant under such Operating Lease with respect to the Substituted Property.

          (x) Lender shall have received such other and further approvals, opinions, documents and
information in connection with the substitution as the Rating Agencies may have requested.

          (y) Lender shall have received copies of all contracts and agreements relating to the leasing
and operation of the Substitute Property together with a certification of Borrower attached to each
such contract or agreement certifying that the attached copy is a true and correct copy of such
contract or agreement and all amendments thereto.

          (z) Lender shall have a received a certification of Borrower that each of the representations
and warranties with respect to the Property as a whole, the Substitute Property
and the Borrower set forth in the Loan Documents are true and correct in all material respects
as of the date of closing of the proposed substitution.

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          (aa) Borrower shall submit to Lender, not less than thirty (30) days prior to the date of such
substitution, a release of lien (and related Loan Documents) for the Substituted Property for
execution by Lender. Such release shall be in a form appropriate for the jurisdiction in which the
Substituted Property is located. Borrower shall deliver an Officer’s Certificate certifying that
the requirements set forth in this Section 2.06 have been satisfied.

          (bb) The total Allocated Loan Amount, in the aggregate, for all prior Substituted Properties
(including the current Substituted Property) is (i) for any consecutive twelve (12) month period,
less than fifteen percent (15%) of the original principal amount of the Loan and (ii) for the
entire term of the Loan, less than twenty-five percent (25%) of the original principal amount of
the Loan.

          (cc) The Substitute Property shall be subject to the lien of the related Mortgage and subject
to the cross-collateralization and cross-default provisions of this Agreement and the Mortgage.

          (dd) Borrower shall have delivered to Lender not less than sixty (60) days prior written
notice of the proposed substitution and Lender shall have received the information and
documentation with respect to the Borrower and the Substitute Property required to be delivered
hereunder not less than thirty (30) days prior to the date of the proposed substitution.

          (ee) Borrower shall have paid to Lender (i) a non-refundable processing fee of $5,000 for each
request for a substitution (provided, that, Borrower shall not be required to pay any such fee in
connection with the first request for a substitution hereunder).

          (ff) Any Management Agreement relating to the Substitute Property shall be satisfactory to a
prudent lender.

          Upon the satisfaction of the foregoing conditions precedent, Lender will release its lien from
the Substituted Property to be released and the Substitute Property shall be deemed to be an
Individual Property for purposes of this Loan Agreement and the Substitute Release Amount with
respect to such Substitute Property shall be deemed to be the Allocated Loan Amount with respect to
such Substitute Property for all purposes hereunder.

          Section 2.07 Holdback For Individual Property Located in St. Paul, Minnesota.

          On the date hereof, Lender shall hold back the amount of $7,540,000 from the proceeds of the
Loan which represents the Allocated Loan Amount for the Individual Property located in St. Paul,
Minnesota (the “Holdback Amount”; such Individual Property, the “Holdback
Property”). Until such time that Borrower receives notice from Lender that the Loan is
scheduled to be in a Securitization (the “Holdback Notice”) and subject to the terms and
conditions set forth below, Lender agrees to advance the Holdback Amount under the Note (the
“Holdback Disbursement”), which shall be deemed for all purposes to be part of the
principal amount of the Loan evidenced by the Note. Lender’s Holdback Notice shall set forth a
date specific by which the Borrower must satisfy the conditions of this Section 2.07 to
obtain the
Holdback Disbursement (the “Outside Disbursement Date”). Lender shall have no
obligation to disburse all or any portion of the Holdback Disbursement unless and until all of the
following

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conditions shall be satisfied in Lender’s sole and absolute discretion (collectively, the
“Funding Conditions”):

          (a) Borrower shall have delivered a written request (the “Disbursement Request”) to
Lender not less than five (5) Business Days (or such time frame reasonably approved by Lender)
prior to the requested date of funding of the Holdback Disbursement (the “Disbursement Funding
Date”);

          (b) No Event of Default shall exist under this Agreement or any of the other Loan Documents at
the time of delivery of the Disbursement Request and on the Disbursement Funding Date;

          (c) Borrower shall have obtained and delivered to Lender a subordination agreement from the
current holder of that Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Financing Statement granted from University Avenue Marketplace, Inc. to The Housing and
Redevelopment Authority of the City of Saint Paul, Minnesota with respect to the Holdback Property
(the “TIF Mortgage”) which subordination agreement subordinates the lien of such TIF
Mortgage to the Lien of the Lender’s Mortgage on the Holdback Property (the “TIF Subordination
Agreement”), such TIF Subordination Agreement to be acceptable to Lender in its sole
discretion;

          (d) The TIF Subordination Agreement must run to, and for the benefit of, Lender and Lender’s
successors and assigns, including specifically, but without limitation, a trustee of a
Securitization in which the Loan is included;

          (e) Upon receipt of the TIF Subordination Agreement, Borrower shall obtain, at Borrower’s sole
cost and expense, an endorsement to Lender’s Title Insurance Policy on the Holdback Property which
reflects that the TIF Mortgage is a subordinate matter and has been moved to Schedule B-II of
Lender’s Title Insurance Policy and insuring that the Lien of Lender’s Mortgage is a first priority
Lien on the Holdback Property, such endorsement to be acceptable to Lender in its sole discretion;

          (f) Borrower shall have executed and delivered to Lender such amendments to the Note, this
Agreement and any of the other Loan Documents as Lender may require to evidence the disbursement of
the Holdback Disbursement, the re-setting of the Note Rate to reflect, if necessary, the blended
interest rate of the Loan funded on the date hereof at the Note Rate and the Holdback Disbursement
being funded at a different interest rate (if such different interest rate is applied to the
Holdback Disbursement because the Borrower has not otherwise maintained one or more interest rate
lock arrangements for the existing Note Rate with the Lender for the Holdback Amount through the
Disbursement Date) and a change in the Monthly Payment Amount pursuant to the terms of the Note,
the fact that Borrower’s obligation to repay same is secured by the Mortgage and such other matters
as Lender may elect in its sole and absolute discretion;

          (g) If required by Lender, Lender shall have received an opinion of counsel in form, scope and
from counsel acceptable to Lender with respect to the execution, delivery and

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enforceability of the
Loan Documents as amended in connection with the funding of the Holdback Disbursement;

          (h) All costs, fees and expenses incurred by Lender in connection with the Holdback
Disbursement (including, without limitation, Lender’s counsel fees, title insurance fees or
premiums, recording costs and taxes with respect to the recording of any amendment to the Mortgage)
shall be the sole responsibility of Borrower and shall be paid to Lender on or before the
Disbursement Funding Date; and

          (i) In the event that all of the Funding Conditions have not been satisfied on or before the
Outside Disbursement Date, Lender shall have no obligation to fund the Holdback Disbursement.

          In the event the Borrower does not request and obtain the Holdback Disbursement pursuant to
the requirements set forth above: (i) Borrower shall, within five (5) Business Days of the Outside
Disbursement Date, distribute the Holdback Property to its direct or indirect owners and continue
to comply with the requirements of Article VI hereof; (ii) if reasonably required by
Lender, Borrower shall update the Nonconsolidation Opinion to reflect that the Holdback Property is
no longer owned by the Borrower; (iii) without further action by the parties, the face amount of
the Note shall automatically be deemed to be revised to be a Note in the principal amount of
$122,460,000; (iv) the Borrower shall cause the applicable Operating Lease to be terminated with
respect to the Holdback Property; and (v) Borrower shall have executed and delivered to Lender such
amendments to this Agreement and any of the other Loan Documents as Lender may require to evidence
that the Holdback Property is being removed from the Loan and that the Holdback Disbursement is not
being made. Any costs and expenses incurred by Borrower and/Lender in connection with the
requirements of this paragraph shall be paid by Borrower upon demand by Lender.

ARTICLE III

CONDITIONS PRECEDENT

          The obligation of Lender to make the Loan hereunder is subject to the fulfillment by Borrower
or waiver by Lender of the following conditions precedent no later than the Closing Date:

          Section 3.01 Representations and Warranties; Compliance with Conditions.

          The representations and warranties of Borrower contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the Closing Date, and
Lender shall have determined that no Default or Event of Default shall have occurred and is
continuing on the Closing Date; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan Document on its part to
be observed or performed.

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          Section 3.02 Delivery of Loan Documents; Title Insurance; Reports; Leases.

          (a) Mortgage, Loan Agreement and Note. Lender shall have received from Borrower a
fully executed and acknowledged Mortgage with respect to each Individual Property and evidence
reasonably acceptable to Lender that each Mortgage and Uniform Commercial Code financing statement
has been delivered to the title company issuing the Title Insurance Policy for recording so as to
effectively create upon such recording valid and enforceable Liens upon each Individual Property,
of the requisite priority, in favor of Lender (or such other trustee as may be required under local
law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to
the Loan Documents. Lender shall have also received from Borrower fully executed counterparts of
the Environmental Indemnity, this Agreement, the Note and all other Loan Documents.

          (b) Title Insurance. Lender shall have received each Title Insurance Policy dated as
of the Closing Date, with reinsurance reasonably acceptable to Lender. Each Title Insurance Policy
shall (i) provide coverage with respect to the applicable Individual Property in an amount
acceptable to Lender, (ii) insure Lender that the Mortgage creates a valid lien on each Individual
Property of the requisite priority subject only to Permitted Encumbrances and standard exceptions
and exclusions from coverage (as modified by the terms of any endorsements), (iii) contain such
endorsements and affirmative coverages as Lender may reasonably request to the extent available in
the states and jurisdictions where the applicable Individual Property is located, and (iv) name
Lender as the insured. The Title Insurance Policy shall be assignable. Lender also shall have
received evidence that all premiums in respect of each such Title Insurance Policy have been paid.

          (c) Survey. Lender shall have received a current title survey for each Individual
Property, certified to the title company issuing the Title Insurance Policy and Lender and their
successors and assigns, in form and content satisfactory to Lender and prepared by a professional
and properly licensed land surveyor satisfactory to Lender in accordance with the 2005 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys. The survey shall meet the
classification of an “Urban Survey” and the following additional items from the list of “Optional
Survey Responsibilities and Specifications” (Table A) should be added to each survey: 1, 2, 3, 4,
6, 8, 9, 10, 11(a) (as to utilities, surface matters only) and 13. Such survey shall reflect the
same legal description contained in the Title Insurance Policy referred to in subsection (b) above
and shall include, among other things, a metes and bounds description of the real property
comprising part of each Individual Property reasonably satisfactory to Lender. The surveyor’s seal
shall be affixed to the survey and the surveyor shall provide a certification for each survey in
form and substance acceptable to Lender.

          (d) Insurance. Lender shall have received copies of the Policies required hereunder,
satisfactory to Lender in its reasonable discretion, and evidence of the payment of all Insurance
Premiums payable for the existing policy period.

          (e) Environmental Reports. Lender shall have received an Environmental Report in
respect of each Individual Property reasonably satisfactory to Lender.

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          (f) Zoning/Building Code. Lender shall have received evidence of compliance with
zoning and building ordinances and codes, including, without limitation, required certificates of
occupancy, reasonably acceptable to Lender with respect to each Individual Property.

          (g) Encumbrances. Borrower shall have taken or caused to be taken such actions in
such a manner so that Lender has a valid and perfected first Lien as of the Closing Date on each
Individual Property, subject only to applicable Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents, and Lender shall have received satisfactory evidence
thereof.

          (h) Lien Searches. Borrower shall have delivered to Lender certified search results
pertaining to the Borrower, Borrower Principal and such other Persons or any SPE Component Entity
as reasonably required by Lender for state and federal tax liens, bankruptcy, judgment, litigation
and state and local UCC filings.

          Section 3.03 Related Documents.

          Each additional document not specifically referenced herein, but relating to the transactions
contemplated herein, shall have been duly authorized, executed and delivered by all parties thereto
and at Lender’s written request, Lender shall have received and approved certified copies thereof.

          Section 3.04 Organizational Documents.

          On or before the Closing Date, Borrower shall deliver or cause to be delivered to Lender (a)
copies certified by Borrower of all organizational documentation related to Borrower, each SPE
Component Entity and Borrower Principal which shall be reasonably acceptable to Lender, and (b)
such other evidence of the formation, structure, existence, good standing and/or qualification to
do business of the Borrower, each SPE Component Entity and Borrower Principal, as Lender may
reasonably request, including, without limitation, good standing or existence certificates,
qualifications to do business in the appropriate jurisdictions, resolutions authorizing the
entering into of the Loan and incumbency certificates as may be requested by Lender.

          Section 3.05 Opinions of Borrower’s Counsel.

          Lender shall have received opinions of counsel (a) with respect to non-consolidation issues,
(b) with respect to due execution, authority and enforceability of the Loan Documents, and (c) with
respect to Delaware single member limited liability company issues and Delaware authority to file
bankruptcy petition issues, each of which shall be in form and substance reasonably satisfactory to
Lender and Lender’s counsel.

          Section 3.06 Annual Budget.

          Borrower shall have delivered to Lender, for Lender’s review and approval, the Annual Budget
for the current fiscal year. Any proposed modifications to such Annual Budget shall be delivered
to Lender for its review, but not approval.

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          Section 3.07 Taxes and Other Charges.

          Borrower shall have paid all Taxes and Other Charges (including any in arrears) relating to
the Property, except to the extent the same are not yet delinquent or are being contested in
accordance with the terms and conditions of Section 5.04(b) hereof), which amounts may be
funded with proceeds of the Loan.

          Section 3.08 Completion of Proceedings.

          All limited liability company and other proceedings taken by Borrower in connection with the
transactions contemplated by this Agreement and other Loan Documents and all documents incidental
thereto shall be reasonably satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such authority documents as Lender
may reasonably request.

          Section 3.09 Payments.

          All payments, deposits or escrows required to be made or established by Borrower under this
Agreement, the Note and the other Loan Documents on or before the Closing Date shall have been made
in accordance with the terms and conditions hereof and thereof.

          Section 3.10 Transaction Costs.

          Except as otherwise expressly provided herein, Borrower shall have paid or reimbursed Lender
for all actual, reasonable out of pocket expenses in connection with the underwriting, negotiation
and closing of the Loan, including title insurance premiums and other title company charges;
recording, registration, filing and similar fees, taxes and charges; transfer, mortgage, deed,
stamp or documentary taxes or similar fees or charges; costs of third-party reports, including
without limitation, environmental studies, credit reports, seismic reports, engineer’s reports,
appraisals and surveys; underwriting and origination expenses; and all actual, reasonable legal
fees and expenses charged by counsel to Lender.

          Section 3.11 No Material Adverse Change.

          There shall have been no material adverse change in the financial condition or business
condition of the Property, Borrower, Lease Guarantor, Borrower Principal, BTDS, any SPE Component
Entity or any other person or party contributing to the operating income and operations of the
Property since the date of the most recent financial statements and/or other information delivered
to Lender. The income and expenses of the Property, the occupancy and leases thereof, and all
other features of the transaction shall be as represented to Lender without material adverse
change. None of Borrower, BTDS, Lease Guarantor, Borrower Principal nor any SPE Component Entity
shall be the subject of any bankruptcy, reorganization, or insolvency proceeding.

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          Section 3.12 Leases and Rent Roll.

          Lender shall have received copies of all Leases affecting the Property, which shall be
reasonably satisfactory in form and substance to Lender. Lender shall have received a current
certified rent roll setting forth the Rents for each Individual Property, reasonably satisfactory
in form and substance to Lender. Lender shall have received a copy of the Operating Lease Guaranty
affecting the Property, which shall be reasonably satisfactory in form and substance to Lender.

          Section 3.13 Tenant Estoppels.

          Borrower shall have delivered to Lender an executed tenant estoppel letter, which shall be in
form and substance reasonably satisfactory to Lender, from each Operating Lessee with respect to
the applicable Operating Lease.

          Section 3.14 REA Estoppels.

          Borrower shall have delivered to Lender an executed REA estoppel letter, which shall be in
form and substance reasonably satisfactory to Lender, from each party to any REA for the Property.

          Section 3.15 Subordination and Attornment.

          Borrower shall have delivered to Lender executed instruments acceptable to Lender
subordinating to the Mortgage all of the Operating Leases affecting the Property designated by
Lender.

          Section 3.16 Tax Lot.

          Lender shall have received evidence that each Individual Property constitutes one (1) or more
separate tax lots, which evidence shall be reasonably satisfactory in form and substance to Lender.

          Section 3.17 Physical Conditions Report.

          Lender shall have received a Physical Conditions Report with respect to each Individual
Property, which report shall be reasonably satisfactory in form and substance to Lender.

          Section 3.18 Appraisal.

          Lender shall have received an appraisal of each Individual Property, which shall be
satisfactory in form and substance to Lender, which supports the Operating Lease Rent payable by
the applicable Operating Lessee with respect to each Individual Property.

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          Section 3.19 Financial Statements.

          Lender shall have received the most recently produced certified and, as applicable, audited
financial statements and related information in form and substance reasonably satisfactory to
Lender, including, without limitation, a balance sheet, income and expense statement and statement
of cash flows with respect to Lease Guarantor, a projected operating statement with respect to each
Individual Property for the current year-to-date and for such prior years as reasonably required by
Lender, and an annual budget, all in form and substance and from professionals reasonably
satisfactory to Lender.

          Section 3.20 Intentionally Deleted.

          Section 3.21 Purchase Agreement.

          The transactions contemplated by the Purchase Agreement shall have been consummated or shall
be consummated contemporaneously with the closing.

          Section 3.22 Further Documents.

          Lender or its counsel shall have received such other and further approvals, opinions,
documents and information as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance satisfactory to Lender and its counsel.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          Borrower and, where specifically indicated, Borrower Principal represents and warrants to
Lender as of the Closing Date that:

          Section 4.01 Organization.

          Each of the Borrower and Borrower Principal (a) has been duly organized and is validly
existing and in good standing with requisite power and authority to own its properties and to
transact the businesses in which it is now engaged, (b) is duly qualified to do business and is in
good standing in each jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations, (c) possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its properties and to
transact the businesses in which it is now engaged except to the extent the failure could not
reasonably be expected to cause a MAE, and the sole business of Borrower is the ownership of the
Property, and (d) in the case of Borrower, has full power, authority and legal right to mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and convey, as applicable, all of its
right, title and interest in the Property pursuant to the terms of the Loan Documents. Each of the
Borrower and Borrower Principal, has full power, authority and legal right to execute and deliver
the Loan Documents to which it is a party. Each of Borrower and Borrower Principal represent and
warrant that the chart attached hereto as Exhibit B sets forth an accurate listing of

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the direct and indirect owners of the equity interests in Borrower, each SPE Component Entity
(if any) and each Borrower Principal.

          Section 4.02 Status of Borrower.

          Borrower’s exact legal name is correctly set forth on the first page of this Agreement, on
each Mortgage and on any UCC-1 financing statements filed in connection with the Loan. Borrower is
an organization of the type specified on the first page of this Agreement. Borrower is
incorporated in or organized under the laws of the State of Delaware. Borrower’s principal place of
business and chief executive office, and the place where Borrower keeps its books and records,
including recorded data of any kind or nature, regardless of the medium of recording, including
software, writings, plans, specifications and schematics, has been for the preceding four months
(or, if less, the entire period of the existence of Borrower) the address of Borrower set forth on
the first page of this Agreement. Borrower’s organizational identification number is 4104734.

          Section 4.03 Validity of Documents.

          Each of Borrower and Borrower Principal has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan Documents to which they
are parties. This Agreement and such other Loan Documents have been duly executed and delivered by
or on behalf of Borrower and Borrower Principal and constitute the legal, valid and binding
obligations of Borrower and Borrower Principal enforceable against Borrower and Borrower Principal,
as applicable, in accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

          Section 4.04 No Conflicts.

          The execution, delivery and performance of this Agreement and the other Loan Documents by
Borrower and Borrower Principal will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or
assets of Borrower and Borrower Principal pursuant to the terms of any agreement or instrument to
which Borrower and Borrower Principal is a party or by which any of Borrower’s and Borrower
Principal’s property or assets is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over Borrower and Borrower Principal or any of Borrower’s and Borrower Principal’s
properties or assets which, in each case, could reasonably be expected to cause a MAE. Any
consent, approval, authorization, order, registration or qualification of or with any Governmental
Authority required for the execution, delivery and performance by Borrower and Borrower Principal
of this Agreement or any of the other Loan Documents has been obtained and is in full force and
effect, except for any violation that could not, individually or in the aggregate, reasonably be
expected to result in a MAE.

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          Section 4.05 Litigation.

          There are no actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or, to Borrower’s and Borrower Principal’s knowledge,
threatened against or affecting Borrower, Borrower Principal or any Individual Property, which
actions, suits or proceedings, if adversely determined against Borrower, Borrower Principal or any
Individual Property could reasonably be expected to cause a MAE.

          Section 4.06 Agreements.

          Borrower is not a party to any agreement or instrument or subject to any restriction which
could reasonably be expected to materially and adversely affect Borrower or any Individual
Property, or Borrower’s business, properties or assets, operations or condition, financial or
otherwise. Borrower is not in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or any Individual Property is bound which is
reasonably likely to cause a MAE. Borrower has no material financial obligation under any
agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, other
than (a) obligations incurred in the ordinary course of the operation of the Property, and (b)
obligations under the Loan Documents.

          Section 4.07 Solvency.

          Borrower and Borrower Principal have (a) not entered into the transaction or executed the
Note, this Agreement or any other Loan Documents with the actual intent to hinder, delay or defraud
any creditor and (b) received reasonably equivalent value in exchange for their obligations under
such Loan Documents. Giving effect to the Loan, the fair saleable value of the assets of Borrower
and each Borrower Principal exceeds and will, immediately following the making of the Loan, exceed
the total liabilities of Borrower and each Borrower Principal, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. No petition in bankruptcy has
been filed against Borrower, Borrower Principal, any SPE Component Entity (if any) in the last ten
(10) years, and neither Borrower nor Borrower Principal or any SPE Component Entity (if any) in the
last ten (10) years has made an assignment for the benefit of creditors or taken advantage of any
Creditors Rights Laws. Neither Borrower nor Borrower Principal or any SPE Component Entity (if
any) is contemplating either the filing of a petition by it under any Creditors Rights Laws or the
liquidation of all or a major portion of Borrower’s assets or property, and Borrower has no
knowledge of any Person contemplating the filing of any such petition against Borrower, Borrower
Principal or any SPE Component Entity (if any).

          Section 4.08 Intentionally Deleted.

          Section 4.09 No Plan Assets.

          Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to
Title I of ERISA, and none of the assets of Borrower constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a)
Borrower is not a “governmental plan” within the meaning of Section 3(32) of

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ERISA and (b) transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code currently in
effect, which prohibit or otherwise restrict the transactions contemplated by this Agreement.

          Section 4.10 Not a Foreign Person.

          Borrower is not a “foreign person” within the meaning of Sections 1445 or 7701 of the Code.

          Section 4.11 Enforceability.

          The Loan Documents are not subject to any right of rescission, set-off, counterclaim or
defense by Borrower, including the defense of usury, nor would the operation of any of the terms of
the Loan Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable (subject to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law)), and neither Borrower nor
Borrower Principal has asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.

          Section 4.12 Business Purposes.

          The Loan is solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.

          Section 4.13 Compliance.

          Borrower and each Individual Property, and the use and operation thereof, comply with all
Legal Requirements, including, without limitation, building and zoning ordinances and codes and the
Americans with Disabilities Act, except for any non-compliance that individually or in the
aggregate could not reasonably be expected to cause a MAE with respect to an Individual Property.
To Borrower’s knowledge, Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority which could reasonably be expected to cause a MAE
and Borrower has received no written notice of any such default or violation. There has not been
committed by Borrower or, to Borrower’s knowledge, any other Person in occupancy of or involved
with the operation or use of any Individual Property any act or omission affording any Governmental
Authority the right of forfeiture as against any Individual Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan Documents.

          Section 4.14 Financial Information.

          All financial data, including, without limitation, the balance sheets, statements of cash
flow, statements of income and operating expense and rent rolls, that have been delivered to Lender
in respect of Borrower, any Borrower Principal and/or the Property (a) are true, complete and
correct in all material respects, (b) accurately represent the financial condition of Borrower,
Borrower Principal or the Property, as applicable, as of the date of such reports, and (c) to the

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extent prepared or audited by an independent certified public accounting firm, have been
prepared in accordance with GAAP throughout the periods covered, except as disclosed therein.
Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are
known to Borrower and could reasonably be expected to cause a MAE, except as referred to or
reflected in said financial statements. Since the date of such financial statements, to Borrower’s
knowledge, there has been no materially adverse change in the financial condition, operations or
business of Borrower or Borrower Principal from that set forth in said financial statements that
could reasonably be expected to have a MAE.

          Section 4.15 Condemnation.

          No Condemnation or other proceeding has been commenced or, to Borrower’s knowledge, is
threatened or contemplated with respect to all or any portion of any Individual Property or for the
relocation of roadways providing access to the related Individual Property that individually or in
the aggregate could reasonably be expected to cause a MAE.

          Section 4.16 Utilities and Public Access; Parking.

          Each Individual Property has adequate rights of access to public ways and is served by water,
sewer, sanitary sewer and storm drain facilities adequate to service each Individual Property for
full utilization of the Property for its intended uses except to the extent any such failure
individually or in the aggregate could not reasonably be expected to cause a MAE. All public
utilities necessary to the use of each Individual Property as currently used are located either in
the public right-of-way abutting the Property (which are connected so as to serve the related
Individual Property without passing over other property) or in recorded easements serving each
Individual Property and such easements are set forth in and insured by the Title Insurance Policy.
All roads necessary for the use of the Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities. Each Individual Property
has, or is served by, parking to the extent required to comply with all Legal Requirements.

          Section 4.17 Separate Lots.

          Each Individual Property is comprised of one (1) or more parcels which constitute separate tax
lots and do not constitute a portion of any other tax lot not a part of such Individual Property.

          Section 4.18 Assessments.

          To Borrower’s knowledge, there are no pending or proposed special or other assessments for
public improvements or otherwise affecting any Individual Property, nor are there any contemplated
improvements to any Individual Property that may result in such special or other assessments, in
each case that individually or in the aggregate could reasonably be expected to cause a MAE.

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          Section 4.19 Insurance.

          Borrower has obtained and has delivered to Lender certified copies of all Policies or
certificates of insurance with respect to all such Policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. To Borrower’s knowledge, no Person,
including Borrower, has done, by act or omission, anything which would impair in any material
respect the coverage of any of the Policies.

          Section 4.20 Use of Property.

          Each Individual Property is used exclusively for the purposes set forth with respect to each
Individual Property on Schedule III attached hereto and other appurtenant and related uses.

          Section 4.21 Certificate of Occupancy; Licenses.

          All material certifications, permits and licenses, including, without limitation, certificates
of completion or occupancy and any applicable liquor license required for the legal use, occupancy
and operation of each Individual Property for its current use as stated herein, have been obtained
and are valid and in full force and effect, except to the extent any such failure could reasonably
be expected individually or in the aggregate to cause a MAE. Borrower shall keep and maintain all
licenses necessary for the operation of each Individual Property for the purpose intended herein,
except to the extent any such failure could not reasonably be expected individually or in the
aggregate to cause a MAE. The use being made of each Individual Property is in conformity with the
certificate of occupancy and any permits or licenses issued for the related Individual Property,
except to the extent any such failure could not reasonably be expected individually or in the
aggregate to cause a MAE.

          Section 4.22 Flood Zone.

          None of the Improvements on any Individual Property are located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards, or, if any portion of
the Improvements is located within such area, Borrower has obtained the insurance prescribed in
Section 8.01(a)(i).

          Section 4.23 Physical Condition.

          Except as set forth in each Physical Conditions Report, to Borrower’s knowledge, (i) each
Individual Property, including, without limitation, all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good condition, order and
repair in all material respects, subject to ordinary wear and tear, and (ii) there exists no
structural or other material defects or damages in any Individual Property, as a result of a
Casualty or otherwise, and whether latent or otherwise. Borrower has not received written notice
from any insurance company or bonding company of any defects or inadequacies in any Individual
Property, or any part thereof, which would materially adversely affect the insurability of the same
or cause the imposition of extraordinary premiums or charges thereon or of any termination

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or threatened termination of any policy of insurance or bond and, in each case, which defects
or inadequacies remain outstanding or otherwise uncured.

          Section 4.24 Boundaries.

          Except as set forth in, and insured pursuant to, the Title Insurance Policies, (a) none of the
Improvements which were included in determining the appraised value of each Individual Property lie
outside the boundaries and building restriction lines of the related Individual Property to any
material extent, and (b) no improvements on adjoining properties encroach upon any Individual
Property and no easements or other encumbrances upon any Individual Property encroach upon any of
the Improvements in a manner that could reasonably be expected to cause a MAE with respect to an
Individual Property.

          Section 4.25 Leases and Rent Roll.

          Borrower has delivered to Lender a true, correct and complete rent roll for the Property as of
the Closing Date (a “Rent Roll”) which includes a listing of (i) all Leases affecting each
Individual Property and (ii) all subleases or other agreements (whether written or oral) pursuant
to which any Operating Lessee subleases or otherwise permits a third party to sublease, occupy or
otherwise use all or any portion of any Individual Property (including schedules for all executed
agreements with third parties not yet in occupancy or under which the rent commencement date has
not occurred). Except as set forth in the Rent Roll or estoppel certificates delivered to Lender
on or prior to the Closing Date: (a) each Lease (including each Operating Lease) is in full force
and effect; (b) the Tenants under the Leases have accepted possession of and are in occupancy of
all of their respective demised premises; (c) all Rents due and payable under the Leases
(including under the Operating Leases) have been paid and no portion thereof has been paid for any
period more than thirty (30) days in advance; (d) no Tenant has made any written claim of a
material default against the landlord under any Lease which remains outstanding; (g) to Borrower’s
knowledge there is no present material default by any Tenant under any Lease (including under any
Operating Lease); (h) all security deposits under the Leases, if any, have been collected by
Borrower; (i) Borrower is the sole owner of the entire landlord’s interest in each Lease (including
each Operating Lease); (j) each Lease is the valid, binding and enforceable obligation of Borrower
and the applicable Tenant thereunder (subject to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and subject as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or at law)) and there
are no agreements with the Tenants under the Leases other than as expressly set forth in the
Leases; (k) no Person has any possessory interest in, or right to occupy, any Individual Property
or any portion thereof as of the date hereof except as specifically disclosed in the Rent Roll; (l)
none of the Leases (including the Operating Leases) contains any option or offer to purchase or
right of first refusal to purchase the related Individual Property or any part thereof; and (m)
neither the Leases (including the Operating Leases), nor the Rents have been assigned, pledged or
hypothecated except to Lender, and no other Person has any interest therein except each Tenant as
to Properties subject to the applicable Operating Lease.

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          Section 4.26 Filing and Recording Taxes.

          All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or enforcement of any of the
Loan Documents, including, without limitation, any Mortgage, have been paid or will be paid, and,
under current Legal Requirements, the Mortgage is enforceable in accordance with its terms by
Lender (or any subsequent holder thereof) (subject to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and subject as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law)).

          Section 4.27 Management Agreement.

          There is no Management Agreement in effect with respect to any Individual Property.

          Section 4.28 Illegal Activity.

          No portion of any Individual Property has been or will be purchased with proceeds of any
illegal activity, and no part of the proceeds of the Loan will be used in connection with any
illegal activity.

          Section 4.29 Construction Expenses.

          To Borrower’s knowledge after due inquiry, there are no claims for payment for work, labor or
materials affecting any Individual Property which are or may become a lien prior to, or of equal
priority with, the Liens created by the Loan Documents that individually or in the aggregate could
reasonably be expected to cause a MAE.

          Section 4.30 Collateral Property.

          Borrower has paid in full for, and is the owner of, all Collateral Property (other than
tenants’ property) used in connection with the operation of each Individual Property, free and
clear of any and all security interests, liens or encumbrances, except for Permitted Encumbrances
and the Lien and security interest created by the Loan Documents.

          Section 4.31 Taxes.

          Borrower and Borrower Principal have filed (or have filed extensions for filing) all federal,
state, county, municipal, and city income, personal property and other tax returns required to have
been filed by them and have paid (or made adequate provision for the payment of) the taxes payable
by Borrower and Borrower Principal, as applicable.

          Section 4.32 Permitted Encumbrances.

          None of the Permitted Encumbrances, individually or in the aggregate, materially and adversely
affects the fair market value of the Individual Property, materially impairs the use

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or the operation of the related Individual Property, materially impairs Borrower’s ability to
pay its obligations as and when due.

          Section 4.33 Federal Reserve Regulations.

          Borrower will use the proceeds of the Loan for the purposes set forth in Section
2.01(d) hereof and not for any illegal activity. No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System or for any other purpose which would be
in violation of such Regulation U.

          Section 4.34 Investment Company Act.

          Borrower is not (a) an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding
company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding
company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of
1935, as amended; or (c) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

          Section 4.35 Reciprocal Easement Agreements.

          Neither Borrower nor, to Borrower’s knowledge, any other party to such agreement is currently
in material default (nor has any written notice been given or received with respect to an alleged
or current material default) under any of the terms and conditions of any REA which individually or
in the aggregate could reasonably be expected to cause a MAE.

          Section 4.36 No Change in Facts or Circumstances; Disclosure.

          All information submitted by Borrower or its agents to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection with the Loan or in
satisfaction of the terms thereof and all statements of fact made by Borrower in this Agreement or
in any other Loan Document, are accurate, complete and correct in all material respects, except to
the extent that such failure to be accurate, complete and current in all material respects could
not reasonably be expected to cause a MAE. There has been no material adverse change in any
condition, fact, circumstance or event that would make any such information inaccurate, incomplete
or otherwise misleading in any material respect, except to the extent that such failure to be
accurate, complete or otherwise not misleading in any material respect could not reasonably be
expected to cause a MAE.

          Section 4.37 Intellectual Property.

          All trademarks, trade names and service marks necessary to the business of Borrower as
presently conducted or as Borrower contemplates conducting its business are in good standing and,
to the extent of Borrower’s actual knowledge, uncontested. Borrower has not infringed, is not
infringing, and has not received notice of infringement with respect to asserted trademarks, trade
names and service marks of others. To Borrower’s knowledge, there is no infringement by others of
trademarks, trade names and service marks of Borrower.

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          Section 4.38 Survey. 

          The surveys for each Individual Property delivered to Lender in connection with this Agreement
has been prepared in accordance with the provisions of Section 3.02(c) hereof, and to the
knowledge of Borrower does not fail to reflect any material matter affecting the Property or the
title thereto.

          Section 4.39 Intentionally omitted.

          Section 4.40 Patriot Act.

          All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001,
107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of
the United States government and its various executive departments, agencies and offices related to
the subject matter of the Patriot Act, including Executive Order 13224 effective September 24, 2001
(collectively referred to in this Section only as the “Patriot Act”) and are incorporated
into this Section. Each of Borrower and Borrower Principal hereby represents and warrants that
Borrower and Borrower Principal and each and every Person affiliated with Borrower or Borrower
Principal or that to Borrower’s knowledge has an economic interest in Borrower, or, to Borrower’s
knowledge, that has or will have an interest in the transaction contemplated by this Agreement or
in any Individual Property or will participate, in any manner whatsoever, in the Loan, is (i) not a
“blocked” person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and all
modifications thereto or thereof (as used in this Section only, the “Annex”); (ii) in full
compliance with the requirements of the Patriot Act and all other requirements contained in the
rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (as used
in this Section only, “OFAC”); (iii) operated under policies, procedures and practices, if
any, that are in compliance with the Patriot Act and available to Lender for Lender’s review and
inspection during normal business hours and upon reasonable prior notice; (iv) not in receipt of
any notice from the Secretary of State or the Attorney General of the United States or any other
department, agency or office of the United States claiming a violation or possible violation of the
Patriot Act; (v) not listed as a Specially Designated Terrorist or as a “blocked” person on any
lists maintained by the OFAC pursuant to the Patriot Act or any other list of terrorist
organizations maintained pursuant to any of the rules and regulations of the OFAC issued pursuant
to the Patriot Act or on any other list of terrorists or terrorist organizations maintained
pursuant to the Patriot Act; (vi) not a person who has been determined by competent authority to be
subject to any of the prohibitions contained in the Patriot Act; and (vii) not owned or controlled
by or now acting and or will in the future act for or on behalf of any person named in the Annex or
any other list promulgated under the Patriot Act or any other person who has been determined to be
subject to the prohibitions contained in the Patriot Act. Borrower covenants and agrees that in
the event Borrower receives any notice that Borrower Principal or Borrower (or any of its
beneficial owners or affiliates or participants) become listed on the Annex or any other list
promulgated under the Patriot Act or is indicted, arraigned, or custodially detained on charges
involving money laundering or predicate crimes to money laundering, Borrower shall immediately
notify Lender. It shall be an Event of Default hereunder if Borrower, Borrower Principal or any
other party (other than Lender) to any Loan Document becomes listed on the Annex or any other list
promulgated under the Patriot Act or is

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indicted, arraigned or custodially detained on charges involving money laundering or predicate
crimes to money laundering.

          Section 4.41 Assumptions.

          Each of the assumptions contained in the opinion attached hereto as Exhibit C related
to issues of substantive consolidation issued by Wolf, Block, Schorr & Solis-Cohen LLP to Lender on
the date hereof (the “Nonconsolidation Opinion”) are true and correct in all material
respects.

          Section 4.42 Survival.

          Each of Borrower and Borrower Principal agree that, unless expressly provided otherwise, all
of the representations and warranties of Borrower and Borrower Principal set forth in this
Agreement and in the other Loan Documents shall survive for so long as any portion of the Debt
remains owing to Lender. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents by Borrower and Borrower Principal shall be deemed to have
been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender
or on its behalf.

ARTICLE V

BORROWER COVENANTS

          From the date hereof and until repayment of the Debt in full and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the Lien of the Mortgage
(and all related obligations (with respect to one or more of the Individual Properties)) in
accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants
and agrees with Lender that:

          Section 5.01 Existence; Compliance with Legal Requirements.

          (a) Borrower shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises and comply in all
material respects with all Legal Requirements applicable to it and the related Individual Property.
Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission
affording any Governmental Authority the right of forfeiture as against any Individual Property or
any material part thereof or any monies paid in performance of Borrower’s obligations under any of
the Loan Documents. Borrower shall at all times maintain, preserve and protect all franchises and
trade names to the extent necessary in connection with the operation of each Individual Property.

          (b) After prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceedings, promptly initiated and conducted in good faith and with due
diligence, any Legal Requirement affecting the related Individual Property, provided that (i) no
Event of Default has occurred and is continuing; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other material instrument to which

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Borrower or the related Individual Property is subject and shall not constitute a default
thereunder; (iii) neither such Individual Property, nor Borrower shall be affected in any material
adverse way as a result of such proceeding; (iv) non-compliance with the Legal Requirements shall
not impose civil (other than monetary damages which are anticipated to be less than $250,000 in the
aggregate) or criminal liability on Borrower or Lender; and (v) Borrower shall have furnished the
security as may be required in the proceeding to ensure compliance by Borrower with the Legal
Requirements.

          Section 5.02 Maintenance and Use of Property.

          Borrower shall cause each Individual Property to be maintained in a good and safe condition
and repair, ordinary wear and tear excepted and subject to Excusable Delay and the provisions of
this Agreement with respect to any Casualty or Condemnation. The Improvements and the Collateral
Property shall not be removed, demolished or, other than in accordance with the provisions of
Section 5.21, materially altered (except for normal replacement of the Collateral Property)
without the prior written consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed, provided, however, Lender’s consent shall be deemed granted under this
Section 5.02 if not disapproved by Lender in writing within fifteen (15) days of Lender’s
receipt of the Borrower’s request pursuant to this Section in an envelope marked “LENDER’S RESPONSE
IS REQUIRED WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF SECTION
5.02 OF THE LOAN AGREEMENT” together with all other information and documentation related thereto
that is reasonably requested by Lender in connection with its analysis of the request hereunder.
Borrower shall cause each Individual Property not to be used other than for retail purposes (other
than the Individual Property operated as a distribution center located in Rockford, Illinois) and
related ancillary uses, in each case consistent in all material respects with the manner in which
any such Individual Property is currently being used. If under applicable zoning provisions the
use of all or any portion of any Individual Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or the nonconforming
Improvement to be abandoned without the express written consent of Lender.

          Section 5.03 Waste.

          Borrower shall not commit or suffer any waste of any Individual Property or make any change in
the use of the Property which will in any way materially increase the risk of fire or other hazard
arising out of the operation of any Individual Property, or take any action that could reasonably
be expected to invalidate or give cause for cancellation of any Policy, or do or permit to be done
thereon anything that could reasonably be expected to have an MAE. Borrower will not, without the
prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of any Individual Property,
regardless of the depth thereof or the method of mining or extraction thereof.

          Section 5.04 Taxes and Other Charges; Contests.

          (a) Subject to its right to contest any Taxes as set forth in Section 5.04(b) hereof,
Borrower shall pay or cause to be paid all Taxes and Other Charges now or hereafter

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levied or assessed or imposed against each Individual Property or any part thereof prior to
the time the same shall become delinquent; provided, however, Borrower’s obligation to directly pay
Taxes shall be suspended for so long as Borrower complies with the terms and provisions of
Section 9.06 hereof. Borrower shall, upon written request of Lender, furnish to Lender
receipts for the payment of the Taxes and the Other Charges (provided, however, that Borrower is
not required to furnish such receipts for payment of Taxes in the event that such Taxes have been
paid by Lender pursuant to Section 9.06 hereof). Subject to its right to contest any such
amounts as set forth in Section 5.04(b) hereof, Borrower shall not suffer and shall
promptly cause to be paid and discharged or bonded over any Lien or charge whatsoever which may be
or become a Lien or charge against any Individual Property, and shall promptly pay for all utility
services provided to each Individual Property.

          (b) After prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any Lien or any Taxes or
Other Charges, provided that (i) no Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with the provisions of any other
material instrument to which Borrower is subject and shall not constitute a default thereunder and
such proceeding shall be conducted in accordance in all material respects with all applicable Legal
Requirements; (iii) neither the related Individual Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower
shall promptly upon final determination thereof pay the amount of such Lien or such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in connection
therewith; (v) such proceeding shall suspend the collection of such contested Lien, Taxes or Other
Charges from the related Individual Property; and (vi) after taking into account the funds then on
deposit in the applicable Reserve Account available for use in the payment of any such contested
Taxes or Other Charges, Borrower shall furnish such security as may be required in the proceeding,
or deliver to Lender such reserve deposits as may be reasonably requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and penalties thereon
(unless Borrower has paid all of the Taxes or Other Charges under protest). Lender may pay over
any such cash deposit or part thereof held by Lender to the claimant entitled thereto at any time
when, in the reasonable judgment of Lender, the entitlement of such claimant is established or the
related Individual Property (or part thereof or interest therein) shall be in danger of being sold,
forfeited, terminated, canceled or lost or there shall be any danger of the Lien of the Mortgage
being primed by any related Lien.

          Section 5.05 Litigation.

          Borrower shall give prompt written notice to Lender of any litigation or governmental
proceedings pending or threatened in writing against Borrower which, if adversely determined, could
reasonably be expected to result in a MAE.

          Section 5.06 Access to Property.

          Borrower shall permit agents, representatives and employees of Lender to inspect each
Individual Property or any part thereof at reasonable hours upon reasonable advance written notice
and in accordance with Borrower’s reasonable requirements.

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          Section 5.07 Notice of Default.

          Borrower shall promptly advise Lender of the occurrence of any Default or Event of Default, in
each case to the extent Borrower has knowledge thereof.

          Section 5.08 Cooperate in Legal Proceedings.

          Borrower shall at Borrower’s reasonable expense cooperate fully with Lender with respect to
any proceedings before any court, board or other Governmental Authority which could reasonably be
expected to in any material adverse way affect the rights of Lender hereunder or any rights
obtained by Lender under any of the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings.

          Section 5.09 Performance by Borrower.

          Borrower shall in a timely manner observe, perform and fulfill in all material respects each
and every covenant, term and provision to be observed and performed by Borrower under this
Agreement and the other Loan Documents and any amendments, modifications or changes thereto.

          Section 5.10 Awards; Insurance Proceeds.

          Subject to the terms and conditions of Article VIII hereof, Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully or
equitably payable in connection with any Individual Property, and Lender shall be reimbursed for
any actual reasonable out of pocket expenses incurred in connection therewith (including
reasonable, actual attorneys’ fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of a Casualty or Condemnation affecting any Individual
Property or any part thereof) out of such Awards or Insurance Proceeds.

          Section 5.11 Financial Reporting.

          (a) Borrower shall, and shall cause, Borrower Principal to, keep adequate books and records of
account in accordance with GAAP, or in accordance with other methods reasonably acceptable to
Lender in its sole discretion, consistently applied and shall furnish to Lender:

     (i) prior to a Securitization, monthly (commencing in March, 2006), and following a
Securitization, quarterly and annual certified rent rolls signed and dated by Borrower,
detailing the names of all Tenants of the Improvements, the portion of Improvements (in
terms of square footage) occupied by each Tenant, the base rent, additional rent and any
other charges payable under each Lease (including annual store sales required to be reported
by Tenant under any Lease), and the term of each Lease, including the commencement and
expiration dates and any tenant extension, expansion or renewal options, the extent to which
any Tenant is in default under any Lease, and any other information as is reasonably
required by Lender, within thirty (30) days after the end of each fiscal month, forty-five
(45) days after the end of each fiscal quarter or ninety (90) days after the close of each
fiscal year of Borrower;

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     (ii) prior to a Securitization, monthly (commencing in March, 2006), and following a
Securitization, quarterly, so-called “four walls” operating statements for each Individual
Property and for the Property in the aggregate, including calculations of EBITDA, which
shall be prepared and certified by Borrower, within thirty (30) days after the end of each
fiscal month or forty-five (45) days after the end of each fiscal quarter, as applicable;

     (iii) prior to a Securitization, monthly (commencing in March, 2006), and following a
Securitization, quarterly, unaudited financial statements of Borrower and Borrower
Principal, which shall be prepared and certified by Borrower, within thirty (30) days after
the end of each fiscal month or forty-five (45) days after the end of each fiscal quarter,
as applicable;

     (iv) annual balance sheets, profit and loss statements, statements of cash flows, and
statements of change in financial position of Borrower and Borrower Principal audited by an
Acceptable Accountant, within ninety (90) days after the close of each fiscal year of
Borrower;

     (v) an Annual Budget of Borrower not later than forty-five (45) days after the
commencement of each fiscal year of Borrower in form reasonably satisfactory to Lender. In
the event that Lender reasonably objects to a proposed Annual Budget submitted by Borrower,
Lender shall advise Borrower of such reasonable objections within fifteen (15) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to
Lender. Lender shall advise Borrower of any reasonable objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to Borrower a reasonably
detailed description of such objections) and Borrower shall promptly revise the same in
accordance with the process described in this subsection until Lender reasonably approves
the Annual Budget. Until such time that Lender approves a proposed Annual Budget, which
approval shall not be unreasonably withheld, conditioned or delayed, the most recent Annual
Budget shall apply; provided that, such most recent Annual Budget shall be adjusted to
reflect actual increases in Taxes and Insurance Premiums. Any failure by Lender to object
to a proposed Annual Budget within the time periods provided herein shall be deemed approval
by Lender of such proposed Annual Budget; and

     (vi) (A) annual audited financial statements of Lease Guarantor within ninety (90) days
after the close of each fiscal year of Lease Guarantor and (B) quarterly unaudited financial
statements of Lease Guarantor within forty-five (45) days after the end of each fiscal
quarter.

     (b) Upon request from Lender, Borrower shall promptly furnish to Lender:

     (i) a property management report for each Individual Property, showing the number of
inquiries made and/or rental applications received from tenants or prospective tenants and
deposits received from tenants and any other information requested by

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     Lender, in reasonable detail and certified by Borrower under penalty of perjury to be
true and complete in all material respects, but no more frequently than each fiscal quarter;

     (ii) an accounting of all security deposits held in connection with any Lease of any
part of each Individual Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the financial
institutions in which such security deposits are held and the name of the Person to contact
at such financial institution, along with any authority or release necessary for Lender to
obtain information regarding such accounts directly from such financial institutions; and

     (iii) a report of all letters of credit provided by any Tenant in connection with any
Lease of any part of each Individual Property, including the account numbers of such letters
of credit, the names and addresses of the financial institutions that issued such letters of
credit and the names of the Persons to contact at such financial institutions, along with
any authority or release necessary for Lender to obtain information regarding such letters
of credit directly from such financial institutions.

     (c) Borrower shall comply in all material respects with the following:

     (i) Borrower shall deliver the information required to be delivered pursuant to
Section 13.04(a) hereof.

     (ii) Intentionally omitted.

     (iii) All financial statements provided by Borrower hereunder pursuant to Section
5.11(c)(i) hereof shall be prepared in accordance with GAAP, and shall meet the
requirements of Regulation S-X and other applicable legal requirements provided the same
shall, subject to Section 5.11(f) below, be required with respect to the Properties
on an aggregate basis only. All financial statements referred to in Section
5.11(c)(i) shall be audited by Acceptable Accountants in accordance with Regulation S-X
and all other applicable legal requirements, shall be accompanied by the manually executed
report of the independent accountants thereon, which report shall meet the requirements of
Regulation S-X and all other applicable legal requirements, and shall be further accompanied
by a manually executed written consent of the Acceptable Accountants, in form and substance
reasonably acceptable to Lender, to the inclusion of such financial statements in any
Disclosure Document and any Exchange Act Filing and to the use of the name of such
Acceptable Accountants and the reference to such Acceptable Accountants as “experts” in any
Disclosure Document and Exchange Act Filing (as defined below), all of which shall be
provided at the same time as the related financial statements are required to be provided.
All financial statements (audited or unaudited) provided by Borrower under this Section
5.11 shall be certified by the chief financial officer or administrative member of
Borrower, which certification shall state that such financial statements meet the
requirements set forth in the first sentence of this Section 5.11(c)(iii).

     (iv) If requested by Lender, Borrower shall provide Lender, promptly upon request, with
any other or additional financial statements, or financial, statistical or

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operating information, as Lender shall determine to be required pursuant to Regulation
S-X or any amendment, modification or replacement thereto or other legal requirements in
connection with any Disclosure Document or any filing under or pursuant to the Exchange Act
in connection with or relating to a Securitization (hereinafter an “Exchange Act
Filing”) or as shall otherwise be reasonably requested by Lender subject to Section
5.11(f).

     (v) In the event Lender determines, in connection with a Securitization, that the
financial statements required in order to comply with Regulation S-X or other legal
requirements are other than as provided herein, then notwithstanding the provisions of
Section 5.11(c) hereof, Lender may request, and Borrower shall promptly provide,
such combination of Acquired Property Statement and/or Standard Statements or such other
financial statements as Lender determines to be necessary or appropriate for such
compliance.

     (vi) Any reports, statements or other information required to be delivered under this
Agreement shall be delivered in paper form and in the event that Lender requires financial
statements in connection with subsection (c) above because the Loan when combined with the
principal amount of any Affiliated Loans equals or exceeds 20% of the aggregate principal
amount of all mortgage loans included in a Securitization (defined below), Borrower shall
deliver such reports, statements and other information (A) on a diskette, and (B) if
requested by Lender and within the capabilities of Borrower’s data systems without change or
modification thereto, in electronic form and prepared using Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet program and
saved as word processing files).

          (d) Borrower shall furnish Lender with such other additional financial or management
information with respect to Borrower and Borrower Principal (including applicable state and federal
tax returns to the extent applicable or filed) as may, from time to time, be reasonably required by
Lender in form and substance reasonably satisfactory to Lender (including, without limitation, any
financial reports required to be delivered by any Tenant or any guarantor of any Lease and actually
delivered to Borrower pursuant to the terms of such Lease), and shall furnish to Lender and its
agents facilities for the examination and audit of any such books and records.

          (e) All items requiring the certification of Borrower shall, except where Borrower is an
individual, require a certificate executed by the general partner, managing member, chief executive
officer or chief financial officer of Borrower (and the same rules shall apply to any sole
shareholder, general partner or managing member which is not an individual).

          (f) Notwithstanding any other provision of this Section 5.11, Borrower shall not be
required to provide any financial statements with respect to any Person or property other than the
Property and Borrower, Borrower Principal and Lease Guarantor. In no event shall Borrower be
required under this Section 5.11 to deliver any financial statements or other information
with respect to any Tenant or BTDS.

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          Section 5.12 Estoppel Statement.

          (a) After request by Lender at reasonable intervals (but not more than once annually except to
the extent the request is being made by Lender in connection with a potential Securitization in
which the Loan is intended to be included), Borrower shall within fifteen (15) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth (i) the amount of
the original principal amount of the Note, (ii) the rate of interest on the Note, (iii) the unpaid
principal amount of the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi) that the Note, this
Agreement, the Mortgage and the other Loan Documents are valid, legal and binding obligations and
have not been modified or if modified, giving particulars of such modification.

          (b) After Lender’s receipt of written request by Borrower (but not more often than once
annually unless the Borrower is transferring the Property in accordance with the terms hereof),
Lender shall within a reasonable period of time, but not more than thirty (30) days after such
request, furnish Borrower with a statement, duly acknowledged and certified, setting forth that the
Note, this Agreement, the Mortgage and the other Loan Documents are in full force and effect and
have not been modified or if modified, giving particulars of such modification. Lender shall use
reasonable efforts to comply with any request Borrower makes pursuant to the preceding; provided,
however, that the failure of Lender to comply will not constitute a default hereunder by Lender.

          (c) Borrower shall use commercially reasonable efforts to deliver to Lender, promptly upon
request, duly executed estoppel certificates from any one or more Tenants, as required by Lender,
at reasonable intervals with respect to each Tenant (but not more than once annually except to the
extent the request is being made by Lender in connection with a potential Securitization in which
the Loan is intended to be included), attesting to such facts regarding the related Lease as Lender
may require, including, but not limited to attestations that each Lease covered thereby is in full
force and effect with no defaults thereunder on the part of any party, that none of the Rents have
been paid more than one month in advance, except as security, and that the Tenant claims no defense
or offset against the full and timely performance of its obligations under the Lease.

          Section 5.13 Leasing Matters.

          (a) Borrower may permit Operating Lessee to enter into a proposed Lease (including the renewal
or extension of an existing Lease (a “Renewal Lease”)) without the prior written consent of
Lender, provided such proposed Lease or Renewal Lease (i) provides for rental rates and terms
comparable to existing local market rates and terms (taking into account the type and quality of
the tenant) as of the date such Lease is executed by Borrower (unless, in the case of a Renewal
Lease, the rent payable during such renewal, or a formula or other method to compute such rent, is
provided for in the original Lease), (ii) is an arm’s-length transaction with a bona fide,
independent third party tenant, (iii) does not have a materially adverse effect on the value of the
related Individual Property taken as a whole, (iv) is subject and subordinate to the Mortgage and
the Tenant thereunder agrees to attorn to Lender, (v) does not contain any option, offer, right of
first refusal, or other similar right to acquire all or any portion of the related Individual
Property, (vi) has a base term of less than the term of the applicable Operating

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Lease, (vii) has no rent, credits, free rents or concessions granted thereunder that Lender
deems unacceptable in its reasonable discretion, (viii) is written on a form of lease reasonably
acceptable to Lender, and (ix) when taken together with the square footage leased or subleased
under any other Lease or Renewal Lease at any Individual Property does not exceed 10,000 square
feet of such Individual Property. All proposed Leases or Renewals which do not satisfy the
requirements set forth in this subsection shall be subject to the prior approval of Lender and its
counsel, which consent shall not be unreasonably withheld and Borrower shall reimburse Lender for
its actual reasonable out of pocket costs and expenses (including reasonable attorneys’ fees)
incurred by Lender in connection with such proposed Lease. Borrower shall promptly deliver to
Lender copies of all Leases which are entered into pursuant to this subsection together with
Borrower’s certification that it has satisfied all of the conditions of this Section.

          (b) Borrower (i) shall observe and perform or cause Operating Lessee to observe and perform,
as applicable, in all material respects all the obligations imposed upon the landlord under the
Leases and shall not do or permit to be done anything to impair the value of any of the Leases as
security for the Debt in any manner which could reasonably be expected to cause a material adverse
effect with respect to an Individual Property; (ii) shall promptly send or cause Operating Lessee
to send copies to Lender of all notices of default which Borrower shall send or receive thereunder;
(iii) shall enforce or cause Operating Lessee to enforce all of the material terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be observed or
performed; (iv) shall not collect any of the Rents more than one (1) month in advance (except
security deposits shall not be deemed Rents collected in advance); (v) with the exception of the
Loan Documents, shall not execute any other assignment of the landlord’s interest in any of the
Leases or the Rents; and (vi) shall not consent to any assignment of or subletting under any Leases
not in accordance with their terms, without the prior written consent of Lender, provided that, in
no event shall Borrower permit, nor shall Lender be obligated to consent to, any assignment of or
subletting under any Operating Lease to (x) the Borrower Principal and/or (y) any Affiliate of
Borrower Principal or any Affiliate of Operating Lessee.

          (c) Borrower may, without the prior written consent of Lender, amend, modify or waive the
provisions of any Lease or terminate, reduce Rents under, accept a surrender of space under, or
shorten the term of, any Lease (including any guaranty, letter of credit or other credit support
with respect thereto) provided that such action (taking into account, in the case of a termination,
reduction in rent, surrender of space or shortening of term, the planned alternative use of the
affected space) does not cause a material adverse effect with respect to an Individual Property,
and provided that such Lease, as amended, modified or waived, is otherwise in compliance with the
requirements of this Agreement and any subordination agreement binding upon Lender with respect to
such Lease. A termination of a Lease with a Tenant who is in default beyond applicable notice and
grace periods shall not be considered an action which could cause a material adverse effect with
respect to an Individual Property. Any amendment, modification, waiver, termination, rent
reduction, space surrender or term shortening which does not satisfy the requirements set forth in
this subsection shall be subject to the prior approval of Lender and its counsel, which consent
shall not be unreasonably withheld, conditioned or delayed, and Borrower shall reimburse Lender for
its actual reasonable out of pocket costs and expenses (including reasonable attorneys’ fees)
incurred by Lender in connection with such action. Borrower shall promptly deliver to Lender
copies of amendments, modifications and

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waivers which are entered into pursuant to this subsection together with Borrower’s
certification that it has satisfied all of the conditions of this subsection.

          (d) Notwithstanding anything contained herein to the contrary, Borrower shall not, without the
prior written consent of Lender, enter into, renew, extend, amend, modify, waive any provisions of,
terminate, reduce Rents under, accept a surrender of space under, or shorten the term of any
Operating Lease except (i) in connection with a release of an Individual Property in accordance
with the terms and conditions of this Agreement or (ii) to the extent specifically permitted
pursuant to Section 5.22 hereof.

          Section 5.14 Property Management.

          At any time during the term of the Loan a Management Agreement exists with respect to any
Individual Property:

          (a) (i) Borrower shall promptly perform and observe all of the covenants required to be
performed and observed by it under the Management Agreement and do all things necessary to preserve
and to keep unimpaired its material rights thereunder; (ii) Borrower shall promptly notify Lender
of any default under any Management Agreement of which it is aware; (iii) Borrower shall promptly
deliver to Lender a copy of any written notice of default or other material written notice received
by Borrower under any Management Agreement; (iv) Borrower shall promptly give notice to Lender of
any written notice or other written information that Borrower receives which indicates that Manager
is terminating any Management Agreement or that Manager is otherwise discontinuing its management
of any Individual Property; and (v) Borrower shall promptly enforce the performance and observance
of all of the material covenants required to be performed and observed by Manager under the
Management Agreement, including, without limitation, causing the Property to be operated,
maintained and managed at all times in a manner consistent with the standards for the operation,
management and maintenance of the Property as set forth in the Management Agreement.

          (b) If at any time, (i) Manager shall become insolvent or a debtor in a bankruptcy proceeding,
(ii) an Event of Default has occurred and is continuing; or (iii) a material default by Manager has
occurred and is continuing under any Management Agreement, at the written direction of Lender,
Borrower shall terminate such Management Agreement upon thirty (30) days prior notice to Manager
and replace Manager with a Qualified Manager approved by Lender on terms and conditions reasonably
satisfactory to Lender, it being understood and agreed that the management fee for such replacement
manager shall not exceed then prevailing market rates.

          (c) Borrower shall not take the following actions: (i) surrender, terminate or cancel any
Management Agreement or otherwise replace Manager or enter into any other management agreement with
respect to the related Individual Property except as permitted by the terms of this Loan Agreement
or any other Loan Document; (ii) reduce or consent to the reduction of the term of the Management
Agreement; (iii) increase or consent to the increase of the amount of any charges under the
Management Agreement; or (iv) otherwise modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under any Management Agreement in any material respect.
Borrower shall not replace the Manager at any

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time during the term of the Loan pursuant to this subsection with any Person that is not a
Qualified Manager.

          (d) Borrower shall not pledge, transfer, assign, mortgage, encumber or allow to be encumbered,
its interest in the Management Agreement or any interest therein except to Lender as provided in
the Loan Documents. Without limiting the foregoing, and except to the extent permitted or required
under this Agreement, Borrower shall not consent to any assignment by the Manager of the Manager’s
interest in the Management Agreement or its rights and interests thereunder.

          (e) If during the term of the Loan Borrower replaces Manager with a new property manager that
is an Affiliated Manager, Borrower shall cause to be delivered to Lender an opinion as to
non-consolidation issues between Borrower and such Affiliated Manager, such opinion to be
reasonably acceptable to Lender and the Rating Agencies.

          (f) Borrower shall obtain Lender’s approval of any Management Agreement prior to Borrower
entering into any such agreement, it being understood and agreed that the management fee for such
replacement manager shall not exceed then prevailing market rates. Borrower shall cause any
Management Agreement to be assigned to Lender and subordinated to the Mortgage and the other Loan
Documents pursuant to an assignment and subordination of management agreement substantially in the
form attached hereto as Exhibit D.

          Section 5.15 Liens.

          Subject to Borrower’s right to contest any Lien as set forth in Section 5.04(b)
hereof, Borrower shall not, without the prior written consent of Lender, create, incur, assume or
suffer to exist any Lien on any portion of any Individual Property or permit any such action to be
taken, except Permitted Encumbrances and any other liens specifically permitted by the Loan
Documents.

          Section 5.16 Debt Cancellation.

          Borrower shall not cancel or otherwise forgive or release any material claim or debt (other
than termination of Leases in accordance herewith) owed to Borrower by any Person, except for
adequate consideration or in the ordinary course of Borrower’s business.

          Section 5.17 Zoning.

          Borrower shall not initiate or consent to any zoning reclassification of any portion of any
Individual Property or seek any variance under any existing zoning ordinance or use or permit the
use of any portion of any Individual Property in any manner that could reasonably be expected to
result in such use becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior written consent of Lender.

          Section 5.18 ERISA.

          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its

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rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under ERISA.

          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as requested by Lender in its sole
discretion, that (i) Borrower is not and does not maintain an “employee benefit plan” as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of
the following circumstances is true:

     (A) Equity interests in Borrower are publicly offered securities, within the
meaning of 29 C.F.R. §2510.3-101(b)(2);

     (B) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning of 29
C.F.R. §2510.3-101(f)(2); or

     (C) Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).

          Section 5.19 No Joint Assessment.

          Borrower shall not suffer, permit or initiate the joint assessment of any Individual Property
with (a) any other real property constituting a tax lot separate from the related Individual
Property, or (b) any portion of the related Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the Lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to the related Individual Property.

          Section 5.20 Reciprocal Easement Agreements.

          Borrower shall not enter into, terminate or modify in any material respect any REA without
Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Borrower shall comply in all material respects with all of the material economic terms
and conditions contained in the REA and Borrower shall use reasonable efforts to enforce, comply
with, and cause (in each case, in all material respects) each of the parties to any REA to comply
in all material respects with all of the material economic terms and conditions which run to the
benefit of Borrower contained in the REA. Borrower shall deliver to Lender copies of all notices
of default by Borrower under any REA.

          Section 5.21 Alterations.

          Lender’s prior approval shall be required in connection with any alterations to any
Improvements, exclusive of alterations to tenant spaces required under any Lease, (a) that may have
a material adverse effect on any Individual Property, (b) that are structural in nature or (c)
that, together with any other alterations undertaken at the same time (including any related
alterations, improvements or replacements), are reasonably anticipated to have a cost with

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          respect to each Individual Property in excess of the Alteration Threshold. If the total
unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements
shall at any time exceed the Alteration Threshold, Borrower shall promptly deliver to Lender as
security for the payment of such amounts and as additional security for Borrower’s obligations
under the Loan Documents any of the following: (i) cash, (ii) direct non-callable obligations of
the United States of America or other obligations which are “government securities” within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, to the extent acceptable to the
applicable Rating Agencies, (iii) other securities acceptable to Lender and the Rating Agencies, or
(iv) a completion bond, provided that such completion bond is acceptable to the Lender and the
Rating Agencies. Such security shall be in an amount equal to the excess of the total unpaid
amounts incurred and to be incurred with respect to such alterations to the Improvements over the
Alteration Threshold.

          Section 5.22 Operating Leases.

          (a) Each Individual Property shall at all times be leased directly and exclusively by the
Borrower to the applicable Tenant under the applicable Operating Lease (and not to any other Person
under such Operating Lease or any replacement operating lease), and each Operating Lease shall be
made subordinate to the Mortgage. Neither Borrower nor the Tenant thereunder shall terminate any
Operating Lease or consent to the termination of any Operating Lease unless the following
conditions are met: (i) prior to such termination of the Operating Lease, all of the Tenant’s
rights, obligations, contracts or other agreements related to each Individual Property are assigned
to Borrower, including, without limitation if applicable, all of the Tenant’s right, title and
interest in and to the applicable Management Agreement, if any, and the Manager has agreed in
writing to such assignment, (ii) written notice of the termination of the Operating Lease is
delivered to Lender, and (iii) such termination of the Operating Lease shall not materially
adversely affect the continuous operation of each Individual Property consistent with single tenant
retail stores (or, with respect to the Individual Property located in Rockford, Illinois,
consistent with a distribution center) of similar quality nor affect the validity and
enforceability of the applicable Management Agreement, if any; provided, however, that the
Operating Lease shall be terminated or with respect to any Individual Property which has been
released from the lien of the Mortgage pursuant to the terms of Section 2.05 hereof or
substituted pursuant to Section 2.06 hereof.

          (b) Borrower shall not, and shall cause Tenant not to, pledge, transfer, sublease, assign,
mortgage, encumber, or allow to be encumbered its interest in the Operating Lease or any interest
therein without the prior written consent of the Lender, except for any sublease, license or other
occupancy agreement entered into by the Tenant in the ordinary course of business to the extent
such sublease, license or other occupancy agreement is permitted by the terms of the Operating
Lease. Borrower shall not, and shall cause the Tenant not to, consent to any assignment by any
assignee or sublessee of such assignee’s or sublessee’s interest in the Operating Lease or its
rights and interests thereunder.

          (c) Borrower shall not, and shall cause Tenant under any Operating Lease not to, without the
prior written consent of Lender (not to be unreasonably withheld, conditioned or delayed) renew,
extend, amend, modify, waive any provisions of, terminate, reduce rents payable under, accept a
surrender of, or shorten the term of, the Operating Lease, except with respect to

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the termination of the Operating Lease applicable to any Individual Property which has been
released from the lien of the Mortgage pursuant to the terms of Section 2.05 hereof or
substituted pursuant to Section 2.06 hereof.

ARTICLE VI

ENTITY COVENANTS

          Section 6.01 Single Purpose Entity/Separateness.

          Until the Debt has been paid in full, Borrower represents, warrants and covenants as follows:

          (a) Borrower has not and will not:

     (i) engage in any business or activity other than the leasing, ownership, operation and
maintenance of the Property, and activities incidental thereto as more particularly set
forth in Section 7 of Borrower’s limited liability company agreement;

     (ii) acquire or own any assets other than (A) the Property, (B) such incidental
Collateral Property as may be necessary for the ownership or operation of the Property and
(C) cash deposits disbursed to Borrower pursuant to Section 10.02(c)(x) or
Section 9.07 hereof and not yet distributed to its members;

     (iii) merge into or consolidate with any Person, or, to the fullest extent permitted by
law, dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure;

     (iv) fail to observe all necessary, appropriate and customary organizational
formalities, or fail to preserve its existence (including its separate existence) as an
entity duly formed, validly existing and in good standing under the applicable Legal
Requirements of the jurisdiction of its organization or formation, or amend, modify,
terminate or fail to comply, in all material respects, with the provisions of its
organizational documents;

     (v) form acquire or hold any subsidiary (whether corporate, limited liability,
partnership or other) or own any equity interest in, or make any investment in, any Person;

     (vi) commingle its assets with the assets of any other Person;

     (vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) the Debt, (B) trade and operational
indebtedness incurred in the ordinary course of business with trade creditors, provided such
indebtedness is (1) unsecured (other than mechanics’ liens or other liens being properly
contested in accordance with Section 5.04(b)), (2) not evidenced by a note, (3) on
commercially reasonable terms and conditions, and (4) paid not more than sixty (60)

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days past the date incurred (except to the extent such amounts are being contested in
accordance with the terms of Section 5.04(b) hereof), and/or (C) financing leases
and purchase money indebtedness incurred in the ordinary course of business relating to
Collateral Property; provided however, the aggregate amount of the indebtedness of Borrower
described in (B) and (C) shall not exceed at any time three percent (3%) of the outstanding
principal amount of the Note as of the Closing Date;

     (viii) fail to maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and apart from those of
any other Person and fail to represent its assets and liabilities separate and apart from
those of any other Person; except that Borrower’s financial position, assets, liabilities,
net worth and operating results may be included in the consolidated financial statements of
an Affiliate, provided that such consolidated financial statements contain a footnote
indicating that Borrower is a separate legal entity and that it maintains separate books and
records;

     (ix) enter into any transaction, contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower or Operating
Lessee, or any Affiliate of the foregoing, except upon terms and conditions that are
intrinsically fair, commercially reasonable and, except for capital contributions and
distributions, substantially similar to those that would be available on an arm’s-length
basis with unaffiliated third parties;

     (x) maintain its assets in such a manner that it will be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other Person;

     (xi) assume or guaranty the debts of any other Person, hold itself out to be
responsible for the debts of any other Person, or otherwise pledge its assets to secure the
obligations of any other Person or hold out its credit as being available to satisfy the
obligations of any other Person;

     (xii) make or permit to remain outstanding any loans or advances to, or own or acquire
any stock or securities of, any Person;

     (xiii) except to the extent treated as a division of the sole member of Borrower, fail
to file its own tax returns or file a consolidated federal income tax return with any Person
(unless prohibited or required, as the case may be, by applicable Legal Requirements), and
fail to pay any taxes (other than Taxes required to be paid by Lender hereunder) required to
be paid under applicable law;

     (xiv) fail either to hold itself out to the public as a legal entity separate and
distinct from any other Person or to conduct its business in its own name or fail to correct
any known misunderstanding regarding its separate identity or identify itself as a
department or division of any other Person;

     (xv) fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its contemplated
business

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operations, transactions and liabilities; provided, that, the foregoing shall not
require Borrower’s sole member to make additional capital contributions to Borrower;

     (xvi) without the unanimous written consent of its members and the written consent of
100% of the board of directors of Borrower including, without limitation, each Independent
Director, (a) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any Creditors Rights Laws, (b) seek or consent to the
appointment of a receiver, liquidator or any similar official, (c) take any action that
might cause such entity to become insolvent, or (d) make an assignment for the benefit of
creditors;

     (xvii) fail to allocate shared expenses (including, without limitation, shared office
space and services performed by an employee of an Affiliate) among the Persons sharing such
expenses or to use separate stationery or invoices in blank or bearing its own name and
checks bearing its own name;

     (xviii) fail to remain solvent or pay its own liabilities and expenses (including,
without limitation, salaries of its own employees) only from its own funds;

     (xix) acquire obligations or securities of its partners, members, shareholders or other
affiliates, as applicable;

     (xx) violate or cause to be violated the assumptions made with respect to Borrower and
its principals in any opinion letter pertaining to substantive consolidation delivered to
Lender in connection with the Loan;

     (xxi) fail to maintain a sufficient number of employees in light of its contemplated
business operations (it being understood that in light of Borrower’s contemplated business
operations, Borrower may determine that no employees are required);

     (xxii) hold out its credit or assets as being available to satisfy the obligations of
any other entity, pledge its assets to secure the obligations of any other entity;

     (xxiii) fail to have its own board of directors; or

     (xxiv) fail to cause its board of directors to observe all other Delaware limited
liability company formalities.

          (b) If Borrower is a partnership or limited liability company (and not a single member limited
liability company), each general partner in the case of a general partnership, each general partner
in the case of a limited partnership, or the managing member in the case of a limited liability
company (each an “SPE Component Entity”) of Borrower shall be a corporation whose sole
asset is its interest in Borrower. Each SPE Component Entity (i) will at all times comply with
each of the covenants, terms and provisions contained in Section 6.01(a)(iii) -
(vi) and (viii) — (xxiv), as if such representation, warranty or covenant
was made directly by such SPE Component Entity; (ii) will not engage in any business or activity
other than owning an interest in Borrower; (iii) will not acquire or own any assets other than its partnership, membership,
or

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other equity interest in Borrower; (iv) will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation) other than in the ordinary course of business;
and (v) will cause Borrower to comply with the provisions of this Section 6.01 and
Section 6.04. Prior to the withdrawal or the disassociation of any SPE Component Entity
from Borrower, Borrower shall immediately appoint a new general partner or managing member whose
articles of incorporation are substantially similar to those of such SPE Component Entity and, if
an opinion letter pertaining to substantive consolidation was required at closing, deliver a new
opinion letter in the form acceptable to Lender and the Rating Agencies with respect to the new SPE
Component Entity and its equity owners. Notwithstanding the foregoing, to the extent Borrower is a
single member Delaware limited liability company, so long as Borrower maintains such formation
status, no SPE Component Entity shall be required for such single member Delaware limited liability
company.

          (c) In the event Borrower is a single-member Delaware limited liability company (the
“SMLLC”), the limited liability company agreement of such SMLLC (the “LLC
Agreement”) shall provide that (i) upon the occurrence of any event that causes the sole member
of such SMLLC (any such sole member, the “Member”) to cease to be the member of such SMLLC
(other than (A) upon an assignment by Member of all of its limited liability company interest in
such SMLLC and the admission of the transferee, or (B) the resignation of Member and the admission
of an additional member in either case in accordance with the terms of the Loan Documents and the
LLC Agreement), any Person acting as Independent Director of such SMLLC shall without any action of
any other Person and simultaneously with the Member ceasing to be the member of such SMLLC,
automatically be admitted to such SMLLC (“Special Member”) and shall continue such SMLLC
without dissolution and (ii) Special Member may not resign from such SMLLC or transfer its rights
as Special Member unless (A) a successor Special Member has been admitted to such SMLLC as Special
Member in accordance with requirements of Delaware law and (B) such successor Special Member has
also accepted its appointment as an Independent Director. The LLC Agreement shall further provide
that (i) Special Member shall automatically cease to be a member of such SMLLC upon the admission
to such SMLLC of a substitute Member, (ii) Special Member shall be a member of such SMLLC that has
no interest in the profits, losses and capital of such SMLLC and has no right to receive any
distributions of such SMLLC assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required to make any capital
contributions to such SMLLC and shall not receive a limited liability company interest in such
SMLLC, (iv) Special Member, in its capacity as Special Member, may not bind such SMLLC, and (v)
except as required by any mandatory provision of the Act, Special Member, in its capacity as
Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, such SMLLC, including, without limitation, the merger, consolidation or
conversion of such SMLLC; provided, however, such prohibition shall not limit the obligations of
Special Member, in its capacity as Independent Director, to vote on such matters required by the
Loan Documents or the LLC Agreement. In order to implement the admission to such SMLLC of Special
Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to
such SMLLC as Special Member, Special Member shall not be a member of such SMLLC.

          (d) Upon the occurrence of any event that causes the Member to cease to be a member of such
SMLLC, to the fullest extent permitted by applicable law, the personal

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representative of Member
shall, within ninety (90) days after the occurrence of the event that terminated the continued
membership of Member in such SMLLC, agree in writing (i) to continue such SMLLC and (ii) to the
admission of the personal representative or its nominee or designee, as the case may be, as a
substitute member of such SMLLC, effective as of the occurrence of the event that terminated the
continued membership of Member of such SMLLC in such SMLLC. To the extent permitted by applicable
law, any action initiated by or brought against Member or Special Member under any Creditors Rights
Laws shall not cause Member or Special Member to cease to be a member of such SMLLC and upon the
occurrence of such an event, the business of such SMLLC shall continue without dissolution. To the
extent permitted by applicable law, the LLC Agreement shall provide that each of Member and Special
Member waives any right it might have to agree in writing to dissolve such SMLLC upon the
occurrence of any action initiated by or brought against Member or Special Member under any
Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease
to be a member of such SMLLC.

          Section 6.02 Change of Name, Identity or Structure.

          Borrower shall not change or permit to be changed (a) its name, (b) its identity (including
its trade name or names), (c) its principal place of business, (d) the corporate, partnership or
other organizational structure of Borrower, each SPE Component Entity (if any), or Borrower
Principal, (e) Borrower’s state of organization, or (f) Borrower’s organizational identification
number, without in each case notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in Borrower’s structure,
without first obtaining the prior written consent of Lender. In addition, Borrower shall not
change or permit to be changed any organizational documents of Borrower or any SPE Component Entity
(if any) if such change would violate the covenants set forth in Section 6.01 and
Section 6.04 hereof. Borrower authorizes Lender to file any financing statement or
financing statement amendment reasonably required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the reasonable request of
Lender, Borrower shall execute a certificate in form reasonably satisfactory to Lender listing the
trade names under which Borrower intends to operate each Individual Property, and representing and
warranting that Borrower does business under no other trade name with respect to the Individual
Property. If Borrower does not now have an organizational identification number and later obtains
one, or if the organizational identification number assigned to Borrower subsequently changes,
Borrower shall promptly notify Lender of such organizational identification number or change.

          Section 6.03 Business and Operations.

          Borrower will qualify to do business and will remain in good standing under the laws of the
State as and to the extent the same are required for the ownership, maintenance, leasing and
operation of the Property.

          Section 6.04 Independent Director.

          (a) The organizational documents of each SMLLC and each SPE Component Entity (if any) shall
provide that at all times there shall be, and Borrower shall cause there to be,

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at least two (2)
members of the board of directors (each an “Independent Director”) of each such SMLLC and
each SPE Component Entity (if any) reasonably satisfactory to Lender each of whom are not at the
time of such individual’s initial appointment, and shall not have been at any time during the
preceding five (5) years, and shall not be at any time while serving as a director of such SPE
Component Entity, either (i) a shareholder (or other equity holder in Borrower) of, or an officer,
director, partner, manager, member (other than as a Special Member in the case of an SMLLC),
employee, attorney or counsel of, Borrower, such SPE Component Entity or any of their respective
shareholders, partners, members, subsidiaries or affiliates; (ii) a customer (not including a
customer of any Individual Property) or creditor of, or supplier to, Borrower or any of its
respective shareholders, partners, members, subsidiaries or affiliates who derives any of its
purchases or revenue from its activities with Borrower or such SPE Component Entity or any
Affiliate of any of them; (iii) a Person who Controls or is under common Control with any such
shareholder, officer, director, partner, manager, member, employee, supplier, creditor or customer;
or (iv) a member of the immediate family of any such shareholder, officer, director, partner,
manager, member, employee, supplier, creditor or customer.

          (b) The organizational documents of each SPE Component Entity (if any) shall provide that the
board of directors of such SPE Component Entity shall not take any action which, under the terms of
any certificate of incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires a unanimous vote of the board of directors of such SPE Component Entity of Borrower
unless at the time of such action there shall be at least two (2) members of the board of directors
who are Independent Directors. Such SPE Component Entity will not, without the unanimous written
consent of its board of directors including the Independent Directors, on behalf of itself or
Borrower (i) file or consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable Creditors Rights Laws; (ii) seek or consent to the appointment of
a receiver, liquidator or any similar official; (iii) take any action that is reasonably likely to
cause such entity to become insolvent; or (iv) make an assignment for the benefit of creditors.

ARTICLE VII

NO SALE OR ENCUMBRANCE

          Section 7.01 Transfer Definitions.

          For purposes of this Article VII an “Affiliated Manager” shall mean any manager of the
Property in which Borrower, Borrower Principal any SPE Component Entity (if any) or any affiliate
of such entities has, directly or indirectly, any legal, beneficial or economic interest;
“Control” shall mean the power to direct the management and policies of a Restricted Party,
directly or indirectly, whether through the ownership of voting securities or other beneficial
interests, by contract or otherwise; “Restricted Party” shall mean Borrower, Borrower
Principal, any New Mezzanine Borrower, any SPE Component Entity (if any), any Affiliated Manager
(if any), BTDS or any shareholder, partner, member or non-member manager of any of the
foregoing, or any direct or indirect legal or beneficial owner of Borrower, Borrower
Principal, BTDS, any SPE Component Entity (if any) or any Affiliated Manager (if any), provided,
that, in no event shall Lease Guarantor or any of its shareholders be deemed to be a “Restricted
Party” for purposes of this Article VII; and a “Sale or Pledge” shall mean a
voluntary or involuntary

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sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, grant of any options with respect to, or any other transfer or disposition of (directly
or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not
for consideration or of record) of a legal or beneficial interest.

          Section 7.02 No Sale/Encumbrance.

          (a) Subject to Borrower’s right to effect a release or substitution of an Individual Property
pursuant to Sections 2.05 and 2.06 hereof, Borrower shall not, without the prior
written consent of Lender, cause or permit a Sale or Pledge of the Property, any Individual
Property or any part thereof or any legal or beneficial interest therein nor permit a Sale or
Pledge of an interest in any Restricted Party (except for (i) a pledge by BTDS of the stock or
equity interests in Borrower Principal, (ii) a pledge by The Bon-Ton Corp. of the stock in BTDS and
(iii) a pledge by Lease Guarantor of the stock in The Bon-Ton Corp. (which are hereinafter
collectively referred to as the “Credit Facility Pledge”) pursuant to the terms of the
Senior Credit Facility) (in each case, a “Prohibited Transfer”) other than in connection
with an exercise of remedies by a New Mezzanine Lender under a New Mezzanine Loan pursuant to the
applicable New Mezzanine Loan Documents and pursuant to Leases of space in the Improvements to
Tenants or any other sublease or license of all or any portion of any Individual Property in
accordance with the provisions of Section 5.13.

          (b) A Prohibited Transfer shall include, but not be limited to, (i) an installment sales
agreement wherein Borrower agrees to sell the Property, any Individual Property or any part thereof
for a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial
part of any Individual Property for other than actual occupancy by a space tenant thereunder or a
sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right,
title and interest in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation,
any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance
of new stock in one or a series of transactions; (iv) if a Restricted Party is a limited or general
partnership or joint venture, any merger or consolidation or the change, removal, resignation or
addition of a general partner or the Sale or Pledge of the partnership interest of any general or
limited partner or any profits or proceeds relating to such partnership interests or the creation
or issuance of new partnership interests; (v) if a Restricted Party is a limited liability company,
any merger or consolidation or the change, removal, resignation or addition of a managing member or
non-member manager (or if no managing member, any member) or the Sale or Pledge of the membership
interest of any member or any profits or proceeds relating to such membership interest; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of
the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or
beneficial interests; or (vii) the removal or the resignation of Manager (including, without
limitation, an Affiliated Manager) other than in accordance with Section 5.14; and (viii)
the termination, assignment or any Sale or Pledge of any Operating Lease or the Borrower’s or
Operating Lessee’s interests thereunder.

          (c) Notwithstanding that a Credit Facility Pledge is excluded from the restrictions on a Sale
or Pledge of the interests in a Restricted Party set forth in this Article VII, Borrower
hereby agrees that in the event that the pledgee of the Credit Facility Pledge exercises

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its
remedies under the Senior Credit Facility and forecloses on the Credit Facility Pledge and such
foreclosure (or other exercise of remedies) results in any Person and its Affiliates owning in
excess of forty-nine percent (49%) of the ownership interests in a Restricted Party, Borrower
shall, prior to such transfer, deliver a revised substantive non-consolidation opinion to Lender
and New Mezzanine Lender, if any, reflecting such transfer, which opinion shall be in form, scope
and substance reasonably acceptable in all respects to Lender and New Mezzanine Lender, if any, and
acceptable in all respects to the Rating Agencies.

          Section 7.03 Permitted Transfers.

          Notwithstanding the provisions of Section 7.02, the following transfers shall not be
deemed to be a Prohibited Transfer provided no Event of Default exists (each, a “Permitted
Transfer”): (a) a transfer by devise or descent or by operation of law upon the death of a
member, partner or shareholder of a Restricted Party; and (b) the transfer, in one or a series of
transactions, of not more than forty-nine percent (49%) of the stock, limited partnership interests
or non-managing membership interests (as the case may be) in a Restricted Party; provided,
however, with respect to transfers pursuant to clause (a) and (b), (i) no such transfer
shall result in a change of control in the Restricted Party or a change of control of the
day-to-day operations of the Property, (ii) as a condition to each such transfer under clause (b),
Lender shall receive not less than thirty (30) days prior written notice of such proposed transfer,
(iii) Borrower shall deliver evidence reasonably acceptable to Lender that there has not been and
will not be any breach of the representations and covenants set forth in Article VI hereof
and (iv) no such transfer shall result in the transferee owning more than forty-nine percent (49%)
of the direct or indirect interests in the Borrower if such transferee did not own forty-nine
percent (49%) or more of the direct or indirect interests in the Borrower as of the date hereof.
Notwithstanding the foregoing, if any transfer permitted under this Section 7.03 results in
any Person owning in excess of forty-nine percent (49%) of the ownership interest in a Restricted
Party, Borrower shall, prior to such transfer, deliver a revised substantive non-consolidation
opinion to Lender reflecting such transfer, which opinion shall be in form, scope and substance
reasonably acceptable in all respects to Lender and acceptable in all respects to the Rating
Agencies. Notwithstanding the foregoing, in the event that Borrower is a single member limited
liability company, no transfer shall be permitted which results in the Borrower having more than
one (1) member.

          Section 7.04 Lender’s Rights.

          Lender reserves the right to condition the consent to a Prohibited Transfer requested
hereunder upon (a) a modification of the terms hereof and an assumption of the Note and the other
Loan Documents by the proposed transferee and a modification of the Loan Documents to the extent
reasonably necessary to reflect the Prohibited Transfer, (b) receipt of payment of a transfer fee
equal to one percent (1%) of the outstanding principal balance of the Loan and all of Lender’s
expenses incurred in connection with such Prohibited Transfer, (c) receipt of written confirmation
from the Rating Agencies that the Prohibited Transfer will not result in a downgrade, withdrawal or
qualification of the initial, or if higher, then current ratings
issued in connection with a Securitization, or if a Securitization has not occurred, any
ratings to be assigned in connection with a Securitization, (d) the proposed transferee’s continued
compliance with the covenants set forth in this Agreement (including, without limitation, the

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covenants in Article VI) and the other Loan Documents, (e) a Qualified Manager for each Individual
Property and a Management Agreement reasonably satisfactory to Lender, and (f) the satisfaction of
such other conditions and/or legal opinions as Lender shall reasonably require. All reasonable
actual out-of-pocket expenses incurred by Lender shall be payable by Borrower whether or not Lender
consents to the Prohibited Transfer. Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon a Prohibited Transfer made without Lender’s consent. This
provision shall apply to each and every Prohibited Transfer, whether or not Lender has consented to
any previous Prohibited Transfer. Notwithstanding anything to the contrary contained in this
Section 7.04, if any Sale or Pledge permitted under this Article VII results in any Person
and its Affiliates owning in excess of forty-nine percent (49%) of the ownership interests in a
Restricted Party, Borrower shall, prior to such transfer, and in addition to any other requirement
for Lender consent contained herein, deliver a revised substantive non-consolidation opinion to
Lender reflecting such Prohibited Transfer, which opinion shall be in form, scope and substance
reasonably acceptable in all respects to Lender and acceptable in all respects to the Rating
Agencies.

          Section 7.05 Assumption.

          Notwithstanding the foregoing provisions of this Article VII, following the date which is six
(6) months from the Closing Date, Lender shall not unreasonably withhold consent to a transfer of
the Property in its entirety to, and the related assumption of the Loan by, any Person (a
“Transferee”) provided that each of the following terms and conditions are satisfied:

          (a) no Default or Event of Default is continuing;

          (b) Borrower shall have (i) delivered written notice to Lender of the terms of such
prospective transfer not less than sixty (60) days before the date on which such transfer is
scheduled to close and, concurrently therewith, all such information concerning the proposed
Transferee as Lender shall reasonably require and (ii) paid to Lender a non-refundable processing
fee in the amount of $5,000 (provided, that, Borrower shall not be required to pay any processing
fee in connection with the first request for approval of a Loan assumption pursuant to this
Section 7.05).

          (c) Borrower shall have obtained Lender’s prior written approval, such approval not to be
unreasonably withheld, provided, that, Lender shall have the right to approve or disapprove the
proposed transfer based on its then current underwriting and credit requirements for similar loans
secured by similar properties which loans are sold in the secondary market, such approval not to be
unreasonably withheld. In determining whether to give or withhold its approval of the proposed
transfer, Lender shall consider the experience and track record of Transferee and its principals in
owning and operating facilities similar to the Property, the financial strength of Transferee and
its principals, the general business and credit standing of Transferee and its principals and
Transferee’s and its principals’ relationships and experience with contractors, vendors, tenants,
lenders and other business entities; provided,
however, that, notwithstanding Lender’s agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval shall be given or withheld
based on what Lender determines to be commercially reasonable and, if given, may be given

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subject
to such conditions as Lender may deem reasonably appropriate. Lender may withhold its consent to
any proposed transfer occurring prior to a Securitization if the consideration to be paid by the
Transferee, as determined by Lender, is less than the appraised value of the Property (as adjusted
as a result of any Property Releases), as determined by Lender in connection with Lender’s
underwriting of the Loan.

          (d) Borrower shall have paid to Lender (i) upon Lender’s approval of the assumption of the
Loan by the then-proposed Transferee, a non-refundable assumption fee in an amount equal to one
half of one percent (0.5%) of the then outstanding principal amount of the Loan and (ii)
concurrently with the closing of the assumption of the Loan and the related sale of the Property,
all reasonable, actual out-of-pocket costs and expenses, including reasonable attorneys’ fees,
incurred by Lender in connection with the transfer;

          (e) Transferee assumes and agrees to pay the Debt as and when due subject to the provisions of
Article XV hereof and, prior to or concurrently with the closing of such transfer, Transferee and
its constituent partners, members or shareholders as Lender may reasonably require, shall execute,
without any cost or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption;

          (f) Borrower and Transferee, without any cost to Lender, shall furnish any information
requested by Lender for the preparation of, and shall authorize Lender to file, new financing
statements and financing statement amendments and other documents to the fullest extent permitted
by applicable law and shall execute any additional documents reasonably requested by Lender;

          (g) Borrower shall have delivered to Lender, without any cost or expense to Lender, such
endorsements to Lender’s Title Insurance Policy insuring that fee simple title to the Property, as
applicable, is vested in Transferee (subject to Permitted Encumbrances), hazard insurance
endorsements or certificates and other similar materials as Lender may reasonably deem necessary at
the time of the transfer, all in form and substance reasonably satisfactory to Lender;

          (h) Transferee shall have furnished to Lender the organizational documents of Transferee and
evidence of its good standing, and the qualification of the signers to execute the assumption of
the Debt, which papers shall include certified copies of all documents relating to the organization
and formation of Transferee and of the entities, if any, which are partners or members of
Transferee. Transferee and such constituent partners, members or shareholders of Transferee (as
the case may be), as Lender shall reasonably require, shall comply with the covenants set forth in
Article VI hereof;

          (i) The Manager shall be a Qualified Manager;

          (j) Transferee shall furnish an opinion of counsel satisfactory to Lender and its counsel (A)
that Transferee’s formation documents provide for the matters described in
subparagraph (h) above, (B) that the assumption of the Debt has been duly authorized, executed
and delivered, and that the Note, the Mortgage, this Agreement, the assumption agreement and the
other Loan Documents are valid, binding and enforceable against Transferee in accordance

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with their
terms, (C) that Transferee and any entity which is a controlling stockholder, member or general
partner of Transferee, have been duly organized, and are in existence and good standing, and (D)
with respect to such other matters as Lender may reasonably request;

          (k) if required by Lender, Lender shall have received confirmation in writing from the Rating
Agencies that rate the Securities to the effect that the transfer will not result in a
qualification, downgrade or withdrawal of any rating initially assigned or to be assigned to the
Securities;

          (l) Borrower’s obligations under the contract of sale pursuant to which the transfer is
proposed to occur shall expressly be subject to the satisfaction of the terms and conditions of
this Section 7.05;

          (m) Transferee shall, prior to such transfer, deliver a substantive non-consolidation opinion
to Lender, which opinion shall be in form, scope and substance acceptable in all respects to Lender
and the Rating Agencies; and

          (n) Simultaneously with any such transfer permitted hereunder, any New Mezzanine Loan shall
have been paid in full or the assumption of the Loan and the Transferee shall have been approved by
any New Mezzanine Lender and the New Mezzanine Loan shall have been assumed by an entity related to
Transferee pursuant to the terms of the New Mezzanine Loan Documents.

          A consent by Lender with respect to a transfer of the Property in its entirety to, and the
related assumption of the Loan by, a Transferee pursuant to this Section 7.05 shall not be
construed to be a waiver of the right of Lender to consent to any subsequent transfer of the
Property.

          Section 7.06 Immaterial Transfers.

          Borrower may, without the consent of Lender, (i) make immaterial transfers of portions of the
Property to Governmental Authorities for dedication or public use (subject to the provisions of
Section 8.03), and (ii) grant easements, restrictions, covenants, reservations and rights
of way in the ordinary course of business for access, water and sewer lines, telephone and
telegraph lines, electric lines or other utilities or for other similar purposes, provided that no
such transfer, conveyance or encumbrance set forth in the foregoing clauses (i) and (ii) shall
materially impair the utility, operation or value of the applicable Individual Property. In
connection with any such transfer permitted pursuant to this Section 7.06, Lender, upon
receipt of written request from Borrower, shall execute and deliver any instrument reasonably
necessary or appropriate, in the case of any transfer referred to in clause (i) above, to release
the portion of the Property affected by such transfer from the Lien of the applicable Mortgage or,
in the case of clause (ii) above, to subordinate the Lien of the applicable Mortgage to such
easements, restrictions, covenants, reservations and rights of way or other similar grants upon
receipt by Lender of:

          (a) thirty (30) days prior written notice thereof;

          (b) a copy of the instrument or instruments of transfer;

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          (c) an Officer’s Certificate stating (i) with respect to any such transfer, the consideration,
if any, being paid for the transfer and (ii) that such transfer does not materially impair the
utility, operation or value of the applicable Individual Property; and

          (d) reimbursement of all of Lender’s actual reasonable out-of-pocket costs and expenses
incurred in connection with such transfer.

ARTICLE VIII

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

          Section 8.01 Insurance.

          (a) Borrower shall obtain and maintain, or cause to be maintained, at all times insurance for
Borrower and each Individual Property providing at least the following coverages:

     (i) comprehensive “all risk” insurance on the Improvements and the Collateral Property,
in each case (A) in an amount equal to one hundred percent (100%) of the “Full Replacement
Cost,” which for purposes of this Agreement shall mean actual replacement value (exclusive
of costs of excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to the Improvements
and Collateral Property waiving all co-insurance provisions; (C) providing for no deductible
in excess of $250,000 for all such insurance coverage; and (D) if any of the Improvements
or the use of any Individual Property shall at any time constitute legal non-conforming
structures or uses, providing coverage for contingent liability from Operation of Building
Laws, Demolition Costs and Increased Cost of Construction Endorsements and containing an
“Ordinance or Law Coverage” or “Enforcement” endorsement. In addition, Borrower shall
obtain: (y) if any portion of the Improvements is currently or at any time in the future
located in a “special flood hazard area” designated by the Federal Emergency Management
Agency, flood hazard insurance in an amount equal to the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act
of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended; and (z)
earthquake insurance in amounts and in form and substance reasonably satisfactory to Lender
in the event any Individual Property is located in an area with a high degree of seismic
risk, provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required under this subsection
(i);

     (ii) Commercial General Liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about any Individual Property, with
such insurance (A) to be on the so-called “occurrence” form
with a general aggregate limit of not less than $2,000,000 and a per occurrence limit
of not less than $1,000,000; (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic conditions making
such protection inadequate; and (C) to cover at least the following hazards: (1) premises
and operations; (2) products and completed operations exposure, if applicable; (3)

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independent contractors; (4) blanket contractual liability; and (5) contractual liability
covering the indemnities contained in Article XII and Article XIV hereof to the extent the
same is available;

     (iii) loss of rents insurance or business income insurance, as applicable, (A) with
loss payable to Lender; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above; and (C) which provides that after the physical loss to
the Improvements and Collateral Property occurs, the loss of rents or income, as applicable,
will be insured until such rents or income, as applicable, either return to the same level
that existed prior to the loss, or the expiration of eighteen (18) months, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such period; and
(D) which contains an extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same level it was at
prior to the loss, or the expiration of six (6) months from the date that the related
Individual Property is repaired or replaced and operations are resumed, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such period. The
amount of such loss of rents or business income insurance, as applicable, shall be
determined prior to the date hereof and at least once each year thereafter based on
Borrower’s reasonable estimate of the gross income from the related Individual Property for
the succeeding period of coverage required above. All proceeds payable to Lender pursuant
to this subsection shall be held by Lender in an Eligible Account and shall be applied to
the obligations secured by the Loan Documents from time to time due and payable hereunder
and under the Note; provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by the Loan Documents on
the respective dates of payment provided for in the Note, this Agreement and the other Loan
Documents except to the extent such amounts are actually paid out of the proceeds of such
loss of rents or business income insurance, as applicable;

     (iv) at all times during which structural construction, repairs or alterations are
being made with respect to the Improvements, and only if the related Individual Property
coverage form does not otherwise apply, (A) owner’s contingent or protective liability
insurance covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the insurance provided for
in subsection (i) above written in a so-called Builder’s Risk Completed Value form (1) on a
non-reporting basis, (2) against “all risks” insured against pursuant to subsection (i)
above, (3) including permission to occupy the related Individual Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions or coverage provided without a
co-insurance provision;

     (v) workers’ compensation, subject to the statutory limits of the State, and employer’s
liability insurance in respect of any work or operations on or about the related Individual
Property, or in connection with such Individual Property or its operation (if applicable);

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     (vi) comprehensive boiler and machinery insurance, if applicable, in amounts as shall
be reasonably required by Lender on terms consistent with the commercial property insurance
policy required under subsection (i) above;

     (vii) excess liability insurance in an amount not less than $75,000,000 per occurrence
on terms consistent with the commercial general liability insurance required under
subsection (ii) above; and

     (viii) upon sixty (60) days’ written notice, such other reasonable insurance and in
such reasonable amounts as Lender from time to time may reasonably request against such
other insurable hazards which at the time are commonly insured against for property similar
to each Individual Property located in or around the region in which the applicable
Individual Property is located.

          With respect to the Policies required to be maintained pursuant to clauses (i) through (viii)
above, Borrower shall use commercially reasonable efforts, consistent with those of prudent owners
of institutional quality commercial real estate, to maintain insurance coverage against Losses
resulting from acts of terrorism.

          (b) All insurance provided for in Section 8.01(a) shall be obtained under valid and
enforceable policies (collectively, the “Policies” or in the singular, the
“Policy”), and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds. The Policies shall be issued by financially sound
and responsible insurance companies authorized to do business in the State and having a claims
paying ability rating of “A” or better by at least two Rating Agencies, one of which must be S&P or
such other Rating Agencies approved by Lender. The Policies described in Section 8.01(a)
shall designate Lender and its successors and assigns as additional insureds, mortgagees and/or
loss payee as deemed appropriate by Lender. Borrower shall deliver abstracts of the Policies and
insurance certificates to the Lender prior to the Closing Date. Not less than ten (10) days prior
to the expiration dates of the Policies required to be maintained hereunder, Borrower shall deliver
to Lender certificates for such Policies which shall be satisfactory to Lender and shall be
accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the
“Insurance Premiums”). Borrower shall deliver abstracts of the Policies (in substance
acceptable to Lender) that are evidenced by the certificates delivered pursuant to the immediately
preceding sentence. Further, upon request of Lender, Borrower shall promptly, or cause Operating
Lessee to promptly (but in no event more than five (5) Business Days after Lender’s request) (i)
permit Lender, or its insurance consultant acting on Lender’s behalf, access to the full blanket
insurance policy at such location that the Borrower or Operating Lessee, as applicable, maintains
such policy (which includes the Policies) for purposes of reading and duplicating such blanket
insurance policy (or the relevant portions thereof as determined by Lender) and (ii) deliver to
Lender copies of all applicable excerpts from the Policies (or full copies of the Policies in the
event the same are required by court order to be produced by Lender or Borrower in connection with
any proceeding or action or claim thereunder or relating thereto) promptly upon request therefor
by Lender, which excerpts shall include (but not be limited to) the insurance companies providing
coverage, the actual coverage provided thereunder, the limits of coverage, applicable endorsements,
and all provisions of the Policies required by Lender to make a determination of loss or otherwise
defend, file, respond or process a claim under or relating to such Policies.

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          (c) Any blanket insurance Policy shall specifically allocate to each Individual Property the
amount of coverage from time to time required hereunder in compliance with the provisions of
Section 8.01(a).

          (d) All Policies provided for or contemplated by Section 8.01(a), except for the
Policy referenced in Section 8.01(a)(v), shall name Operating Lessee as the insured and
Borrower and Lender as the additional insureds, as their respective interests may appear, and in
the case of property damage, boiler and machinery, flood and earthquake insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the
loss thereunder shall be payable to Lender.

          (e) All Policies provided for in Section 8.01(a) shall contain clauses or endorsements
to the effect that:

     (i) no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant
or other occupant, or failure to comply with the provisions of any Policy, which might
otherwise result in a forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as Lender is concerned;

     (ii) the Policies shall not be materially changed (other than to increase the coverage
provided thereby) or canceled without at least thirty (30) days’ prior written notice to
Lender and any other party named therein as an additional insured;

     (iii) the issuers thereof shall give written notice to Lender if the Policies have not
been renewed thirty (30) days prior to its expiration; and

     (iv) Lender shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.

          (f) If at any time Lender is not in receipt of written evidence that all insurance required
hereunder is in full force and effect, Lender shall have the right, without notice to Borrower, to
take such action as Lender deems necessary to protect its interest in any Individual Property,
including, without limitation, obtaining some or all of such insurance coverage as is required in
this Article VIII. All premiums incurred by Lender in connection with such action or in obtaining
such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and, until
paid, shall be secured by the Mortgage and shall bear interest at the Default Rate.

          Section 8.02 Casualty.

          (a) If an Individual Property shall be damaged or destroyed, in whole or in part, by fire or
other casualty (a “Casualty”), Borrower shall give prompt notice of such damage to Lender
and shall promptly commence and diligently prosecute the Restoration of the related Individual
Property in accordance with Section 8.04, provided Lender shall make all Net Proceeds
available pursuant to Section 8.04. Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be obligated to,
make proof of loss if not made promptly by Borrower. Borrower shall adjust all claims for

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Insurance Proceeds which are reasonably anticipated to be in excess of $500,000 in consultation
with, and reasonable approval of, Lender; provided, however, if an Event of Default has occurred
and is continuing, Lender shall have the exclusive right to participate in the adjustment of all
claims for Insurance Proceeds.

          (b) Notwithstanding anything to the contrary contained herein, Borrower shall be obligated to
rebuild or restore the Improvements of the applicable Individual Property following a Casualty to
the extent that the Operating Lessee is obligated to rebuild or restore pursuant to the terms of
its Operating Lease.

          Section 8.03 Condemnation.

          (a) Borrower shall promptly give Lender notice of the actual or threatened commencement of any
proceeding for the Condemnation of any Individual Property of which Borrower has knowledge and
shall deliver to Lender copies of any and all papers served in connection with such proceedings.
Lender may participate in any such proceedings, and Borrower shall from time to time deliver to
Lender all applicable documents in its possession reasonably requested by it to permit such
participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or quasi-public
authority through Condemnation or otherwise (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at
the time and in the manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall
not be limited to the interest paid on the Award by the condemning authority but shall be entitled
to receive out of the Award interest at the rate or rates provided herein or in the Note. If an
Individual Property or any portion thereof is taken by a condemning authority, Borrower shall
promptly commence and diligently prosecute the Restoration of the related Individual Property and
otherwise comply with the provisions of Section 8.04, provided Lender shall make all Net
Proceeds available pursuant to Section 8.04. If any Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right,
whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the Debt.

          (b) Notwithstanding anything to the contrary contained herein, Borrower shall be obligated to
rebuild or restore the Improvements of the applicable Individual Property
following a Condemnation to the extent that the Operating Lessee is obligated to rebuild or
restore pursuant to the terms and conditions of Article XVII of the applicable Operating Lease. In
the event a Total Loss (as defined in the applicable Operating Lease) related to a Condemnation has
occurred with respect to any Individual Property and the Operating Lessee elects not to restore or
rebuild in accordance with Article XVII of the applicable Operating Lease, Borrower shall pay to
Lender the Award (such Award being paid to Lender shall equal the portion of the Award paid to
Borrower and the Award paid to Operating Lessee under the applicable Operating Lease which has been
assigned to Borrower, as landlord, in connection

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with Operating Lessee’s termination of the
Operating Lease as to the Individual Property that suffered a Total Loss).

          Section 8.04 Restoration.

          The following provisions shall apply in connection with the Restoration of an Individual
Property:

          (a) Provided that Borrower delivers to Lender a written undertaking to expeditiously commence
and to satisfactorily complete with due diligence the Restoration in accordance with the terms of
this Agreement, the Net Proceeds shall be disbursed by Lender to Borrower upon receipt subject to
the prior satisfaction of the requirements set forth in clause (c) below. Borrower hereby
covenants and agrees that it shall not waive, pursuant to Section 17.3(d) of the Operating Lease,
the requirement that Operating Lessee restore in all circumstances other than a Total Loss (as
defined in the applicable Operating Lease).

          (b) The term “Net Proceeds” for purposes of this Section 8.04 shall mean: (i) the net
amount of all insurance proceeds received by Lender pursuant to Section 8.01(a)(i),
(iv), (vi) and (vii) as a result of a Casualty, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in
collecting the same (“Insurance Proceeds”), or (ii) the net amount of the Award as a result
of a Condemnation, after deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting the same (“Condemnation Proceeds”),
whichever the case may be.

          (c) The Net Proceeds shall be made available to Borrower for Restoration provided that each of
the following conditions are met:

     (A) no Event of Default shall have occurred and be continuing;

     (B) the Operating Lease applicable to the Individual Property that suffered a
Casualty or Condemnation shall remain in full force and effect during and after the
completion of the Restoration without abatement of rent beyond the time required for
Restoration;

     (C) Borrower shall commence the Restoration as soon as reasonably practicable
(but in no event later than 90 days after such Casualty or Condemnation, whichever
the case may be, occurs) and shall diligently pursue the same to satisfactory
completion;

     (D) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date or (2)
such time as may be required under applicable zoning law, ordinance, rule or
regulation, or (3) the expiration of the insurance coverage referred to in
Section 8.01(a)(iii);

     (E) such Individual Property and the use thereof after the Restoration will be
in compliance with and permitted under all Legal Requirements;

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     (F) the Restoration shall be done and completed by Borrower in an expeditious
and diligent fashion and in compliance with all applicable Legal Requirements;

     (G) such Casualty or Condemnation, as applicable, does not result in the loss
of access to such Individual Property or the Improvements; and

     (H) the Net Proceeds together with any cash or cash equivalent deposited by
Borrower with Lender are sufficient in Lender’s reasonable judgment to cover the
cost of the Restoration.

     (ii) The Net Proceeds shall be held by Lender, and, until disbursed in accordance with
the provisions of this Section 8.04, shall constitute additional security for the
Debt and other obligations under the Loan Documents. The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower from time to time during the course of the
Restoration, upon receipt of evidence satisfactory to Lender that (A) all the conditions
precedent to such advance, including those set forth in Section 8.04(b)(i), have
been satisfied, (B) all materials installed and work and labor performed (except to the
extent that they are to be paid for out of the requested disbursement) in connection with
the related Restoration item have been paid for in full, and (C) there exist no notices of
pendency, stop orders, mechanic’s or materialmen’s liens or notices of intention to file
same, or any other liens or encumbrances of any nature whatsoever on the related Individual
Property which have not either been fully bonded to the satisfaction of Lender and
discharged of record or in the alternative fully insured to the satisfaction of Lender by
the title company issuing the Title Insurance Policy. Notwithstanding the foregoing,
Insurance Proceeds from the Policies required to be maintained by Borrower pursuant to
Section 8.01(a)(iii) shall be held and disbursed in accordance with Section
8.01(a)(iii).

     (iii) All plans and specifications required in connection with the Restoration shall be
subject to prior review and acceptance by an independent consulting engineer selected by
Lender (the “Restoration Consultant”). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in connection
with the Restoration. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration pursuant to the contracts in excess of $250,000 under which they
have been engaged, shall be subject to prior review and acceptance by the Restoration
Consultant. All costs and expenses incurred by Lender in connection with making the Net
Proceeds available for the Restoration, including, without limitation,
reasonable counsel fees and disbursements and the Restoration Consultant’s fees, shall
be paid by Borrower.

     (iv) In no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for work in place
as part of the Restoration, as certified by the Restoration Consultant, minus the
Restoration Retainage. The term “Restoration Retainage” shall mean an amount equal to ten
percent (10%) of the costs actually incurred for work in place as part of the Restoration,
as certified by the Restoration Consultant, until the Restoration has been completed. The
Restoration Retainage shall be reduced to five percent (5%) of the costs

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incurred upon receipt by Lender of satisfactory evidence that fifty percent (50%) of the Restoration has
been completed. The Restoration Retainage shall in no event, and notwithstanding anything
to the contrary set forth above in this Section 8.04(b), be less than the amount
actually held back by Borrower from contractors, subcontractors and materialmen engaged in
the Restoration. The Restoration Retainage shall not be released until the Restoration
Consultant certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Section 8.04(b) and that all approvals necessary for the
re-occupancy and use of the related Individual Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that Lender will release the portion of the
Restoration Retainage being held with respect to any contractor, subcontractor or
materialmen engaged in the Restoration as of the date upon which the Restoration Consultant
certifies to Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the provisions of the
contractor’s, subcontractor’s or materialman’s contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by Lender or by the
title company issuing the Title Insurance Policy, and Lender receives an endorsement to the
Title Insurance Policy insuring the continued priority of the lien of the Mortgage and
evidence of payment of any premium payable for such endorsement. If required by Lender, the
release of any such portion of the Restoration Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

     (v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.

     (vi) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of the Restoration Consultant, be sufficient to pay in full the
balance of the costs which are estimated by the Restoration Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit the deficiency
(the “Net Proceeds Deficiency”) with Lender before any further disbursement of the
Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 8.04(b) shall
constitute additional security for the Debt and other obligations under the Loan Documents.

     (vii) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the
Net Proceeds Deficiency deposited with Lender after the Restoration Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions of this
Section 8.04(b), and the receipt by Lender of evidence satisfactory to Lender that
all costs incurred in connection with the Restoration have been paid in full, shall be
remitted by Lender to Borrower, provided no Event of Default shall have

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occurred and shall be continuing under the Note, this Agreement or any of the other Loan Documents.

          (d) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be
returned to Borrower as excess Net Proceeds pursuant to Section 8.04(b)(vii) may (x) be
retained and applied by Lender toward the payment of the Debt whether or not then due and payable
in such order, priority and proportions as Lender in its sole discretion shall deem proper, or, (y)
at the sole discretion of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes and upon such conditions as Lender shall designate.

          (e) In the event of foreclosure of the Mortgage, or other transfer of title to the Property in
extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to
the Policies then in force concerning the Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.

ARTICLE IX

RESERVE FUNDS

          Section 9.01 Required Repairs.

          Borrower shall make the repairs and improvements to the Property set forth on Schedule
I (the repairs and improvements that are Required Repairs hereunder are identified as such if
there is a cost for completion set forth in the “Immediate” column of the applicable schedule for
each Individual Property attached hereto as Schedule I) and as such repair or improvement
is more particularly described in the Physical Conditions Report prepared in connection with the
closing of the Loan and delivered by Lender to Borrower prior to the date hereof (such repairs
hereinafter referred to as “Required Repairs”). Borrower shall complete the Required
Repairs in a good and workmanlike manner on or before the date that is twelve (12) months from the
date hereof or within such other time frame for completion, if any, specifically set forth on
Schedule I.

          Section 9.02 Replacements.

          (a) On an ongoing basis throughout the term of the Loan, Borrower shall make capital repairs,
replacements and improvements necessary to keep each Individual Property in a good and safe
condition and repair consistent with past practice, ordinary wear and tear
excepted (and subject to Excusable Delay and the provisions of this Agreement with respect to
any Casualty or Condemnation) including, but not limited to, those repairs, replacements and
improvements described in the Physical Conditions Report for the applicable Individual Property or
such other repairs, replacements and improvements approved by Lender (collectively, the
“Replacements”). Borrower shall complete all Replacements in a good and workmanlike manner
as soon as commercially reasonable after commencing to make each such Replacement.

          (b) Borrower shall establish on the date hereof an Eligible Account (which shall be a
sub-account of the Cash Management Account in Lender’s election) with Lender or

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Lender’s agent to fund the Replacements (the “Replacement Reserve Account”) into which Borrower shall deposit
on the date hereof $0.00. In addition, Borrower shall deposit $28,438.67 (the “Replacement
Reserve Monthly Deposit”) into the Replacement Reserve Account on each Payment Date, provided,
however, for such time that no Low EBITDA Period or Event of Default exists, the Replacement
Reserve Monthly Deposit shall be waived. Amounts so deposited shall hereinafter be referred to as
“Replacement Reserve Funds”.

          (c) In lieu of making the deposits pursuant to Section 9.02(b) in cash, Borrower may
deliver to Lender a Letter of Credit in an amount equal to the Required Deposit (the
“Replacement Reserve L/C”). Each Letter of Credit delivered under this Agreement shall be
additional security for the payment of the Debt. Upon the occurrence of, and during the
continuation of, an Event of Default, Lender shall have the right, at its option, to draw on any
Letter of Credit and to apply all or any part thereof to the payment of the items for which such
Letter of Credit was established or to apply such Letter of Credit to payment of the Debt in such
order, proportion or priority as Lender may determine. Any such application to the Debt shall
require Borrower to pay any applicable Prepayment Premium. On the Maturity Date, any such Letter
of Credit may be applied to reduce the Debt. In addition to any other right Lender may have to
draw upon a Letter of Credit pursuant to the terms and conditions of this Agreement, Lender shall
have the additional rights to draw in full any Letter of Credit: (i) with respect to any evergreen
Letter of Credit, if Lender has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided at least thirty (30) days
prior to the date on which the outstanding Letter of Credit is scheduled to expire; (ii) with
respect to any Letter of Credit with a stated expiration date, if Lender has not received a notice
from the issuing bank that it has renewed the Letter of Credit at least thirty (30) days prior to
the date on which such Letter of Credit is scheduled to expire and a substitute Letter of Credit is
not provided at least thirty (30) days prior to the date on which the outstanding Letter of Credit
is scheduled to expire; (iii) upon receipt of notice from the issuing bank that the Letter of
Credit will be terminated (except if the termination of such Letter of Credit is permitted pursuant
to the terms and conditions of this Agreement or a substitute Letter of Credit is provided); or
(iv) if Lender has received notice that the bank issuing the Letter of Credit shall cease to be an
Eligible Institution. Notwithstanding anything to the contrary contained in the above, Lender is
not obligated to draw any Letter of Credit upon the happening of an event specified in (i), (ii),
(iii) or (iv) above and shall not be liable for any losses sustained by Borrower due to the
insolvency of the bank issuing the Letter of Credit if Lender has not drawn the Letter of Credit.

          (d) Upon the occurrence of a Property Release, provided no Event of Default has occurred and
is continuing, Lender shall (i) promptly cause to be returned to Borrower that portion of the
balance, if any, of the Required Repair Funds and the Replacement Reserve Funds
attributable to the Individual Property that has been released pursuant to Section
2.05, or (ii) promptly reduce the amount of the Replacement Reserve L/C, in the amount of such
Letter of Credit attributable to the Individual Property that has been released pursuant to
Section 2.05.

          Section 9.03 Lease Shortfall Reserve Account.

          Borrower shall establish on the date hereof a sub-account of the Cash Management Account for
the deposit of funds in connection with a Low EBITDA Period (the “Lease Shortfall Reserve
Account”). During the existence of a Level 1 EBITDA Period,

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Borrower shall deposit fifty
percent (50%) of all Excess Cash into the Lease Shortfall Reserve Account and during the existence
of a Level 2 EBITDA Period, Borrower shall deposit one hundred percent (100%) of all Excess Cash
into the Lease Shortfall Reserve Account (amounts on deposit in the Lease Shortfall Reserve Account
are referred to as the “Lease Shortfall Reserve Funds”). All Lease Shortfall Reserve Funds
shall be, and remain, collateral for the Loan until such time that the Debt is paid in full.
Borrower shall not be entitled to any disbursement of the Lease Shortfall Reserve Funds
notwithstanding that the applicable Low EBITDA Period may no longer exist. Upon payment in full of
the Debt, all amounts remaining on deposit, if any, in the Lease Shortfall Reserve Account shall be
returned to Borrower and no other party shall have any right or claim thereto.

          Section 9.04 Required Work.

          Borrower shall diligently pursue all Required Repairs and Replacements (collectively, the
“Required Work”) to completion in accordance with the following requirements:

          (a) Lender reserves the right, at its option, to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties providing labor or
materials in connection with the Required Work to the extent any such contract or work order
exceeds $250,000. Upon Lender’s request, Borrower shall assign any contract or subcontract to
Lender.

          (b) In the event Lender determines in its reasonable discretion that any Required Work is not
being or has not been performed in a workmanlike or timely manner and such failure could reasonably
be expected to cause a MAE with respect to an Individual Property, and Borrower fails to cure such
deficiency within ten (10) Business Days after written notice thereof, provided, that, if such
deficiency cannot, by its nature, be cured within such ten (10) Business Day period, Borrower must
initiate and diligently pursue a cure within such ten (10) Business Day period (and thereafter
conduct such cure to completion) then Lender shall have the option to withhold disbursement for
such unsatisfactory Required Work and to proceed under existing contracts or, if the contractor
under the existing contract is in default thereof, to contract with other third parties to complete
such Required Work and to apply the Required Repair Funds or the Replacement Reserve Funds, as
applicable, toward the labor and materials necessary to complete such Required Work, after
providing prior written notice to Borrower.

          (c) In order to facilitate Lender’s completion of the Required Work as permitted by subsection
(b) above, Borrower grants Lender the right to enter onto the applicable
Individual Property and perform any and all work and labor necessary to complete the Required
Work and/or employ watchmen to protect each Individual Property from damage. All sums so expended
by Lender, to the extent not from the Reserve Funds, shall be deemed to have been advanced under
the Loan to Borrower and secured by the Mortgage. For this purpose Borrower constitutes and
appoints Lender its true and lawful attorney-in-fact with full power of substitution to complete or
undertake the Required Work in the name of Borrower upon Borrower’s failure to do so in a
workmanlike and timely manner. Such power of attorney shall be deemed to be a power coupled with
an interest and cannot be revoked. Borrower empowers said attorney-in-fact as follows: (i) to use
any of the Reserve Funds for the purpose of making or

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completing the Required Work; (ii) to make
such additions, changes and corrections to the Required Work as shall be reasonably necessary or
desirable to complete the Required Work in accordance with the terms and conditions of this Article
IX; (iii) to employ such contractors, subcontractors, agents, architects and inspectors as shall be
reasonably required for such purposes; (iv) to pay, settle or compromise all existing bills and
claims which in Lender’s reasonable judgment are validly due and payable and which are or may
become Liens against such Individual Property, or as may be necessary or desirable for the
completion of the Required Work, or for clearance of title; (v) to execute all applications and
certificates in the name of Borrower which may be reasonably required by any of the contract
documents; (vi) to prosecute and defend all actions or proceedings in connection with any
Individual Property or the rehabilitation and repair of any Individual Property; and (vii) to do
any and every act which Borrower could reasonably be expected to do on its own behalf to comply
with the terms of this Agreement.

          (d) Nothing in this Section 9.04 shall: (i) make Lender responsible for making or
completing the Required Work; (ii) require Lender to expend funds in addition to the applicable
Reserve Funds to make or complete any Required Work, (iii) obligate Lender to proceed with the
Required Work; or (iv) obligate Lender to demand from Borrower additional sums to make or complete
any Required Work.

          (e) Borrower shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties performing Required Work
pursuant to this Section 9.04 to enter onto the applicable Individual Property during
normal business hours (subject to the rights of tenants under their Leases) to inspect the progress
of any Required Work and all materials being used in connection therewith, to examine all plans and
shop drawings relating to such Required Work which are or may be kept at such Individual Property,
and to complete any Required Work to the extent Lender is permitted to perform and complete any
Required Work pursuant to this Section 9.04. Borrower shall cause all contractors and
subcontractors to cooperate with Lender and Lender’s representatives or such other persons
described above in connection with inspections described in this Section 9.04 or the
completion of Required Work pursuant to this Section 9.04.

          (f) Lender may, to the extent any Required Work would reasonably require an inspection of any
Individual Property, inspect such Individual Property at Borrower’s expense prior to making a
disbursement of the Reserve Funds in order to verify completion of the Required Work for which
reimbursement is sought; provided, however, in no event shall the Lender have the right to require
an inspection for Required Work (taking into consideration the project as a whole) estimated to
cost in the aggregate less than $250,000. Borrower shall pay
Lender a reasonable inspection fee not exceeding $1,000 for each such inspection. Lender may
require that (at no additional cost to Borrower) such inspection be conducted by an appropriate
independent qualified professional reasonably selected by Lender and/or may require a copy of a
certificate of completion by an independent qualified professional reasonably acceptable to Lender
prior to the disbursement of the Reserve Funds. Borrower shall pay the expense of the inspection
as required hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional.

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          (g) The Required Work and all materials, equipment, fixtures, or any other item comprising a
part of any Required Work shall be constructed, installed or completed, as applicable, free and
clear of all mechanic’s, materialman’s or other Liens (except for Permitted Encumbrances and
subject to Borrower’s right to contest any lien in accordance with Section 5.04(b)
hereof.).

          (h) Before each disbursement of the Reserve Funds for Required Work estimated to cost in
excess of $250,000, Lender may require Borrower to provide Lender with a search of title to the
related Individual Property effective to the date of the disbursement, which search shows that no
mechanic’s or materialmen’s or other Liens of any nature have been placed against the related
Individual Property since the date of recordation of the Mortgage and that title to the related
Individual Property is free and clear of all Liens (except for Permitted Encumbrances).

          (i) All Required Work shall comply in all material respects with all Legal Requirements and
applicable insurance requirements including, without limitation, applicable building codes, special
use permits, environmental regulations, and requirements of insurance underwriters.

          (j) Borrower hereby assigns to Lender all rights and claims Borrower may have against all
Persons supplying labor or materials in connection with the Required Work; provided, however, that
Lender may not pursue any such rights or claims unless an Event of Default has occurred and remains
uncured.

          Section 9.05 Release of Reserve Funds.

          (a) Upon written request from Borrower and satisfaction of the requirements set forth in this
Agreement, Lender shall disburse to Borrower amounts from (i) the Required Repair Account to the
extent necessary to reimburse Borrower for the actual costs of each Required Repair (but not
exceeding 125% of the original estimated cost of such Required Repair as set forth on Schedule
I, unless Lender has agreed to reimburse Borrower for such excess cost pursuant to Section
9.05(f)) or (ii) the Replacement Reserve Account to the extent necessary to reimburse Borrower
for the actual costs of any approved Replacements. Notwithstanding the preceding sentence, in no
event shall Lender be required to (x) disburse any amounts which would cause the amount of funds
remaining in the Required Repair Account after any disbursement (other than with respect to the
final disbursement) to be less than 125% of the then current estimated cost of completing all
remaining Required Repairs for the Property, (y) disburse funds from any of the Reserve Accounts if
an Event of Default exists, or (z) disburse funds from the Replacement Reserve Account to reimburse
Borrower for the costs of routine
repairs or maintenance to the Property or for costs which are to be reimbursed from funds held
in the Required Repair Account.

          (b) Each request for disbursement from any of the Reserve Accounts shall be on a form provided
or otherwise reasonably approved by Lender and shall (i) include copies of invoices for all items
or materials purchased and all labor or services provided and (ii) specify (A) the Required Work
for which the disbursement is requested, (B) the quantity and price of each item purchased, if the
Required Work includes the purchase or replacement of specific

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items, (C) the price of all
materials (grouped by type or category) used in any Required Work other than the purchase or
replacement of specific items, and (D) the cost of all contracted labor or other services
applicable to each Required Work for which such request for disbursement is made. With each
request Borrower shall certify that all Required Work has been performed in compliance in all
material respects with all Legal Requirements. Except as provided in Section 9.05(d), each
request for disbursement shall be made only after completion of the Required Repair, Replacement
(or the portion thereof completed in accordance with Section 9.05(d)), as applicable, for
which disbursement is requested. Borrower shall provide Lender evidence reasonably satisfactory to
Lender of such completion or performance.

          (c) Borrower shall pay all invoices in connection with the Required Work with respect to which
a disbursement is requested prior to submitting such request for disbursement from the Reserve
Accounts or, at the request of Borrower, Lender will issue joint checks, payable to Borrower and
the contractor, supplier, materialman, mechanic, subcontractor or other party to whom payment is
due in connection with the Required Work. In the case of payments made by joint check, Lender may
require a waiver of lien from each Person receiving payment prior to Lender’s disbursement of the
Reserve Funds. In addition, as a condition to any disbursement, Lender may require Borrower to
obtain lien waivers from each contractor, supplier, materialman, mechanic or subcontractor who
receives payment in an amount equal to or greater than $100,000 for completion of its work or
delivery of its materials. Any lien waiver delivered hereunder shall conform to all Legal
Requirements and shall cover all work performed and materials supplied (including equipment and
fixtures) for the related Individual Property by that contractor, supplier, subcontractor, mechanic
or materialman through the date covered by the current disbursement request (or, in the event that
payment to such contractor, supplier, subcontractor, mechanic or materialmen is to be made by a
joint check, the release of lien shall be effective through the date covered by the previous
release of funds request).

          (d) If (i) the cost of any item of Required Work exceeds $50,000 and (ii) the contractor
performing such Required Work requires periodic payments pursuant to terms of a written contract, a
request for disbursement from the Reserve Accounts may be made after completion of a portion of the
work under such contract, provided (A) such contract requires payment upon completion of such
portion of work, (B) the materials for which the request is made are on site at the related
Individual Property and are properly secured or have been installed in the related Individual
Property, (C) all other conditions in this Agreement for disbursement have been satisfied, and (D)
in the case of a Replacement, funds remaining in the Replacement Reserve Account are, in Lender’s
reasonable judgment, sufficient to complete such Replacement and the other Replacements specified
in Schedule II (and which have not yet been completed and paid in full).

          (e) Borrower shall not make a request for, nor shall Lender have any obligation to make, any
disbursement from any Reserve Account more frequently than once in any calendar month and (except
in connection with the final disbursement) in any amount less than the lesser of (i) $10,000 or
(ii) the total cost of the Required Work for which the disbursement is requested.

          (f) In the event any Borrower requests a disbursement from the Required Repair Account to
reimburse Borrower for the actual cost of labor or materials used in

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connection with repairs or
improvements other than the Required Repairs specified on Schedule I, or for a Required
Repair to the extent the cost of such Required Repair exceeds 125% of the estimated cost of such
Required Repair as set forth on Schedule I (in either case, an “Additional Required
Repair”), Borrower shall disclose in writing to Lender the reason why funds in the Required
Repair Account should be used to pay for such Additional Required Repair. If Lender reasonably
determines that (i) such Additional Required Repair is of the type intended to be covered by the
Required Repair Account, (ii) such Additional Required Repair is not covered or is not of the type
intended to be covered by the Replacement Reserve Account, (iii) costs for such Additional Required
Repair are reasonable, (iv) the funds in the Required Repair Account are sufficient to pay for such
Additional Required Repair and all other Required Repairs for the related Individual Property
specified on Schedule I, and (v) all other conditions for disbursement under this Agreement
have been met, Lender shall disburse funds from the Required Repair Account in accordance with the
terms and conditions of this Section 9.05.

          (g) In the event any Borrower requests a disbursement from the Replacement Reserve Account to
reimburse Borrower for the actual cost of labor or materials used in connection with repairs or
improvements other than the Replacements specified in the Physical Conditions Report prepared in
connection with the closing of the Loan (an “Additional Replacement”), Borrower shall
disclose in writing to Lender the reason why funds in the Replacement Reserve Account should be
used to pay for such Additional Replacement. If Lender reasonably determines that (i) such
Additional Replacement is of the type intended to be covered by the Replacement Reserve Account,
(ii) such Additional Replacement is not covered or is not of the type intended to be covered by the
Required Repair Account, (iii) costs for such Additional Replacement are reasonable, (iv) the funds
in the Replacement Reserve Account are sufficient to pay for such Additional Replacement and all
other Replacements for the Property specified in Schedule II (and which have not yet been
completed and paid in full), and (v) all other conditions for disbursement under this Agreement
have been met, Lender may disburse funds from the Replacement Reserve Account in accordance with
this Section 9.05.

          (h) Lender’s disbursement of any Reserve Funds or other acknowledgment of completion of any
Required Work in a manner reasonably satisfactory to Lender shall not be deemed a certification or
warranty by Lender to any Person that the Required Work has been completed in accordance with Legal
Requirements.

          (i) If the funds in any Reserve Account should exceed the amount of payments actually applied
by Lender for the purposes of the account, Lender shall, at Borrower’s option, promptly either
return any excess to Borrower or credit such excess against future payments to be made to that
Reserve Account. If at any time Lender reasonably determines that the Reserve Funds are not or
will not be sufficient to make the required payments, Lender shall
notify Borrower of such determination and Borrower shall pay to Lender any amount necessary to
make up the deficiency within ten (10) days after written notice from Lender to Borrower requesting
payment thereof.

          (j) The insufficiency of any balance in any of the Reserve Accounts shall not relieve Borrower
from its obligation to fulfill all preservation and maintenance covenants in the Loan Documents.

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          (k) Upon the earlier to occur of (i) the timely completion of all Required Repairs and any
Additional Required Repairs, if any, in accordance with the requirements of this Agreement, as
verified by Lender in its reasonable discretion, or (ii) the payment in full of the Debt, all
amounts remaining on deposit, if any, in the Required Repair Account shall be returned to Borrower
and no other party shall have any right or claim thereto.

          (l) Upon payment in full of the Debt, all amounts remaining on deposit, if any, in the
Replacement Reserve Account shall be returned to Borrower and no other party shall have any right
or claim thereto.

          Section 9.06 Tax and Insurance Reserve Funds.

          Borrower shall establish on the date hereof an Eligible Account with Lender or Lender’s agent
sufficient to discharge Borrower’s obligations for the payment of Taxes and Insurance Premiums
pursuant to Section 5.04 and Section 8.01 hereof, respectively (the “Tax and
Insurance Reserve Account”) into which Borrower shall deposit on the date hereof $0, which
amount, when added to the required monthly deposits set forth in the next sentence, is sufficient
to make the payments of Taxes and Insurance Premiums as required herein, provided, however, for
such time that no Low EBITDA Period or Event of Default exists, deposits required to be made into
the Tax and Insurance Reserve Account pursuant to this Section 9.06 shall be waived.
During the existence of an Event of Default or a Low EBITDA Period, Borrower shall deposit into the
Tax and Insurance Reserve Account on each Payment Date (a) one-twelfth of the Taxes that Lender
reasonably estimates will be payable during the next ensuing twelve (12) months or such higher
amount necessary to accumulate with Lender sufficient funds to pay all such Taxes at least thirty
(30) days prior to the earlier of (i) the date that the same will become delinquent and (ii) the
date that additional charges or interest will accrue due to the non-payment thereof, and (b) except
to the extent Lender has waived the insurance escrow because the insurance required hereunder is
maintained under a blanket insurance Policy reasonably acceptable to Lender in accordance with
Section 8.01(c), one-twelfth of the Insurance Premiums that Lender reasonably estimates
will be payable during the next ensuing twelve (12) months for the renewal of the coverage afforded
by the Policies upon the expiration thereof or such higher amount necessary to accumulate with
Lender sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter called the “Tax and
Insurance Reserve Funds”). Lender will apply the Tax and Insurance Reserve Funds to payments
of Taxes and Insurance Premiums required to be made by Borrower pursuant to Section 5.04
and Section 8.01 hereof, respectively. In making any disbursement from the Tax and
Insurance Reserve Account, Lender may do so in good faith according to any bill, statement or
estimate procured from the appropriate public office or tax lien service (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums),
without inquiry into the accuracy of such bill, statement or estimate or into the validity of
any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of the
Tax and Insurance Reserve Funds shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Section 5.04 and Section 8.01 hereof, respectively, Lender shall, at
Borrower’s option, promptly return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Reserve Account. In allocating any such excess,
Lender may deal with the person shown on Lender’s records as being the owner of the related
Individual Property. Any amount remaining in the Tax and Insurance Reserve Account after the Debt
has

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been paid in full shall be returned to Borrower and no other party shall have any right or
claim thereto. If at any time Lender reasonably determines that the Tax and Insurance Reserve
Funds are not or will not be sufficient to pay Taxes and Insurance Premiums by the dates set forth
in (a) and (b) above, Lender shall notify Borrower of such determination and Borrower shall pay to
Lender any amount necessary to make up the deficiency within ten (10) days after written notice
from Lender to Borrower requesting payment thereof.

          Section 9.07 Excess Cash Reserve Account.

          Borrower shall establish on the date hereof an Eligible Account into which Borrower shall
deposit all Excess Cash After Lease Shortfall Deposits on each Payment Date during the continuance
of any default under a New Mezzanine Loan, if any, or Event of Default (the “Excess Cash
Reserve Account”). Amounts so deposited shall hereinafter be referred to as the “Excess
Cash Reserve Funds” and shall be collateral for the Loan. Sums from the Excess Cash Reserve
Account shall be disbursed to Borrower upon the earlier to occur of (a) payment in full of the Debt
or (b) the cure of all Events of Default to the satisfaction of Lender.

          Section 9.08 Reserve Funds Generally.

          (a) (i) No earnings or interest on the Tax and Insurance Reserve Account shall be payable to
Borrower. Neither Lender nor any loan servicer that at any time holds or maintains the Tax and
Insurance Reserve Account shall have any obligation to keep or maintain the Tax and Insurance
Reserve Account or any funds deposited therein in interest-bearing accounts. If Lender or any such
loan servicer elects in its sole and absolute discretion to keep or maintain the Tax and Insurance
Reserve Account or any funds deposited therein in an interest-bearing account, the account shall be
an Eligible Account and (A) such funds shall not be invested except in Permitted Investments, and
(B) all interest earned or accrued thereon shall be for the account of and be retained by Lender or
such loan servicer.

     (ii) Funds deposited in the other Reserve Accounts except for the Tax and Insurance
Reserve Account, shall be held in an interest-bearing business savings account and interest
shall be credited to Borrower. In no event shall Lender or any loan servicer that at any
time holds or maintains such Reserve Accounts be required to select any particular
interest-bearing account or the account that yields the highest rate of interest, provided
that selection of the account shall be consistent with the general standards at the time
being utilized by Lender or the loan servicer, as applicable, in establishing similar
accounts for loans of comparable type. All such interest shall be and become part of the
such Reserve Account and shall be disbursed in accordance with Section 9.05 above;
provided, however, that Lender may, at its election, apply toward the repayment of the
Debt any such interest during the occurrence and continuance of an Event of Default.
Borrower agrees that it shall include all interest on Reserve Funds as the income of
Borrower (and, if Borrower is a partnership or other pass-through entity, the partners,
members or beneficiaries of Borrower, as the case may be), and shall be the owner of the
funds in the Reserve Accounts for federal and applicable state and local tax purposes.

          (b) Borrower grants to Lender a first priority security interest in, and assigns and pledges
to Lender, each of the Reserve Accounts and any and all Reserve Funds now or

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hereafter deposited in
the Reserve Accounts as additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Accounts and the Reserve Funds shall constitute additional
security for the Debt. The provisions of this Section 9.08 are intended to give Lender or
any subsequent holder of the Loan “control” of the Reserve Accounts within the meaning of the UCC.

          (c) The Reserve Accounts and any and all Reserve Funds now or hereafter deposited in the
Reserve Accounts shall be subject to the exclusive dominion and control of Lender, which shall hold
the Reserve Accounts and any or all Reserve Funds now or hereafter deposited in the Reserve
Accounts subject to the terms and conditions of this Agreement. Borrower shall have no right of
withdrawal from the Reserve Accounts or any other right or power with respect to the Reserve
Accounts or any or all of the Reserve Funds now or hereafter deposited in the Reserve Accounts,
except as expressly provided in this Agreement.

          (d) Lender shall furnish or cause to be furnished to Borrower, without charge, an annual
accounting of each Reserve Account in the normal format of Lender or its loan servicer, showing
credits and debits to such Reserve Account and the purpose for which each credit or debit to each
Reserve Account was made.

          (e) As long as no Event of Default has occurred and is continuing, Lender shall make
disbursements from the Reserve Accounts in accordance with this Agreement. All such disbursements
contemplated by Section 9.05 hereof shall be deemed to have been expressly pre-authorized
by Borrower, and shall not be deemed to constitute the exercise by Lender of any remedies against
Borrower unless an Event of Default has occurred and is continuing and Lender has expressly stated
in writing its intent to proceed to exercise its remedies as a secured party, pledgee or lienholder
with respect to the Reserve Accounts.

          (f) If any Event of Default occurs and is continuing, Borrower shall immediately lose all of
its rights to receive disbursements from the Reserve Accounts until the earlier to occur of (i) the
date on which such Event of Default is cured to Lender’s satisfaction, or (ii) the payment in full
of the Debt. In addition, at Lender’s election, Borrower shall lose all of its rights to receive
interest on the Replacement Reserve Account during the occurrence and continuance of an Event of
Default. Upon the occurrence and during the continuance of any Event of Default, Lender may
exercise any or all of its rights and remedies as a secured party, pledgee and lienholder with
respect to the Reserve Accounts. Without limitation of the foregoing, upon the occurrence and
during the continuance of any Event of Default, Lender may use and disburse the Reserve Funds (or
any portion thereof) for any of the following purposes: (A) repayment of the Debt, including, but
not limited to, principal prepayments and the prepayment premium applicable to such full or partial
prepayment (as applicable); (B)
reimbursement of Lender for all losses, fees, costs and expenses (including, without
limitation, reasonable legal fees) suffered or incurred by Lender as a result of such Event of
Default; (C) payment of any amount expended in exercising any or all rights and remedies available
to Lender at law or in equity or under this Agreement or under any of the other Loan Documents; (D)
payment of any item from any of the Reserve Accounts as required or permitted under this Agreement;
or (E) any other purpose permitted by applicable law; provided, however, that any such application
of funds shall not cure or be deemed to cure any Event of Default. Without limiting any other
provisions hereof, each of the remedial actions described in the immediately

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preceding sentence
shall be deemed to be a commercially reasonable exercise of Lender’s rights and remedies as a
secured party with respect to the Reserve Funds and shall not in any event be deemed to constitute
a setoff or a foreclosure of a statutory banker’s lien. Nothing in this Agreement shall obligate
Lender to apply all or any portion of the Reserve Funds to effect a cure of any Event of Default,
or to pay the Debt in any specific order of priority. The exercise of any or all of Lender’s
rights and remedies under this Agreement or under any of the other Loan Documents shall not in any
way prejudice or affect Lender’s right to initiate and complete a foreclosure under the Mortgage.

          (g) The Reserve Funds shall not constitute escrow or trust funds and may be commingled with
other monies held by Lender. Notwithstanding anything else herein to the contrary, Lender may
commingle in one or more Eligible Accounts any and all funds controlled by Lender, including,
without limitation, funds pledged in favor of Lender by other borrowers, whether for the same
purposes as the Reserve Accounts or otherwise. Without limiting any other provisions of this
Agreement or any other Loan Document, the Reserve Accounts may be established and held in such name
or names as Lender or its loan servicer, as agent for Lender, shall deem appropriate, including,
without limitation, in the name of Lender or such loan servicer, as agent for Lender. In the case
of any Reserve Account which is held in a commingled account, Lender or its loan servicer, as
applicable, shall maintain records sufficient to enable it to determine at all times which portion
of such account is related to the Loan. The Reserve Accounts are solely for the protection of
Lender. With respect to the Reserve Accounts, Lender shall have no responsibility beyond the
allowance of due credit for the sums actually received by Lender or beyond the reimbursement or
payment of the costs and expenses for which such accounts were established in accordance with their
terms. Upon assignment of the Loan by Lender, any Reserve Funds shall be turned over to the
assignee and any responsibility of Lender as assignor shall terminate. The requirements of this
Agreement concerning Reserve Accounts in no way supersede, limit or waive any other rights or
obligations of the parties under any of the Loan Documents or under applicable law.

          (h) Borrower shall not, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in the Reserve Accounts or the Reserve Funds deposited
therein or permit any Lien to attach thereto, except for the security interest granted in this
Section 9.08, or any levy to be made thereon, or any UCC financing statements, except those
naming Lender as the secured party, to be filed with respect thereto.

          (i) Borrower will maintain the security interest created by this Section 9.08 as a
first priority perfected security interest and will defend the right, title and interest of Lender
in and to the Reserve Accounts and the Reserve Funds against the claims and demands of all Persons
whomsoever. At any time and from time to time, upon the reasonable request of Lender
in writing, and at the sole expense of Borrower, Borrower will promptly and duly execute and
deliver such further instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted.

          (j) Borrower hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, in any jurisdictions and with any filing
offices as Lender may determine, in its sole discretion, are necessary or advisable to

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perfect the security interests granted to Lender in connection herewith. Such financing statements may
describe the collateral in the same manner as described in this Agreement or may contain an
indication or description of collateral that describes such property in any other manner as Lender
may determine, in its sole discretion, is necessary or prudent to ensure the perfection of the
security interest in the collateral granted to Lender in connection herewith. Borrower shall
promptly reimburse Lender for any reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by Lender in connection with the foregoing.

ARTICLE X

CASH MANAGEMENT

          Section 10.01 Cash Management Account.

          (a) Borrower acknowledges and confirms that Borrower has established, and Borrower covenants
that it shall maintain an interest bearing Eligible Account into which Borrower shall deposit or
cause to be deposited, all Rents and other revenue from the Property to which Borrower is entitled,
including all proceeds of any sale of an Individual Property but excluding any Insurance Proceeds
(except for the monthly allocation of proceeds paid pursuant to the insurance policy required to be
maintained pursuant to Section 8.01(a)(iii) hereof) and Awards (such account and the
sub-accounts thereof, and any replacements or substitutions of such account are referred to herein
as the “Cash Management Account”). The Cash Management Account is currently established
with Bank of America, N.A., is in the name of Bonstores Realty One, LLC and bears account number
1235865655.

          (b) The Cash Management Account shall be in the name of Borrower for the benefit of Lender,
provided that Borrower shall be the owner of all funds on deposit in such account for federal and
applicable state and local tax purposes. Sums on deposit in the Cash Management Account shall be
invested only in such Permitted Investments as determined and directed by Lender and all income
earned thereon shall be the income of Borrower and be applied to and become part of the Cash
Management Account, to be disbursed in accordance with this Article X. Lender shall have no
liability for any loss resulting from the investment of funds in Permitted Investments in
accordance with the terms and conditions of this Agreement.

          (c) The Cash Management Account shall be subject to the exclusive dominion and control of
Lender and, except as otherwise expressly provided herein, neither Borrower nor any other party
claiming on behalf of, or through, Borrower shall have any right of withdrawal therefrom or any
other right or power with respect thereto.

          (d) Lender shall be responsible for the performance only of such duties with respect to the
Cash Management Account as are specifically set forth herein, and no duty shall be implied from any
provision hereof. Lender shall not be under any obligation or duty to perform any act which would
involve it in expense or liability or to institute or defend any suit in respect hereof, or to
advance any of its own monies, except in connection with its gross negligence or willful
misconduct. Borrower shall indemnify and hold Lender and its directors, employees, officers and
agents harmless from and against any loss, cost or damage (including, without

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limitation, reasonable attorneys’ fees and disbursements) incurred by such parties in connection with the Cash
Management Account other than such as result from the gross negligence or willful misconduct of
Lender or its officers, employees and/or agents or intentional nonperformance by Lender of its
obligations under this Agreement.

          Section 10.02 Deposits and Withdrawals.

          (a) Borrower represents, warrants and covenants that:

     (i) All Rents from the Property shall (A) be deemed additional security for payment of
the Debt and shall be held in trust for the benefit, and as the property, of Lender, (B) not
be commingled with any other funds or property of Borrower, and (C) if received by Borrower
notwithstanding the instructions to Operating Lessee, be deposited in the Cash Management
Account promptly upon receipt; and

     (ii) Except as is otherwise specifically provided hereunder, so long as any portion of
the Debt remains outstanding, neither Borrower nor any other Person shall open or maintain
any accounts other than the Cash Management Account into which Rents and revenues from the
sale or release of any Individual Property or any portion thereof are deposited. The
foregoing shall not prohibit Borrower from utilizing one or more separate accounts for the
disbursement or retention of any other funds relating to the ownership and/or operation of
the Property or that have been transferred to Borrower pursuant to the express terms of this
Agreement.

          (b) Reserved.

          (c) On each Payment Date (and if such day is not a Business Day, then the immediately
preceding day which is a Business Day) commencing the month during which the first Payment Date
occurs, Borrower hereby irrevocably authorizes Lender to withdraw or allocate to the sub-accounts
of the Cash Management Account, as the case may be, amounts received in the Cash Management
Account, in each case to the extent that sufficient funds remain therefor:

     (i) in connection with the sale of an Individual Property and the release thereof
pursuant to Section 2.05 of this Agreement, an amount equal to the Release Amount
shall be paid to Lender in repayment of the principal balance of the Loan;

     (ii) during the existence of an Event of Default or Low EBITDA Period, funds sufficient
to pay the monthly deposits to the Tax and Insurance Reserve Account shall be allocated to
the Tax and Insurance Reserve Account to be held and disbursed in accordance with
Section 9.06;

     (iii) funds sufficient to pay the Monthly Payment Amount shall be withdrawn and paid to
Lender;

     (iv) during the existence of an Event of Default or Low EBITDA Period, funds sufficient
to pay the Replacement Reserve Monthly Deposit shall be allocated to the Replacement Reserve
Account to be held and disbursed in accordance with Section 9.05;

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     (v) to the extent applicable, funds sufficient to pay any interest accrued or accruing
at the Default Rate, late payment charges, if any, and any other sums due and payable to
Lender under any of the Loan Documents, shall be withdrawn and paid to Lender and applied
against such items;

     (vi) provided no Event of Default or Low EBITDA Period is continuing and the New
Mezzanine Loan, if any, has not been paid in full, all amounts remaining on deposit shall be
disbursed to the to the New Mezzanine Lender as a distribution from Borrower to New
Mezzanine Borrower;

     (vii) during the existence of a Low EBITDA Period but provided no Event of Default is
continuing and the New Mezzanine Loan, if any, has not been paid in full, funds sufficient
to pay the debt service due and payable under the New Mezzanine Loan Documents together with
such other amounts as New Mezzanine Lender notifies Lender are due and payable under the New
Mezzanine Loan, if any at such time shall be deposited with the New Mezzanine Lender;

     (viii) during the existence of a Low EBITDA Period but provided no Event of Default
exists, funds shall be allocated to the Lease Shortfall Reserve Account in amounts required
under, and to be held in accordance with, Section 9.03;

     (ix) during the existence of any Event of Default hereunder, funds in an amount equal
to the Excess Cash After Lease Shortfall Deposits shall be deposited in the Excess Cash
Reserve Account to be held and disbursed in accordance with Section 9.07;

     (x) provided no Event of Default exists, funds in an amount equal to the Excess Cash
After Lease Shortfall Deposits shall be disbursed to Borrower, at Borrower’s direction.

          (d) Notwithstanding anything to the contrary herein, Borrower acknowledges that Borrower is
responsible for monitoring the sufficiency of funds deposited in the Cash Management Account and
that Borrower is liable for any deficiency in available funds, irrespective of whether Borrower has
received any account statement, notice or demand from Lender or Lender’s servicer. If the amount
on deposit in the Cash Management Account is insufficient to make all of the withdrawals and
allocations described in Section 10.02(c)(i) through (iv) above, Borrower shall
deposit such deficiency into the Cash Management Account within five (5) days (provided that such
five day period shall not constitute a grace period for any default or Event of Default under this
Agreement or any other Loan Document based on a failure to satisfy any monetary obligation provided
in any Loan Document).

          (e) If an Event of Default shall have occurred and is continuing, Borrower hereby irrevocably
authorizes Lender to make any and all withdrawals from the Cash Management Account and transfers
between any of the Reserve Accounts as Lender shall determine in Lender’s sole and absolute
discretion and Lender may use all funds contained in any such accounts for any purpose in
accordance with applicable law, including but not limited to repayment of the Debt in such order,
proportion and priority as Lender may determine in its sole and absolute discretion. Lender’s
right to withdraw and apply funds as stated herein shall be

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in addition to all other rights and remedies provided to Lender under this Agreement, the Note, the Mortgage and the other Loan
Documents.

          Section 10.03 Security Interest.

          (a) To secure the full and punctual payment of the Debt and performance of all obligations of
Borrower now or hereafter existing under this Agreement and the other Loan Documents, Borrower
hereby grants to Lender a security interest in the Cash Management Account, all interest, cash,
checks, drafts, certificates and instruments, if any, from time to time deposited or held therein,
any and all amounts invested in Permitted Investments, and all “proceeds” (as defined in the UCC as
in effect in the state in which the Cash Management Account is located or maintained) of any or all
of the foregoing. Furthermore, Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in any of the foregoing or permit any
Lien to attach thereto or any levy to be made thereon or any UCC Financing Statements to be filed
with respect thereto. Borrower will maintain the security interest created by this Section
10.03(a) as a first priority perfected security interest and will defend the right, title and
interest of Lender in and to the Cash Management Account against the claims and demands of all
Persons whomsoever.

          (b) Borrower authorizes Lender to file any financing statement or statements required by
Lender to establish or maintain the validity, perfection and priority of the security interest
granted herein in connection with the Cash Management Account. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower will promptly and duly execute and
deliver all further instruments and documents, and take all further action, that may be reasonably
necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby (including, without limitation, any
security interest in and to any Permitted Investments) or to enable Lender to exercise and enforce
its rights and remedies hereunder.

          (c) Upon the occurrence and during the continuance of an Event of Default, Lender may exercise
any or all of its rights and remedies as a secured party, pledgee and lienholder with respect to
the Cash Management Account. Without limitation of the foregoing, upon the occurrence and during
the continuance of any Event of Default, Lender may use the Cash Management Account for any of the
following purposes: (i) repayment of the Debt, including, but not limited to, principal prepayments
and the prepayment premium applicable to such full or partial prepayment (as applicable); (ii)
reimbursement of Lender for all losses, fees, costs and expenses (including, without limitation,
reasonable legal fees) suffered or incurred by Lender as a result of such Event of Default; (iii)
payment of any amount expended in exercising any or all rights and remedies available to Lender at
law or in equity or under this Agreement or under any of the other Loan Documents; (iv) payment of
any item as required or permitted under
this Agreement; or (v) any other purpose permitted by applicable law; provided, however, that
any such application of funds shall not cure or be deemed to cure any Event of Default. Without
limiting any other provisions hereof, each of the remedial actions described in the immediately
preceding sentence shall be deemed to be a commercially reasonable exercise of Lender’s rights and
remedies as a secured party with respect to the Cash Management Account and shall not in any event
be deemed to constitute a setoff or a foreclosure of a statutory banker’s lien. Nothing in this
Agreement shall obligate Lender to apply all or any portion of the Cash Management

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Account to effect a cure of any Event of Default, or to pay the Debt in any specific order of
priority. The exercise of any or all of Lender’s rights and remedies under this Agreement or under
any of the other Loan Documents shall not in any way prejudice or affect Lender’s right to initiate
and complete a foreclosure under the Mortgage.

          Section 10.04 Definitions.

          Notwithstanding anything to the contrary contained herein, for purposes of this Article X
only, Business Day shall mean a day on which Lender is open for the conduct of substantially all of
its banking business at the office in the city in which the Note is payable (excluding Saturdays
and Sundays and U.S. legal holidays).

ARTICLE XI

EVENTS OF DEFAULT; REMEDIES

          Section 11.01 Event of Default.

          The occurrence of any one or more of the following events shall constitute an “Event of
Default”:

          (a) if any portion of the Debt is not paid on or prior to the date the same is due or if the
entire Debt is not paid on or before the Maturity Date;

          (b) except as otherwise expressly provided in the Loan Documents, if any of the Taxes or Other
Charges are not paid when the same are due and payable, unless there is sufficient money in the Tax
and Insurance Reserve Account for payment of amounts then due and payable and Lender’s access to
such money has not been constrained or restricted in any manner;

          (c) if the Policies are not kept in full force and effect, or if the abstracts, copies of the
Policies or certificates, as the case may be, are not delivered to Lender pursuant to Section
8.01 within five (5) Business Days following Lender’s delivery of written notice to Borrower of
such failure to deliver such abstracts, copies of the Policies or certificates, as provided in
Section 8.01;

          (d) if Borrower breaches any covenant with respect to itself or any SPE Component Entity (if
any) contained in Article VI or there is any breach of any covenant contained in Article VII
hereof;

          (e) if any material representation or warranty of, or with respect to, Borrower, Borrower
Principal, any SPE Component Entity, or any member, general partner, principal or beneficial
Borrower of any of the foregoing, made herein, in any other Loan Document, or in any certificate,
report, financial statement or other instrument or document furnished to Lender at the time of the
closing of the Loan or during the term of the Loan shall have been false or misleading in any
material respect when made; provided, however, that if such representation or warranty which was
false or misleading in any material respect is, by its nature, curable and is not

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reasonably likely to cause a MAE, and such representation or warranty was not false or
misleading in any material respect to the knowledge of the party making such representation when
made, then same shall not constitute an Event of Default unless Borrower, Borrower Principal, or
SPE Component Entity, as applicable, has not cured same so as to make it true and correct as and
when made within ten (10) days after receipt by Borrower of notice from Lender in writing of such
breach;

          (f) if (i) Borrower, Operating Lessee, Lease Guarantor or any managing member or general
partner of Borrower, Borrower Principal, Lease Guarantor or any SPE Component Entity (if any) shall
commence any case, proceeding or other action (A) under any Creditors Rights Laws, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of its assets, or
Borrower, any managing member or general partner of Borrower, Borrower Principal, Lease Guarantor
or any SPE Component Entity (if any) shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Borrower, any managing member or general
partner of Borrower, Borrower Principal, Lease Guarantor or any SPE Component Entity (if any) any
case, proceeding or other action of a nature referred to in clause (i) above which (A) results in
the entry of a final, non-appealable order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of ninety (90) days; or (iii) there
shall be commenced against Borrower, any managing member or general partner of Borrower, Borrower
Principal, Lease Guarantor or any SPE Component Entity (if any) any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of any order for any such
relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within
ninety (90) days from the entry thereof; or (iv) Borrower, any managing member or general partner
of Borrower, Borrower Principal, Lease Guarantor or any SPE Component Entity (if any) shall have
consented to, or approved, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Borrower, any managing member or general partner of Borrower, Borrower Principal, Lease Guarantor
or any SPE Component Entity (if any) shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due, provided, that, the Lender shall not be
obligated to declare that any of the foregoing actions or events with respect to the Lease
Guarantor is an Event of Default under the Loan Documents;

          (g) if Borrower shall be in default beyond applicable notice and grace periods under any other
mortgage, deed of trust, deed to secure debt or other security agreement covering any part of any
Individual Property, whether it be superior or junior in lien to the Mortgage;

          (h) subject to Borrower’s right to contest as provided in Section 5.04(b) hereof, if
any Individual Property becomes subject to any mechanic’s, materialman’s or other Lien other than a
Lien for any Taxes or Other Charges not then due and payable and the Lien shall remain undischarged
of record (by payment, bonding or otherwise) for a period of thirty (30) days;

          (i) subject to Borrower’s right to contest as provided in Section 5.04(b) hereof, if
any federal tax lien is filed against Borrower or Borrower Principal, any member or

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general partner of Borrower or Borrower Principal or any SPE Component Entity (if any) or any
Individual Property and same is not discharged of record within sixty (60) days after same is
filed;

          (j) if a judgment is filed against the Borrower in excess of $250,000 which is uninsured and
is not vacated or discharged within sixty (60) days, and the same could reasonably be expected to
cause a MAE;

          (k) if any default occurs under any guaranty or indemnity executed in connection herewith and
such default continues after the expiration of applicable grace periods, if any;

          (l) if Borrower shall permit any event within its control to occur that would cause any REA to
terminate without notice or action by any party thereto or would entitle any party to terminate any
REA and the term thereof by giving notice to Borrower; or any REA shall be surrendered, terminated
or canceled for any reason or under any circumstance whatsoever except as provided for in such REA;
or any material term of any REA shall be modified or supplemented without Lender’s prior written
consent; or Borrower shall fail, within ten (10) Business Days after demand by Lender, to exercise
its option to renew or extend the term of any REA or shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to such REA except as provided for in
such REA, in each case if such action could reasonably be expected to cause a MAE with respect to
an Individual Property;

          (m) if Borrower shall continue to be in default under any other term, covenant or condition of
this Agreement or any of the Loan Documents for more than twenty (20) days after notice from Lender
in the case of any default which can be cured by the payment of a sum of money or for thirty (30)
days after notice from Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and Borrower or Operating Lessee
shall have commenced to cure such default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower or Operating Lessee in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be for a period in
excess of one hundred twenty (120) days;

          (n) if a material default shall occur under any Management Agreement or the related assignment
of management agreement and any such default shall continue beyond the applicable grace period, if
any, provided for therein;

          (o) if any of the assumptions contained in any opinion relating to issues of substantive
consolidation delivered to the Lender in connection with the Loan, or in any other opinion relating
to substantive consolidation delivered subsequent to the closing of the Loan, is or shall become
untrue in any material respect;

          (p) any Operating Lease or the Operating Lease Guaranty shall at any time cease to be in full
force and effect with respect to any Individual Property that is subject to the Lien of a Mortgage;

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          (q) if Borrower or Operating Lessee shall be in default in any of its obligations under the
Operating Lease and any such default shall continue beyond the applicable grace period, if any,
provided for therein;

          (r) if Lease Guarantor shall be in default in any of its obligations under the Operating Lease
Guaranty and any such default shall continue beyond the applicable grace period, if any, provided
for therein; or

          (s) if any Letter of Credit delivered pursuant to this Agreement which is required to be
maintained hereunder is not renewed or replaced and delivered to Lender within thirty (30) days
prior to the expiration date thereof or the applicable required reserve deposit (for which the
Letter of Credit originally was delivered in lieu of) has not been deposited with Lender on or
before the date which is thirty (30) days prior to the expiration date of such Letter of Credit.

          Section 11.02 Remedies.

          (a) Upon the occurrence and during the continuance of an Event of Default (other than an Event
of Default described in Section 11.01(f) above) Lender may, in addition to any other rights
or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in any Individual Property, including, without limitation,
declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower and any Individual
Property, including, without limitation, all rights or remedies available at law or in equity; and
upon the occurrence and during the continuance of any Event of Default described in Section
11.01(f) above, the Debt and all other obligations of Borrower hereunder and under the other
Loan Documents shall immediately and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein
or in any other Loan Document to the contrary notwithstanding.

          (b) Upon the occurrence and during the continuance of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender against Borrower
under this Agreement or any of the other Loan Documents executed and delivered by, or applicable
to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the enforcement of its rights
and remedies under any of the Loan Documents with respect to any Individual Property. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued independently,
singularly, successively, together or otherwise, at such time and in such order as Lender may
determine in its sole discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by applicable law, equity or
contract or as set forth herein or in the other Loan Documents.

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ARTICLE XII

ENVIRONMENTAL PROVISIONS

          Section 12.01 Environmental Representations and Warranties.

          Borrower represents and warrants, except to the extent disclosed in any Environmental Report
of any Individual Property or as would not reasonably be expected to cause a MAE with respect to an
Individual Property: (a) there are no Hazardous Materials or underground storage tanks in, on, or
under any Individual Property, except those that are in compliance in all material respects with
Environmental Laws and with permits issued pursuant thereto (if such permits are required), if any;
(b) there are no present or currently threatened or, to Borrower’s knowledge, past Releases of
Hazardous Materials in violation of any Environmental Law; (c) there is, to Borrower’s knowledge,
no threat of any Release of Hazardous Materials migrating to any Individual Property; (d) there is
no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with any Individual Property except to the extent that any non-compliance matter has
been fully resolved with the applicable Governmental Authority; (e) Borrower does not know of, and
has not received, any written notice from any Person relating to Hazardous Materials in, on, under
or from any Individual Property; (f) each Individual Property is free of Mold; and (g) Borrower has
truthfully and fully provided to Lender, in writing, any and all reports, audits, investigations
and assessments relating to environmental conditions in, on, under or from each Individual Property
contained in Borrower’s files and records or in Borrower’s control, including but not limited to
any reports relating to Hazardous Materials in, on, under or migrating to or from each Individual
Property and/or to the environmental condition of or the presence of Mold at each Individual
Property.

          Section 12.02 Environmental Covenants.

          Borrower covenants and agrees that so long as Borrower owns, manages, is in possession of, or
otherwise controls the operation of any Individual Property: (a) all uses and operations on or of
each Individual Property, whether by Borrower or any other Person, shall be in material compliance
with the substantive requirements of all Environmental Laws and permits issued pursuant thereto;
(b) there shall be no Releases of Hazardous Materials in, on, under or from any Individual Property
that would be reasonably likely to result in a material violation of Environmental Law; (c) there
shall be no Hazardous Materials in, on, or under any Individual Property, except those that are
both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto, if and
to the extent required, and (ii) (A) in amounts not in excess of that necessary to operate the
related Individual Property for the purposes set forth herein; (B) fully disclosed to Lender in
writing; or (C) with respect to Mold, not in a condition, location, or of a type which would be
reasonably likely to pose a material risk to human health or safety or the environment or which may
result in damage to or would adversely affect or impair the value or marketability of the related
Individual Property; (d) Borrower shall keep each Individual Property free and clear of all
Environmental Liens; (e) Borrower shall, at its sole cost and expense, cooperate in all activities
pursuant to Section 12.04 below; (f) Borrower shall, at its sole cost and expense, perform
any investigation of environmental conditions in connection with each Individual Property, pursuant
to any reasonable written request of Lender, upon Lender’s

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reasonable belief that such condition at any Individual Property is not in material compliance
with all applicable Environmental Laws, and share with Lender the reports and other results
thereof, and Lender and other Indemnified Parties shall be entitled to rely on such reports and
other results thereof; (g) Borrower shall, at its sole cost and expense, comply with all reasonable
written requests of Lender to (i) reasonably effectuate remediation of any Hazardous Materials in,
on, under or from each Individual Property as required by applicable Environmental Law; and (ii)
comply with any applicable Environmental Law; (h) Borrower shall not allow any tenant or other user
of any Individual Property to violate any Environmental Law; and (i) Borrower shall immediately
notify Lender in writing after it has become aware of (A) any material Release or threatened
Release of Hazardous Materials in, on, under, from or migrating towards any Individual Property and
presence of Hazardous Materials other than as permitted by this Section 12.02; (B) any
material non-compliance with any Environmental Laws related in any way to any Individual Property;
(C) any actual or potential Environmental Lien against any Individual Property; (D) any required or
proposed action by any Governmental Authority of environmental conditions relating to any
Individual Property; and (E) any written notice of which Borrower becomes aware from any source
whatsoever (including but not limited to a Governmental Authority) relating to violations of, or
non-compliance with, Environmental Laws by Borrower. Any failure of Borrower to perform its
obligations pursuant to this Section 12.02 shall constitute bad faith waste with respect to
the Property.

          Section 12.03 Lender’s Rights.

          Lender and any other Person designated by Lender, including but not limited to any duly
authorized representative of a Governmental Authority, and any environmental consultant, and any
receiver appointed by any court of competent jurisdiction, shall have the right, but not the
obligation, to enter upon any Individual Property at all reasonable times to assess any and all
aspects of the environmental condition of the related Individual Property and its use, including
but not limited to conducting any environmental assessment or audit (the scope of which shall be
determined in Lender’s sole discretion). Pursuant to Section 12.02(f) of this Agreement,
Lender may require Borrower to collect samples of soil, groundwater or other water, air, or
building materials, and conduct other invasive testing. If within 60 days of such written request
from Lender, Borrower has failed to provide to Lender the results of such sampling, Borrower shall
cooperate with and provide access to Lender and any such person or entity designated by Lender, to
perform such sampling.

          Section 12.04 Operations and Maintenance Programs.

          If recommended by the Environmental Report and if required by applicable Environmental Law
with respect to any Individual Property, Borrower shall establish and comply with an operations and
maintenance program with respect to such Individual Property, in form and substance reasonably
acceptable to Lender, prepared by an environmental consultant reasonably acceptable to Lender.
Without limiting the generality of the preceding sentence, Lender may require (a) periodic notices
or reports regarding matters addressed by the operation and maintenance program to Lender in form,
substance and at such intervals as Lender may reasonably require, (b) an amendment to such
operations and maintenance program reasonably required to address changing circumstances or
applicable laws, (c) access to such Individual Property by Lender, its agents or servicer, subject
to Section 5.06 of the Loan Agreement, to

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review and assess the environmental condition of such Individual Property and Borrower’s
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.

          Section 12.05 Environmental Definitions.

          “Environmental Law” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, and other legally enforceable government
directives or requirements, as well as common law, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery
Act, that apply to Borrower or any Individual Property and relate to Hazardous Materials or
protection of human health or the environment applicable to Borrower or any Individual Property.
“Environmental Liens” means all Liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Borrower or any other Person (but
excluding any intentional act or omission of Lender). “Environmental Report” means, with
respect to each Individual Property, the written report prepared by EMG as the result of the
environmental site assessments of such Individual Property and which was delivered to Lender in
connection with the Loan. “Hazardous Materials” shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil; explosives,
flammable materials; radioactive materials; polychlorinated biphenyls and compounds containing
them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or
could become friable; underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on any Individual Property is prohibited by any
Environmental Law; and any other material or substance defined as a “hazardous substance,”
“hazardous material”, “hazardous waste”, “toxic substance”, “toxic pollutant”, “contaminant”, or
“pollutant” within the meaning of any Environmental Law. “Mold” shall mean any toxic mold,
fungi, bacterial or microbial matter present at or in any Individual Property, including, without
limitation, building materials which is in a condition, location or a type which may pose a
material risk to human health or safety or the environment, may result in material damage to or
would adversely affect or impair the material value or marketability of any Individual Property.
“Release” of any Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.

ARTICLE XIII

SECONDARY MARKET

          Section 13.01 Transfer of Loan.

          Lender may, at any time, sell, transfer or assign the Loan Documents, or grant participations
therein (“Participations”) or syndicate the Loan (“Syndication”) or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (“Securities”) (a Syndication or the issuance
of Participations and/or Securities, a “Securitization”).

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          Section 13.02 Delegation of Servicing.

          At the option of Lender, the Loan may be serviced by a servicer/trustee selected by Lender and
Lender may delegate all or any portion of its responsibilities under this Agreement and the other
Loan Documents to such servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee; provided, however, Lender shall give Borrower notice of Lender’s selection of any
such servicer within a reasonable period of time thereafter.

          Section 13.03 Dissemination of Information.

          Lender may forward to each purchaser, transferee, assignee, or servicer of, and each
participant, or investor in, the Loan, or any Participations and/or Securities or any of their
respective successors (collectively, the “Investor”) or any Rating Agency rating the Loan,
or any Participations and/or Securities, each prospective Investor, and any organization
maintaining databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire relating to the Debt and to
Borrower, Operating Lessee, any managing member or general partner thereof, Borrower Principal,
Lease Guarantor, BTDS, any SPE Component Entity (if any) and each Individual Property, including
financial statements, whether furnished by Borrower or otherwise, as Lender reasonably determines
necessary or desirable, but subject to the condition that such information is confidential and is
to be used only in connection with the Securitization. Subject to the foregoing, Borrower
irrevocably waives any and all rights it may have under applicable Legal Requirements to prohibit
such disclosure, including but not limited to any right of privacy.

          Section 13.04 Regulation AB Information.

          (a) If, at the time one or more Disclosure Documents (as defined below) are being prepared for
a securitization, Lender expects that Borrower alone or Borrower and one or more affiliates of
Borrower collectively, or the Property alone or the Property and any other parcel(s) of real
property, together with improvements thereon and personal property related thereto, that is
“related”, within the meaning of the definition of Significant Obligor (as defined below), to the
Property (a “Related Property”) collectively, will be a Significant Obligor, Borrower shall
furnish to Lender upon request (i) the selected financial data or, if applicable, net operating
income, required under Item 1112(b)(1) of Regulation AB and meeting the requirements thereof, if
Lender expects that the principal amount of the Loan, together with any loans made to an affiliate
of Borrower or secured by a Related Property that is included in a securitization with the Loan (a
“Related Loan”), as of the cut-off date for such securitization may, or if the principal
amount of the Loan together with any Related Loans as of the cut-off date for such securitization
and at any time during which the Loan and any Related Loans are included in a securitization does,
equal or exceed ten percent (10%) (but less than twenty percent (20%)) of the aggregate principal
amount of all mortgage loans included or expected to be included, as applicable, in the
securitization or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB and
meeting the requirements thereof, if Lender expects that the principal amount of the Loan together
with any Related Loans as of the cut-off date for such securitization may, or if the principal
amount of the Loan together with any Related Loans as of the cut-off date for such securitization
and at any time during which the Loan and any Related

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Loans are included in a securitization does, equal or exceed twenty percent (20%) of the
aggregate principal amount of all mortgage loans included or expected to be included, as
applicable, in the securitization. Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in connection with the
preparation of Disclosure Documents for the securitization, (B) not later than forty-five(45) days
after the end of each fiscal quarter of Borrower and (C) not later than ninety (90) days after the
end of each fiscal year of Borrower; provided, however, that Borrower shall not be obligated to
furnish financial data or financial statements pursuant to clauses (B) or (C) of this sentence with
respect to any period for which an Exchange Act Filing is not required. As used herein,
“Regulation AB” shall mean Regulation AB under the Securities Act of 1933 and the Securities
Exchange Act of 1934 (as amended). As used herein, “Disclosure Document” shall mean a
prospectus, prospectus supplement, private placement memorandum, or similar offering memorandum or
offering circular, in each case in preliminary or final form, used to offer securities in
connection with a securitization. As used herein, “Significant Obligor” shall have the
meaning set forth in Item 1101(k) of Regulation AB.

          (b) In no event shall Borrower be required to deliver information or financial statements
pursuant to Section 13.04(a) with respect to any Tenant or BTDS.

          Section 13.05 Cooperation.

          At the request of the holder of the Note and, to the extent not already required to be
provided by Borrower under this Agreement, Borrower, Manager and Borrower Principal shall use
reasonable efforts to provide information not in the possession of the holder of the Note in order
to satisfy the market standards to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection with such sales or
transfers, including, without limitation, to:

          (a) provide updated financial, budget and other information with respect to each Individual
Property, Borrower, Operating Lessee, Borrower Principal, Lease Guarantor, BTDS and Manager and
provide modifications and/or updates to the appraisals, market studies, environmental reviews and
reports (Phase I reports and, if appropriate, Phase II reports) and engineering reports of each
Individual Property obtained in connection with the making of the Loan (all of the foregoing,
together with the information required to be provided pursuant to Section 13.04, being
referred to as the “Provided Information”), together, if customary, with appropriate
verification and/or consents of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys reasonably acceptable to Lender and the Rating Agencies;

          (b) make changes to the organizational documents of Borrower, any SPE Component Entity and
their respective principals;

          (c) cause counsel to render or update existing opinion letters as to enforceability and
non-consolidation which may be relied upon by the holder of the Note, the Rating Agencies and their
respective counsel, which shall be dated as of the closing date of the Securitization;

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          (d) permit site inspections, appraisals, market studies and other due diligence investigations
of each Individual Property, as may be reasonably requested by the holder of the Note or the Rating
Agencies or as may be necessary or appropriate in connection with the Securitization;

          (e) make the representations and warranties with respect to each Individual Property,
Operating Lease, Borrower, Borrower Principal and the Loan Documents as are made in the Loan
Documents and such other representations and warranties as may be reasonably requested by the
holder of the Note or the Rating Agencies;

          (f) execute such amendments to the Loan Documents as may be reasonably requested by the holder
of the Note or the Rating Agencies or otherwise to effect the Securitization including, without
limitation, bifurcation of the Loan into two or more components and/or separate notes and/or
creating a senior/subordinate note structure; provided, however, that Borrower shall not be
required to modify or amend any Loan Document if such modification or amendment would (i) change
the interest rate or the stated maturity, except in connection with a bifurcation of the Loan which
may result in varying Note Rates for each component thereof, but which shall have the same initial
weighted average coupon of the Note Rate on the Closing Date, or (ii) in the reasonable judgment of
Borrower, modify or amend the loan term or amortization term or any other economic term of the
Loan, except in a de minimis way, (iii) in the reasonable judgment of Borrower, materially increase
Borrower’s obligations and liabilities or decrease Borrower’s rights under the Loan Documents,
except in a de minimis way; (iv) cause the Borrower to incur expenses in excess of the $50,000
threshold set forth below in Section 13.02 and the Lender has not agreed to pay such
expenses in excess of $50,000; or (v) affect Borrower’s rights to substitute the Property or prepay
the Loan hereunder;

          (g) deliver to Lender and/or any Rating Agency, (i) one or more certificates executed by an
officer of the Borrower certifying as to the accuracy, as of the closing date of the
Securitization, of all representations made by Borrower in the Loan Documents as of the Closing
Date in all relevant jurisdictions or, if such representations are no longer accurate, certifying
as to what modifications to the representations would be required to make such representations
accurate as of the closing date of the Securitization, and (ii) certificates of the relevant
Governmental Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower as of the date of the closing date of the Securitization;

          (h) have reasonably appropriate personnel participate in a bank meeting and/or presentation
for the Rating Agencies or Investors; and

          (i) cooperate with and assist Lender in obtaining ratings of the Securities from two (2) or
more of the Rating Agencies.

          Notwithstanding anything to the contrary set forth herein, Borrower covenants and agrees that
after the Closing Date and prior to a Securitization, Lender shall have the right to create a
mezzanine loan (the “New Mezzanine Loan”), to establish different interest rates and to
reallocate the amortization and principal balances of each of the Loan and the New Mezzanine Loan
between each other and to require the payment of the Loan and the New Mezzanine Loan in such order
of priority as may be designated by Lender; provided, that in no event shall the

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weighted average coupon of the Loan and the New Mezzanine Loan following any such reallocation
or modification at any time change from the weighted average coupon for all in effect immediately
preceding such reallocation, modification or creation of the New Mezzanine Loan. Borrower shall
execute and deliver, and cause to be executed and delivered, such documents as shall reasonably be
required by Lender in connection with this Section, all in form and substance reasonably
satisfactory to Lender and the Rating Agencies, including, without limitation, in connection with
the creation of the New Mezzanine Loan, a promissory note and loan documents necessary to evidence
the New Mezzanine Loan (collectively, the “New Mezzanine Loan Documents”), and Borrower
shall execute such amendments to the Loan Documents as are necessary in connection with the
creation of the New Mezzanine Loan. In addition, Borrower shall cause the formation of one or more
special purpose, bankruptcy remote entities as required by Lender in order to serve as the
borrowers under each New Mezzanine Loan (each, a “New Mezzanine Borrower”) and the
applicable organizational documents of Borrower shall be amended and modified as necessary or
required in the formation of any New Mezzanine Borrower. Further, in connection with the New
Mezzanine Loan, Borrower shall deliver to Lender opinions of legal counsel with respect to due
execution, authority and enforceability of the New Mezzanine Loan and the Loan Documents, as
amended and an updated substantive non-consolidation opinion for the Loan and a substantive
non-consolidation opinion with respect to the New Mezzanine Loan, each as reasonably acceptable to
Lender, prospective investors and/or the Rating Agencies. In connection with the New Mezzanine
Loan, Lender shall require, among other things, (i) the formation of one or more special purpose,
bankruptcy remote entities, which shall own all of the direct legal and beneficial ownership
interests in Borrower, (ii) that such New Mezzanine Borrower execute a promissory note with respect
to the New Mezzanine Loan to be evidenced thereby and (iii) that such New Mezzanine Borrower
execute and deliver such other agreements, documents and instruments (including, without
limitation, a pledge agreement pursuant to which each such New Mezzanine Borrower pledge all of its
right, title and interest in and to the legal and beneficial ownership interests in Borrower as
collateral for the New Mezzanine Loan) as Lender may reasonably request to achieve optimum pricing
for the New Mezzanine Loan.

          In connection with the foregoing, in the event Borrower fails to execute and deliver any
documents reasonably required by Lender within ten (10) Business Days, time being of the essence,
following request therefor, Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect such transactions, Borrower ratifying all that such
attorney shall do by virtue thereof. It shall be an Event of Default under this Agreement, the
Note, the Mortgage and the other Loan Documents if Borrower fails to promptly comply with any of
the terms, covenants or conditions of this Section.

          All costs and expenses incurred by Borrower (including, without limitation, legal fees and
expenses and any costs associated with creating one or more New Mezzanine Loans and obtaining UCC
insurance and mezzanine endorsements to the Borrower’s title policy(ies), in each case, for the
benefit of Lender or any existing or future mezzanine lender) in connection with Borrower’s
complying with the requests and requirements made under this Section 13.05 shall be paid by
Borrower, provided, that, Lender shall be required to pay any reasonable expenses of Borrower that
exceed $50,000. All third party report costs (excluding opinion letters required hereunder) and
Rating Agency expenses shall be paid by Lender.

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          In the event that Borrower requests any consent or approval hereunder and the provisions of
this Agreement or any Loan Documents require the receipt of written confirmation from each Rating
Agency with respect to the rating on the Securities, or, in accordance with the terms of the
transaction documents relating to a Securitization, such a rating confirmation is required in order
for the consent of Lender to be given, Borrower shall pay all actual reasonable out-of-pocket costs
and expenses of Lender, Lender’s servicer and each Rating Agency in connection therewith, and, if
applicable, shall pay any fees imposed by any Rating Agency as a condition to the delivery of such
confirmation.

          Section 13.06 Securitization Indemnification.

          (a) Borrower and Borrower Principal understand that certain of the Provided Information may be
included in Disclosure Documents in connection with the Securitization and may also be included in
filings with the Securities and Exchange Commission pursuant to the Securities Act or the Exchange
Act, or provided or made available to investors or prospective investors in the Securities, the
Rating Agencies, and service providers relating to the Securitization. In the event that the
Disclosure Document is required to be revised prior to the sale of all Securities, Borrower and
Borrower Principal will cooperate with the holder of the Note in updating the Disclosure Document
by providing all current information necessary to keep the Disclosure Document accurate and
complete in all material respects.

          (b) Borrower and Borrower Principal agree to provide in connection with each of (i) a
preliminary and a final offering memorandum or private placement memorandum or similar document
(including any Investor or Rating Agency “term sheets” or presentations relating to the Property
and/or the Loan) or (ii) a preliminary and final prospectus or prospectus supplement, as
applicable, an indemnification certificate (A) certifying that Borrower and Borrower Principal have
examined certain portions of such memorandum or prospectus or other document (including any
Investor or Rating Agency “term sheets” or presentations relating to the Property and/or the Loan),
as applicable, including without limitation, the sections entitled “Special Considerations,” and/or
“Risk Factors,” and “Certain Legal Aspects of the Mortgage Loan,” or similar sections, and all
sections relating to Borrower, Operating Lessee, Borrower Principal, the Manager, their Affiliates,
the Loan, the Loan Documents, any Operating Lease and the Property, and any risks or special
considerations relating thereto, and that, to the knowledge of Borrower, such sections do not
contain any untrue statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they were made, not
misleading (any of the foregoing actions by Borrower and/or Borrower Principal, in each case,
determined as of the date such information or statement is provided, a “Borrower
Misstatement”), (B) indemnifying Lender (and for purposes of this Section 13.06, Lender
hereunder shall include its officers and directors) and the Affiliate of Lender that (i) has filed
the registration statement, if any, relating to the Securitization and/or (ii) which is acting as
issuer, depositor, sponsor and/or a similar capacity with respect to the Securitization (any Person
described in (i) or (ii), an “Issuer Person”), and each director and officer of any Issuer
Person, and each Person or entity who controls any Issuer Person within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (collectively, the “Issuer Group”),
and each Person which is acting as an underwriter, manager, placement agent, initial purchaser or
similar capacity with respect to the Securitization, each of its directors and officers and each
Person who controls any such Person within the meaning of Section 15 of the

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Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter
Group”) for any Losses to which Lender or the Issuer Group may become subject insofar as the
Losses arise out of any Borrower Misstatement contained in such sections (including any Investor or
Rating Agency “term sheets” or presentations relating to the Property and/or the Loan) or arise out
of or are based upon the omission or alleged omission to state therein a material fact required to
be stated in such sections (including any Investor or Rating Agency “term sheets” or presentations
relating to the Property and/or the Loan) or necessary in order to make the statements in such
sections (including any Investor or Rating Agency “term sheets” or presentations relating to the
Property and/or the Loan) or in light of the circumstances under which they were made, not
misleading (collectively the “Securities Liabilities”) and (C) agreeing to reimburse
Lender, the Issuer Group and the Underwriter Group for any legal or other expenses reasonably
incurred by Lender and Issuer Group in connection with investigating or defending the Securities
Liabilities; provided, however, that Borrower will be liable in any such case under clauses (B) or
(C) above only to the extent that any such Securities Liabilities arise out of or are based upon
any such untrue statement or omission made therein, as of the date such information or statement is
provided, in reliance upon and in conformity with information furnished to Lender or any member of
the Issuer Group or Underwriter Group by or on behalf of Borrower or Borrower Principal in
connection with the preparation of the memorandum or prospectus or other document (including any
Investor or Rating Agency “term sheets” or presentations relating to the Property and/or the Loan)
or in connection with the underwriting of the Loan, including, without limitation, financial
statements of Borrower or Borrower Principal, operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to each Individual Property. This
indemnity agreement will be in addition to any liability which Borrower and Borrower Principal may
otherwise have. Moreover, the indemnification provided for in Clauses (B) and (C) above shall be
effective whether or not an indemnification certificate described in (A) above is provided and
shall be applicable based on information previously provided by Borrower and Borrower Principal or
their Affiliates if Borrower or Borrower Principal do not provide the indemnification certificate.

          (c) In connection with filings under the Exchange Act or any information provided to holders
of Securities on an ongoing basis, Borrower and Borrower Principal agree to indemnify (i) Lender,
the Issuer Group and the Underwriter Group for Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Securities Liabilities arise out of or are
based upon the omission or alleged omission to state in the Provided Information a material fact
required to be stated in the Provided Information in order to make the statements in the Provided
Information, in light of the circumstances under which they were made not misleading and (ii)
reimburse Lender, the Issuer Group or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the Issuer Group or the Underwriter Group in connection with
defending or investigating the Securities Liabilities.

          (d) Promptly after receipt by an indemnified party under this Section 13.06 of notice
of the commencement of any action, such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 13.06, notify the indemnifying
party in writing of the commencement thereof, but the omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability which the indemnifying party may have to
any indemnified party hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party. In the event that any action is brought

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against any indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled, jointly with any other indemnifying party, to
participate therein and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such indemnified party. After
notice from the indemnifying party to such indemnified party under this Section 13.06 the
indemnifying party shall be responsible for any reasonable legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such legal defenses and
to otherwise participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more than one such
separate counsel unless counsel for an indemnified party shall have reasonably concluded that there
may be legal defenses available to its client that are different from or additional to those
available to another indemnified party.

          (e) In order to provide for just and equitable contribution in circumstances in which the
indemnity agreements provided for in Section 13.06(c) or Section 13.06(d) is or
are for any reason held to be unenforceable by an indemnified party in respect of any losses,
claims, damages or liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 13.06(c) or Section 13.06(d), the
indemnifying party shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or action in respect thereof); provided,
however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which the respective
parties are entitled, the following factors shall be considered: (i) the indemnified party’s,
Borrower’s and Borrower Principal’s relative knowledge and access to information concerning the
matter with respect to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender, Borrower and Borrower Principal hereby agree that it would not be equitable
if the amount of such contribution were determined by pro rata or per capita allocation.

          (f) The liabilities and obligations of Borrower, Borrower Principal and Lender under this
Section 13.06 shall survive the satisfaction of this Agreement and the satisfaction and
discharge of the Debt.

          Section 13.07 Servicer.

          At the option of Lender, the Loan may be serviced by a servicer/trustee selected by Lender and
Lender may delegate all or any portion of its responsibilities under this Agreement and the other
Loan Documents to such servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.

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ARTICLE XIV

INDEMNIFICATIONS

          Section 14.01 General Indemnification.

          Borrower shall indemnify, defend and hold harmless the Indemnified Parties from and against
any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more of the following:
(a) any accident, injury to or death of persons or loss of or damage to property occurring in, on
or about any Individual Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (b) any use, nonuse or condition in, on or
about any Individual Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) performance of any labor or services or
the furnishing of any materials or other property in respect of any Individual Property or any part
thereof; (d) any failure of any Individual Property to be in compliance with any applicable Legal
Requirements; (e) any and all claims and demands whatsoever which may be asserted against Lender by
reason of any alleged obligations or undertakings on its part to perform or discharge any of the
terms, covenants, or agreements contained in any Lease; (f) the holding or investing of the Reserve
Accounts or the performance of the Required Work, Additional Required Repairs or Additional
Replacements, or (g) the payment of any commission, charge or brokerage fee to anyone which may be
payable in connection with the funding of the Loan (other than for fees imposed or charges by any
broker hired solely by Lender) (collectively, the “Indemnified Liabilities”); provided,
however, that Borrower shall not have any obligation to Lender hereunder (i) to the extent that
such Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of Lender or its agents or representatives or, (ii) with respect to clauses (a)-(e)
above, to the extent that the circumstances giving rise to any indemnification obligation which
Borrower may have under any of clauses (a)-(e) above occurs only after (and not to any degree
before) Lender has taken possession of the applicable Individual Property and Borrower is no longer
in possession of such Individual Property. To the extent that the undertaking to indemnify, defend
and hold harmless set forth in the preceding sentence may be unenforceable because it violates any
applicable law or public policy, Borrower shall pay the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Lender.

          Section 14.02 Mortgage and Intangible Tax Indemnification.

          Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out of or in any way
relating to any tax on the making and/or recording of the Mortgage, the Note or any of the other
Loan Documents, but excluding any income, franchise or other similar taxes.

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          Section 14.03 ERISA Indemnification.

          Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Section 4.09 or Section 5.18 of this Agreement.

          Section 14.04 Provided Information Indemnification.

          In addition to, but without duplication of, any indemnification provided pursuant to Article
XIII, Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out of or in any
Provided Information.

          Section 14.05 Survival.

          The obligations and liabilities of Borrower under this Article XIV shall fully survive
indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of
foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the
Mortgage.

ARTICLE XV

EXCULPATION

          Section 15.01 Exculpation.

     (a) Except as otherwise provided herein or in the other Loan Documents, Lender shall not
enforce the liability and obligation of Borrower or Borrower Principal or any SPE Component Entity,
as applicable, to perform and observe the obligations contained herein or in the other Loan
Documents by any action or proceeding wherein a money judgment shall be sought against Borrower or
Borrower Principal or any SPE Component Entity, except that Lender may bring a foreclosure action,
action for specific performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Agreement, the Note, the Mortgage and the other Loan Documents, and
the interest in the Property, the Rents and any other collateral given to Lender created by this
Agreement, the Note, the Mortgage and the other Loan Documents; provided, however, that any
judgment in any such action or proceeding shall be enforceable only to the extent of Borrower’s or
Borrower Principal’s collective interest in the Property, the Operating Leases, in the Rents and in
any other collateral given to Lender. Lender, by accepting this Agreement, the Note, the Mortgage
and the other Loan Documents, agrees that it shall not, except as otherwise provided in this
Section 15.01, sue for, seek or demand any deficiency judgment against Borrower or Borrower
Principal or any SPE Component Entity in any such action or proceeding, under or by reason of or
under or in connection with this

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Agreement, the Note, the Mortgage or the other Loan Documents. The provisions of this
Section 15.01 shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by this Agreement, the Note, the Mortgage or the other Loan
Documents; (ii) impair the right of Lender to name Borrower or Borrower Principal as a party
defendant in any action or suit for judicial foreclosure and sale under this Agreement and the
Mortgage; (iii) affect the validity or enforceability of any indemnity contained in Articles XIII
and XIV; (iv) impair Lender’s right to enforce its remedies under the Environmental Indemnity and
the Exceptions to Non-Recourse Guaranty; (v) impair the right of Lender to obtain the appointment
of a receiver; (vi) impair the enforcement of the assignment of leases provisions contained in the
Mortgage; or (vii) impair the right of Lender to obtain a deficiency judgment or other judgment on
the Note against Borrower, Operating Lessee or Borrower Principal if necessary to obtain any
Insurance Proceeds or Awards to which Lender would otherwise be entitled under this Agreement;
provided, however, Lender shall only enforce such judgment to the extent of the Insurance Proceeds
and/or Awards actually collected or received by Borrower.

     (b) Notwithstanding the provisions of this Section 15.01 to the contrary, Borrower
shall be personally liable to Lender for Losses due to (but only to the extent such Losses were
caused by):

     (i) fraud or intentional or willful material misrepresentation by Borrower, Borrower
Principal or any other Affiliate or agent of Borrower, any New Mezzanine Borrower or
Borrower Principal in connection with the execution and the delivery of this Agreement, the
Note, the Mortgage, any of the other Loan Documents, or any certificate, report, financial
statement or other instrument or document furnished to Lender at the time of the closing of
the Loan or during the term of the Loan;

     (ii) Borrower’s or any Affiliate’s misapplication or misappropriation of Rents received
by Borrower and not applied or paid in accordance with the requirements of the Loan
Documents;

     (iii) Borrower’s or any Affiliate’s misapplication or misappropriation of tenant
security deposits or Rents collected in advance and not applied in accordance with the terms
of the Loan Documents;

     (iv) the misapplication or the misappropriation of Insurance Proceeds or Awards by
Borrower or any New Mezzanine Borrower;

     (v) Borrower’s willful refusal to pay Taxes, Other Charges (except to the extent that
sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to
the terms hereof and there exists no impediment to Lender’s utilization thereof), charges
for labor or materials or other charges that can create liens on any Individual Property
beyond any applicable notice and cure periods specified herein;

     (vi) any act of intentional waste or arson by Borrower, any New Mezzanine Borrower, any
principal, Affiliate, agent, member or general partner thereof or by Borrower Principal, any
principal, Affiliate, agent, member or general partner thereof;

     (vii) Borrower’s willful misconduct; or

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     (viii) Borrower’s, any New Mezzanine Borrower’s or any Affiliate’s, failure following
any Event of Default to deliver to Lender upon demand all Rents received and books and
records relating to any Individual Property.

          (c) Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability as
set forth in subsection (a) above SHALL BECOME NULL AND VOID and shall be of no further force and
effect and the Debt immediately shall become fully recourse to Borrower and Borrower Principal, on
a joint and several basis in the event (i) of a breach by Borrower or any SPE Component Entity of
any of the covenants set forth in Article VI hereof (other than Sections
6.01(a)(xv) and (xviii)), to the extent that such breach is (A) material and (B) is not
cured within fifteen (15) days of the earlier to occur of notice from Lender or Borrower’s
knowledge of such breach, (ii) of a breach of any of the covenants set forth in Article VII hereof,
(iii) any Individual Property or any part thereof shall become an asset in a voluntary bankruptcy
or insolvency proceeding of Borrower, (iv) Borrower, Borrower Principal or any Affiliate, officer,
director, or representative which controls, directly or indirectly, Borrower or Borrower Principal
files, or joins in the filing of, an involuntary petition against Borrower under any Creditors
Rights Laws, or solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower from any Person; (v) Borrower files an answer consenting to or otherwise
acquiescing in or joining in any involuntary petition filed against it, by any other Person under
any Creditors Rights Laws, or solicits or causes to be solicited petitioning creditors for any
involuntary petition from any Person; (vi) any Affiliate, officer, director, or representative
which controls Borrower consents to or acquiesces in or joins in an application for the appointment
of a custodian, receiver, trustee, or examiner for Borrower or any portion of any Individual
Property or (vii) Borrower or Borrower Principal or any agent or Affiliate thereof interferes in
any way with Lender’s pursuit of any remedies, including any actions taken consistent with the
commencement of foreclosure proceedings, following an Event of Default.

          (d) Nothing herein shall be deemed to be a waiver of any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim
for the full amount of the indebtedness secured by the Mortgage or to require that all collateral
shall continue to secure all of the indebtedness owing to Lender in accordance with this Agreement,
the Note, the Mortgage or the other Loan Documents.

ARTICLE XVI

NOTICES

          Section 16.01 Notices.

          All notices, consents, approvals and requests required or permitted hereunder or under any
other Loan Document shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States mail, postage prepaid, return
receipt requested, (b) expedited prepaid overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or by (c) telecopier (with answer back
acknowledged provided an additional notice is given pursuant to subsection (b) above), addressed as
follows (or at such other address and Person as shall be designated from time to

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time by any party hereto, as the case may be, in a written notice to the other parties hereto
in the manner provided for in this Section):

	 	 	 	 	 
	 

	 	If to Lender:
	 	Bank of America, N.A.
	 

	 	 	 	Capital Markets Servicing Group
	 

	 	 	 	900 West Trade Street, Suite 650
	 

	 	 	 	Mail Code: NC1-026-06-01
	 

	 	 	 	Charlotte, North Carolina 28255
	 

	 	 	 	Attn: Servicing Manager
	 

	 	 	 	Telephone No: (866) 531-0957
	 

	 	 	 	Facsimile No.: (704) 317-4501
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Cadwalader, Wickersham & Taft LLP
	 

	 	 	 	227 West Trade Street, Suite 2400
	 

	 	 	 	Charlotte, North Carolina 28202
	 

	 	 	 	Attention: Richard Madden, Esq.
	 

	 	 	 	Telephone No.: (704) 348-5100
	 

	 	 	 	Facsimile No.: (704) 348-5200
	 
	 	 	 	 
	 

	 	If to Borrower:
	 	Bonstores Realty One, LLC
	 

	 	 	 	P.O. Box 2821
	 

	 	 	 	York, Pennsylvania 17402
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile No.: (717) 751-3008
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Wolf, Block, Schorr & Solis-Cohen LLP
	 

	 	 	 	1650 Arch Street, 22nd Floor
	 

	 	 	 	Philadelphia, Pennsylvania 19103
	 

	 	 	 	Attention: Henry F. Miller, Esq.
	 

	 	 	 	Facsimile No.: (215) 977-2740
	 
	 	 	 	 
	 

	 	If to Borrower	 	 
	 

	 	Principal:
	 	Bonstores Holdings One, LLC
	 

	 	 	 	P.O. Box 2821
	 

	 	 	 	York, Pennsylvania 17402
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile No.: (717) 751-3008
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Wolf, Block, Schorr & Solis-Cohen LLP
	 

	 	 	 	1650 Arch Street, 22nd Floor
	 

	 	 	 	Philadelphia, Pennsylvania 19103
	 

	 	 	 	Attention: Henry F. Miller, Esq.
	 

	 	 	 	Facsimile No.: (215) 977-2740

A notice shall be deemed to have been given: in the case of hand delivery, at the time of
delivery; in the case of registered or certified mail, when delivered or the first attempted
delivery

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on a Business Day; or in the case of expedited prepaid delivery and telecopy, upon the first
attempted delivery on a Business Day.

ARTICLE XVII

FURTHER ASSURANCES

          Section 17.01 Replacement Documents.

          Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any other Loan Document which is not of public record, and, in the case
of any such mutilation, upon surrender and cancellation of such Note or other Loan Document,
Borrower will issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of
such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount
thereof and otherwise of like tenor.

          Section 17.02 Recording of Mortgage, Etc.

          Borrower forthwith upon the execution and delivery of each Mortgage and thereafter, from time
to time, will cause each Mortgage and any of the other Loan Documents creating a lien or security
interest or evidencing the lien hereof upon each Individual Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places as may be required
by any present or future law in order to publish notice of and fully to protect and perfect the
lien or security interest hereof upon, and the interest of Lender in, each Individual Property.
Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to
the preparation, execution, acknowledgment and/or recording of the Note, the Mortgage, the other
Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument
with respect to each Individual Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection with the execution
and delivery of the Mortgage, any deed of trust or mortgage supplemental hereto, any security
instrument with respect to each Individual Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by applicable law so
to do, but excluding any income, franchise or other similar taxes.

          Section 17.03 Further Acts, Etc.

          Borrower will, at the cost of Borrower, and without expense to Lender, do, execute,
acknowledge and deliver all and every further acts, deeds, conveyances, deeds of trust, mortgages,
assignments, security agreements, control agreements, notices of assignments, transfers and
assurances as Lender shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become
bound to convey or assign to Lender, or for carrying out the intention or facilitating the
performance of the terms of this Agreement or for filing, registering or recording

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each Mortgage, or for complying in all material respects with Legal Requirements. Borrower
hereby authorizes the filing of one or more financing statements and financing statement amendments
to evidence more effectively, perfect and maintain the priority of the security interest of Lender
created by the Loan Documents in each Individual Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity, including without
limitation, such rights and remedies available to Lender pursuant to this Section 17.03 to
the extent Borrower fails to perform its obligations hereunder.

Section 17.04 Changes in Tax, Debt, Credit and Documentary Stamp Laws.

(a) If any law is enacted or adopted or amended after the date of this Agreement which deducts
the Debt from the value of any Individual Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on the Debt or Lender’s interest in any Individual Property,
Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have the option by
written notice of not less than one hundred twenty (120) days to declare the Debt immediately due
and payable.

(b) Borrower will not claim or demand or be entitled to any credit or credits on account of
the Debt for any part of the Taxes or Other Charges assessed against any Individual Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of
any Individual Property, or any part thereof, for real estate tax purposes by reason of the
Mortgage or the Debt. If such claim, credit or deduction shall be required by applicable law,
Lender shall have the option, by written notice of not less than one hundred twenty (120) days, to
declare the Debt immediately due and payable.

If at any time the United States of America, any State thereof or any subdivision of any such
State shall require revenue or other stamps to be affixed to the Note, any Mortgage, or any of the
other Loan Documents or impose any other tax or charge on the same, Borrower will pay for the same,
with interest and penalties thereon, if any.

Section 17.05 Expenses.

Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon
receipt of written notice from Lender for all actual, reasonable out-of-pocket costs and expenses
(including reasonable, actual attorneys’ fees and disbursements and the allocated costs of internal
legal services and all actual disbursements of internal counsel) reasonably incurred by Lender in
accordance with this Agreement in connection with (a) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by counsel required
hereunder (including without limitation any opinions requested by Lender as to any legal matters
arising under this Agreement or the other Loan Documents with respect to any Individual Property);
(b) Borrower’s ongoing performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing

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Date, including, without limitation, confirming compliance with environmental and insurance
requirements; (c) following a request by Borrower, Lender’s ongoing performance and compliance with
all agreements and conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (d) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or other modifications
to this Agreement and the other Loan Documents and any other documents or matters requested by
Lender; (e) securing Borrower’s compliance with any requests made pursuant to the provisions of
this Agreement; (f) the filing and recording fees and expenses, title insurance and reasonable fees
and expenses of counsel for providing to Lender all required legal opinions, and other similar
expenses incurred in creating and perfecting the Lien in favor of Lender pursuant to this Agreement
and the other Loan Documents; (g) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other litigation, in each
case against, under or affecting Borrower, this Agreement, the other Loan Documents, any Individual
Property, or any other security given for the Loan; and (h) enforcing any obligations of or
collecting any payments due from Borrower under this Agreement, the other Loan Documents or with
respect to any Individual Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a “work-out” or of any
insolvency or bankruptcy proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of Lender. Notwithstanding anything to the
contrary contained in this Section 17.05, expenses relating to any Securitization shall be
governed by Section 13.05.

ARTICLE XVIII

WAIVERS

          Section 18.01 Remedies Cumulative; Waivers.

          The rights, powers and remedies of Lender under this Agreement shall be cumulative and not
exclusive of any other right, power or remedy which Lender may have against Borrower or Borrower
Principal pursuant to this Agreement or the other Loan Documents, or existing at law or in equity
or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No
delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be deemed expedient.
A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or
power consequent thereon.

          Section 18.02 Modification, Waiver in Writing.

          No modification, amendment, extension, discharge, termination or waiver of any provision of
this Agreement, or of the Note, or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in a

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writing signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle
Borrower to any other or future notice or demand in the same, similar or other circumstances.

          Section 18.03 Delay Not a Waiver.

          Neither any failure nor any delay on the part of Lender in insisting upon strict performance
of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other instrument given as
security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any other right, power,
remedy or privilege. In particular, and not by way of limitation, by accepting payment after the
due date of any amount payable under this Agreement, the Note or any other Loan Document, Lender
shall not be deemed to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.

          Section 18.04 Trial by Jury.

          BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY
WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER,
BORROWER PRINCIPAL AND LENDER.

          Section 18.05 Waiver of Notice.

          Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect
to any matter for which this Agreement or the other Loan Documents do not specifically and
expressly provide for the giving of notice by Lender to Borrower.

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          Section 18.06 Remedies of Borrower.

          In the event that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where by law or under this Agreement or the
other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably
or promptly, Borrower agrees that neither Lender nor its agents shall be liable for any monetary
damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive
relief or declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action seeking declaratory
judgment. Lender agrees that, in such event, it shall cooperate in expediting any action seeking
injunctive relief or declaratory judgment.

          Section 18.07 Waiver of Marshalling of Assets.

          To the fullest extent permitted by law, Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with
interests in Borrower, and of each Individual Property and the Property, and agrees not to assert
any right under any laws pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of
each Individual Property and the Property for the collection of the Debt without any prior or
different resort for collection or of the right of Lender to the payment of the Debt out of the net
proceeds of each Individual Property and the Property in preference to every other claimant
whatsoever.

          Section 18.08 Waiver of Statute of Limitations.

          Borrower hereby expressly waives and releases, to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or performance of its
Other Obligations.

          Section 18.09 Waiver of Counterclaim.

          Borrower hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender or its agents.

ARTICLE XIX

GOVERNING LAW

     Section 19.01 Choice of Law.

     This Agreement shall be deemed to be a contract entered into pursuant to the laws of the State
of New York and shall in all respects be governed, construed, applied and enforced in accordance
with the laws of the State of New York, provided however, (a) that with respect to the creation,
perfection, priority and enforcement of any Lien created by the Loan Documents, and the
determination of deficiency judgments, the laws of the state where each Individual

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Property is located shall apply, and (b) with respect to the security interest in each of the
Reserve Accounts and the Cash Management Account, the laws of the state where each such account is
located shall apply.

          Section 19.02 Severability.

          Wherever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

          Section 19.03 Preferences.

          Lender shall have the continuing and exclusive right to apply or reverse and reapply any and
all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent
Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, receiver or any other party under any Creditors Rights Laws, state or federal
law, common law or equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived and continue in
full force and effect, as if such payment or proceeds had not been received by Lender.

ARTICLE XX

MISCELLANEOUS

          Section 20.01 Survival.

          This Agreement and all covenants, agreements, representations and warranties made herein and
in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and
the execution and delivery to Lender of the Note, and shall continue in full force and effect so
long as all or any of the Debt is outstanding and unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the legal representatives, successors and
assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf
of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of
Lender.

          Section 20.02 Lender’s Discretion.

          Whenever pursuant to this Agreement, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive.

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          Section 20.03 Headings.

          The Article and/or Section headings and the Table of Contents in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this Agreement for any
other purpose.

          Section 20.04 Cost of Enforcement.

          In the event (a) that the Mortgage is foreclosed in whole or in part, (b) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its
constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit
of its creditors, or (c) Lender exercises any of its other remedies under this Agreement or any of
the other Loan Documents, Borrower shall be chargeable with and agrees to pay all costs of
collection and defense, including attorneys’ fees and costs, incurred by Lender or Borrower in
connection therewith and in connection with any appellate proceeding or post-judgment action
involved therein, together with all required service or use taxes.

          Section 20.05 Schedules Incorporated.

          The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.

          Section 20.06 Offsets, Counterclaims and Defenses.

          Any assignee of Lender’s interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any assignor of such
documents, and no such unrelated counterclaim or defense shall be interposed or asserted by
Borrower in any action or proceeding brought by any such assignee upon such documents and any such
right to interpose or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.

          Section 20.07 No Joint Venture or Partnership; No Third Party Beneficiaries.

          (a) Borrower and Lender intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender or to grant Lender any interest in any Individual Property other than that of
mortgagee, beneficiary or lender.

          (b) This Agreement and the other Loan Documents are solely for the benefit of Lender and
Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein. All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lender will refuse to make
the Loan in the absence of strict compliance with any or all thereof

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and no other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s
sole discretion, Lender deems it advisable or desirable to do so.

          (c) The general partners, members, principals and (if Borrower is a trust) beneficial owners
of Borrower are experienced in the ownership and operation of properties similar to each Individual
Property, and Borrower and Lender are relying solely upon such expertise and business plan in
connection with the ownership and operation of each Individual Property. Borrower is not relying
on Lender’s expertise, business acumen or advice in connection with the Property.

          (d) Notwithstanding anything to the contrary contained herein, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and
other documents.

          (e) By accepting or approving anything required to be observed, performed or fulfilled or to
be given to Lender pursuant to this Agreement, the Mortgage, the Note or the other Loan Documents,
including, without limitation, any officer’s certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness
of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation
with respect thereto by Lender.

          (f) Borrower recognizes and acknowledges that in accepting this Agreement, the Note, the
Mortgage and the other Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the representations and warranties set forth in Article IV of this Agreement without
any obligation to investigate any Individual Property and notwithstanding any investigation of any
Individual Property by Lender; that such reliance existed on the part of Lender prior to the date
hereof, that the warranties and representations are a material inducement to Lender in making the
Loan; and that Lender would not be willing to make the Loan and accept this Agreement, the Note,
the Mortgage and the other Loan Documents in the absence of the warranties and representations as
set forth in Article IV of this Agreement.

          Section 20.08 Publicity.

          All news releases, publicity or advertising by Borrower or its Affiliates through any media
intended to reach the general public which refers to the Loan, Lender, Banc of America Securities
LLC, or any of their Affiliates shall be subject to the prior written approval of Lender, not to be
unreasonably withheld, conditioned or delayed. Lender shall be permitted to make any news,
releases, publicity or advertising by Lender or its Affiliates through any media intended to reach
the general public which refers to the Loan, the Property, Borrower, Borrower Principal and their
respective Affiliates subject to the prior written approval of Borrower not to be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, Borrower agrees that Lender may
share any information pertaining to the Loan, the Properties, the Borrower, Operating Lessee,
Borrower Principal, BTDS and Lease Guarantor with Bank of America Corporation, including its bank
subsidiaries, Banc of America Securities LLC and any

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other Affiliates of the foregoing, the Rating Agencies and Investors in connection with the
sale or transfer of the Loan or any Participations and/or Securities created. In no event shall
this Section 20.08 limit the rights of Lender under Section 13.03 hereof.

          Section 20.09 Conflict; Construction of Documents; Reliance.

          In the event of any conflict between the provisions of this Agreement and any of the other
Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge
that they were represented by competent counsel in connection with the negotiation, drafting and
execution of the Loan Documents and that such Loan Documents shall not be subject to the principle
of construing their meaning against the party which drafted same. Borrower acknowledges that, with
respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into
the Loan without relying in any manner on any statements, representations or recommendations of
Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it under any of the
Loan Documents or any other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them
may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or
take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real estate financings
and other real estate transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

          Section 20.10 Entire Agreement.

          THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO
AND THERETO IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, CONSTITUTE THE FULL, COMPLETE AND
FINAL EXPRESSION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND SUPERSEDE ALL PRIOR AGREEMENTS
BETWEEN THE PARTIES HERETO AND THERETO IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER
ORAL OR WRITTEN. THE PROVISIONS OF THIS AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR
ORAL AGREEMENT OR OF A CONTEMPORANEOUS ORAL AGREEMENT BETWEEN THE PARTIES HERETO. THE PARTIES
AFFIRM THAT THERE IS NO UNWRITTEN ORAL AGREEMENT BETWEEN THE PARTIES. IF THERE ARE ANY NON-STANDARD
TERMS, THEY ARE REDUCED TO WRITING AS FOLLOWS: NONE .

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

- 122 -

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
duly authorized representatives, all as of the day and year first above written.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	BONSTORES REALTY ONE, LLC, a
 Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	  /S/ JAMES H. BAIREUTHER
	 

	 	 	 	 
	 

	 	 	 	Name: James H. Baireuther
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	BORROWER PRINCIPAL:
	 
	 	 	 	 
	 	 	Acknowledged and agreed to with respect to its

obligations set forth in Article IV, Article XIII

and Article XVIII hereof:
	 
	 	 	 	 
	 	 	BONSTORES HOLDINGS ONE, LLC, a
 Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	  /S/ JAMES H. BAIREUTHER
	 

	 	 	 	 
	 

	 	 	 	Name: James H. Baireuther
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	LENDER:
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., a 
national banking
association
	 
	 	 	 	 
	 

	 	By:
	 	  /S/ LISA MCGEE
	 

	 	 	 	 
	 

	 	 	 	Name: Lisa McGee
	 

	 	 	 	Title: Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]