August 29, 2003
Exhibit (b)(4)
BANC ONE CAPITAL MARKETS tel 312 732 4000
ASSET-BACKED FINANCE fax 312 732 3600
Mail Code I11-1729
1 Bank One Plaza
Chicago, IL 60670
BANC ONE
CAPITAL MARKETS, INC.
This letter is confidential and therefore shall not be disclosed by you to any
third party or governmental entity without the prior written consent of Bank
One, NA, except as otherwise set forth herein.
CONFIDENTIAL
August 29, 2003
The Bon-Ton Stores, Inc.
2801 East Market Street
York, Pennsylvania 17405
Attn: James H. Baireuther
RE: COMMITMENT LETTER
Ladies and Gentlemen:
You have advised Bank One, NA, with its main office in Chicago,
Illinois ("BANK ONE") and Banc One Capital Markets, Inc. ("BOCM") that The
Bon-Ton Stores, Inc., a Pennsylvania corporation (the "PARENT") intends to
acquire all of the outstanding capital stock (the "ACQUISITION") of The
Elder-Beerman Stores Corp., an Ohio corporation (the "TARGET") in a transaction
that will include (i) a tender offer (the "TENDER OFFER") by the Parent and/or
one or more of its subsidiaries to acquire all of the outstanding capital stock
of the Target, (ii) the payment of all fees and expenses associated with the
Acquisition, (iii) the merger (the "MERGER") of the Target with a subsidiary of
the Parent following the Acquisition, and (iv) the refinancing (the
"REFINANCING") of certain existing indebtedness of the Parent and certain of its
subsidiaries and Target and certain of its subsidiaries, including, without
limitation, certain indebtedness that is or could be required to be repurchased
or becomes, or could be declared, due and payable as a result of the Tender
Offer, the Acquisition or the financing of the Acquisition, or the Merger, and
to pay related fees and expenses. The Tender Offer, the Acquisition, the Merger
and the Refinancing, and the payment of related fees and expenses are herein
referred to collectively as the "TRANSACTIONS."
1. Commitment. You have advised us that the commitment to provide
the financing contemplated hereby is a condition precedent to the signing of a
definitive agreement in connection with the Acquisition (the "ACQUISITION
AGREEMENT"). You have also advised us that, subject to the other provisions of
this letter, a copy of this letter
August 29, 2003
(together with the exhibits hereto, the "COMMITMENT LETTER") will be provided to
the Target but that you understand that our obligation to make any monies
available pursuant hereto is subject expressly to the execution and delivery of
definitive documentation, including, without limitation, the Fee Letter (defined
below), a definitive receivables purchase agreement, reasonably satisfactory to
us and covering the matters expressly referred to herein and in the exhibits
hereto (collectively, the "DEFINITIVE DOCUMENTS"), and is subject to
satisfaction of the other conditions precedent set out in the Indicative Summary
of Terms and Conditions attached as Exhibit A hereto (the "TERM SHEET") and in
the Definitive Documents. In connection with the foregoing, we are pleased to
advise you that Bank One hereby commits (the "COMMITMENT"), subject to the terms
and conditions set forth herein and in the Term Sheet and in the Definitive
Documents, that it and/or one or more of its affiliates will make up to $250
million in initial aggregate commitments to purchase Receivables INTERESTS, the
proceeds of which, together with other financing arranged by the Parent, will be
used to effect the Refinancing of the receivables facilities in connection with
the effectiveness of the Merger (as defined in the Acquisition Agreement), which
Commitment shall automatically be reduced to $125 million on January 15, 2004
and which shall terminate on the date that is 364 days after the date any
portion of this Commitment is first made available, subject to earlier
termination of such Commitment pursuant to the terms of this Commitment Letter
and the Definitive Documents.
At the option of the Parent, up to $100 million of the Commitment will
be available to refinance on the "Share Acceptance Date" (as defined in the
Acquisition Agreement draft dated 8/20/03 provided to us) a corresponding
portion of the receivables financing facility currently provided by Eagle
Funding Corporation, CRC Funding, LLC (formerly Corporate Receivables
Corporation) and certain other institutions to The El-Bee Receivables
Corporation, such refinancing to be subject to substantially the same terms and
conditions as provided in the existing definitive documents for such receivables
financing facility that have been provided to us and to the execution of
definitive documents with respect to the refinancing of such receivables
financing facility. The portion of the Commitment utilized to effect such
refinancing shall terminate on the date that is 364 days after the closing date
of such refinancing. At the option of the Parent, up to $150 million of the
Commitment will be available to refinance on the Share Acceptance Date a
corresponding portion of the existing receivables financing facility currently
provided by Bank One and certain other persons to The Bon-Ton Receivables
Partnership, L.P., such refinancing to be subject to substantially the same
terms and conditions as provided in the existing definitive documents for such
receivables financing facility provided that (i) such definitive documents are
amended to reflect a "AA" level of credit enhancement, as outlined in Exhibit B
hereto and the pricing for such receivables financing facility shall be amended
as described in the Fee Letter and (ii) the portion of the Commitment utilized
to effect such refinancing shall terminate on the date that is 364 days after
the closing date of such refinancing. In addition, any portion of the Commitment
utilized by the Parent pursuant to this paragraph shall be subject to the
automatic reduction of the Commitment to $125 million on January 15, 2004 as
described in the preceding paragraph and any such reduction shall be allocated
between the refinanced receivables facilities at the option of the Parent.
Bank One and BOCM have reviewed certain historical and pro forma
financial statements of the Parent and Target prepared by or on behalf of the
Parent and the Target. Bank One's Commitment is subject to there not having
occurred or become known any material adverse change with respect to the
financial condition, operations, liabilities, assets or prospects of Target and
its subsidiaries, as shown in such materials. If Bank One's or BOCM's continuing
review of materials about Target or the Acquisition discloses information, or
either otherwise discovers information not previously disclosed to it, which
either Bank One or BOCM believes has a materially negative impact on the Parent,
Target and their respective
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August 29, 2003
subsidiaries' financial condition, operations, liabilities, assets and prospects
taken as a whole either may, in its respective sole discretion, suggest
alternative financing amounts or structures that ensure adequate protection for
the Financial Institutions or decline to participate in the proposed financing.
Bank One's Commitment is further subject to (i) Bank One's receipt of
the fee payable pursuant to the terms of the Fee Letter on the date the Parent
signs this Commitment Letter, (ii) Bank One's review and approval of the terms
of the financing arranged by the Parent to effect the Acquisition and (iii) no
material adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of (a) the Parent and its
subsidiaries since December 31, 2002, (b) the Target and its subsidiaries since
December 31, 2002, or (c) the Parent, the Target and their respective
subsidiaries, taken as a whole, since the pro forma financial statements (dated
August 18, 2003) received by the Bank One and BOCM. Agents, officers, directors
and employees of Bank One, BOCM and their affiliates will have the right to
share amongst themselves information received from Parent and its affiliates and
their respective agents, officers, directors and employees.
2. Fees. The Parent agrees to pay or cause to be paid to Bank One
and BOCM the fees and expenses provided in that certain Fee Letter Agreement,
dated as of the date hereof, among Bank One, BOCM and the Parent (the "FEE
LETTER").
3. Syndication. Bank One and BOCM shall have the right to
syndicate, sell, transfer, or assign any portion of Bank One's Commitment
hereunder and any portion of the Receivables Interests (as defined in the Term
Sheet), and the Parent agrees to use, and cause the Target to use, all
commercially reasonable efforts to assist Bank One and BOCM in the syndication
process. Any third party to which any portion of the Commitment or the
Receivables Interests is so syndicated, sold, transferred or assigned shall
become a Financial Institution hereunder (a "FINANCIAL INSTITUTION") and shall
have all of the rights of Bank One and the other Financial Institutions set
forth herein, unless otherwise expressly agreed, and Bank One shall be released
from all liability with respect to any portion of its Commitment that has been
so syndicated, sold, transferred or assigned. You agree to actively assist, and
to cause the Target to actively assist, Bank One and BOCM in achieving
syndication of the Commitment and the Receivables Interests in a manner
reasonably satisfactory to Bank One. Bank One and BOCM shall be entitled, after
consultation with the Parent, to change any or all of the structure, terms or
pricing of the receivables financing facilities (the "FACILITIES") for the
Parent and the Target referenced in this Commitment Letter if the syndication
has not been completed (ie Bank One's Commitment has not been reduced to $125
million prior to November 15, 2003) and if Bank One and BOCM determine that such
changes are advisable in order to ensure a successful syndication of the
Facilities. BOCM's undertaking and Bank One's Commitment hereunder are subject
to the agreements in this paragraph and this paragraph shall survive the closing
of the Facilities.
You hereby represent and warrant that (i) all information, other than
Projections (as defined below), which has been or is hereafter made available to
us or the other Financial Institutions by you or any of your representatives in
connection with the transactions contemplated hereby ("INFORMATION") has been or
will be reviewed and analyzed by you in connection with your own due diligence
investigation and is now and as of the Closing Date (as defined below) as
supplemented by you prior to the Closing Date, will be complete and correct in
all material respects and does not now and as of the Closing Date (as
supplemented by you prior to the Closing Date), will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained
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August 29, 2003
therein not misleading and (ii) all financial projections that have been or are
hereafter made available to us or the other Financial Institutions by you or any
of your representatives in connection with the Acquisition (the "PROJECTIONS")
have been or will be prepared in good faith based upon assumptions believed to
be reasonable. You agree to promptly furnish, or cause the Parent and its
subsidiaries and, following the execution of the Acquisition Agreement, the
Target and its subsidiaries, to promptly furnish, us with such Information and
Projections as we may reasonably request and to supplement such Information and
such Projections from time to time until the initial funding under the
Commitment (the "CLOSING DATE") so that the representation and warranty in the
preceding sentence is correct on the Closing Date. You hereby covenant that all
Information that is hereafter made available to you by the Parent and its
subsidiaries and the Target and its subsidiaries, or any of their respective
representatives in connection with the Acquisition and the Receivables Facility
will be reviewed and analyzed by you in connection with performing your own due
diligence investigation. The representations and warranties contained in this
paragraph shall remain effective until the Definitive Documents are executed,
and, thereafter, the disclosure representations contained herein shall be
superseded by those contained in such Definitive Documents; provided that in the
event such Definitive Documents are not executed, such representations and
warranties will remain effective after the termination of the Commitment.
4. Confidentiality. By accepting delivery of this Commitment
Letter, the Parent hereby agrees that it will not disclose, either expressly or
impliedly, without Bank One's and BOCM's consent, to any person any of the terms
of the Commitment, or the fact that the Commitment or the financing proposal
represented thereby exists except that the Parent may disclose any of the
foregoing to any employee, director, officer, financial advisor (BUT NOT TO ANY
FINANCIAL ADVISOR WHICH MAY BE A PROVIDER OF FINANCING IN THIS TRANSACTION) or
attorney of the Parent to whom, in each case, it is necessary to disclose such
information so long as any such employees, directors, officers, advisors or
attorneys are directed to observe this confidentiality obligation; provided,
however, that (i) the Parent may disclose the Commitment Letter and the Term
Sheet (but not the Fee Letter) in connection with its bid for the Target in
order to demonstrate its ability to obtain financing and (ii) upon the Parent's
execution of this Commitment Letter, the Parent may make public disclosure of
the existence and the amount of the Commitment and the Parent may publicly file
a copy of the Commitment Letter and the Term Sheet (but not the Fee Letter), or
make such other disclosures if such disclosure is, in the opinion of the
Parent's counsel, required by law. Without limiting the generality of the
foregoing, the Parent will not make a public disclosure of the Fee Letter
without a written opinion of its counsel indicating such disclosure is required
by law or regulation. Notwithstanding the foregoing, however, the Parent (and
each employee, representative or other agent of the Parent) may disclose to any
and all persons, without limitation of any kind, the "tax treatment" and "tax
structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are or have been provided to the
Parent relating to such tax treatment or tax structure, except that, with
respect to any document or similar item that in either case contains information
concerning such tax treatment or tax structure of the transactions contemplated
hereby as well as other information, this proviso shall only apply to such
portions of the document or similar item that relate to such tax treatment or
tax structure of the transactions contemplated hereby. In the event that you
disclose the contents of this Commitment Letter in contravention of the
preceding paragraph, you shall be deemed to have accepted the terms and
conditions of this Commitment Letter and the Fee Letter. Additionally, you agree
to allow Bank One, BOCM or any of their affiliates to reference this Commitment
for the benefit of promoting Bank One, BOCM or any of their affiliates.
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August 29, 2003
6. Expenses; Indemnification. The Parent agrees (i) to reimburse
Bank One and BOCM for all out-of-pocket expenses (including the fees and
expenses of outside counsel and time charges for inside counsel) incurred in
connection with this Commitment Letter, Fee Letter, and the Term Sheet (the
Commitment Letter, Fee Letter and Term Sheet collectively the "RECEIVABLES
LETTERS"), the transactions contemplated by the Receivables Letters, and Bank
One's and BOCM's on-going due diligence, including without limitation travel
expenses and costs incurred in connection with the preparation, negotiation,
execution, administration, syndication, distribution (including, without
limitation, via the internet), and enforcement of any document relating to this
transaction and Bank One's and BOCM's roles hereunder; (ii) to indemnify and
hold harmless Bank One, BOCM, the Financial Institutions and their respective
officers, employees, agents, attorneys, directors, and affiliates (collectively,
the "Indemnified Persons") against any and all losses, claims, damages, or
liabilities of every kind whatsoever to which the Indemnified Persons may become
subject in connection in any way with the transaction which is the subject of
the Receivables Letters, including without limitation expenses incurred in
connection with investigating or defending against any liability or action
whether or not a party thereto, except to the extent any of the foregoing is
found in a final judgment by a court of competent jurisdiction to have arisen
primarily from such Indemnified Person's gross negligence or willful misconduct;
and (iii) that no Indemnified Person shall have any liability to the Parent for
consequential damages on any theory of liability in connection in any way with
the transaction which is the subject of the Receivables Letters (including
without limitation any liability resulting from Bank One's multiple capacities
in the transaction). The obligations described in this paragraph are independent
of all other obligations of the Parent hereunder and under the Definitive
Documents, shall survive the expiration, revocation or termination of the
Receivables Letters, and shall be payable whether or not the financing
transactions contemplated by the Receivables Letters shall close. Bank One's and
BOCM's respective obligations under the Receivables Letters are enforceable
solely by the party signing the Receivables Letters and may not be relied upon
by any other person. For purposes of this paragraph, the terms "Bank One" and
"BOCM" shall include any affiliate of either.
7. Miscellaneous. This Commitment Letter (including the exhibits
hereto) and the Fee Letter set forth the entire understanding of the parties
thereto as to the subject matter thereof. The Commitment will expire at 11:00
a.m. Chicago, Illinois time on September 2, 2003 unless accepted prior to such
time; provided that, after acceptance, the Commitment hereunder will terminate
upon the earliest of (i) the termination of the Acquisition Agreement, (ii) the
acceptance by the Target or any of its affiliates of an offer for all or any
substantial portion of the capital stock or assets of the Target other than the
Tender Offer, or (iii) 5:00 p.m. Chicago, Illinois time on November 26, 2003
(unless the Commitment has been utilized on or prior to such time).
The Commitment is not assignable by you, and nothing in this Commitment
Letter, express or implied, shall give any person, other than the parties hereto
and the Indemnified Parties referred to herein, any benefit or any legal or
equitable right, remedy or claim under this Commitment Letter.
In connection with the services and transactions contemplated hereby,
the Parent agrees that Bank One is permitted to access, use and share with any
of its bank or non-bank affiliates, agents, advisors (legal or otherwise) or
representatives, any information concerning the Parent, the Target or any of
their respective affiliates that is or may come into the possession of Bank One
or any of such affiliates. Bank One and its affiliates will treat confidential
information relating to the Parent, the Target and their respective affiliates
with the same degree of care as they treat their own confidential information.
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August 29, 2003
As you know, other business units and/or affiliates of BANK ONE
CORPORATION ("BOC") are, or may be, providing other financial services and
products to you in connection with the transaction which is the subject of this
letter. You acknowledge and consent to these multiple roles, and further
acknowledge that the fact that another unit of BOC is providing another service
or product or proposal therefor to you does not mean that such service, product
or proposal (i) is acceptable to Bank One and BOCM (both of which are affiliates
of BOC) in their capacities hereunder; (ii) is consistent with the terms or this
commitment; or (iii) is or will be acceptable to any other Financial
Institutions.
You understand that Bank One and BOCM may each have other customers
with interests conflicting with your interests and that each may from time to
time provide financing or other services to these customers. Consistent with its
policy to hold in confidence the affairs of its customers, each of Bank One and
BOCM will not furnish confidential information obtained from you to any other
customer. By the same token, neither Bank One nor BOCM will make available to
you confidential information that it has obtained from any other customer.
This Commitment Letter and the Term Sheet supersede any and all prior
versions hereof or thereof. This Commitment Letter may only be amended by a
writing signed by all parties hereto. This Commitment Letter shall be governed
by, and construed in accordance with, the internal laws of the State of Illinois
as applied to agreements made and performed within such state without giving
effect to the principles and conflicts of law thereof. To the fullest extent
permitted by applicable law, each of Bank One, BOCM and the Parent hereby
irrevocably submits to the jurisdiction of any Illinois State court or Federal
court sitting in Chicago, Illinois in respect of any suit, action or proceeding
arising out of or relating to the provisions of this Commitment Letter
(including the exhibits hereto and the Fee Letter) and irrevocably agrees that
all claims in respect of any such suit, action, or proceeding may be heard and
determined in any such court. EACH OF BANK ONE, BOCM AND THE PARENT WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDINGS BROUGHT IN ANY SUCH COURT, AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
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August 29, 2003
Please indicate your acceptance of our Commitment and your agreement to
the matters contained in this Commitment Letter (including the exhibits hereto
and the Fee Letter) by executing this document and returning it to us prior to
the time of expiration set forth above. This commitment letter may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together shall
constitute but one and the same agreement.
Sincerely,
BANK ONE, NA
By: /s/ Elizabeth Chung
------------------------------------------
Name: Elizabeth Chung
Title: Managing Director
BANC ONE CAPITAL MARKETS, INC.
By: /s/ Elizabeth Chung
------------------------------------------
Name: Elizabeth Chung
Title: Managing Director
Accepted and agreed to as of
August 29, 2003:
THE BON-TON STORES, INC.
By: /s/ James H. Baireuther
-------------------------------
Name: James H. Baireuther
Title: Vice Chairman
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August 29, 2003
EXHIBIT A - TERM SHEET
THE BON-TON RECEIVABLES PARTNERSHIP, LP
INDICATIVE SUMMARY OF TERMS AND CONDITIONS
$250,000,000 REVOLVING CREDIT CARD RECEIVABLES FACILITY
[ ] indicates to be determined
The following term sheet is meant to provide indicative terms and conditions for
a credit card receivables securitization facility. It does not purport to
contain all, or the expected phrasing of, such terms and conditions that would
ultimately be contained in the final legal documentation for such facility. Any
transaction is subject to satisfactory documentation. Bracketed items or "TBD"
are those items to be determined or finalized pending further discussion,
receipt of additional information or due-diligence.
I. FACILITY AND PARTICIPANTS
ORIGINATOR(S): The Bon-Ton Department Stores, Inc. and [The
El-Bee Chargit Corp./The Elder-Beerman
Stores Corp.] (the "Originators"). Pursuant
to a Transfer Agreement ("TA"), the
Originators will from time to time transfer
(and/or contribute) to the Seller (as
defined below) all their respective right,
title and interest in and to Receivables (as
defined below) via a series of true sales
(and/or other outright assignments), as
opined by outside legal counsel for the
Originator.
SELLER: The Bon-Ton Receivables Partnership, LP
("SPE" or "Seller"), a bankruptcy-remote
entity, which is wholly owned by
subsidiaries of The Bon-Ton Department
Stores, Inc. SPE's sole purpose is to
acquire credit card Receivables from each
Originator pursuant to the TA. SPE, in turn,
will sell undivided interests in the
Receivables and certain related rights to
the Purchasers pursuant to an Amended and
Restated Receivables Purchase Agreement
("RPA").
PURCHASERS: Multi-seller asset-backed commercial paper
conduits (the "Conduits"), including a
conduit administered by Bank One, NA ("Bank
One"), and such other financial institutions
that may be party to the Facility (the
"Financial Institutions")(the Financial
Institutions, together with the Conduits,
are collectively, the "Purchasers").
August 29, 2003
AGENT: Bank One, NA
ARRANGER: Banc One Capital Markets, Inc. ("BOCM").
PERFORMANCE GUARANTOR: The Bon-Ton Stores, Inc. or The Bon-Ton
Department Stores, Inc. ("Performance
Guarantor"). The Performance Guarantor will
guarantee the performance by each Originator
of their servicing, payment, and other
obligations under the transaction documents.
COLLECTION AGENT: The Seller. The Seller has designated
The Bon-Ton Department Stores, Inc. ("The
Bon-Ton") and El-Bee Chargit Corp. as
sub-servicers. The Agent shall have the
right at any time to designate an
alternative Collection Agent if deemed
necessary to protect their interests in the
Receivables.
SUB-SERVICER FEE: The Seller shall pay the sub-servicer a
monthly fee, payable in arrears, equal to 2%
per annum multiplied by the average
outstanding principal balance of all
Receivables sold during the preceding
calendar month.
FACILITY: Facility for the purchase of undivided
interests ("Receivable Interests") in all
Receivables (as defined below), the
associated Collections and related security
(including, without limitation, all of SPE's
rights under the Transfer Agreement and all
contracts and records related to the
Receivables). During the term of the
Facility, each Conduit will make purchases
of Receivable Interests on an offering
basis, and if a Conduit shall decline to
make its pro-rata share of such purchase,
the Financial Institution providing
liquidity to such Conduit will commit to
make such purchase.
Each Conduit will fund its on-going
purchases of Receivable Interests with
commercial paper issued by such Conduit
which is rated at least A-1 and P-1 by,
respectively, Standard and Poor's and
Moody's (the "Rating Agencies"). In
addition, the Financial Institution which
administers such Conduit will provide a
liquidity back-up facility for the
commercial paper issued by the Conduit.
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August 29, 2003
FACILITY LIMIT: The maximum investment in Receivables
by all Purchasers at any one time will be
$250 million, as such amount may be
increased from time to time with consent of
each of the Purchasers. The maximum
investment in Receivables by a Bank One
administered conduit or Bank One, NA shall
not exceed $250 million (prior to January
15, 2004) or $125 million (on and after
January 15, 2004). The liquidity commitment
provided by each Financial Institution to
its respective Conduit shall be sized to at
least 100% of the Facility Limit for such
Conduit. Bank One's liquidity commitment to
Falcon shall be sized to 102% of the
Facility Limit.
REVOLVING PERIOD: The Purchasers will make purchases of
Receivable Interests on and from the
Closing Date until the occurrence of the
Facility Termination Date.
CLOSING DATE: [ ]
FACILITY TERMINATION DATE: The earliest to occur of (i) the Liquidity
Termination Date, (ii) the date the Seller
shall exercise its right to repurchase
outstanding Receivable Interests, and (iii)
any date following the occurrence and during
the continuance of any Termination Event
which the Agent or the Required Investors
(Purchasers with commitments exceeding 66
2/3% of the Facility Limit) declare to be
the Facility Termination Date.
LIQUIDITY TERMINATION DATE: 364 days from the Closing Date. On an annual
basis thereafter, upon receiving 30 days
notice from the Seller, the Liquidity
Termination Date shall be extended for
another 364 day period at the sole
discretion of the Purchasers.
TERMINATION DATE: For any Receivable Interest, the
Facility Termination Date, and solely with
respect to a Receivable Interest of a
Conduit Purchaser or the Seller, that
business day so designated by the Seller or
a Conduit Purchaser by notice to each of the
other Conduit Purchasers and the Seller.
LIQUIDATION DAY: For any Receivable Interest, the
earliest to occur of (i) any business day so
designated by the Agent on or at any time
following any day on which the conditions
precedent are not satisfied, (ii) any
business day so designated by the Seller or
the Agent after the occurrence of a
Termination Event and (iii) the
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August 29, 2003
business day immediately prior to the
occurrence of a Termination Event caused by
the bankruptcy of an Originator or Seller.
INTEREST RATE SWAPS: Subject to terms and conditions
which will be outlined in the program
documents, Seller will be required, on or
prior to the 30th day following the Closing
Date, to enter into interest rate swap
agreements or caps with approved
counterparties rated at least A-1/P-1 to
hedge 100% of the notional amount of the
aggregate amounts borrowed under the
facility. All fees and hedge payments will
be included in the finance charge waterfall
and excess spread computations.
INTERCREDITOR AGREEMENT: Seller and The Bon-Ton Department
Stores, Inc. are both parties to an
Intercreditor Agreement with General
Electric Capital Corporation (GECC) and Bank
One, NA (f/k/a as The First National Bank of
Chicago), dated as of April 15, 1997, which
provides GECC, as administrative agent for
itself and the lenders under The Bon-Ton
Department Stores, Inc.'s asset-based Credit
Agreement as amended, dated April 15, 1997,
a subordinated interest in the Receivables.
This Agreement will be amended in
conjunction with the closing of The
Bon-Ton's new asset-based facility.
CHARITABLE CONTRIBUTIONS: BTRGP, Inc. the general partner of the
Seller reserves the right to make a
charitable contribution of $60,000 to a
non-profit institution unaffiliated with
BTRGP, Inc, the Seller, each Originator, or
any affiliate thereof, and receive a credit
on account of such contribution against the
amount of Pennsylvania taxes payable by
BTRGP, Inc. Such contributions will only be
made from the proceeds of distributions
received by BTRGP, Inc. from the Seller.
II. RECEIVABLES PURCHASES
RECEIVABLES: The indebtedness and other obligations owed
to the Seller whether constituting an
account, chattel paper, instrument or
general intangible, arising in connection
with the sale or lease of goods or the
rendering of services under, with the use of
or otherwise in connection with an Account
including, without limitation, the
obligation to pay any Finance Charges with
respect thereto.
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August 29, 2003
ACCOUNT: With respect to any obligor, any type of
charge account under or pursuant to which
such obligor is permitted to make purchases
of inventory, goods, insurance and/or
services or leased goods or inventory, in
any such case on credit. Such term shall
include without limitation, a revolving
credit account.
FINANCE CHARGES: Any finance, interest, late payment charges
or similar charges owing by an obligor
pursuant to a contract.
ELIGIBLE RECEIVABLES: All Receivables which meet the criteria in
Exhibit I.
NET RECEIVABLE BALANCE: The principal amount of all Eligible
Receivables at such time, reduced by the
aggregate amount by which the principal
balance of all Eligible Receivables of all
obligors that are natural persons not
resident in the United States exceeds an
amount equal to the product of (a) [1]% and
(b) an amount equal to the average of the
outstanding principal balance of Eligible
Receivables at the end of the most recently
ended fiscal month.
DEEMED COLLECTIONS: If on any day the principal receivable
balance of, or finance charges in respect
of, a Receivable is (a) reduced as a result
of any defective or rejected goods and
services, any cash discount or any
adjustment by the Seller, the Collection
Agent, or each Originator, (b) reduced or
cancelled as a result of a setoff in respect
of any claim by any person, or (c) reduced
as a result of a representation or warranty
no longer being true with respect to a
Receivable, the Seller shall be deemed to
have received a Collection of such
Receivable in full.
RECEIVABLE INTERESTS: At any time, an undivided percentage
ownership interest associated with a
designated amount of Capital, Discount Rate
and Tranche Period(s) selected by the Seller
in (i) all Receivables arising prior to the
time existing and hereafter arising
Receivables, (ii) all related security and
(iii) all Collections with respect to, and
other proceeds of, such Receivables. THE
UNDIVIDED PERCENTAGE EVIDENCED BY EACH
RECEIVABLE INTEREST SHALL EQUAL:
C
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August 29, 2003
NRB - R
C = THE CAPITAL OF SUCH RECEIVABLE
INTEREST.
NRB = THE NET RECEIVABLES BALANCE
R = RESERVES EQUALS THE SUM OF THE
LOSS RESERVE AND DILUTION
RESERVE
RESERVES: The Reserves will be the sum of the Loss
Reserve and the Dilution Reserve.
LOSS RESERVE: The Loss Percentage MULTIPLIED BY THE NET
RECEIVABLES BALANCE.
LOSS PERCENTAGE: The greater of (i) the LP Multiplier times
the highest Loss-to-Liquidation Ratio
calculated as of the last day of each of the
three complete fiscal month period then most
recently ended or (ii) 15%
LP MULTIPLIER: [The LP Multiplier shall be 4; provided,
that if, as of the last day of any fiscal
month, the average Loss-to-Liquidation Ratio
in respect of the three fiscal months then
most recently ended shall exceed 3%, the LP
Multiplier shall at all times thereafter be
5 until the average Loss-to-Liquidation
Ratio in respect of the three fiscal months
then ended shall, for a period of six
consecutive months, have been less than 3%.]
The Agent intends to simplify this
calculation.
DILUTION RESERVE: The greater of (a) 8% and (b) the average
Dilution Ratio in respect of the three
fiscal months then most recently ended,
MULTIPLIED BY THE NET RECEIVABLE BALANCE.
DILUTION RATIO: In respect of any fiscal month a percentage
equal to (i) the DR Multiplier times the
aggregate amount of Dilutions which occurred
during such fiscal month, divided by (ii)
the Net Receivable Balance on the last day
of such fiscal month.
DR MULTIPLIER: [The DR Multiplier shall be 2.75; provided,
that if, as of the last day of any fiscal
month, the average Loss-to-Liquidation Ratio
in
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August 29, 2003
respect of the three fiscal months then most
recently ended shall exceed 3%, the LP
Multiplier shall at all times thereafter be
3.50 until the average Loss-to-Liquidation
Ratio in respect of the three fiscal months
then ended shall, for a period of six
consecutive months, have been less than 3%.]
The Agent intends to simplify this
calculation.
DILUTIONS: The aggregate amount of reductions in the
principal balance of Receivables as a result
of set-off, discount, adjustment, or
otherwise, other than cash Collections on
account of the Receivables.
CHARGED-OFF RECEIVABLE: A Receivable (i) as to which the obligor has
become bankrupt, (ii) as to which the
obligor is deceased, (iii) which consistent
with the credit and collection policy is
written-off as uncollectible, or (iv) which
has been identified by the Seller has
uncollectible.
DEFAULTED RECEIVABLE: A receivable which remains unpaid for more
than 150 days from the original due date.
DELINQUENT RECEIVABLE: A receivable which remains unpaid for more
than 90 days from the original due date.
DELINQUENCY RATIO: As of any date, a percentage equal to
(i) the aggregate outstanding PRINCIPAL
BALANCE of all Receivables that were more
than 90 days past due as of the last day of
the most recently ended calendar month
divided by (ii) the aggregate outstanding
PRINCIPAL BALANCE of all Receivables as of
the last day of the most recently ended
calendar month.
LOSS-TO-LIQUIDATION RATIO: The ratio computed as of the last day of the
most recently ended calendar month by
dividing (i) the outstanding GROSS PRINCIPAL
BALANCE of all Receivables that became
Charged-Off Receivables during such month,
by (ii) the aggregate amount of all
principal Collections (including principal
recoveries) received during such month.
EXCESS SPREAD: As of any date, the per annum rate equal to
(I) the Portfolio Yield, minus (ii) the
weighted average Discount Rate applicable to
the Receivable Interests of the Purchasers
and hedge
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August 29, 2003
payments and applicable fees, minus (iii)
2%, minus (iv) all fees and expenses
(expressed as a percentage of the Facility
Limit) then due and payable by the Seller to
the Agent for its own account for the
account of any Purchaser.
PORTFOLIO YIELD: For any period, a fraction expressed as a
percentage, the numerator which is Finance
Charge Collections (including finance charge
recoveries) less gross principal charged-off
Receivables, and the denominator of which is
the average aggregate outstanding principal
balance of all Receivables for such month.
PERFECTION: In connection with the TA, each Originator
will be required to grant a security
interest and perfect the SPE's ownership
interest in the Receivables, associated
collections and related security. Such
security interest will be assigned to the
Agent for the benefit of the Purchasers
under the RPA. In connection with the RPA,
the Seller will be required to grant a
security interest and perfect the Agent's
interest, for the benefit of the Purchasers,
in the Receivables, associated collections
and related security. UCC filings will be
required in connection with both the TA and
RPA.
SELLER INTEREST: The Seller shall ensure that the aggregate
Receivable Interests shall at no time exceed
100% of the Facility Limit. If the aggregate
Receivable Interests of the Purchasers
exceeds 100%, the Seller shall make the
required repayment within one business day
after the delivery of a daily or monthly
report as applicable (the "Required Cure
Period").
III. COLLECTION AND SETTLEMENT
COLLECTION AGENT DUTIES : The Collection Agent shall be responsible
for the servicing and collection of the
Receivables. Servicing shall be conducted in
accordance with the Collection Agent's
existing credit and collection policies. The
Collection Agent will hold all documents,
instruments, and records relating to the
Receivables for the benefit of the
Purchasers and the Seller.
REPORTING: The Collection Agent will furnish to the
Agent for the Purchasers a monthly report,
which shall be due on the 15th day (or the
next business day) of the following month
and a daily report which
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August 29, 2003
shall be due on the following business day.
Borrowing base shortfalls will be deposited
into a new cash collateral account
established for the benefit of the Agent and
the Purchasers.
Reporting of aged accounts shall be in
accordance with the Missing Payment
Indicator (MPI) aging methodology.
El-Bee Chargit Corp will be permitted to
estimate principal receivables, collections,
dilution, and charge-offs until December 31,
2003 or such later date as agreed to by the
Agent
COLLECTIONS
AND ACCOUNTS: The Collection Agent shall instruct obligors
to make payments in respect of the
Receivables (the "Collections") either to a
lockbox in the name of the Seller (which is
currently administered by Regulus West LLC)
(the "lockbox"), other lockboxes as approved
by the Agent, or at a store location of each
Originator.
All Collections in the approved lockboxes
shall be remitted on the same business day
to a concentration account with a permitted
concentration account bank (which is
currently Wachovia Bank, National
Association).
The Agent shall have a perfected security
interest in all lockboxes, concentration and
collection accounts. Furthermore, the Agent
shall have the ability at any time to take
control of any lockbox, concentration, or
collection account pursuant to control
agreements executed by each Originator,
Seller, Agent, and the depository
institutions holding such accounts.
Each Originator has agreed to cause each of
its stores (a) to deposit all in-store
collections with a local bank within one
business day of its receipt thereof, and (b)
on the same day as such deposit, to initiate
a remittance to a concentration account with
a permitted concentration account bank
(Wachovia); provided that neither the Seller
nor any Originator shall be in breach of its
obligations under clause (a) above if an
amount not to exceed [5]% of the aggregate
in-store collections during any month shall
fail to be deposited within one business day
of the receipt thereof so long as all such
in-store collections are deposited within
two business days of receipt.
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August 29, 2003
The Agent may at any time, on written notice
to the Seller, direct that the Seller, and
the Seller thereupon shall, direct each
Originator to (i) cease accepting in-store
collections at individual cash registers
within a store, (ii) accept all in-store
collections at a single collection point
within each store, and otherwise segregate,
record, and maintain the separateness of all
in-store collections from all other cash and
payment items handled or located at such
store, and (iii) remit on a daily basis from
each store location all in-store collections
to an account specified by the Agent.
The Servicer shall distribute Collections
from these accounts to either the Agent (for
the benefit of the Purchasers) or the
Seller, pursuant to the terms of the RPA.
Such payments will be subject to daily
settlement in conjunction with the delivery
of the daily Report.
SELECTION OF TRANCHE
PERIODS: Each Receivable Interest purchased by the
Purchasers shall at all times have an
associated amount of Capital, a Discount
Rate and Tranche Period applicable to it.
TRANCHE PERIOD: (a) if Discount for such Receivable Interest
is calculated with respect to the Conduit CP
Rate, a period of days not to exceed 270
days commencing on a business day requested
by the Seller and agreed to by each Conduit
Purchaser.
(b) if Discount for such Receivable Interest
is calculated on the basis of the LIBO Rate,
a period of one, two, or three months, or
such other period as may be mutually
agreeable to the Agent and the Seller,
commencing on a business day selected by the
Seller or Agent.
(c) if Discount for such Receivable Interest
is calculated on the basis of Bank One's
Prime Rate, a period of days not to exceed
30 days commencing on a business day
selected by the Seller.
If any Tranche Period would end on a day
which is not a business day, such Tranche
Period shall end on the next succeeding
business day, provided, however, that in the
case of Tranche Periods corresponding to the
LIBO Rate, if such next succeeding business
day falls in a new month, such Tranche
Period shall end on the immediately
preceding business day.
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August 29, 2003
In case of any Tranche Period for any
Receivable Interest of which commences
before the Termination Date and would
otherwise end on a day occurring after the
Termination Date, such Tranche Period shall
end on the Termination Date.
The duration of each Tranche Period in
respect of any Receivable Interest which
commences after the Liquidation Day for such
Receivable Interest shall be of such
duration as selected by the Agent.
TRANSFER TO FINANCIAL
INSTITUTIONS: The initial Discount Rate for any Receivable
Interest transferred to a Financial
Institution shall be Bank One's Prime Rate,
until the Seller gives notice to the
Financial Institution of another Discount
Rate, and the Tranche Period for such
Receivable Interest shall be a period of
five days commencing on the day that such
Receivable is transferred to such Financial
Institution.
DISCOUNT: For each Receivable Interest for any Tranche
Period:
DR x C x AD/360
DR= The Discount Rate for such Receivable
Interest for such Tranche Period
C= The Capital for such Receivable
Interest during such Tranche Period
AD= The actual number of days elapsed
during such Tranche Period
DISCOUNT RATE: Either the LIBO rate, the Conduit CP Rate,
or Bank One's Prime Rate, as applicable.
CONDUIT CP RATE: Either the Falcon CP Rate and/or the CP Rate
of each other Conduit Purchaser as
applicable .
FINANCIAL INSTITUTIONS
FUNDING: Capital funded by the Financial Institutions
shall accrue discount at either (i) the
greater of (a) LIBO rate plus [2.25%] or (b)
the interest rate paid pursuant to the
Bon-Ton's new asset-based credit facility,
or (ii) Bank One's Prime Rate, as selected
by the Seller.
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August 29, 2003
DEFAULT PRICING EVENT: During the continuance of a Default Pricing
Event, the Capital of all of the Purchasers
will accrue discount at Bank One's Prime
Rate plus 2%. A Default Pricing Event shall
occur upon the occurrence of a Termination
Event.
LIQUIDATION SETTLEMENT
PROCEDURES: On the Liquidation Day of a Receivable
Interest and on each day thereafter, the
Collection Agent shall set aside and hold in
trust for the holder of such Receivable
Interest, the percentage evidenced by such
Receivable Interest of Collections received
on such day. On the last day of each Tranche
Period of a Receivable Interest after the
occurrence of its Liquidation Day, the
Collection Agent shall remit to the each
Purchaser's account the amounts set aside
pursuant to the preceding sentence, together
with any remaining amounts due, but not to
exceed the sum of (i) the accrued Discount
for such Receivable Interest, (ii) the
Capital of such Receivable Interest, and
(iii) the aggregate of all other amounts
then owed by the Seller to the Purchasers.
If there shall be insufficient funds on
deposit for the Collection Agent to
distribute funds in payment in full of the
aforementioned amounts, the Collection Agent
shall distribute funds in the following
order:
1. Payment of sub-servicer fee if
sub-servicer is not The Bon-Ton;
2. Reimbursement of the Agent's costs
of collection and enforcement of
the program documents;
3. Payment of all accrued Discount for
the Receivable Interests and/or
applicable hedge payments and
applicable fees;
4. Reduction of Capital of the
Receivable Interests; and
5. Payment of all other amounts due to
the Purchasers
Following the date on which all accrued and
unpaid Discount, Capital, and all other
amounts owed hereunder or under the fee
letter (collectively, the "Aggregate
Unpaids") are reduced to zero, the
Collection Agent shall pay to Seller any
remaining Collections.
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August 29, 2003
PAYMENTS: On the last day of each Tranche Period the
Seller shall pay to each Purchaser an amount
equal to the accrued and unpaid Discount for
such Tranche Period due to such Purchaser.
The Seller shall pay to each Purchaser all
fees and expenses due as set forth in the
fee letter with such Purchaser, and any and
all issuing and paying agent fees and
commissions of placement agents and
commercial paper dealers in respect of
commercial paper issued to fund any
Receivable Interest. All per annum fees
shall be payable monthly in arrears and due
on the first business day of each month.
IV. OTHER PROVISIONS
REPRESENTATIONS AND WARRANTIES: Including the following:
1. Corporate Existence and Power;
2. No Conflict - transaction documents do
not contravene or violate any existing
corporate agreements of Seller or any
Originator;
3. Governmental Authorization - no
authorization from any governmental
authority is required;
4. Binding Effect - transaction documents
are enforceable against the Seller and
each Originator;
5. Accuracy of Information;
6. Use of Proceeds - No proceeds from any
purchase of Receivables will be used by
Seller or any Originator in a manner
inconsistent with any regulations of
the Federal Reserve System;
7. Title to Receivables Purchased from the
Originators - Each Receivable
transferred by the Originators has been
purchased by the Seller from each
Originator in accordance with the terms
of the Transfer Agreement and the
Seller has obtained legal and equitable
title to such Receivable;
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August 29, 2003
8. Good Title and Perfection - Immediately
prior to each purchase by the
Purchasers, the Seller shall be the
legal and beneficial owner of the
Receivables, free and clear of any
adverse claim, except as created by the
program documents;
9. Places of Business - The principal
places of business and chief executive
offices of the Seller and each
Originator are those which have been
represented to the Agent;
10. Collection Accounts - The Seller has
complied with all requirements of the
program documents with respect to the
collection accounts;
11. Material Adverse Effect - Since
[[January 31, 2003]] no event has
occurred which would constitute a
Material Adverse Effect;
12. Names;
13. Actions, Suits - there are no existing
actions or suits which would materially
affect the collectibility of the
Receivables;
14. Credit and Collection Policies - Each
Originator has complied in all material
respects with the credit and collection
policy;
15. Payments to Originators;
16. Ownership of the Seller - The Bon-Ton
and its affiliates own 100% of the
capital stock of the Seller; and
17. The Seller is not an Investment Company
within the meaning of the Investment
Company Act of 1940.
18. Each Originator must be a direct or
indirect wholly-owned subsidiary of The
Bon-Ton Stores, Inc.
CONDITIONS PRECEDENT
TO INITIAL PURCHASE: Customary for financing arrangements,
including but not limited to the following:
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August 29, 2003
1. (i) A field-audit on the Receivables
conducted by outside third-party
auditors and pursuant to agreed upon
procedures developed by the Agent and
agreed to by the Collection Agent, and
(ii) an on-site due-diligence by the
Agent and the Purchasers at the
Collection Agent's and/or each
Originator's respective principal place
of business and/or chief executive
office, with each (i) and (ii)
producing satisfactory results to allow
for the internal credit approval by
each of the Financial Institutions;
2. Executed documentation with respect to
the Agent's control of lockboxes,
concentration, and collection accounts;
3. Any required opinions (including,
without limitation, opinions with
respect to governmental approvals,
consents, filings or actions in each
jurisdiction in which Receivables are
originated or billed) of (Originator's
and/or in-house) Counsel which are
satisfactory to Purchasers' counsel and
allows for the internal credit approval
by each of the Financial Institutions;
4. A pro forma Monthly Report representing
the performance of the Receivables to
be funded by the Facility for the
calendar month immediately prior to the
Closing Date;
5. Pro-forma Daily Report;
6. Marking by each Originator and Seller
of their respective records evidencing
the sale of the Receivables
contemplated thereof by the TA and RPA;
7. Executed copies of UCCs to be filed in
connection with the TA and RPA;
8. Payment of any up-front fees due to the
Purchasers pursuant to their respective
Fee Letters and due at the Closing
Date;
9. Others as are customary or may be
required after due-diligence; and
10. ALL OTHER APPLICABLE CONDITIONS RELATED
TO THE CLOSING OF THE ACQUISITION.
CONDITIONS PRECEDENT
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August 29, 2003
TO ALL PURCHASES: Customary for financing arrangements, plus
the following:
1. No breach of any representation or
warranty;
2. No Termination Event or potential
Termination Event has occurred;
3. The Liquidity Termination Date shall
not have occurred;
4. The aggregate Capital of all Receivable
Interests does not exceed the Facility
Limit and the aggregate Receivable
Interests does not exceed 100%.
POSITIVE COVENANTS: Including the following:
1. Periodic financial reporting of
Originators and Seller;
2. Notice of: Termination Events,
potential Termination Events, the entry
of any judgment or decree against the
Seller or any Originator or any of
their respective subsidiaries if the
aggregate amount of all judgements
exceeds $[5,000,000], or any litigation
which is likely to have a material
adverse effect on the collectibility of
the Receivables.
3. 100% ownership of Seller by The Bon-Ton
and its affiliates;
4. Compliance with laws;
5. Proper maintenance of records and books
of account;
6. Allowing on-going field audits of the
Receivables and Purchasers' due
diligence similar to those required
under "Conditions Precedent to Initial
Purchase" above;
7. Compliance with respect to contracts
related to the Receivables and
compliance in all material respect with
the credit and collection policies;
8. Perfected ownership interest in the
Receivables by Seller and perfected
first priority undivided percentage
ownership interest in the Receivables,
related security, and Collections with
respect thereto in favor of the Agent
and the Purchasers;
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August 29, 2003
9. Each Originator and Seller shall take
all reasonable steps to maintain the
Seller's identity as a separate legal
entity;
10. The Seller and each Originator shall
perform all required obligations and
duties under the Transfer Agreement;
11. The Seller shall cause each Originator
to remit all Collections received by the
Originator to the concentration account
not later than the business day
immediately after receipt of such
Collections;
12. OTHERS AS ARE CUSTOMARY OR MAY BE
REASONABLY REQUIRED
NEGATIVE COVENANTS: Including the following:
1. The Seller will not change its name,
identity, or corporate structure without
(i) providing 45 days prior notice and
(ii) delivering to the Agent all
required financing statements;
2. The Seller will not add or terminate any
collection account or concentration
account bank or lockbox provider
without, at least 10 days before the
proposed effective day, providing prior
notice and delivering collection account
agreements pertaining to the new
accounts.
3. No adverse claim shall be created on or
with respect to any Receivable or
related security or Collections in
respect thereof;
4. The Seller shall not make any material
change in the character of its business
or the credit and collection policy;
5. Except as otherwise permitted, the
Seller shall not extend or modify the
terms of any Receivable;
6. The Seller shall not enter into any
agreement, merger arrangement, or
instrument other than that permitted
under the program documents;
7. The Seller shall not amend any of its
corporate documents in any respect that
would impair its ability to comply with
the program documents; and
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August 29, 2003
8. The Seller shall not create, incur,
guarantee, assume, or suffer to exist
any indebtedness other than that allowed
under the program documents.
9. OTHERS AS CUSTOMARY OR WHICH MAY BE
REASONABLY REQUIRED
TERMINATION EVENTS: Including the following:
1. (i) Failure of the Seller, Collection
Agent or any Originator (the "Seller
Parties") to perform or observe any
term, covenant or agreement under the TA
or RPA or other program documents
subject to a 10 business day grace
period or (ii) failure to make any
payment or deposit when due thereunder,
subject to a 1 business day grace period
for any payment or deposit which is not
in respect of Capital;
2. Any representations or warranties made
by any Seller Party shall prove to have
been incorrect when made;
3. Failure of the Seller, any Originator or
any of their respective subsidiaries to
pay its debts as such debts become due
or shall admit in writing its inability
to pay its debts generally or shall make
a general assignment for the benefit of
any creditors;
4. (i) The Seller or any Originator shall
fail to observe or perform any covenant,
condition, or provision of the Transfer
Agreement and such failure shall
continue beyond the applicable cure
period, (ii) the "Termination Date" in
the TA shall have occurred, or (iii) any
Originator ceases to transfer or is
incapable of transferring Receivables to
the Seller or the Seller, for any
reason, shall cease to buy Receivables
under the TA;
5. Voluntary or involuntary bankruptcy or
insolvency proceedings are commenced by
or against any Originator or Seller;
6. Excess Spread shall be less than 2% on
an annualized basis for three
consecutive months;
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August 29, 2003
7. The Originator and its affiliates shall
cease to own directly 100% of the shares
of the outstanding capital stock of the
Seller or a change of control shall
occur with respect to any Originator;
8. The aggregate Receivable Interests shall
exceed 100% at any time and shall not
have been cured within the Required Cure
Period ;
9. 3-month rolling average Delinquency
Ratio exceeds [3.5]%;
10. 3-month rolling average
Loss-to-Liquidation Ratio exceeds
[2.8]%;
11. 3-month rolling average Principal
Payment Ratio exceeds [14]%;
12. FINANCIAL COVENANTS TO BE THE SAME AS
INCLUDED IN THE BON-TON'S NEW
ASSET-BASED CREDIT FACILITY;
13. The failure of any material entity to
make any payment when due (whether at
scheduled maturity, by acceleration,
when declared to be due and payable or
otherwise) in respect of any
indebtedness (other than any
indebtedness with respect to which the
payee is The Bon-Ton Stores, Inc. or any
affiliates thereof) outstanding
(individually or in the aggregate) in a
principal amount of $[5,000,000] and
such failure shall remain unremedied for
3 business days.
14. OTHERS WHICH ARE CUSTOMARY OR WHICH MAY
BE REASONABLY REQUIRED
EXPENSES: The Bon-Ton will reimburse the Agent, the
Purchasers, Arranger or other appropriate
parties for all out-of-pocket expenses,
legal fees, due diligence, and audit fees,
etc. incurred in the negotiation,
arrangement, enforcement, and administration
of this Facility, including those charged to
it by Bank One and Banc One Capital Markets.
Annual audits will be conducted at Seller's
expense (not more than once per year unless
a Termination Event occurs) provided that an
additional audit of combined monthly
reporting and consolidated receivables
systems will be performed at Seller's
expense upon the consolidation of the
receivables systems of The Bon-Ton and The
El-Bee Chargit Corp.
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August 29, 2003
INDEMNITIES: Indemnities by the Seller. Without limiting
any other rights which the Agent or any
Purchaser may have hereunder or under
applicable law, the Seller hereby agrees to
indemnify the Agent and each Purchaser and
their respective officers, directors, agents
and employees (each an "Indemnified Party")
from and against any and all damages,
losses, claims, taxes, liabilities, costs,
expenses and for all other amounts payable,
including reasonable attorneys' fees (which
attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of
the foregoing being collectively referred to
as "Indemnified Amounts') awarded against or
incurred by any of them arising out of or as
a result of this agreement or the
acquisition, either directly or indirectly,
by a Purchaser of an interest in the
Receivables, excluding, however:
1. Indemnified Amounts to the extent final
judgment of a court of competent
jurisdiction holds such Indemnified
Amounts resulted from gross negligence
or willful misconduct on the part of the
Indemnified Party seeking;
2. Recourse for Receivables that are
uncollectible or uncollected (whether on
account of the insolvency, bankruptcy or
lack of creditworthiness of the related
obligor or otherwise); provided that the
foregoing shall not negate, impair
otherwise modify any (or the effect of
any) of the representations, warranties,
covenants or other agreements of the
Seller contained in this agreement; or
3. Taxes imposed by the jurisdiction in
which such Indemnified Party's principal
executive office is located, on or
measured by the overall net income of
such Indemnified Party to the extent
that the computation of such taxes is
consistent with the characterization of
the acquisition by the Purchasers of
Receivable Interests as a loan or loans
by the Purchasers to the Seller secured
by the Receivables, related security,
and Collections;
Provided, however, that nothing contained in
this sentence shall limit the liability of
the Seller or the Collection Agent or limit
the recourse of the Purchasers to the Seller
or Collection Agent for amounts otherwise
specifically provided to be paid by the
Seller or the Collection Agent under the
terms of this indemnification. The Seller
shall indemnify the Agent and the Purchasers
for
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August 29, 2003
Indemnified Amounts (including, without
limitation, losses in respect of
uncollectible receivables regardless of
whether reimbursement therefor would
constitute recourse to the Seller or the
Collection Agent) relating to or resulting
from:
1. Any representation or warranty made by
the Seller or the Collection Agent (or
any officers of the Seller or the
Collection Agent) under or in connection
with this agreement, any Monthly Report
or any other information or report
delivered by the Seller or the
Collection Agent pursuant hereto, which
shall have been false or incorrect when
made or deemed made;
2. The failure by the Seller or the
Collection Agent to comply with any
applicable law, rule or regulation with
respect to any Receivable or contract
related thereto, or the nonconformity of
any Receivable or contract included
therein with any such applicable law,
rule or regulation;
3. Any failure of the Seller of the
Collection Agent to perform its duties
or obligations in accordance with the
provisions of this agreement;
4. Any products liability or similar claim
arising out of or in connection with
merchandise, insurance or services which
are the subject of any contract;
5. Any dispute, claim, offset or defense
(other than discharge in bankruptcy of
the Obligor) of the obligor to the
payment of any Receivable (including,
without limitation, a defense based on
such Receivable or the related contract
not being an legal, valid and binding
obligation of such obligor enforceable
against it in accordance with its
terms), or any other claim resulting
from the sale of the merchandise or
service related to such Receivable or
the furnishing or failure to furnish
such merchandise or services;
6. Any Receivable which is treated as or
represented by the Seller to be an
Eligible Receivable (including, without
limitation, for purposes of computing
the Net Receivables Balance at any time)
which is not at the date thereof an
Eligible Receivable;
7. The commingling of Collections of
Receivables at any time with other
funds;
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8. Any investigation, litigation, or
proceeding related to or arising from
this agreement, the transactions
contemplated hereby, the use of the
proceeds of a purchase, the ownership of
the Receivable Interests or any other
investigation, litigation or proceeding
relating to the Seller in which any
Indemnified Party becomes involved as a
result of any of the transactions
contemplated hereby; excluding, however,
any investigation, litigation or
proceeding that related solely to the
compliance or noncompliance by any
Purchaser with any state or federal laws
applicable to such Purchaser because of
such Purchaser's regulatory status or
any contractual restriction (other than
the program documents) binding on such
Purchaser;
9. Any inability to litigate any claim
against any obligor in respect of any
Receivable as a result of such obligor
being immune from civil and commercial
law and suit on the grounds of
sovereignty or otherwise from any legal
action, suit or proceeding; and
10. Any Termination Event caused by (i)
bankruptcy of the Seller or any
Originator or (ii) failure of either the
Seller or any Originator to pay its
debts when due.
The Seller shall be given notice of any
claim for indemnified liabilities and, in
the case of any litigation or proceeding
brought by any person or entity that is not
a party to this agreement which litigation
or proceeding is reasonably likely to give
rise to a claim hereunder for
indemnification the Seller shall be afforded
a reasonable opportunity to participate in
the defense, compromise or settlement
thereof.
CONFIDENTIALITY: The Seller, Collection Agent, each
Originator, Purchasers, and Agent agree to
each maintain the confidentiality of the TA,
RPA and any other proprietary information
with respect to this transaction, except
that all parties may disclose the
information to their respective regulators,
accountants, lawyers, and as required by law
or judicial order. The Agent and each
Purchaser may disclose the information to
the rating agencies, any commercial paper
dealers, providers of credit enhancement or
liquidity to the Conduit, and the Agent or
the Purchasers may
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August 29, 2003
disclose the information to prospective or
actual assignees or participants.
Notwithstanding the foregoing, each party
hereto (and each employee, representative,
or other agent of any of the foregoing) may
disclose to any and all persons, without
limitation of any kind, the "tax treatment"
and "tax structure" (in each case, within
the meaning of Treasury Regulation Section
1.6011-4) of the transaction contemplated
herein and all materials of any kind
(including opinions or other tax analyses)
that are or have been provided to any of the
foregoing relating to such tax treatment or
tax structure, and it is hereby confirmed
that each of the foregoing has been so
authorized since the commencement of
discussions regarding the proposed
transaction.
Exhibit I
ELIGIBLE RECEIVABLES
"Eligible Receivables" means, at any time, a Receivable:
1. the obligor of which (a) is not an affiliate of any of the parties hereto;
and (b) is not a government or a governmental subdivision or agency,
2. the obligor of which is not the obligor of any Defaulted Receivable or any
Charged-off Receivable,
3. which is not a Defaulted Receivable (> 150 days past due) or a Charged-Off
Receivable,
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August 29, 2003
4. which is an account receivable representing all or part of the sales price
of merchandise, insurance or services within the meaning of Section 3 (c)
(5) of the Investment Company Act of 1940, as amended,
5. which is an "account" or "general intangible" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions,
6. which is denominated and payable only in United States dollars in the United
States,
7. which, together with the related contract, is in full force and effect and
constitutes the legal, valid and binding obligation of the related obligor
enforceable by the Seller against such obligor in accordance with its terms
subject to no offset, counterclaim or other defense,
8. which arises under a contract which (A) does not require the obligor under
such contract to consent to the transfer, sale or assignment of the rights
and duties of the Seller or the Originator (or any other originator) under
such contract and (B) does not contain a confidentiality provision that
purports to restrict the ability of any Purchaser to exercise its rights
under this agreement, including, without limitation, its right to review the
contract,
9. which is not subject to any right of rescission, set-off, counterclaim, any
other defense (including defenses arising out of violation of usury laws) of
the obligor or any other adverse claim,
10. as to which the Originator of such Receivable has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it,
11. all right, title and interest to and in which has been validly transferred
by the Originator to the Seller under and in accordance with the Transfer
Agreement, and the Seller has good and marketable title thereto free and
clear of any adverse claim.
12. which has been posted to the applicable Account of the Obligor thereon,
13. (A) which does not arise from an Account which has been classified by the
Seller, the Originator of the Collection Agent as being cancelled,
counterfeit or fraudulent, and (B) if the card issued in connection with the
related Account has been lost or stolen, the Obligor thereon has not
asserted the occurrence of any unauthorized charges thereon,
14. which was created in compliance, and continues to be in compliance, in each
case, in all material respects with all laws (including, without limitation,
laws, rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) applicable to the Seller and to the
Originator (and, if other than the Originator,
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August 29, 2003
the originator in respect of such Receivable) and pursuant to a contract
which complies in all material respects with all such laws,
15. which satisfies all applicable requirements of the credit and collection
policy,
16. which is not an Elder-Beerman Shoebilee receivable, a pharmacy receivable,
or any non-private label credit card receivables,
17. which is not a receivable of a deferred account which has a deferred payment
terms of greater than forty months,
18. when acquired hereunder does not cause the Outstanding Balance of
Receivables arising under deferred accounts to exceed 10% of the Outstanding
Balance of Receivables, and
19. which (A) arises in the ordinary course of business of the Originator from
an authorized use of an Account with the Originator in connection with the
purchase of goods or services of goods by the applicable obligor from the
Originator, and (B) arises solely from the sale or the provision of goods or
services to the related obligor by the Originator, and not by any other
entity (in whole or in part); provided that a Receivable that meets the
criteria set forth in this definition but for this clause (xvi) shall
nonetheless constitute an "Eligible Receivable" if:
(x) such Receivable arises from the purchase of goods or services from
an entity that is either (A) a wholly-owned subsidiary of the
Originator, (B) an entity that has been merged into the Originator
or (C) an entity all or a substantial part of the assets in respect
of which the applicable obligor is part of the associated "customer
base" have been acquired by the Originator,
(y) such Receivable arises from the purchase of goods or services with
the use of (A) an Account or (B) a charge account all the rights
and obligations of the issuer in connection with which Account have
been assigned to and assumed by the Originator, and
(z) the principal balance of such Receivable, together with the
aggregate principal balance of all other Receivables that
constitute Eligible Receivables by reason of this proviso does not
exceed an amount equal to [10]% of the principal balance of all
Eligible Receivables at such time or such other higher amount as
agreed upon by each Purchaser;
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August 29, 2003
20. OTHER ELIGIBILITY CRITERIA TO BE DETERMINED.
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August 29, 2003
Exhibit B
Terms and Conditions for "AA" rated structure for existing $150,000,000
Bon-Ton Receivables Partnership, L.P. facility
1. The loss reserve will be dynamic based upon a to-be-determined, mutually
agreed upon calculation, subject to a new floor of 15% (increased from 12%
in the current Bon-Ton transaction).
2. The dilution reserve will be dynamic based on a to-be-determined mutually
agreed-upon calculation, subject to a floor of 8%.
3. Hedge with A-1/P-1 counterparties required to equal to 100% of the notional
amount of the aggregate borrowed amount under the facility. All fees and
hedge payments to be included in finance charge waterfall and excess spread
computations.
4. New principal payment trigger (>14%)
5. Reduce the Loss-to-Liquidation Ratio trigger level to 2.8% from 3.5%
6. Daily Reporting including borrowing base true-ups into cash collateral
account.
7. Aging based on MPI (Missing Payment Indicator)