EXHIBIT (b)(1)
GENERAL ELECTRIC CAPITAL CORPORATION
800 CONNECTICUT AVENUE, TWO NORTH
NORWALK, CONNECTICUT 06854
August 29, 2003
The Bon-Ton Stores, Inc.
2801 E. Market Street
P.O. Box 2801
York, PA 17405
Attn: James H. Baireuther
Re: Commitment Letter
Ladies and Gentlemen:
You have advised General Electric Capital Corporation ("GE Capital" or "Agent")
that The Bon-Ton Stores, Inc., a Pennsylvania corporation ("Parent"), and a
newly organized Ohio corporation ("Acquisition Co."), which is a direct, wholly
owned subsidiary of The Bon-Ton Department Stores, Inc. ("Bon-Ton"), may enter
into a merger agreement, in form and substance reasonably satisfactory to us
(the "Merger Agreement") (it being acknowledged that the draft dated August 29,
2003 previously delivered to us will be satisfactory to us, subject to our
reasonable approval of the disclosure schedules), with The Elder-Beerman Stores
Corp., an Ohio corporation ("Elder-Beerman"), pursuant to which Acquisition Co.
will (i) make a cash tender offer ("Tender Offer") for up to 100% of the issued
and outstanding shares of common stock, no par value (the "Shares"), of
Elder-Beerman at a price not to exceed $7.00 per Share and (ii) be merged with
and into Elder-Beerman, with Elder-Beerman being the surviving corporation (the
"Merger"), as soon as practicable after the completion and consummation of the
Tender Offer and in any event within three (3) business days after the date on
which Acquisition Co. acquires a sufficient number of Shares to cause the Merger
to be effected without a vote of the shareholders of Elder-Beerman (the "Short
Form Merger Threshold"). The Tender Offer and the Merger are herein referred to
as the "Acquisition". The Acquisition will be approved by the board of directors
of each of Parent and Elder-Beerman and such approval shall not have been
withdrawn or qualified in a manner adverse to Parent or the Lenders (as defined
in the Term Sheets referred to below). The Tender Offer will be conditioned upon
the receipt of at least two-thirds of the total number of Shares outstanding on
a "fully diluted basis" (on a "fully-diluted basis" meaning the number of Shares
then issued and outstanding plus all Shares which the Company may be required to
issue as of such date pursuant to options, deferred shares, warrants, rights,
convertible or exchangeable securities or similar obligations then outstanding,
whether or not then vested or exercisable) (the "Minimum Shares"). The Merger
Agreement will, among other things, provide that each shareholder of
Elder-Beerman (other than Acquisition Co. and
The Bon-Ton Stores, Inc.
August 29, 2003
Parent and other than shareholders who have perfected appraisal rights) who has
not participated in the Tender Offer will, upon consummation of the Merger,
receive a cash merger price per Share equal to $7.00. You have further advised
us that it is your intention so long as the Minimum Shares are tendered (and the
conditions precedent to the purchase of such Shares in the Merger Agreement are
satisfied), to purchase the Shares tendered on the expiration of the Tender
Offer period (the "Initial Offer Period").
We understand that in the event that the Short Form Merger Threshold is not
obtained simultaneously with the Minimum Shares (a) in order to finance the
Tender Offer, certain related fees and expenses and to refinance certain of its
outstanding indebtedness, Bon-Ton and certain of its subsidiaries (including The
Bon-Ton Stores of Lancaster, Inc. ("Lancaster")) will require a senior secured
credit facility of up to $203,000,000 comprised of (i) a $150,000,000 revolving
credit facility, (ii) a $15,000,000 term loan B facility and (iii) a $38,000,000
term loan C facility (collectively, the "Tender Facility") and (b) to refinance
certain indebtedness of Elder-Beerman, Elder-Beerman will require a senior
secured revolving credit facility of up to $75,000,000 (the "Target Facility").
You have further advised us that upon the consummation of the Merger (and in
order to refinance the Tender Facility and the Target Facility if the Minimum
Shares are purchased but the Short Form Merger Threshold is not obtained),
Bon-Ton, Lancaster and Elder-Beerman will require a senior secured credit
facility of up to $325,000,000 comprised of (a) a $300,000,000 revolving credit
facility (which will include a letter of credit subfacility of up to
$50,000,000) and (b) a $25,000,000 term loan B (collectively, the "Permanent
Facility" and together with the Tender Facility and the Target Facility, each a
"Facility" and collectively, the "Facilities"). We understand that no external
financing will be required in connection with the Acquisition other than (i) as
reflected in the Tender Facility Term Sheet attached hereto as Exhibit A (the
"Tender Facility Term Sheet"), the Target Facility Term Sheet attached hereto as
Exhibit B (the "Target Facility Term Sheet") and the Permanent Facility Term
Sheet attached hereto as Exhibit C (the "Permanent Facility Term Sheet," and
together with the Tender Facility Term Sheet and the Target Facility Term Sheet,
each a "Term Sheet" and collectively, the "Term Sheets", and together with this
letter, this "Commitment Letter") and (ii) (A) amendments to the "Securitization
Documents" (the "Existing BT Securitization Documents") as defined in that
certain Amended and Restated Credit Agreement dated as of May 21, 2003, among
Bon-Ton, Lancaster, the lenders party thereto and GE Capital, as administrative
agent (the "Existing Credit Agreement") or a new securitization facility (the
"New BT Securitization Documents"), which New BT Securitization Documents will
be effective on the date on which Acquisition Co. acquires the Minimum Shares
and (B) a waiver of the "change of control" (the "EB Securitization Amendment"
and together with the New BT Securitization Documents, the "New Securitization
Documents") under the "Securitization Documents" (the "Existing EB
Securitization Documents"), as defined in that certain Amended and Restated
Credit Agreement dated as of July 9, 2002 among Elder-Beerman, the Lenders party
thereto, Citibank, N.A., as Issuer, and Citicorp USA, Inc., as agent and swing
loan bank, which EB Securitization Amendment will be effective from the date of
acquisition of the Minimum Shares by Acquisition Co. through the date of the
Merger. As used in this Commitment Letter, the term "Transactions" means (i) the
Tender Offer and the Merger, (ii) the execution, delivery and performance of the
definitive documentation evidencing the Tender Facility, the Target Facility
and/or the Permanent Facility, as the case may be (including, without
limitation, the borrowing of any loans thereunder, the incurrence of any
obligations in respect of letters of credit and the granting of
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August 29, 2003
liens on the Collateral with the priority contemplated by this Commitment
Letter), and (iii) the other transactions contemplated by this Commitment Letter
(including the New Securitization Documents).
Based on our understanding of the Transactions and the information which you
have provided to us to date, GE Capital is pleased to offer to commit to provide
(i) the entire amount of the Tender Facility, (ii) the entire amount of the
Target Facility and (iii) the entire amount of the Permanent Facility, in each
case on the terms and conditions set forth herein and described in the Tender
Facility Term Sheet, the Target Facility Term Sheet and the Permanent Facility
Term Sheet, as the case may be, and in the letter agreement of even date
herewith from GE Capital to you providing for the payment of certain fees and
consideration relating to the Facilities (the "Fee Letter").
GE Capital's commitments hereunder and agreement to perform the services
described herein are subject to (i) our not having discovered or otherwise
become aware of any information not previously disclosed to us that we believe
to be inconsistent in a material and adverse manner with the information
provided to us prior to the date hereof regarding the business, assets,
financial condition or results of operations of either Parent and its
subsidiaries, taken as a whole, or Elder-Beerman and its subsidiaries, taken as
a whole, (ii) our satisfaction that, prior to and during the syndication of the
Facilities, there shall be no competing issues of debt securities or commercial
bank or other credit facilities of Parent, Elder-Beerman or their respective
subsidiaries being offered, placed or arranged relating to the Transactions
(other than the New Securitization Documents) and (iii) the other conditions set
forth in the Term Sheets.
Upon acceptance of this Commitment Letter, GECC Capital Markets Group, Inc.
("GECMG") will initiate discussions with potential Lenders relating to the
syndication of the Facilities. It is expressly understood by you that GE
Capital, through GECMG, intends to syndicate the Facilities to allow GE Capital
to sell down the Facilities to its desired hold position. You will agree to a
syndication timetable that allows for the primary syndication of the Facilities
prior to the closing thereof. GE Capital's commitment hereunder is expressly
subject to the immediately preceding sentences; however, the success of the
syndication will not be a condition precedent to the closing of the relevant
Facilities.
GECMG will syndicate the Transactions with the assistance of Borrower. Such
assistance shall include, but not be limited to (i) prompt assistance in the
preparation of the information memorandum and the verification of the
completeness and accuracy of the information contained therein; (ii) preparation
of offering materials and projections by you and your advisors taking into
account the proposed Transactions and Facilities; (iii) providing GECMG with all
information reasonably deemed necessary by GECMG to successfully complete the
syndication; (iv) confirmation as to the accuracy and completeness of such
offering materials, information and projections; (v) participation of your
senior management in meetings and conference calls with potential Lenders at
such times and places as GECMG may reasonably request; and (vi) using reasonable
best efforts to ensure that the syndication efforts benefit from your existing
lending relationships. It is understood that, GECMG and GE Capital intend to
request that the lenders party to the Existing Credit Agreement participate in
the Facilities. In the event that Requisite Lenders (as defined in the Existing
Credit Agreement) commit to provide the
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August 29, 2003
Facilities, the definitive documentation for the Tender Facility and/or the
Permanent Facility may take the form of an amendment and restatement of the
Existing Credit Agreement as to one or more of such Facilities or any of the
loans thereunder.
GECMG may provide to industry trade organizations information with respect to
the Facilities that is necessary and customary for inclusion in league table
measurements.
You agree that GECMG will act as the sole syndication agent for the Facilities
and that no additional agents, co-agents or arrangers will be appointed, or
other titles conferred, without GECMG's consent. You agree that no Lender will
receive any compensation of any kind for its participation in the Facilities,
except as expressly provided for in this Commitment Letter or the Fee Letter.
To ensure an orderly and effective syndication of the Facilities, you agree that
until the termination of the syndication, as determined by GECMG, you will not
and will not permit any of your affiliates to (and, from and after the execution
of the Merger Agreement, Elder-Beerman will not and will not permit any of its
affiliates to), syndicate or issue, attempt to syndicate or issue, announce or
authorize the announcement of the syndication of or issuance of, or engage in
discussions concerning the syndication or issuance of, any debt facility or debt
security (including any renewals thereof), without the prior written consent of
GECMG (other than the New Securitization Documents).
This Commitment Letter is being provided to you on the condition that, except as
required by law, neither it, the Fee Letter, the Prior Letter (as defined
below), nor their contents will be disclosed publicly or privately except (i) to
those individuals who are your directors, officers, employees or advisors who
have a need to know of them as a result of their being specifically involved in
the Transactions under consideration and then only on the condition that such
matters may not be further disclosed, (ii) to Elder-Beerman and its directors,
officers, employees and advisors or (iii) as may be compelled to be disclosed in
a judicial or administrative proceeding or as otherwise required by law;
provided that upon your acceptance of this Commitment Letter in accordance with
the terms hereof you may disclose this Commitment Letter (or the terms or
substance hereof) but not the Fee Letter (nor the terms or substance thereof) in
any Schedule TO filed with the Securities Exchange Commission and in any offer
to purchase sent to the holders of the Shares. No person, other than the parties
signatory hereto, is entitled to rely upon this Commitment Letter or any of its
contents. We agree that we will maintain any information delivered to us by you
or your advisors and identified as confidential in accordance with Section 11.8
of the Existing Credit Agreement. No person shall, except as required by law,
use the name of, or refer to, GE Capital, or any of its affiliates, in any
correspondence, discussions, press release, advertisement or disclosure made in
connection with the Transactions without the prior written consent of GE
Capital. Notwithstanding anything to the contrary set forth in this Commitment
Letter, the Fee Letter, the Prior Letter or in any other agreement to which the
parties hereto are parties or by which they are bound, the obligations of
confidentiality contained herein and therein, as they relate to the Facilities
and the Transactions, shall not apply to the federal tax structure or federal
tax treatment of the Transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the
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August 29, 2003
Transactions. The preceding sentence is intended to cause the Transactions not
to be treated as having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
Regulations promulgated under Section 6011 of the Internal Revenue Code of 1986,
as amended, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the tax structure of the Transactions or any tax matter or tax idea
related to the Transactions.
Regardless of whether the commitment herein is terminated or the Transactions or
the Facilities close, you agree to pay upon demand to GE Capital all
out-of-pocket expenses ("Transaction Expenses") which may be incurred by GE
Capital or GECMG in connection with the Facilities or the Transactions
(including all reasonable legal, environmental, and other consultant costs and
fees incurred in the preparation of this Commitment Letter, the Fee Letter, the
Prior Letter, and evaluation of and documenting of the Facilities and the
Transactions). By countersignature below, you agree that GE Capital may charge
any and all Transaction Expenses to the Existing Credit Facility. Regardless of
whether the commitment herein is terminated or the Transactions or the
Facilities close, you shall indemnify and hold harmless each of GE Capital,
GECMG, the Lenders, their respective affiliates, and the directors, officers,
employees, agents, attorneys and representatives of any of them (each, an
"Indemnified Person"), from and against all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including, but not limited to,
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal), which may be instituted or asserted
against or incurred by any such Indemnified Person in connection with, or
arising out of, this Commitment Letter, the Fee Letter, the Prior Letter, the
Facilities or the Transactions under consideration, the documentation related
thereto, any other financing related thereto, any actions or failures to act in
connection therewith, and any and all environmental liabilities and legal costs
and expenses arising out of or incurred in connection with any disputes between
or among any parties to any of the foregoing, and any investigation, litigation,
or proceeding related to any such matters. Notwithstanding the preceding
sentence, indemnitors shall not be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results solely from that Indemnified Person's
gross negligence, willful misconduct or material breach of this Commitment
Letter, as finally determined by a court of competent jurisdiction. Under no
circumstances shall GE Capital, GECMG, you or any of their or your respective
affiliates be liable to you or any other person for any punitive, exemplary,
consequential or indirect damages which may be alleged in connection with this
Commitment Letter, the Fee Letter, the Prior Letter, the Transactions, the
Facilities, the documentation related thereto or any other financing, regardless
of whether the commitment herein is terminated or the Transactions or the
Facilities close.
EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS COMMITMENT LETTER, THE FEE
LETTER, THE PRIOR LETTER, ANY TRANSACTIONS RELATING HERETO OR THERETO, OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH
PARTY HERETO CONSENTS AND AGREES THAT THE
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August 29, 2003
STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN OR AMONG ANY OF THE PARTIES HERETO PERTAINING TO THIS COMMITMENT LETTER,
THE FEE LETTER, THE PRIOR LETTER, THE FACILITIES OR THE TRANSACTIONS UNDER
CONSIDERATION, ANY OTHER FINANCING RELATED THERETO, AND ANY INVESTIGATION,
LITIGATION, OR PROCEEDING RELATED TO OR ARISING OUT OF ANY SUCH MATTERS,
PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT (INCLUDING AN APPELLATE COURT) LOCATED OUTSIDE
OF SUCH JURISDICTION. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND HEREBY WAIVES ANY OBJECTION, WHICH SUCH PARTY MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR INCONVENIENT FORUM.
This Commitment Letter and the Fee Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter or the Fee Letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart. By signing this
Commitment Letter, Parent, Bon-Ton, Lancaster and GE Capital acknowledge that
this Commitment Letter supersedes any and all discussions and understandings,
written or oral, between or among GE Capital and any other person as to the
subject matter hereof, including, without limitation, any prior commitment
letters and the letter of interest dated July 30, 2003, between GE Capital
Commercial Finance, Inc. and Bon-Ton (collectively, the "Prior Letter"). No
amendments, waivers or modifications of this Commitment Letter or any of its
contents shall be effective unless expressly set forth in writing and executed
by Parent, Bon-Ton, Lancaster and Agent. This Commitment Letter is governed by
and shall be construed in accordance with the laws of the State of New York
applicable to contracts made and performed in that state. The compensation,
reimbursement, indemnification, confidentiality and syndication provisions
contained herein and in the Fee Letter shall remain in full force and effect
regardless of whether definitive documentation shall be executed and delivered
and notwithstanding the termination of this Commitment Letter or GE Capital's
commitment hereunder.
This Commitment Letter shall be of no force and effect unless and until (i) this
Commitment Letter and the Fee Letter are each executed and delivered to the
undersigned at GE Capital on or before 5:00 p.m. on September 8, 2003 at 800
Connecticut Avenue, Two North, Norwalk, CT 06854 and (ii) such delivery is
accompanied by payment of any fee, deposits or other amounts due and payable to
GE Capital as provided in the Fee Letter. Once effective, GE Capital's
commitment to provide financing in accordance with the terms of this Commitment
Letter shall cease if the Transactions do not close and the Tender Facility and
Target Facility or the Permanent Facility are not funded for any reason, on or
before November 5, 2003 and, notwithstanding any further discussions,
negotiations or other actions taken after such date, neither GE Capital nor any
of its affiliates shall have any liability (other than solely as a result of a
material breach of this Commitment Letter by us) to any person in connection
with its refusal to fund the Facilities or any portion thereof after such date.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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We look forward to continuing to work with you toward completing this
transaction.
Our business is helping yours.
Sincerely,
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Chris Chioslo
--------------------------------
Its Duly Authorized Signatory
AGREED AND ACCEPTED THIS
29th DAY OF September, 2003
THE BON-TON STORES, INC.
By: /s/ James H. Baireuther
-------------------------
Its: Vice Chairman
THE BON-TON DEPARTMENT STORES, INC.
By: /s/ James H. Baireuther
-------------------------
Its: Vice Chairman
THE BON-TON STORES OF LANCASTER, INC.
By: /s/ James H. Baireuther
-------------------------
Its: Vice Chairman
[SIGNATURE PAGE TO COMMITMENT LETTER]
EXHIBIT A
$203,000,000
SENIOR SECURED TENDER FACILITY
Summary of Terms and Conditions
The following sets forth the terms and conditions for the Tender Facility that
will be available to Bon-Ton, Lancaster and Acquisition Co. in connection with
the Tender Offer.
AGENT: GE Capital.
LEAD ARRANGER: GECMG.
BORROWERS: Bon-Ton and Lancaster ("Borrowers").
LENDERS: GE Capital and other lenders acceptable to
Agent.
SUMMARY OF TERMS
FOR REVOLVER:
MAXIMUM REVOLVER AMOUNT: A non-amortizing revolving credit facility
in an aggregate principal amount of up to
$150,000,000 for revolving credit advances
(each, an "Advance") (including a letter of
credit subfacility of up to $25,000,000)
(the "Revolver"). Letters of credit (each, a
"Letter of Credit") will be issued by GE
Capital and/or one of its affiliates (each
such issuer, an "Issuing Bank"), on terms
acceptable to Agent and Issuing Bank, and
will be guaranteed or otherwise backed by
the Revolver Lenders. GE Capital's Revolver
commitment may also include a swing line
subfacility of up to $15,000,000. Upon the
Tender Facility Closing Date (as defined
below), all Letters of Credit issued under
the Existing Credit Agreement will be deemed
to be issued under the Tender Facility.
Loans under the Tender Facility will be
available during the period commencing on
the date on which Acquisition Co. accepts
for payment the Minimum Shares in the Tender
Offer (the "Tender Facility Closing Date")
and ending on the Tender Facility Maturity
Date (as defined below).
A-1
TERM: The earliest of (a) the date of the Merger,
(b) ninety (90) days after the Tender
Facility Closing Date and (c) January 30,
2004 (the date on which the loans are
repayable, the "Tender Facility Maturity
Date").
AVAILABILITY: The sum of (a) up to the lesser of (i) 75%
of Borrowers' eligible inventory valued at
the lower of cost (FIFO) or market ("Book
Value"), and (ii) 85% of the net realizable
liquidation value of Borrowers' eligible
inventory and (b) an amount equal to the
lesser of (i) $15,000,000 and (ii) the sum
of (x) 40% of the appraised orderly
liquidation value of eligible fixtures,
machinery and equipment of Borrowers and (y)
50% of the appraised fair market value of
certain designated real properties, in each
case, less reserves established by Agent in
its reasonable credit judgment, but not to
exceed the Maximum Revolver Amount.
Agent will retain the right from time to
time to establish or modify advance rates,
standards of eligibility and reserves
against availability, in the exercise of
Agent's reasonable credit judgment.
In addition to any other reserves
established by Agent, the following reserves
shall be established against availability:
(a) 35% of eligible trade letter of credit
obligations; (b) 100% of the face amount of
all other letters of credit outstanding; (c)
in the event the outstanding amount of the
Term Loan B exceeds the lesser of (i) 7.5%
of Borrowers' eligible inventory valued at
Book Value and (ii) 7.5% of the net
realizable liquidation value of eligible
inventory, the amount of such excess; and
(d) to the extent that more than the Minimum
Shares but less than the Short Form Merger
Threshold are tendered on the Tender
Facility Closing Date and the Tender Offer
is extended (or if there is a subsequent
offer period) as to those Shares not
tendered, an amount equal to the amount of
the Revolver which is necessary to be
borrowed to purchase the remaining Shares.
A-2
SUMMARY OF TERMS FOR TERM
LOAN B
MAXIMUM AMOUNT: $15,000,000 to be advanced on the Tender
Facility Closing Date ("Term Loan B").
TERM: The Tender Facility Maturity Date. If the
Revolver is terminated, the Term Loan B will
immediately be due and payable in full on
the date of termination of the Revolver.
AMORTIZATION: Payable in full on the Tender Facility
Maturity Date.
SUMMARY OF TERMS FOR TERM
LOAN C
MAXIMUM AMOUNT: The lesser of (i)$38,000,000 and (ii) fifty
percent (50%) of the market value (as set
forth in Regulation U) of the Shares
accepted and purchased on the Tender
Facility Closing Date or on any date after
the Tender Facility Closing Date on which
Shares are validly tendered and accepted for
payment prior to the expiration of the
Tender Offer ("Term Loan C").
TERM: The Tender Facility Maturity Date. If the
Revolver is terminated, the Term Loan C will
immediately be due and payable in full on
the date of termination of the Revolver.
AMORTIZATION: Payable in full on the Tender Facility
Maturity Date.
TERMS OF GENERAL
APPLICABILITY
USE OF PROCEEDS: The proceeds of the Term Loan B will be used
solely to make a capital contribution to
Acquisition Co. to enable Acquisition Co. to
fund the purchase of the Shares of
Elder-Beerman validly tendered and accepted
for payment as of the Tender Facility
Closing Date. The proceeds of the Term Loan
C will be used solely to make a capital
contribution to Acquisition Co. to enable
Acquisition Co. to fund the purchase of the
Shares of Elder-Beerman validly tendered and
accepted for payment as of the Tender
Facility Closing Date or validly tendered
and accepted for payment after the Tender
Facility Closing Date. Advances made on the
A-3
Tender Facility Closing Date under the
Revolver will be used to refinance the
indebtedness outstanding in respect of the
Existing Credit Agreement, to make a capital
contribution to Acquisition Co. to enable
Acquisition Co. to fund the purchase of the
Shares validly tendered and accepted for
payment to the extent that the Term Loan B
has been drawn in full and the Term Loan C
has been drawn in the Maximum Amount thereof
and to pay certain fees and expenses
associated with the Tender Offer and the
Tender Facility. Advances made after the
Tender Facility Closing Date will be used
for Borrowers' working capital purposes,
permitted capital expenditures, and other
general corporate purposes and to make
capital contributions to Acquisition Co. to
fund the purchase of Shares validly tendered
and accepted for payment prior to the
expiration of the Tender Offer (or during a
subsequent offer period, if any).
INTEREST:
Rates: At Borrowers' option, all Revolver loans
will bear interest at either (a) a floating
rate equal to the Index Rate (to be defined)
plus the Applicable Margin(s) (as defined
below) or (b) absent a default, a fixed rate
for periods of one, two or three months
equal to the reserve adjusted London
Interbank Offered Rate ("LIBOR Rate") plus
the Applicable Margin(s).
The interest rate for Term Loan B will be
Index Rate plus 6.00%, per annum.
The interest rate for Term Loan C will be
Index Rate plus 10.00%, per annum.
Payment Dates: Interest will be payable monthly in arrears
for Index Rate loans and at the expiration
of each LIBOR period for LIBOR loans.
Other Terms: All interest will be calculated based on a
360-day year and actual days elapsed. The
Tender Facility documentation will contain
(a) LIBOR breakage provisions and LIBOR
borrowing mechanics, (b) LIBOR Rate
definitions, and (c) an Index Rate
definition which will equal the higher of
the prime rate as reported by The Wall
Street Journal or the overnight
A-4
Federal funds rate plus 50 basis points.
APPLICABLE MARGINS: The following Applicable Margins (consisting
of per annum rate margins) shall apply:
Applicable Revolver Index Margin 1.00%
Applicable Revolver LIBOR Margin 2.50%
FEES: In addition to the fees payable to GE
Capital as specified in the Fee Letter, the
following fees will be payable under the
Tender Facility documentation.
Letter of Credit Fee: For (a) trade letters of credit, a fee equal
to the greater of (i) 1.50% per annum and
(ii) 0.25% less than the Applicable Revolver
LIBOR Margin, per annum and (b) other
letters of credit, a fee equal to the
Applicable Revolver LIBOR Margin per annum.
In either case, the Letter of Credit Fee is
calculated on the basis of a 360-day year
and actual days elapsed on the face amount
of such letters of credit under the
Revolver, payable monthly in arrears, plus
any costs and expenses incurred by Agent in
arranging for the issuance or guaranty of
letters of credit and any charges assessed
by the issuing financial institution.
Unused Facility Fee: 0.50% per annum (calculated on the basis of
a 360-day year and actual days elapsed) on
the average unused daily balance of the
Revolver, payable monthly in arrears.
DEFAULT RATES: From and after the occurrence and during the
continuance of a default, the interest rates
applicable to all loans and the Letter of
Credit Fee will be increased by 2% per annum
over the interest rate or Letter of Credit
Fee otherwise applicable and such interest
and fees will be payable on demand.
SECURITY/GUARANTORS: To secure all obligations of Borrowers in
connection with the Tender Facility, GE
Capital, for itself and the other Lenders,
would receive a fully perfected first
priority security interest in all of the
existing and after acquired real and
personal, tangible and intangible assets of
Borrowers and their respective subsidiaries
(other than Elder-Beerman and its
subsidiaries) including, without limitation,
all cash, cash equivalents, bank accounts,
accounts, other receivables, chattel
A-5
paper, contract rights, inventory (wherever
located), instruments, documents, securities
(whether or not marketable), including the
Shares accepted and purchased by Acquisition
Co. (the "Margin Stock Collateral"),
equipment, fixtures, real property
interests, franchise rights, patents, trade
names, trademarks, copyrights, intellectual
property, general intangibles, investment
property and all substitutions, accessions
and proceeds of the foregoing (including
insurance proceeds) (collectively, the
"Collateral"), except for Designated Assets,
as that term is defined in the existing
Intercreditor Agreement dated April 1997
among GE Capital, The Bon-Ton Department
Stores, Inc., The Bon-Ton Receivable
Partnership and The First National Bank of
Chicago (the "BT Intercreditor Agreement").
All Collateral would be free and clear of
other liens, claims and encumbrances, except
permitted liens and encumbrances acceptable
to GE Capital; it being understood that with
respect to the Borrowers, liens and
encumbrances (A) with respect to the New BT
Securitization Documents and (B) otherwise
permitted under the Existing Credit
Agreement (other than in respect of the
Existing Credit Agreement) are acceptable.
Proceeds of the Margin Stock Collateral
shall be used to pay the Term Loan C prior
to the Revolver and the Term Loan B.
Proceeds of Collateral, other than the
Margin Stock Collateral, shall be applied to
the loans in the following order: Revolver,
the Term Loan B and then the Term Loan C.
All obligations of Borrowers under the
Tender Facility would be cross-defaulted to
each other and to all other material
indebtedness of Borrowers and any of their
respective subsidiaries. All such
obligations would be cross-collateralized
and guaranteed by Parent, The Bon-Ton Corp.
("Holdings"), Bon-Ton, Lancaster,
Acquisition Co. and certain subsidiaries of
Borrowers including The Bon-Ton Trade Corp.,
and The Bon-Ton Giftco, Inc., but excluding
Elder-Beerman and its subsidiaries.
In addition, Agent shall receive a pledge of
all of the issued and outstanding stock of
the subsidiaries of Borrowers including The
Bon-Ton Trade Corp. and The Bon-Ton Giftco,
Inc.
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Agent is authorized to pre-file financing
statements and other evidences of liens with
respect to all of the Collateral, including
"all-assets" filings, if applicable, naming
Agent as secured party.
COMMITMENT Borrowers may, from time to time, reduce the
REDUCTIONS/OPTIONAL Revolver commitment in amounts and at such
PREPAYMENTS: times to be agreed. Neither the Term Loan B
nor the Term Loan C may be voluntarily
prepaid.
MANDATORY PREPAYMENTS: Borrowers shall make prepayments against
principal in the following amounts: (a) all
net proceeds of any sale or other
disposition of any assets of Borrowers and
any of their respective subsidiaries, if
any, (other than (i) the sale of inventory
in the ordinary course, (ii) the sale or
other disposition of equipment, fixtures and
real estate that are obsolete or no longer
used or useful in the Borrowers' and their
subsidiaries business, (iii) sales of
Borrowers' private-label credit card
receivables pursuant to the New BT
Securitization Documents and (iv) other
customary exceptions consistent with the
Existing Credit Agreement), (b) subject to
exceptions for repairs and replacements, all
net insurance proceeds or other awards
payable in connection with the loss,
destruction or condemnation of any assets of
either Borrower and its subsidiaries, if any
and (c) 100% of the net proceeds from the
sale or issuance of equity or debt
securities.
CONDITIONS PRECEDENT The closing shall be subject to the
TO CLOSING: conditions set forth on Schedule I.
CONDITIONS PRECEDENT TO The funding of each Advance (and the
EACH ADVANCE OR ISSUANCE issuance of each Letter of Credit) under the
OF LETTER OF CREDIT: Tender Facility shall be subject to
conditions precedent as follows:
There shall exist no default or Event of
Default (as defined below) under the Tender
Facility documentation at the time of or
after giving effect to the making of, the
applicable Advances or Letters of Credit.
The representations and warranties of
Borrowers therein, including those regarding
Material Adverse Change, shall be true and
correct in all material respects
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immediately prior to, and after giving
effect to, funding or issuance.
No Advance (or issuance of any Letter of
Credit) shall result in the outstanding
principal amount of the Tender Facility
exceeding the Availability.
REPRESENTATIONS AND The Tender Facility documentation will
WARRANTIES: contain representations and warranties
customary for transactions of this size and
type and other representations and
warranties deemed by Agent appropriate to
the specific transaction (which will be
applicable to Borrowers and their respective
subsidiaries), including, without
limitation, the following: corporate status
of Borrowers and each of their respective
subsidiaries; corporate powers;
authorization and no conflict; financial
statements and projections; governmental
approvals and consents; obligations binding;
use of proceeds and margin stock; Investment
Company Act and PUHC Act of 1935; Material
Adverse Change; litigation; ERISA; accuracy
of financial statements and all other
information provided in connection with the
transactions contemplated hereby (including
copies of all material documents and
diligence information); no violation; title
to properties and liens; licenses and
permits; compliance with law; taxes and
environmental matters; insurance; brokers;
environmental matters; deposit accounts;
government contracts; customer and trade
relations; and solvency.
FINANCIAL REPORTING: The Tender Facility documentation will
require Borrowers, on a monthly basis, to
provide to Agent and Lenders internally
prepared financial statements. Annually,
Borrowers will be required to provide
audited financial statements. All financial
statements shall be prepared on a
consolidated basis.
OTHER REPORTING The Tender Facility documentation will
REQUIREMENTS: require Borrowers to provide to Agent and
Lenders borrowing base certificates weekly.
Borrowers will be required to deliver a
board approved operating plan for the
subsequent year and all material
communications and letters from Borrowers'
auditors, including any "final" management
letter, if any. In addition, Borrowers will
provide, from time to time, such other
information
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reasonably requested by Agent or Lenders.
AFFIRMATIVE COVENANTS: The Tender Facility documentation will
contain affirmative covenants customary for
transactions of this size and type and other
covenants deemed by Agent appropriate to the
specific transaction (which will be
applicable to Borrowers and their respective
subsidiaries), including, without
limitation, the following: maintenance of
existence and compliance with laws;
compliance with and maintenance of licenses,
permits, authorizations and material
agreements; at Borrowers' expense,
monitoring of all collateral to include
weekly borrowing base certificates and
periodic field exams and Appraisals on a
schedule to be determined and upon the
occurrence of a default or Event of Default;
provision of access to properties, books and
records and access to facilities, management
and auditors; maintenance of insurance; use
of proceeds; maintenance of properties;
payment of all taxes and other obligations
as and when due; environmental matters;
further assurances; ERISA; environmental
matters; and maintenance of a cash
management system acceptable to Agent
(including sweeps of cash receipts and
repayments of the loans on a daily basis).
FINANCIAL COVENANTS: The Tender Facility documentation will
contain minimum fixed charge coverage
requirements, tested quarterly, of not less
than 1.0 to 1.0 and maximum capital
expenditures limitations. All definitions
and levels of capital expenditures are to be
agreed.
NEGATIVE COVENANTS: The Tender Facility documentation will
contain negative covenants customary for
transactions of this size and type and other
covenants deemed by Agent appropriate to the
specific transaction (which will be
applicable to Borrowers and their respective
subsidiaries) including, without limitation:
- restrictions on debt, guaranties and
other contingent liabilities;
- restrictions on liens;
- restrictions on investments;
A-9
- restrictions on the sale, transfer
or other disposition of assets of
Borrowers and their respective
subsidiaries other than in the
ordinary course (subject to
exceptions for sales of inventory in
the ordinary course of business and
sales and dispositions of obsolete
assets no longer used or useful in
the operations of their respective
businesses);
- restrictions on mergers,
consolidations and acquisitions of
Borrowers and their respective
subsidiaries;
- restrictions on dividends,
distributions, redemptions and
repurchases by Borrowers and their
respective subsidiaries on or of the
capital stock of Borrowers; it being
understood that Borrowers may
continue to pay dividends at the
current annualized rate consistent
with amounts previously paid;
- restrictions on payments in respect
of other debt and payment of
management fees to affiliates;
- prohibition on the prepayment of
certain intercompany notes;
- restrictions on affiliate
transactions;
- restrictions on changes in business
or capital structure;
- restrictions on changes in fiscal
year or accounting method;
- restrictions on amendments of
constituent documents and material
contracts that would have an adverse
affect on Lenders;
- restrictions on speculative
transactions;
- restrictions on other negative
pledges and other restrictions on
distributions applicable to
Borrowers and their respective
subsidiaries; and
A-10
- restrictions on sale leaseback or
synthetic lease arrangements
applicable to Borrowers and their
respective subsidiaries.
EVENTS OF DEFAULT: The Tender Facility documentation will
contain events of default customary for
transactions of this size and type and other
events of default deemed by Agent
appropriate to the specific transaction
(which would be applicable to Borrowers and
their respective subsidiaries), including,
without limitation: non-payment of
principal, interest, or fees when due;
non-payment of other amounts within ten (10)
days of the date when due; breach of
representation or warranty; breach of
covenants (with certain covenants to be
subject to a period of grace to be
negotiated); certain enforcement
proceedings; ERISA events; change of
control; insolvency events; cross defaults
to other material indebtedness of Borrowers
and their respective subsidiaries and
Borrowers' securitization facility; certain
judgments; and invalidity of the loan
documents.
INDEMNIFICATION: Borrowers shall indemnify and hold harmless,
and provide limitations of liability to
Agent, the Lead Arranger, Lenders, and each
of their affiliates and each of their
respective officers, directors, employees,
agents, advisors, attorneys, and
representatives, in connection with the
Tender Facility, subject to customary
limitations for gross negligence and willful
misconduct.
EXPENSES: Borrowers shall jointly and severally pay
the expenses of Agent and the Lead Arranger
including, without limitation, the
reasonable fees and disbursements of counsel
and third party appraisers, consultants and
auditors advising Agent and the Lead
Arranger, internally allocated charges and
expenses relating to Agent's initial and
ongoing borrowing base examinations,
expenses in connection with periodic field
audits, the monthly and other monitoring of
assets, syndication, enforcement of rights,
other miscellaneous disbursements, in
connection with the preparation and
negotiation of the Tender Facility and any
amendments thereto, including the reasonable
expenses of counsel, Weil, Gotshal & Manges
LLP.
A-11
ASSIGNMENTS AND Assignments in minimum amounts to be
PARTICIPATIONS: determined (other than assignments to
existing Lenders or their affiliates, for
which there is no minimum) shall be
permitted subject to the consent of Agent
and the Issuing Bank. Participations (which
shall permit voting only on matters
requiring unanimous consent of Lenders)
shall be permitted. Assignment fee of $3,500
shall be payable to Agent by the assigning
Lender.
REQUIRED LENDERS: Lenders holding more than 50% of the
outstanding commitments and/or exposure
under the Tender Facility.
AMENDMENTS: The Tender Facility documentation will
contain amendment provisions customary for
transactions of this size and type and
others deemed by Agent appropriate to the
specific transaction which may include
voting by types of tranche and supermajority
voting for certain types of amendments.
GOVERNING LAW: State of New York
COUNSEL TO AGENT: Weil, Gotshal & Manges LLP
A-12
SCHEDULE I
CONDITIONS PRECEDENT TO CLOSING
The closing and the availability of the Tender Facility shall be conditioned
upon the satisfaction of the following conditions precedent on or before
November 5, 2003.
1. The negotiation, execution and delivery of definitive documentation
relating to the Tender Facility in form and substance satisfactory to
Agent and Lenders. In addition, each of the Lenders shall have
received such documents, instruments and opinions as are customary for
transactions of this size and type (including, without limitation,
organic documents, governmental certifications as to good standing and
qualification, resolutions, officers' certificates and the like, in
each case in form and substance satisfactory to Agent).
2. The documents and materials filed publicly in connection with the
Tender Offer (the "Offer Materials") and the Merger shall have been
furnished to Agent and shall be in form and substance reasonably
satisfactory to Agent.
3. The Tender Offer shall have been, or shall be concurrently,
consummated pursuant to the Offer Materials and the Merger Agreement,
which shall be in form and substance reasonably satisfactory Agent;
and no provision of the Tender Offer or the Merger Agreement shall
have been amended, supplemented, waived or otherwise modified without
the consent of Agent.
4. The board of directors of Parent and Elder-Beerman shall have approved
the Tender Offer and the Merger and such approval shall not have been
withdrawn or qualified in a manner adverse to Parent, Acquisition Co.
or Lenders.
5. Acquisition Co. shall have acquired, concurrently with the making of
the first loans under the Tender Facility, not fewer than the Minimum
Shares, and there shall not have been any material change in the
number of Shares outstanding from the 11,581,445 Shares outstanding on
June 12, 2003 (net of treasury stock), options to purchase Shares
outstanding from the 1,746,297 options to purchase Shares outstanding
on June 12, 2003, or deferred shares outstanding from the 59,655
deferred shares outstanding on June 25, 2003.
6. Agent and Lenders shall have received satisfactory opinions of special
and local independent counsel to Borrowers, addressing such matters as
Agent and Lenders shall reasonably request, including, without
limitation, existence, good standing and foreign qualification; the
due authorization, execution and enforceability of all Tender Facility
documentation; no conflicts with organic documents, laws, regulations
(including Regulations U and X of the Board of Governors of the
Federal Reserve System) or material agreements; creation and
perfection of liens; and no litigation.
A-I-1
7. To the extent required, each Lender shall have received form FR U-1 or
Form FR G-3, as applicable, executed by Borrowers.
8. All fees and expenses (including fees and expenses of counsel)
required to be paid to Agent, the Lead Arranger and each of the
Lenders on or before the Tender Facility Closing Date shall have been
paid.
9. There shall have occurred no material adverse change, individually or
in the aggregate, in (i) the business, condition (financial or
otherwise), operations, performance, properties or prospects of
Borrowers taken as a whole, Elder-Beerman and its subsidiaries taken
as a whole or the industry in which any Borrower or Elder-Beerman and
their respective subsidiaries operates, in each case since May 3,
2003, (ii) the ability of Borrowers or any Guarantor to perform any of
their respective obligations under the Tender Facility documentation,
(iii) the ability of Agent and Lenders to enforce the Tender Facility
documentation or (iv) the financial, capital or credit markets
generally or in the market for issuances of syndicated loans which
could, in the reasonable judgment of GECMG, reasonably be expected to
materially impair the satisfactory syndication of the Tender Facility,
the Target Facility or the Permanent Facility (any of the foregoing
being a "Material Adverse Change").
10. The consummation of the Transactions shall not (i) violate any
applicable law, statute, rule or regulation or (ii) conflict with, or
result in a default or event of default under, any organic documents
or any material agreement of Borrowers or any of their respective
subsidiaries or Elder-Beerman or any of its subsidiaries (other than
change of control provisions in material agreements representing
indebtedness being paid in full on the date of such change of control)
after giving effect to the Transactions.
11. There shall be in effect no temporary restraining order, preliminary
or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Transactions, nor shall any
proceeding by any governmental entity seeking any of the foregoing be
pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Transactions, that makes the consummation of the Transactions
illegal.
12. All governmental and third party approvals necessary or, in the
reasonable discretion of Agent, advisable in connection with the
Transactions and the continuing operations of Borrowers and their
respective subsidiaries and Elder-Beerman and its subsidiaries shall
have been obtained and be in full force and effect, and all applicable
waiting or appeal periods shall have expired without any action being
taken or known to be threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the
Transactions or the financing thereof.
A-I-2
13. Agent shall have received the results of a recent UCC, tax and
judgment lien searches in each relevant jurisdiction with respect to
Borrowers and their respective subsidiaries and Elder-Beerman and its
subsidiaries and such search shall reveal no liens on any of the
assets of Borrowers or their respective subsidiaries or Elder-Beerman
and its subsidiaries, except for liens that will be removed prior to
the Tender Facility Closing Date.
14. Agent shall be reasonably satisfied with the existing cash management
system of Borrowers and their respective subsidiaries and
Elder-Beerman and its subsidiaries; it being acknowledged that Agent
is satisfied with the structure of the cash management system of the
Borrowers on the date hereof with the institution of the cash sweep
and repayment mechanics described in this Commitment Letter.
15. All actions and filings necessary or, in the judgment of Agent,
desirable to perfect the security interests in the Collateral shall
have been taken or made (or arrangements reasonably satisfactory to
Agent shall have been made with respect thereto), including, without
limitation (i) full cash dominion by means of control or similar
agreements in respect of all deposit and securities accounts of
Borrowers and their respective subsidiaries, (ii) the filing of UCC
financing statements in respect of Borrowers and their respective
subsidiaries and (iii) the filing of mortgages and security agreements
in respect of Borrowers, Elder-Beerman and their respective
subsidiaries (and Agent shall have received satisfactory real property
surveys, title commitments and title insurance policies with respect
to real property (including such evidence of zoning and other legal
compliance, certificates of occupancy, other permits and endorsements
as Agent may reasonably require) in an amount and from an insurer
acceptable to Agent).
16. Agent and Lenders shall have received an update of the appraisal dated
April 18, 2003 from GB Asset Advisors LLC of the Collateral comprised
of inventory.
17. Borrowers and their respective subsidiaries (including Elder-Beerman)
shall have no outstanding indebtedness, liens or preferred equity
after giving effect to the Tender Offer other than (i) in the case of
Borrowers and their respective subsidiaries (other than
Elder-Beerman), the indebtedness under and liens in respect of (A) the
Tender Facility, (B) the New BT Securitization Documents and (C)
indebtedness otherwise permitted under the Existing Credit Agreement
(other than the Existing Credit Agreement) and (ii) in the case of
Elder-Beerman and its subsidiaries the indebtedness under and liens in
respect of (A) the Target Facility, (B) the Existing EB Securitization
Documents, as amended by the EB Securitization Amendment and (C) such
other indebtedness or liens in respect of capital leases, purchase
money liens and real estate loans not required to be paid as a result
of the Transactions and which are acceptable to Lenders. The Target
Facility shall have been, or shall be concurrently, funded pursuant to
definitive documentation which shall be in form and substance
satisfactory to Agent.
A-I-3
18. The following shall have occurred: (i) the New Securitization
Documents shall be in form and substance reasonably satisfactory to
the Lenders and shall provide financing of not less than $250,000,000
pursuant to (A) the New BT Securitization Documents based on the
receivables of Bon-Ton and its subsidiaries (including Elder-Beerman
and its subsidiaries) or (B) $100,000,000 pursuant to a continuation
of the facility covered by the Existing EB Securitization Documents
and $150,000,00 based on the Existing BT Securitization Documents,
(ii) the BT Intercreditor Agreement shall have been amended or
replaced in form and substance satisfactory to the Lenders to reflect
the New BT Securitization Documents and (iii) Agent, on behalf of the
Lenders, shall have entered into an Intercreditor Agreement in form
and substance satisfactory to the Lenders, in respect of the Existing
EB Securitization Documents, as amended by the EB Securitization
Amendment.
19. Agent's review of and satisfaction with Borrowers' tax assumptions
which, if not true, could have a Material Adverse Effect.
20. The corporate and capital structure and ownership of Borrowers,
Elder-Beerman and their respective subsidiaries after the Tender Offer
and as contemplated by the Merger Agreement shall be reasonably
satisfactory to Agent.
21. The Lenders shall be satisfied that (a) there is no litigation or
other proceeding with respect to the Acquisition or the other
Transactions which is material and adverse to the interests of the
Lenders or the Transactions, (b) there is no other litigation or
proceeding deemed material by the Lenders and not heretofore disclosed
to Agent and (c) there are no developments in any litigation or
proceedings which, in the case of clauses (b) and (c), could
reasonably be expected to have a Material Adverse Effect.
22. Agent, the Lead Arranger and Lenders shall have been given ongoing
access to the management, outside consultants, records, books of
account, contracts, and properties of Borrowers and their respective
subsidiaries (and, from and after the execution of the Merger
Agreement, Elder-Beerman and its subsidiaries) and shall have received
such financial, business, legal, and other information or documents
regarding Borrowers, Elder-Beerman, and their respective subsidiaries,
in each case as Agent, the Lead Arranger, Lenders and their respective
counsel shall have requested.
23. Borrowers (and, from and after the execution of the Merger Agreement,
Elder-Beerman) shall have granted Agent access to and the right to
inspect all reports, audits and other internal information of
Borrowers, Elder-Beerman and their respective subsidiaries relating to
environmental matters and Agent and Lenders shall be reasonably
satisfied that Borrowers, Elder-Beerman and their respective
subsidiaries are in compliance with all applicable environmental laws
and regulations and be satisfied with the costs of maintaining such
compliance. If, and to the extent requested by Agent, Borrowers will
provide environmental
A-I-4
surveys or reviews in scope and form, by firms, and with results
acceptable to Agent.
24. Agent and Lenders shall be reasonably satisfied with the insurance
protection for Borrowers, Elder-Beerman and their respective
subsidiaries given the industry, size, risk and the collateral
position (terms, underwriter, scope and coverage to be reasonably
acceptable to Agent and Lenders including, without limitation, flood
insurance as necessary, and non-renewal, cancellation and amendment
riders to provide thirty (30) days advance notice to Agent (or shorter
notice as may be reasonably acceptable to Agent) and Agent shall be
named as loss payee with respect to the Collateral and additional
insured, as the case may be, on the policies of Borrowers,
Elder-Beerman and their respective subsidiaries.
25. Borrowers (and, from and after the execution of the Merger Agreement,
Elder-Beerman) shall provide to Agent and Lenders the following
information:
(i) receipt and review of the following financial statements: (A)
within thirty (30) days after the end of each fiscal month,
the reports required to be delivered pursuant to clause (a) of
Annex E to the Existing Credit Agreement; and (B) within
forty-five (45) days after the end of each fiscal quarter, the
reports required to be delivered pursuant to clause (b) of
Annex E to the Existing Credit Agreement;
(ii) at least ten (10) business days prior to the Tender Facility
Closing Date, projected consolidated income statements,
balance sheets and statements of cash flow in the format
utilized by Borrowers in the preparation of their respective
financial statements set forth in their respective SEC filings
prior to the date hereof and otherwise in form and substance
satisfactory to Agent and Lenders for Borrowers and their
respective subsidiaries; and
(iii) the unaudited consolidated and consolidating balance sheet,
income statement, statement of cash flows and availability
projections of Borrowers and their subsidiaries as of February
1, 2003 after giving pro forma effect to the Transactions.
26. All representations and warranties in the definitive Tender Facility
documentation (including, without limitation, the material adverse
change and litigation representations) shall be true and correct in
all respects.
27. No default or Event of Default under the definitive Tender Facility
documentation shall exist at the time of, or after giving effect to
the making of, the Advances or loans to be made or the Letters of
Credit to be issued on the Tender Facility Closing Date.
28. Agent shall be satisfied that Borrowers and their subsidiaries (other
than Elder-Beerman and its subsidiaries), on a consolidated basis, are
solvent after giving effect to the Tender Offer, the Transactions and
the other transactions
A-I-5
contemplated hereby and shall have received a certificate from the CFO
of Bon-Ton to such effect, in form and substance satisfactory to
Agent.
29. "Borrowing Availability" (as defined in the Existing Credit Agreement)
less the aggregate amount of all fees, costs and expenses incurred in
connection with the Transaction and payable on or about the Tender
Facility Closing Date (excluding for purposes of this calculation the
purchase price of the Shares and any severance costs) shall be not
less than $50,000,000.
30. Borrowers and Elder-Beerman shall have minimum excess availability
under the Permanent Facility in the aggregate on the Tender Facility
Closing Date (giving pro forma effect to the Transaction, with fees
incurred in connection with the Transaction having been paid and with
trade payables being paid currently, expenses and liabilities being
paid in the ordinary course of business and without acceleration of
sales and without deterioration of working capital and assuming the
advance rates set forth in the Permanent Facility Term Sheet) of
$50,000,000.
31. No person or "group" (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than
Bon-Ton, Acquisition Co. or their affiliates or any group of which any
of them is a member, shall have acquired after the date of this
Commitment Letter beneficial ownership (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of 10% or more of the
outstanding Shares (other than any person or group which owns on the
date of this Commitment Letter 10% or more of the outstanding Shares
and has filed a schedule with the Securities and Exchange Commission
reporting such ownership prior to the date of this Commitment Letter).
32. There shall not have occurred any of the following which is material
and adverse to the interests of the Lenders or the Transactions: (1)
any general suspension of trading in securities on the New York Stock
Exchange, the American Stock Exchange or in the Nasdaq National Market
System, for a period in excess of three hours (excluding suspensions
or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (2) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3)
any limitation or proposed limitation (whether or not mandatory) by
any United States governmental entity that has a material adverse
effect generally on the extension of credit by banks or other
financial institutions, (4) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States or (5) in the case of any of
the situations in clauses (1) through (4) of this paragraph existing
at the time of the commencement of the Tender Offer, a material
acceleration or worsening thereof.
A-I-6
EXHIBIT B
$75,000,000
SENIOR SECURED TARGET FACILITY
Summary of Terms and Conditions
The following sets forth the terms and conditions for the Target Facility that
will be available to Elder-Beerman in connection with the Tender Offer.
AGENT: GE Capital
LEAD ARRANGER: GECMG.
BORROWER: Elder-Beerman ("Borrower").
GUARANTORS: All of the direct and indirect
subsidiaries of Borrower.
LENDERS: GE Capital and other lenders
acceptable to Agent.
TARGET FACILITY AND A non-amortizing revolving credit
MAXIMUM TARGET facility in an aggregate principal
REVOLVER AMOUNT: amount of up to $75,000,000 for
revolving credit advances (each, an
"Advance") to Borrower (including a
letter of credit subfacility of up
to $30,000,000). Letters of credit
(each, a "Letter of Credit") will
be issued under the Target Facility
by GE Capital and/or one of its
affiliates (each such issuer, an
"Issuing Bank"), on terms
acceptable to Agent, and will be
guaranteed or otherwise backed by
the Revolver Lenders. GE Capital's
commitment under the Target
Facility may also include a swing
line subfacility of up to
$10,000,000.
Loans under the Target Facility
will be available during the period
commencing on the date on which
Acquisition Co. accepts for payment
the Minimum Shares in the Tender
Offer (the "Target Facility Closing
Date") and ending on the Target
Facility Maturity Date (as defined
below).
TERM: The earliest of (a) the date of the
Merger, (b) ninety (90) days after
the Target Facility Closing Date
and (c) January 30, 2004 (the date
on which the loans are repayable,
the "Target Facility Maturity
Date").
B-1
AVAILABILITY: The sum of up to the lesser of (a)
75% of Borrower's eligible
inventory valued at the lower of
cost (FIFO) or market ("Book
Value"), and (b) 85% of the net
realizable liquidation value of
Borrower's eligible inventory, less
reserves established by Agent in
its reasonable credit judgment, but
not to exceed the Maximum Target
Revolver Amount.
Agent will retain the right from
time to time to establish or modify
advance rates, standards of
eligibility and reserves against
availability, in the exercise of
Agent's reasonable credit judgment.
In addition to any other reserves
established by Agent, the following
reserves shall be established
against availability: (a) 35% of
eligible trade letter of credit
obligations and (b) 100% of the
face amount of all other letters of
credit outstanding.
USE OF PROCEEDS: Loans made on Target Facility
Closing Date will be used to
refinance existing debt of
Elder-Beerman and its subsidiaries.
Loans made after the Target
Facility Closing Date will be used
for Borrower's working capital
purposes, permitted capital
expenditures, and other general
corporate purposes.
INTEREST:
Rates: At Borrower's option, all loans
will bear interest at either (a) a
floating rate equal to the Index
Rate (to be defined) plus the
Applicable Margin(s) (as defined
below) or (b) absent a default, a
fixed rate for periods of one, two
or three months equal to the
reserve adjusted London Interbank
Offered Rate ("LIBOR Rate") plus
the Applicable Margin(s).
Payment Dates: Interest will be payable monthly in
arrears for Index Rate loans and at
the expiration of each LIBOR period
for LIBOR loans.
Other Terms: All interest will be calculated
based on a 360 day year and actual
days elapsed. The Target Facility
documentation will contain (a)
LIBOR breakage provisions and LIBOR
borrowing mechanics, (b) LIBOR Rate
definitions, and (c) an Index Rate
definition which will equal the
higher of the prime rate
B-2
as reported by The Wall Street
Journal or the overnight Federal
funds rate plus 50 basis points.
APPLICABLE MARGINS The following Applicable Margins
(consisting of per annum rate
margins) shall apply:
Applicable Revolver Index Margin
0.25%
Applicable Revolver LIBOR Margin
1.75%
FEES: In addition to the fees payable to
GE Capital as specified in the Fee
Letter, the following fees will be
payable under the Target Facility
documentation.
Letter of Credit Fee: For (a) trade letters of credit, a
fee equal to the greater of (i)
1.50% per annum and (ii) 0.25% less
than the Applicable Revolver LIBOR
Margin, per annum and (b) other
letters of credit, a fee equal to
the Applicable Revolver LIBOR
Margin per annum. In either case,
the Letter of Credit Fee is
calculated on the basis of a
360-day year and actual days
elapsed on the face amount of such
letters of credit under the Target
Facility, payable monthly in
arrears, plus any costs and
expenses incurred by Agent in
arranging for the issuance or
guaranty of letters of credit and
any charges assessed by the issuing
financial institution.
Unused Facility Fee: 0.375% per annum (calculated on the
basis of a 360-day year and actual
days elapsed) on the average unused
daily balance of the Revolver,
payable monthly in arrears.
DEFAULT RATES: From and after the occurrence and
during the continuance of a
default, the interest rates
applicable to all loans and the
letter of credit fee will be
increased by 2% per annum over the
interest rate or Letter of Credit
Fee otherwise applicable and such
interest and fees will be payable
on demand.
YIELD PROTECTION: The Target Facility documentation
will contain customary yield
protection provisions, including,
without limitation, provisions
relating to compliance with
risk-based capital guidelines,
increased costs, and payments free
and clear of withholding taxes.
SECURITY/GUARANTORS: To secure all obligations of
Borrower in connection with the
Target Facility, GE Capital, for
itself and the
B-3
other Lenders, would receive a
fully-perfected, first-priority
security interest in all of the
existing and after-acquired real
and personal, tangible and
intangible assets of Borrower and
its subsidiaries including, without
limitation, all cash, cash
equivalents, bank accounts,
accounts, other receivables,
chattel paper, contract rights,
inventory (wherever located),
instruments, documents, securities
(whether or not marketable),
equipment, fixtures, real property
interests, franchise rights,
patents, trade names, trademarks,
copyrights, intellectual property,
general intangibles, investment
property and all substitutions,
accessions and proceeds of the
foregoing (including insurance
proceeds) (collectively, the
"Collateral").
All Collateral would be free and
clear of other liens, claims and
encumbrances, except permitted
liens and encumbrances in respect
of (A) the Existing EB
Securitization Documents, as
amended by the EB Securitization
Amendment and (B) capital leases,
purchase money liens and real
estate loans not required to be
paid as a result of the
Transactions and which are
acceptable to GE Capital.
All obligations of the Borrower
under the Target would be
cross-defaulted to all other
material indebtedness of Borrower
and any of its subsidiaries. All
such obligations would be
cross-collateralized and guaranteed
by the Guarantors.
In addition, Agent would receive a
pledge of all of the issued and
outstanding stock of each direct
and indirect subsidiary of
Borrower.
Agent would be authorized to
pre-file financing statements and
other evidences of liens with
respect to all of the Collateral,
including "all-assets" filings, if
applicable, naming Agent as secured
party.
COMMITMENT REDUCTIONS/ Borrower may, from time to time,
OPTIONAL PREPAYMENTS: reduce the Target Facility
commitment in amounts and at such
times to be agreed.
MANDATORY PREPAYMENTS: Borrower shall make prepayments
against principal in the following
amounts: (a) all net proceeds of
any sale or other disposition of
any assets of Borrower and any
B-4
of its subsidiaries, if any, (other
than the sale of inventory in the
ordinary course and other customary
exceptions to be agreed), (b)
subject to exceptions for repairs
and replacements, all net insurance
proceeds or other awards payable in
connection with the loss,
destruction or condemnation of any
assets of Borrower and its
subsidiaries, if any and (c) 100%
of the net proceeds from the sale
or issuance of equity or debt
securities.
CONDITIONS PRECEDENT The closing shall be subject to the
TO CLOSING: conditions set forth on Schedule I.
CONDITIONS PRECEDENT TO The funding of each Advance (and
EACH ADVANCE ORISSUANCE OF the issuance of each Letter of
LETTER OF CREDIT: Credit) under the Target Facility
shall be subject to conditions
precedent as follows:
There shall exist no default or
Event of Default (as defined below)
under the Target Facility
documentation at the time of or
after giving effect to the making
or issuance of the appliable
Advances or Letter of Credit.
The representations and warranties
of Borrower and each Guarantor
therein, including those regarding
Material Adverse Change, shall be
true and correct in all material
respects immediately prior to, and
after giving effect to, funding or
issuance.
No Advance (or issuance of any
Letter of Credit) shall result in
the outstanding principal amount of
the Target Facility exceeding the
Availability.
REPRESENTATIONS AND WARRANTIES: The Target Facility documentation
will contain representations and
warranties customary for
transactions of this size and type
and other representations and
warranties deemed by Agent
appropriate to the specific
transaction (which will be
applicable to Borrower, the
Guarantors and their respective
subsidiaries), including, without
limitation, the following:
corporate status of Borrower and
each of its subsidiaries; corporate
powers; authorization and no
conflict; financial statements and
projections; governmental approvals
and consents; obligations binding;
use of proceeds and margin stock;
Investment Company Act and PUHC Act
of 1935; Material
B-5
Adverse Change; litigation; ERISA;
accuracy of financial statements
and all other information provided
in connection with the transactions
contemplated hereby (including
copies of all material documents
and diligence information); no
violation; title to properties and
liens; licenses and permits;
compliance with law; taxes and
environmental matters; insurance;
brokers; environmental matters;
deposit accounts; government
contracts; customer and trade
relations; and solvency.
FINANCIAL REPORTING: The Target Facility documentation
will require Borrower, on a monthly
basis, to provide to Agent and
Lenders internally prepared
financial statements. Annually,
Borrower will be required to
provide audited financial
statements. All financial
statements shall be prepared on a
consolidated basis.
OTHER REPORTING REQUIREMENTS: The Target Facility documentation
will require Borrower to provide to
Agent and Lenders borrowing base
certificates monthly and more
frequently if a default exists or
if excess availability is less than
an amount to be agreed. Borrower
will be required to deliver a board
approved operating plan for the
subsequent year and all material
communications and letters from
Borrower's auditors, including any
"final" management letters, if any.
In addition, Borrower will provide,
from time to time, such other
information reasonably requested by
Agent or Lenders.
AFFIRMATIVE COVENANTS: The Target Facility documentation
will contain affirmative covenants
customary for transactions of this
size and type and other covenants
deemed by Agent appropriate to the
specific transaction (which will be
applicable to Borrower, the
Guarantors and their respective
subsidiaries), including, without
limitation, the following:
maintenance of existence and
compliance with laws; compliance
with and maintenance of licenses,
permits, authorizations and
material agreements; at Borrower's
expense, monitoring of all
collateral to include monthly
borrowing base certificates and
periodic field exams and Appraisals
on a schedule to be determined, in
each case more frequently (i) upon
the occurrence of a default or
Event of Default and (ii) if excess
availability is less than an amount
to be determined; provision of
access to properties, books and
records and access to facilities,
management and
B-6
auditors; maintenance of insurance;
use of proceeds; maintenance of
properties; payment of all taxes
and other obligations as and when
due; environmental matters; further
assurances; ERISA; environmental
matters; and maintenance of a cash
management system acceptable to
Agent.
FINANCIAL COVENANTS: The Target Facility documentation
will contain minimum fixed charge
coverage requirements, tested
quarterly, of not less than 1.0 to
1.0; maximum capital expenditures
limitations; and minimum excess
availability required to be
maintained at all times. All
definitions and levels of capital
expenditures are to be agreed.
NEGATIVE COVENANTS: The Target Facility documentation
will contain negative covenants
customary for transactions of this
size and type and other covenants
deemed by Agent appropriate to the
specific transaction (which will be
applicable to Borrower, the
Guarantors and their respective
subsidiaries) including, without
limitation:
- restrictions on debt,
guaranties and other
contingent liabilities;
- restrictions on liens;
- restrictions
on investments;
- restrictions on the sale,
transfer or other
disposition of assets of
Borrower and its
subsidiaries other than in
the ordinary course
(subject to exceptions for
sales of inventory in the
ordinary course business
and sales and dispositions
of obsolete assets no
longer used or useful in
the operations of their
respective businesses);
- restrictions on mergers,
consolidations and
acquisitions of Borrower
and its subsidiaries;
- restrictions on dividends,
distributions, redemptions
and repurchases by
Borrower and its
subsidiaries on or of the
capital stock of Borrower;
B-7
- restrictions on payments
in respect of other debt
and payment of management
fees to affiliates;
- prohibition on the
prepayment of certain
intercompany notes;
- restrictions on affiliate
transactions;
- restrictions on changes in
business or capital
structure;
- restrictions on changes in
fiscal year or accounting
method;
- restrictions on amendments
of constituent documents
and material contracts
that would have an adverse
affect on Lenders;
- restrictions on
speculative transactions;
- restrictions on other
negative pledges and other
restrictions on
distributions applicable
to Borrower and its
subsidiaries; and
- restrictions on sale
leaseback or synthetic
lease arrangements
applicable to Borrower and
its subsidiaries.
EVENTS OF DEFAULT: The Target Facility documentation
will contain events of default
customary for transactions of this
size and type and other events of
default deemed by Agent appropriate
to the specific transaction (which
would be applicable to Borrower and
its Subsidiaries), including,
without limitation: non-payment of
principal, interest, or fees when
due; non-payment of other amounts
within ten (10) days of the date
when due; breach of representation
or warranty; breach of covenants
(with certain covenants to be
subject to a period of grace to be
negotiated); certain enforcement
proceedings; ERISA events; change
of control; insolvency events;
cross defaults to material
indebtedness of Borrower and its
subsidiaries; certain judgments;
and invalidity of the loan
documents.
INDEMNIFICATION: Borrower and each Guarantor shall
indemnify and hold harmless, and
provide limitations of liability to
Agent,
B-8
the Lead Arranger, Lenders, and
each of their affiliates and each
of their respective officers,
directors, employees, agents,
advisors, attorneys, and
representatives, in connection with
the Target Facility, subject to
customary limitations for gross
negligence and willful misconduct.
EXPENSES: Borrower and each Guarantor shall
jointly and severally pay the
expenses of Agent and the Lead
Arranger including, without
limitation, the reasonable fees and
disbursements of counsel and third
party appraisers, consultants and
auditors advising Agent and the
Lead Arranger, internally allocated
charges and expenses relating to
Agent's initial and ongoing
borrowing base examinations,
expenses in connection with
periodic field audits, the monthly
and other monitoring of assets,
syndication, enforcement of rights,
other miscellaneous disbursements,
in connection with the preparation
and negotiation of the Target
Facility and any amendments
thereto, including the reasonable
expenses of counsel, Weil, Gotshal
& Manges LLP.
ASSIGNMENTS AND PARTICIPATIONS: Assignments in minimum amounts to
be determined (other than
assignments to existing Lenders or
their affiliates, for which there
is no minimum) shall be permitted
subject to the consent of Agent and
the Issuing Bank. Participations
(which shall permit voting only on
matters requiring unanimous consent
of Lenders) shall be permitted.
Assignment fee of $3,500 shall be
payable to Agent by the assigning
Lender.
REQUIRED LENDERS: Lenders holding more than 50% of
the outstanding commitments and/or
exposure under the Target Facility.
AMENDMENTS: The Target Facility documentation
will contain amendment provisions
customary for transactions of this
size and type and others deemed by
Agent appropriate to the specific
transaction which may include
supermajority voting for certain
types of amendments.
GOVERNING LAW: State of New York
COUNSEL TO AGENT: Weil, Gotshal & Manges LLP
B-9
SCHEDULE I
CONDITIONS PRECEDENT TO CLOSING(1)
The closing and the availability of the Target Facility shall be conditioned
upon the satisfaction of the following conditions precedent on or before
November 5, 2003.
1. The negotiation, execution and delivery of definitive
documentation relating to the Target Facility in form and
substance satisfactory to Agent and Lenders. In addition, each
of the Lenders shall have received such documents, instruments
and opinions as are customary for transactions of this size
and type (including, without limitation, organic documents,
governmental certifications as to good standing and
qualification, resolutions, officers' certificates and the
like, in each case in form and substance satisfactory to
Agent).
2. Agent and Lenders shall have received satisfactory opinions of
special and local independent counsel to Borrower and the
Guarantors, addressing such matters as Agent and Lenders shall
reasonably request, including, without limitation, existence,
good standing and foreign qualification; the due
authorization, execution and enforceability of all Target
Facility documentation; no conflicts with organic documents,
laws, regulations (including Regulations U and X of the Board
of Governors of the Federal Reserve System) or material
agreements; creation and perfection of liens; and no
litigation.
3. All fees and expenses (including fees and expenses of counsel)
required to be paid to Agent, the Lead Arranger and each of
the Lenders on or before the Target Facility Closing Date
shall have been paid.
4. There shall have occurred no material adverse change,
individually or in the aggregate, in (i) the business,
condition (financial or otherwise), operations, performance,
properties or prospects of Borrower and its subsidiaries,
taken as a whole, or the industry in which Borrower and its
subsidiaries operate, in each case since May 3, 2003, (ii) the
ability of Borrower or any Guarantors to perform any of their
respective obligations under the Target Facility
documentation, (iii) the ability of Agent and Lenders to
enforce the Target Facility documentation or (iv) the
financial, capital or credit markets generally or in the
market for issuances of syndicated loans which could, in the
reasonable judgment of GECMG, reasonably be expected to
materially impair the satisfactory syndication of the Target
Facility, the Tender Facility or the Permanent Facility (any
of the foregoing being a "Material Adverse Change").
5. All actions and filings necessary or, in the judgment of
Agent, desirable to perfect the security interests in the
Collateral shall have been taken or made (or arrangements
reasonably satisfactory to Agent shall have been made with
respect
- ------------
(1) Additional conditions precedent may be appropriate based upon the business
and legal diligence of GE Capital and its counsel.
B-I-1
thereto), including, without limitation (i) full cash dominion
by means of control or similar agreements in respect of all
deposit and securities accounts of Borrower and its
subsidiaries, (ii) the filing of UCC financing statements in
respect of Borrower and its subsidiaries and (iii) the filing
of mortgages and security agreements in respect of the
Borrower and its subsidiaries.
6. Agent and Lenders shall have received written reports
consistent with verbal reports of the appraisal from Great
American Group in form and substance acceptable to Agent that
reflects the orderly liquidation value of the Collateral
comprised of inventory.
7. The Lenders shall be satisfied that (a) there is no litigation
or other proceeding with respect to the Acquisition or the
other Transactions which is material and adverse to the
interest of the Lenders or the Transactions, (b) there is no
other litigation or proceeding deemed material by the Lenders
and not heretofore disclosed to Agent and (c) there are no
developments in any litigation or proceedings which, in the
case of clauses (b) and (c), could reasonably be expected to
have a Material Adverse Effect.
8. All representations and warranties in the definitive Target
Facility documentation (including, without limitation, the
material adverse change and litigation representations) shall
be true and correct in all respects.
9. No default or Event of Default under the definitive Target
Facility documentation shall exist at the time of, or after
giving effect to the making of, the Advances to be made or the
Letters of Credit to be issued on the Target Facility Closing
Date.
10. The loans shall have been made under the Tender Facility and
all conditions to the effectiveness thereof set forth in
Exhibit A shall have been satisfied concurrently therewith
unless waived by Agent hereunder.
11. Agent shall be satisfied that Borrower and its subsidiaries,
on a consolidated basis, are solvent after giving effect to
the Tender Offer, the Transactions and the other Transactions
contemplated hereby and shall have received a certificate from
the CFO of Borrower to such effect, in form and substance
satisfactory to Agent..
12. Borrower shall have minimum excess availability under the
Target Facility in the aggregate on the Target Facility
Closing Date (giving pro forma effect to the Transactions,
with fees incurred in connection with the Transaction and
payable on or about the Target Facility Closing Date having
been paid and with trade payables being paid currently,
expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales and without
deterioration of working capital) of $25,000,000.
B-I-2
EXHIBIT C
$325,000,000
SENIOR SECURED PERMANENT FACILITY
Summary of Terms and Conditions
The following sets forth the terms and conditions for the Permanent Facility
that will be available to Bon-Ton, Lancaster and Elder-Beerman upon the
consummation of the Merger.
AGENT: GE Capital.
LEAD ARRANGER: GECMG.
BORROWERS: Bon-Ton, Lancaster and
Elder-Beerman ("Borrowers").
LENDERS: GE Capital and other lenders
acceptable to Agent.
SUMMARY OF TERMS FOR REVOLVER:
MAXIMUM REVOLVER AMOUNT: A non-amortizing revolving credit
facility in an aggregate principal
amount of up to $300,000,000 for
revolving credit advances (each an
"Advance") (including a letter of
credit subfacility of up to
$50,000,000) (the "Revolver").
Letters of credit (each, a "Letter
of Credit") will be issued by GE
Capital and/or one of its
affiliates (each such issuer, an
"Issuing Bank"), on terms
acceptable to Agent and Issuing
Bank, and will be guaranteed or
otherwise backed by the Revolver
Lenders. GE Capital's Revolver
commitment may also include a swing
line subfacility of up to
$25,000,000. Upon the Permanent
Facility Closing Date (as defined
below), all Letters of Credit
issued under the Existing Credit
Agreement or the Tender Facility
and the Target Facility, as the
case may be, will be deemed to be
issued under the Permanent
Facility.
C-1
Loans under the Permanent Facility
will be available during the period
commencing on the date (in no event
later than January 30, 2004) on
which the Merger is consummated
(the "Permanent Facility Closing
Date") and ending on the Permanent
Facility Maturity Date (as defined
below).
TERM: 48 months commencing on the
Permanent Facility Closing Date
(the last day of such period,
the "Permanent Facility Maturity
Date").
AVAILABILITY: The sum of (a) up to the lesser of
(i) 75% of such Borrowers' eligible
inventory valued at the lower of
cost (FIFO) or market ("Book
Value"), and (ii) 85% of the net
realizable liquidation value of
such Borrowers' eligible inventory
and (b) an amount equal to the
lesser of (i) $15,000,000 and (ii)
the sum of (x) 40% of the appraised
orderly liquidation value of
eligible fixtures, machinery and
equipment of such Borrowers and (y)
50% of the appraised fair market
value of designated real
properties, in each case, less
reserves established by Agent in
its reasonable credit judgment, but
not to exceed the Maximum Revolver
Amount. The Revolver availability
shall be allocated among the
Borrowers on the Permanent Facility
Closing Date in an amount based on
the appraisals of the inventory,
fixed assets and designated real
properties.
Agent will retain the right from
time to time to establish or modify
advance rates, standards of
eligibility and reserves against
availability, in the exercise of
Agent's reasonable credit judgment.
In addition to any other reserves
established by Agent, the following
reserves shall be established
against availability: (a) 35% of
eligible trade letter of credit
obligations; (b) 100% of the face
amount of all other letters of
credit outstanding; and (c) in the
event the outstanding amount of the
Term Loan B exceeds the lesser of
(i) 7.5% of Borrowers' combined
eligible inventory valued at Book
Value and (ii) 7.5% of Borrowers'
combined net realizable liquidation
value of eligible inventory, the
amount of such excess.
C-2
SUMMARY OF TERMS FOR TERM LOAN B
MAXIMUM AMOUNT: $25,000,000 to be advanced on the
Permanent Facility Closing Date
("Term Loan B"). The Term Loan B
shall be allocated among the
Borrowers on the Permanent Facility
Closing Date in an amount based on
the appraisals of the inventory,
fixed assets and designated real
properties utilized in calculating
the availability as of the
Permanent Facility Closing Date.
TERM: 48 months. If the Revolver is
terminated, the Term Loan B will
immediately be due and payable in
full on the date of termination of
the Revolver.
AMORTIZATION: Payable in full on the Permanent
Facility Maturity Date.
TERMS OF GENERAL APPLICABILITY
USE OF PROCEEDS: Loans made on the Permanent
Facility Closing Date will be used
to refinance the Tender Facility
and the Target Facility (or, if the
Short-Form Merger Threshold is
obtained prior to the expiration of
the Initial Offer Period, to make
capital contributions to
Acquisition Co. to fund the
purchase of the Shares of
Elder-Beerman validly tendered and
accepted for payment as of the
Permanent Facility Closing Date),
to pay any other cash consideration
required under the Merger Agreement
and certain fees and expenses of
the Transactions and to pay certain
fees and expenses associated with
the Permanent Facility. Loans made
after the Permanent Facility
Closing Date will be used for
Borrowers' working capital
purposes, permitted capital
expenditures, and other general
corporate purposes.
INTEREST:
Rates: At Borrowers' option, all Revolver
loans will bear interest at either
(a) a floating rate equal to the
Index Rate (to be defined) plus the
Applicable Margin(s) (as defined
below) or (b) absent a default, a
fixed rate for periods of one, two
or three months equal to the
reserve adjusted London Interbank
Offered Rate ("LIBOR Rate") plus
the Applicable Margin(s).
C-3
The interest rate for Term Loan B
will be Index Rate plus 5.00% per
annum.
Payment Dates: Interest will be payable monthly in
arrears for Index Rate loans and at
the expiration of each LIBOR period
for LIBOR loans.
Other Terms: All interest will be calculated
based on a 360-day year and actual
days elapsed. The Permanent
Facility documentation will contain
(a) LIBOR breakage provisions and
LIBOR borrowing mechanics, (b)
LIBOR Rate definitions, and (c) an
Index Rate definition which will
equal the higher of the prime rate
as reported by The Wall Street
Journal or the overnight Federal
funds rate plus 50 basis points.
APPLICABLE MARGINS: The following Applicable Margins
(consisting of per annum rate
margins) shall apply until the
Applicable Margins are adjusted as
described below:
Applicable Revolver
Index Margin 0.25%
Applicable Revolver LIBOR
Margin 1.75%
Starting with the delivery to Agent
of Borrowers' consolidated
quarterly financial statements for
the fiscal quarter ending closest
to January 31, 2004, the Applicable
Margins shall be subject to
adjustment (up or down)
prospectively, based on Borrowers'
average excess availability for the
preceding quarter most recently
ended in accordance with a grid to
be determined upon receipt of
financial projections. The grid
will allow for a 0.25% reduction
and 0.50% increase in Applicable
Margins. The definitive Permanent
Facility documentation will contain
provisions regarding the delivery
of financial statements, and the
timing and mechanics of subsequent
prospective adjustments in
Applicable Margins. If a default is
continuing at the time that a
reduction in Applicable Margins is
to be implemented, that reduction
will be deferred until the first
month commencing after the cure or
waiver thereof.
FEES: In addition to the fees payable to
GE Capital as specified in the Fee
Letter, the following fees will be
payable under the Permanent
Facility documentation.
C-4
Letter of Credit Fee: For (a) trade letters of credit, a
fee equal to the greater of (i)
1.50% per annum and (ii) 0.25% less
than the Applicable Revolver LIBOR
Margin, per annum and (b) other
letters of credit, a fee equal to
the Applicable Revolver LIBOR
Margin per annum. In either case,
the Letter of Credit Fee is
calculated on the basis of a
360-day year and actual days
elapsed on the face amount of such
letters of credit under the
Revolver, payable monthly in
arrears, plus any costs and
expenses incurred by Agent in
arranging for the issuance or
guaranty of letters of credit and
any charges assessed by the issuing
financial institution.
Unused Facility Fee: Initially 0.375% per annum
(calculated on the basis of a
360-day year and actual days
elapsed) on the average unused
daily balance of the Revolver,
payable monthly in arrears subject
to adjustments in accordance with a
grid to be determined upon receipt
of financial projections.
DEFAULT RATES: From and after the occurrence and
during the continuance of a
default, the interest rates
applicable to all loans and the
Letter of Credit Fee will be
increased by 2% per annum over the
interest rate or Letter of Credit
Fee otherwise applicable and such
interest and fees will be payable
on demand.
SECURITY/GUARANTORS: To secure all obligations of
Borrowers in connection with the
Permanent Facility, GE Capital, for
itself and the other Lenders, would
receive a fully perfected first
priority security interest in all
of the existing and after acquired
real and personal, tangible and
intangible assets of Borrowers and
their respective subsidiaries
including, without limitation, all
cash, cash equivalents, bank
accounts, accounts, other
receivables, chattel paper,
contract rights, inventory
(wherever located), instruments,
documents, securities (whether or
not marketable), equipment,
fixtures, real property interests,
franchise rights, patents, trade
names, trademarks, copyrights,
intellectual property, general
intangibles, investment property
and all substitutions, accessions
and proceeds of the foregoing
(including insurance proceeds)
(collectively, the "Collateral"),
except for Designated Assets, as
that term is defined in the BT
Intercreditor Agreement (or any
replacement intercreditor
agreement), as amended to include
The El-
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Bee Receivables Corporation in
connection with the New
Securitization Documents.
All Collateral would be free and
clear of other liens, claims and
encumbrances, except permitted
liens and encumbrances acceptable
to GE Capital.
Proceeds of Collateral shall be
used to pay the Revolver prior to
the Term Loan B. All obligations of
Borrowers under the Permanent
Facility would be cross-defaulted
to each other and to all other
material indebtedness of Borrowers
and any of their respective
subsidiaries. All such obligations
would be cross-collateralized and
guaranteed by Parent, Holdings,
Bon-Ton, Lancaster, Elder-Beerman
and certain subsidiaries of
Borrowers including The Bon-Ton
Trade Corp., The Bon-Ton Giftco,
Inc., Elder-Beerman West Virginia,
Inc., Elder-Beerman Holdings, Inc.,
The Bee-Gee Shoe Corp.,
Elder-Beerman Indiana, L.P., The
El-Bee Chargit Corp. and
Elder-Beerman Operations, LLC.
In addition, Agent shall receive a
pledge of all of the issued and
outstanding stock of certain
subsidiaries of Borrowers including
the subsidiaries of Elder-Beerman,
The Bon-Ton Trade Corp., and The
Bon-Ton Giftco, Inc.
Agent is authorized to pre-file
financing statements and other
evidences of liens with respect to
all of the Collateral, including
"all-assets" filings, if
applicable, naming Agent as secured
party.
COMMITMENT REDUCTIONS/OPTIONAL Borrowers may, from time to time,
PREPAYMENTS: reduce the Revolver commitment in
amounts and at such times to be
agreed. Voluntary prepayments of
the Term Loan B following the
second anniversary will be upon
terms and conditions to be agreed.
MANDATORY PREPAYMENTS: Borrowers shall make prepayments
against principal in the following
amounts: (a) all net proceeds of
any sale or other disposition of
any assets of Borrowers and any of
their respective subsidiaries, if
any, (other than (i) the sale of
inventory in the ordinary course,
(ii) the sale or other disposition
of equipment, fixtures and real
estate that are obsolete and no
longer used or useful in the
Borrowers' and their subsidiaries
business, (iii) sales of
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Borrowers' private-label credit
card receivables pursuant to the
New Securitization Documents and
(iv) other customary exceptions
consistent with the Existing Credit
Agreement), (b) subject to
exceptions for repairs and
replacements, all net insurance
proceeds or other awards payable in
connection with the loss,
destruction or condemnation of any
assets of either Borrower and its
subsidiaries, if any and (c) 100%
of the net proceeds from the sale
or issuance of equity or debt
securities.
CONDITIONS PRECEDENT TO CLOSING: The closing shall be subject to the
conditions set forth on Schedule I.
CONDITIONS PRECEDENT TO EACH The funding of each Advance (and
ADVANCE OR ISSUANCE OF the issuance of each Letter of
LETTER OF CREDIT: Credit) under the Permanent
Facility shall be subject to
conditions precedent as follows:
There shall exist no default or
Event of Default (as defined below)
under the Permanent Facility
documentation at the time or after
giving effect to the making of or
issuance of, the applicable
Advances of Letters of Credit.
The representations and warranties
of Borrowers therein, including
those regarding Material Adverse
Change, shall be true and correct
in all material respects
immediately prior to, and after
giving effect to, funding or
issuance.
No Advance (or issuance of any
Letter of Credit) shall result in
the outstanding principal amount of
the Permanent Facility exceeding
the Availability.
REPRESENTATIONS AND WARRANTIES: The Permanent Facility
documentation will contain
representations and warranties
customary for transactions of this
size and type and other
representations and warranties
deemed by Agent appropriate to the
specific transaction (which will be
applicable to Borrowers and their
respective subsidiaries),
including, without limitation, the
following: corporate status of
Borrowers and each of their
respective subsidiaries; corporate
powers; authorization and no
conflict; financial statements and
projections; governmental approvals
and consents;
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obligations binding; use of
proceeds and margin stock;
Investment Company Act and PUHC Act
of 1935; Material Adverse Change;
litigation; ERISA; accuracy of
financial statements and all other
information provided in connection
with the transactions contemplated
hereby (including copies of all
material documents and diligence
information); no violation; title
to properties and liens; licenses
and permits; compliance with law;
taxes and environmental matters;
insurance; brokers; environmental
matters; deposit accounts;
government contracts; customer and
trade relations; and solvency.
FINANCIAL REPORTING: The Permanent Facility
documentation will require
Borrowers, on a monthly basis, to
provide to Agent and Lenders
internally prepared financial
statements. Annually, Borrowers
will be required to provide audited
consolidated and unaudited
consolidating (for Bon-Ton and
Elder-Beerman only) financial
statements. All financial
statements shall be prepared on a
consolidated and consolidating
basis.
OTHER REPORTING REQUIREMENTS: The Permanent Facility
documentation will require
Borrowers to provide to Agent and
Lenders borrowing base certificates
monthly and more frequently if a
default exists or excess
availability is less than an amount
to be agreed. Borrowers will be
required to deliver a board
approved operating plan for the
subsequent year and all material
communications and letters from
Borrowers' auditors, including any
"final" management letters, if any.
In addition, Borrowers will
provide, from time to time, such
other information reasonably
requested by Agent
AFFIRMATIVE COVENANTS: The Permanent Facility
documentation will contain
affirmative covenants customary for
transactions of this size and type
and other covenants deemed by Agent
appropriate to the specific
transaction (which will be
applicable to Borrowers and their
respective subsidiaries),
including, without limitation, the
following: maintenance of existence
and compliance with laws;
compliance with and maintenance of
licenses, permits, authorizations
and material agreements; at
Borrowers' expense, monitoring of
all collateral to include monthly
borrowing base certificates and
field exams and Appraisals
semi-annually, in each
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case more frequently (i) upon the
occurrence of a default or Event of
Default and (ii) if excess
availability is less than an amount
to be determined; provision of
access to properties, books and
records and access to facilities,
management and auditors;
maintenance of insurance; use of
proceeds; maintenance of
properties; payment of all taxes
and other obligations as and when
due; environmental matters; further
assurances; ERISA; environmental
matters; and maintain a cash
management system acceptable to
Agent.
FINANCIAL COVENANTS: The Permanent Facility
documentation will contain minimum
fixed charge coverage requirements,
tested quarterly, of not less than
1.0 to 1.0; maximum capital
expenditures limitations, tested
annually; and minimum excess
availability of not less than
$10,000,000 required to be
maintained at all times. All
definitions and levels of capital
expenditures are to be agreed.
NEGATIVE COVENANTS: The Permanent Facility
documentation will contain negative
covenants customary for
transactions of this size and type
and other covenants deemed by Agent
appropriate to the specific
transaction (which will be
applicable to Borrowers and their
respective subsidiaries) including,
without limitation:
- restrictions on debt,
guaranties and other
contingent liabilities;
- restrictions on liens;
- restrictions on
investments;
- restrictions on the sale,
transfer or other
disposition of assets of
Borrowers and their
respective subsidiaries
other than in the ordinary
course (subject to
exceptions for sales of
inventory in the ordinary
course of business and
sales and dispositions of
obsolete assets no longer
used or useful in the
operations of their
respective businesses);
- restrictions on mergers,
consolidations and
acquisitions of Borrowers
and their respective
subsidiaries;
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- restrictions on dividends,
distributions, redemptions
and repurchases by
Borrowers and their
respective subsidiaries on
or of the capital stock of
Borrowers;
- restrictions on payments
in respect of other debt
and payment of management
fees to affiliates;
- prohibition on the
prepayment of certain
intercompany notes;
- restrictions on affiliate
transactions;
- restrictions on changes in
business or capital
structure;
- restrictions on changes in
fiscal year or accounting
method;
- restrictions on amendments
of constituent documents
and material contracts
that would have an adverse
affect on Lenders;
- restrictions on
speculative transactions;
- restrictions on other
negative pledges and other
restrictions on
distributions applicable
to Borrowers and their
respective subsidiaries;
and
- restrictions on sale
leaseback or synthetic
lease arrangements
applicable to Borrowers
and their respective
subsidiaries.
EVENTS OF DEFAULT: The Permanent Facility
documentation will contain events
of default customary for
transactions of this size and type
and other events of default deemed
by Agent appropriate to the
specific transaction (which would
be applicable to Borrowers and
their respective subsidiaries),
including, without limitation:
non-payment of principal, interest,
or fees when due; non-payment of
other amounts within ten (10) days
of the date when due; breach of
representation or warranty; breach
of covenants (with certain
covenants to be subject to a period
of grace to be negotiated); certain
enforcement proceedings; ERISA
events; change of control;
insolvency events; cross defaults
to other
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material indebtedness of Borrowers
and their respective subsidiaries
and Borrowers' securitization
facility; certain judgments; and
invalidity of the loan documents.
INDEMNIFICATION: Borrowers shall indemnify and hold
harmless, and provide limitations
of liability to Agent, the Lead
Arranger, Lenders, and each of
their affiliates and each of their
respective officers, directors,
employees, agents, advisors,
attorneys, and representatives, in
connection with the Permanent
Facility, subject to customary
limitations for gross negligence
and willful misconduct.
EXPENSES: Borrowers shall jointly and
severally pay the expenses of Agent
and the Lead Arranger including,
without limitation, the reasonable
fees and disbursements of counsel
and third party appraisers,
consultants and auditors advising
Agent and the Lead Arranger,
internally allocated charges and
expenses relating to Agent's
initial and ongoing borrowing base
examinations, expenses in
connection with periodic field
audits, the monthly and other
monitoring of assets, syndication,
enforcement of rights, other
miscellaneous disbursements, in
connection with the preparation and
negotiation of the Permanent
Facility and any amendments
thereto, including the reasonable
expenses of counsel, Weil, Gotshal
& Manges LLP.
ASSIGNMENTS AND PARTICIPATIONS: Assignments in minimum amounts of
$5,000,000 (other than assignments
to existing Lenders or their
affiliates, for which there is no
minimum) shall be permitted subject
to the consent of Agent and the
Issuing Bank. Participations (which
shall permit voting only on matters
requiring unanimous consent of
Lenders) shall be permitted.
Assignment fee of $3,500 shall be
payable to Agent by the assigning
Lender.
REQUIRED LENDERS: Lenders holding more than 50% of
the outstanding commitments and/or
exposure under the Permanent
Facility.
AMENDMENTS: The Permanent Facility
documentation will contain
amendment provisions customary for
transactions of this size and type
and others deemed by Agent
appropriate to the specific
transaction which may include
voting by type of tranche and
supermajority voting for certain
types of amendments.
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GOVERNING LAW: State of New York
COUNSEL TO AGENT: Weil, Gotshal & Manges LLP
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SCHEDULE I
CONDITIONS PRECEDENT TO CLOSING
The closing and the availability of the Permanent Facility shall be conditioned
upon the satisfaction of the following conditions precedent on or before January
30, 2004:
If the Short Form Merger Threshold is obtained simultaneously with the purchase
of the Minimum Shares and without any funding of the Tender Facility and the
Target Facility prior to the expiration of the Initial Offer Period,
1. The Merger shall have been consummated on the terms set forth on the
Merger Agreement; and
2. The conditions precedent set forth in Exhibit A shall apply to the
Permanent Facility and the Permanent Facility Closing Date mutatis
mutandis.
If the Short Form Merger Threshold is not obtained simultaneously with the
purchase of the Minimum Shares, the following conditions precedent shall apply
to the Permanent Facility:
1. The negotiation, execution and delivery of definitive documentation
relating to the Permanent Facility in form and substance satisfactory to
Agent and Lenders. In addition, each of the Lenders shall have received
such documents, instruments and opinions as are customary for
transactions of this size and type (including, without limitation,
organic documents, governmental certifications as to good standing and
qualification, resolutions, officers' certificates and the like, in each
case in form and substance satisfactory to Agent).
2. The Merger shall have been consummated on the terms set forth in the
Merger Agreement.
3. Agent and Lenders shall have received satisfactory opinions of special
and local independent counsel to Borrowers, addressing such matters as
Agent and Lenders shall reasonably request, including, without
limitation, existence, good standing and foreign qualification; the due
authorization, execution and enforceability of all Permanent Facility
documentation; no conflicts with organic documents, laws, regulations
(including Regulations U and X of the Board of Governors of the Federal
Reserve System) or material agreements; creation and perfection of
liens; and no litigation.
4. All fees and expenses (including fees and expenses of counsel) required
to be paid to Agent, the Lead Arranger and each of the Lenders on or
before the Permanent Facility Closing Date shall have been paid.
5. There shall have occurred no material adverse change, individually or in
the aggregate, in (i) the business, condition (financial or otherwise),
operations, performance, properties or prospects of Borrowers taken as a
whole, Elder-
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Beerman and its subsidiaries taken as a whole or the industry in which
any Borrower or Elder-Beerman and their respective subsidiaries
operates, in each case since May 3, 2003, (ii) the ability of Borrowers
or any Guarantor to perform any of their respective obligations under
the Permanent Facility documentation, (iii) the ability of Agent and
Lenders to enforce the Permanent Facility documentation or (iv) the
financial, capital or credit markets generally or in the market for
issuances of syndicated loans which could, in the reasonable judgment of
GECMG, reasonably be expected to materially impair the satisfactory
syndication of the Permanent Facility (any of the foregoing being a
"Material Adverse Change").
6. The consummation of the Transactions shall not (i) violate any
applicable law, statute, rule or regulation or (ii) conflict with, or
result in a default or event of default under, any organic documents or
any material agreement of Borrowers or any of their respective
subsidiaries after giving effect to the Transactions.
7. There shall be in effect no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Transactions, nor shall any proceeding by any
governmental entity seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Transactions,
that makes the consummation of the Transactions illegal.
8. All governmental and third party approvals necessary or, in the
reasonable discretion of Agent, advisable in connection with the
Transactions and the continuing operations of Borrowers and their
respective subsidiaries shall have been obtained and be in full force
and effect, and all applicable waiting or appeal periods shall have
expired without any action being taken or known to be threatened by any
competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Transactions or the financing thereof.
9. All actions and filings necessary or, in the judgment of Agent,
desirable to perfect the security interests in the Collateral shall have
been taken or made (or arrangements reasonably satisfactory to Agent
shall have been made with respect thereto), including, without
limitation (i) full cash dominion by means of control or similar
agreements in respect of all deposit and securities accounts of
Borrowers and their respective subsidiaries, (ii) the filing of UCC
financing statements in respect of Borrowers and their respective
subsidiaries and (iii) the filing of mortgages and security agreements
in respect of Borrowers and their respective subsidiaries (and Agent
shall have received satisfactory real property surveys, title
commitments and title insurance policies with respect to such real
property (including such evidence of zoning and other legal compliance,
certificates of occupancy, other permits and endorsements as Agent may
reasonably require) in an amount and from an insurer acceptable to
Agent). To the extent requested by Agent, Borrowers shall use reasonable
best efforts (it being understood "reasonable best efforts" shall not
require Borrower to pay any
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consent or waiver fee) to obtain landlord, mortgagee and bailee waivers
and consignment or similar filings in form and substance acceptable to
Agent.
10. The Lenders shall be satisfied that (a) there is no litigation or other
proceeding with respect to the Acquisition or the other Transactions
which is material and adverse to the interest of the Lenders or the
Transactions, (b) there is no other litigation or proceeding deemed
material by the Lenders and not heretofore disclosed to Agent and (c)
there are no developments in any litigation or proceedings which, in the
case of clauses (b) and (c), could reasonably be expected to have a
Material Adverse Effect.
11. Agent, the Lead Arranger and Lenders shall have been given ongoing
access to the management, outside consultants, records, books of
account, contracts, and properties of Borrowers and their respective
subsidiaries and shall have received such financial, business, legal,
and other information or documents regarding Borrowers and their
respective subsidiaries, in each case as Agent, the Lead Arranger,
Lenders and their respective counsel shall have requested.
12. All representations and warranties in the definitive Permanent Facility
documentation (including, without limitation, the material adverse
change and litigation representations) shall be true and correct in all
respects.
13. No default or Event of Default under the definitive Permanent Facility
documentation shall exist at the time of, or after giving effect to the
making of, the Advances to be made or the Letters of Credit to be issued
on the Permanent Facility Closing Date.
14. Agent shall be satisfied that Borrowers and their subsidiaries, on a
consolidated basis, are solvent after giving effect to the Tender Offer,
the Transactions and the other transactions contemplated hereby and
shall have received a certificate from the CFO of Bon-Ton to such
effect, in form and substance satisfactory to Agent.
15. Borrowers shall have minimum excess availability under the Permanent
Facility in the aggregate on the Permanent Facility Closing Date (giving
pro forma effect to the Transactions, with fees incurred in connection
with the Transaction having been paid and with trade payables being paid
currently, expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales and without deterioration of
working capital) of $50,000,000.
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