Form 8-K BON TON STORES INC For: Aug 15

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 15, 2016

THE BON-TON STORES, INC.

(Exact name of registrant as specified in its charter)

2801 E. Market Street, York, Pennsylvania 17402

(Address of Principal Executive Offices)

717-757-7660

(Registrant’s Telephone Number, including Area Code)

Not Applicable

(Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01                                           Entry into a Material Definitive Agreement.

Fourth Amendment to Second Amended and Restated Loan and Security Agreement

On August 15, 2016, The Bon-Ton Department Stores, Inc. (“Bon-Ton”), Carson Pirie Scott II, Inc., Bon-Ton Distribution, LLC, McRIL, LLC, Bonstores Realty One, LLC and Bonstores Realty Two, LLC, as borrowers (the “Borrowers”), and The Bon-Ton Stores, Inc., The Bon-Ton Giftco, LLC, Bonstores Holdings One, LLC, and Bonstores Holdings Two, LLC (collectively with the Borrowers, the “Obligors”), entered into a Fourth Amendment (the “Fourth Amendment”) to the Second Amended and Restated Loan and Security Agreement, dated as of March 21, 2011 (as amended or supplemented, the “Loan Agreement”), with Bank of America, N.A., as Agent, and certain financial institutions as lenders.

Commitments for loans under the Loan Agreement are in two tranches: Tranche A revolving commitments of $730 million (which includes a $150 million subline for letters of credit and a $75 million subline for swing line loans) and, pursuant to the Fourth Amendment, Tranche A-1 revolving commitments of $150 million, increased from the previous commitments of $100 million.  The Loan Agreement provides that the Borrowers may make requests to increase the Tranche A revolving commitments up to $800 million in the aggregate upon the satisfaction of certain conditions, provided that the lenders are under no obligation to provide any such increases.  All borrowings under the Loan Agreement are limited by amounts available pursuant to a borrowing base calculation, which is based on percentages of eligible inventory, real estate and credit card receivables, in each case subject to reductions for applicable reserves. The proceeds of the loans under the Tranche A-1 facility will be used to repay existing Tranche A or Tranche A-1 loans, to refinance all or a portion of Bon Ton’s existing 10.625% Senior Notes due 2017 and to pay any fees and expenses incurred in connection with the offering.

Interest will be payable on borrowings under the Tranche A facility and the Tranche A-1 facility at rates equal to either (1) Adjusted LIBOR (equal to the London Interbank Offered Rate for an interest period selected by the Borrowers) plus an applicable margin or (2) a base rate (based on the highest of (a) the Federal Funds Rate plus 0.5%, (b) the Bank of America prime rate, and (c) Adjusted LIBOR based on an interest period of one month plus 1.0%) plus an applicable margin.  The applicable margins in respect of the Tranche A facility are based upon excess availability under the Loan Agreement.  The applicable margins in respect of the Tranche A-1 facility will be 9.5% for LIBOR loans and 8.5% for base rate loans.  The Borrowers are required to pay an unused line fee to the Tranche A lenders at a rate of 0.25% per annum, based upon the unused portion of the total Tranche A revolving commitments.

Loans under the Loan Agreement are secured by a first-priority security interest in substantially all of the current and future assets of the Borrowers and the other Obligors, including, but not limited to, inventory, general intangibles, trademarks, equipment, certain real estate and proceeds from any of the foregoing, subject to certain exceptions and permitted liens.

The minimum excess availability covenant contained in the Loan Agreement requires that minimum excess availability be an amount greater than or equal to the greater of (1) 10% of the lesser of: (a) the aggregate commitments at such time and (b) the aggregate borrowing base at such time and (2), by virtue of the Fourth Amendment, $75 million.  The springing fixed charge coverage ratio contained in the Loan Agreement, under the Fourth Amendment, requires that if, at any time on or after January 29, 2017 and for so long as excess availability under the Loan Agreement is less than 20% of the lesser of (a) the aggregate commitments at such time and (b) the aggregate borrowing base at such time, the fixed charge coverage ratio shall be at least 1.00 to 1.00.  The affirmative covenants contained in the Loan Agreement include requirements that the Obligors and their subsidiaries provide the lenders with certain financial statements, forecasts and other reports, borrowing base certificates and notices; comply with various federal, state and local rules and regulations, their organizational documents and their material contracts; maintain their properties; and take certain actions with respect to any future subsidiaries.  The negative covenants contained in the Loan Agreement impose certain limitations on the Obligors and their subsidiaries, including limitations on any debt the Obligors may have in addition to the existing debt, and the terms of that debt; acquisitions, joint ventures and investments; mergers and consolidations; dispositions of property; dividends by Bon-Ton (dividends, redemption or repurchases of equity securities of Bon-Ton may not, in an aggregate amount, exceed $10 million in any year or $30 million during the term of the agreement; however,

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additional dividends may be paid subject to meeting other requirements); transactions with affiliates; changes in the business or corporate structure of the Obligors or their subsidiaries; prepaying, redeeming or repurchasing certain debt; changes in accounting policies or reporting practices, unless required by GAAP; and speculative transactions.  The Loan Agreement also provides that it is a condition precedent to borrowing that no event has occurred that could reasonably be expected to have a material adverse effect, as defined in the agreement, on Bon-Ton.  If we fail to comply with the financial covenants or the other restrictions contained in the Loan Agreement and certain other debt of Bon Ton, an event of default would occur.  An event of default could result in the acceleration of our debt due to the cross-default provisions within the debt agreements.  The borrowing base calculation under the Loan Agreement contains an inventory advance rate subject to periodic review at the lenders’ discretion.

The foregoing descriptions of the Fourth Amendment are qualified in their entirety by reference to the Fourth Amendment, a copy of which is included as Exhibit 10.1, which is incorporated herein by reference.

Item 9.01                                           Financial Statements and Exhibits.

(d) Exhibits

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 15, 2016

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EXHIBITS

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Exhibit 10.1

[EXECUTION COPY]

FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of August 15, 2016 (this “Amendment”), modifies that certain Second Amended and Restated Loan and Security Agreement, dated as of March 21, 2011 (as amended by that certain First Amendment to Second Amended and Restated Loan and Security Agreement dated as of October 25, 2012, that certain Second Amendment to Second Amended and Restated Loan and Security Agreement dated as of December 12, 2013,  that certain Consent and Third Amendment to Second Amended and Restated Loan and Security Agreement, dated as of January 15, 2016 and as may be further amended, restated, amended and restated, extended, supplemented or otherwise modified in writing from time to time, the “Loan and Security Agreement”), among THE BON-TON DEPARTMENT STORES, INC., a Pennsylvania corporation (“Bon-Ton”), CARSON PIRIE SCOTT II, INC., a Florida corporation (“CPS II”), BON-TON DISTRIBUTION, LLC, an Illinois limited liability company (“Distribution”), MCRIL, LLC, a Virginia limited liability company (“McRIL”), BONSTORES REALTY ONE, LLC, a Delaware limited liability company (“BR1LLC”), BONSTORES REALTY TWO, LLC, a Delaware limited liability company (“BR2LLC” and, together with Bon-Ton, CPS II, Distribution, McRIL, BR1LLC and any other person from time to time a borrower thereunder, collectively, the “Borrowers”), each of the other Obligors party thereto, the financial institutions party thereto from time to time as lenders (collectively, the “Lenders”), BANK OF AMERICA, N.A., a national banking association (“Bank of America”), as agent for the Lenders (in such capacity, the “Agent”), Bank of America and WELLS FARGO BANK, NATIONAL ASSOCIATION, acting as co-collateral Agents (in such capacity, the “Co-Collateral Agents”) and CRYSTAL FINANCIAL LLC, acting as the documentation agent for the Tranche A-1 Facility, and the other parties thereto.  Capitalized terms used herein and not defined shall have the meaning assigned to such terms in the Loan and Security Agreement, as amended by this Amendment.

W I T N E S S E T H:

A.                                    The Borrowers have requested that the Agent and the Lenders agree to amend certain of the terms and provisions of the Loan and Security Agreement as specifically set forth in this Amendment.

B.                                    The undersigned Lenders and the Agent are prepared to amend the Loan and Security Agreement, subject to the conditions and in reliance on the representations set forth herein.

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:

1.                                      Amendments to Loan and Security Agreement.

(a)                                 The Loan and Security Agreement (excluding the schedules and exhibits thereto, which shall remain in full force and effect, except as specifically amended by Section 2 of this Amendment) is hereby amended as set forth in Annex A attached hereto such that all of the newly

inserted double underlined text (indicated textually in the same manner as the following example: double-underlined text) and any formatting changes attached hereto shall be deemed to be inserted and all stricken text (indicated textually in the same manner as the following example: stricken text) shall be deemed to be deleted therefrom.

2.                                      Amendments to Schedules and Exhibits to Loan and Security Agreement.

(a)                                 Schedules 1.1(a) (Commitments of Lenders), 7.1(c) (Commercial Tort Claims), 7.2.1 (Secondary Operating Deposit Accounts), 7.3 (Mortgaged Real Estate), 8.2.1 (Existing Credit Card Arrangements), 8.5 (Deposit Accounts), 8.5(a) (Excluded Deposit and Disbursement Accounts), 8.5(b) (Excluded Trust Accounts), 8.6.1 (Chief Executive Offices and other Business Locations), 9.1.4 (Names and Capital Structure), 9.1.5 (Former Corporate Names and Trade Names), 9.1.12 (Intellectual Property), 9.1.22 (Labor Contracts) to the Loan and Security Agreement are hereby deleted and replaced in their entirety by the schedules attached hereto in Annex B.

(b)                                 The Loan and Security Agreement is hereby amended by adding a new Schedule 14 (Agreement Among Tranche A Lenders and Tranche A-1 Lenders) to the Loan and Security Agreement in the form attached hereto as Annex C.

(c)                                  Exhibit B (Tranche A-1 Revolver Note) to the Loan and Security Agreement is hereby deleted and replaced in its entirety by the exhibit attached hereto as Exhibit B.

(d)                                 Exhibit C (Assignment and Assumption Agreement) to the Loan and Security Agreement is hereby deleted and replaced in its entirety by the exhibit attached hereto as Exhibit C.

(e)                                  The Loan and Security Agreement is hereby amended by adding new Exhibit I-1, Exhibit I-2, Exhibit I-3 and Exhibit I-4 to the Loan and Security Agreement in the forms attached hereto as Exhibit I.

3.                                      Refinancing of Existing Tranche A-1 Revolver Loans.  Each Obligor, and each of the undersigned Lenders, Issuing Banks and the Agent hereby acknowledge that, immediately upon the occurrence of the Fourth Amendment Closing Date, the existing Tranche A-1 Revolver Commitments shall be deemed assigned by each of the Tranche A-1 Lenders holding a Tranche A-1 Revolver Commitment prior to the occurrence of the Fourth Amendment Closing Date (the “Existing Tranche A-1 Lenders”) to the Lenders holding Tranche A-1 Revolver Loans under the Loan and Security Agreement, as amended by this Amendment (the “Fourth Amendment Tranche A-1 Lenders”).  Immediately after giving effect to this Amendment, each Fourth Amendment Tranche A-1 Lender shall hold a Tranche A-1 Revolver Commitment in the principal amount set forth opposite such Fourth Amendment Tranche A-1 Lender’s name on Schedule 1.1(a) attached hereto.  The transactions described in this Section 3 are referred to herein as the “Tranche A-1 Refinancing”.

4.                                      [Reserved].

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5.                                      Conditions Precedent.  This Amendment shall become effective as of the date first written above (the “Fourth Amendment Closing Date”) upon the satisfaction of each of the following conditions precedent:

(a)                                 This Amendment shall have been duly executed and delivered to the Agent by each of the Obligors, the Agent, and the Required Lenders.

(b)                                 [Reserved].

(c)                                  The Agent shall have received an omnibus reaffirmation agreement of the other Loan Documents duly executed by each of the Obligors and the Agent.

(d)                                 [Reserved].

(e)                                  [Reserved].

(f)                                   The Agent shall have received a Borrowing Base Certificate (and all supporting documents and schedules) dated as of the Fourth Amendment Closing Date, in form and substance reasonably satisfactory to it and providing a determination of the Tranche A Borrowing Base and the Tranche A-1 Borrowing Base after giving effect to this Amendment, and the Agent shall be satisfied that, both before and after giving effect to all extensions of credit outstanding or to be made on the Fourth Amendment Closing Date, Excess Availability under the Loan and Security Agreement, as amended by this Amendment, shall not be less than $150,000,000.

(g)                                  The Agent and the Lenders shall be satisfied that the Security Documents remain effective to create in favor of the Agent a legal, valid and enforceable first priority (subject only to Permitted Liens entitled to priority under Applicable Law) perfected security interest in and Lien upon the Collateral.

(h)                                 The Obligors shall have delivered, and shall have caused each Subsidiary to deliver, each Mortgage amendment, in form reasonably acceptable to Agent, necessary to amend the Termination Date stated in such Mortgage and to reflect the modifications to the Loan and Security Agreement contemplated hereby.

(i)                                     The Agent shall have received satisfactory updates with respect to all flood insurance certifications related to any Collateral.

(j)                                    The Agent shall have received a certificate, in form and substance reasonably satisfactory to the Agent, from the chief financial officer or the treasurer of each Obligor certifying that after giving effect to the transactions contemplated by this Amendment (including the extension of the Tranche A-1 Revolver Loans on the Fourth Amendment Closing Date), (x) Parent and its Subsidiaries, on a consolidated basis, are Solvent and (y) each Borrower, individually, is Solvent.

(k)                                 The Agent shall have received a certificate of a duly authorized officer of each Obligor (with such certification to be in such Person’s capacity as an officer of such Obligor and not in such Person’s individual capacity), (i) certifying (x) that such Obligor’s Organic Documents certified by such Obligor to the Agent on the Closing Date remain in full force and effect, without

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amendment (or, if such Organic Documents have been amended, attaching copies thereof, certified by the Secretary of State or another official of such Obligor’s jurisdiction of organization), and (y) that an attached copy of resolutions authorizing execution and delivery of the Amendment is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this Amendment, and (ii) attaching good standing or subsistence certificates, as applicable, for such Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.

(l)                                     The Agent shall have received a written opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP, on behalf of the Borrowers and each of the Guarantors, as well as any relevant local counsel to Obligors, in form and substance reasonably satisfactory to the Agent and each of the Lenders (including an opinion regarding the absence of any conflict between the Loan and Security Agreement as amended hereby and the Senior Note Debt).

(m)                             The Borrowers shall have paid (i) to the Agent all fees to be paid pursuant to that certain Fee Letter, dated as of August 9, 2016, by and among Agent and the Borrowers and (ii) to such other Person(s) as are entitled thereto, all reasonable and documented fees and out-of-pocket expenses to be paid to such Persons on the Fourth Amendment Closing Date (including, without limitation, all reasonable and documented fees, out-of-pocket charges and disbursements of counsel to the Agent), accounting, appraisal, consulting and other reasonable and documented fees and out-of-pocket expenses to the extent invoiced prior to or on the Fourth Amendment Closing Date.

(n)                                 Both immediately before, and immediately after giving effect to this Amendment and transactions hereunder, including all extensions of credit to be made on the Fourth Amendment Closing Date, (i) no Default or Event of Default shall exist and (ii) the representations and warranties set forth in Section 9 of the Loan and Security Agreement shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to the extent that any representation or warranty is already qualified or modified by materiality in the text thereof) as of the Fourth Amendment Closing Date, as though made on and as of such date (except to the extent that such representation or warranty relates to an earlier date or period, in which case as of such earlier date or period).

(o)                                 The Agent shall have received a detailed monthly availability forecast prepared by management of the Borrowers, in a format substantially similar to that contained in the Borrowing Base Certificate, for the period beginning on the Fourth Amendment Closing Date and ending on February 3, 2018.

(p)                                 Substantially concurrently with the Fourth Amendment Closing Date, the Tranche A-1 Refinancing shall have occurred.

(q)                                 The Agent shall have received such additional documents, instruments and information as are customary for transactions of this type as the Agent may reasonably request to effect the transactions contemplated hereby.

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For purposes of determining compliance with the conditions specified in this Section 5, each Lender (including each Fourth Amendment A-1 Lender) that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice from such Lender prior to the proposed Fourth Amendment Closing Date specifying its objection thereto.

6.                                      Representations and Warranties.  Each of the Obligors hereby represents and warrants to the Agent and the Lenders as of the date hereof as follows:

(a)                                 Authorization. The execution and delivery by each Obligor of this Amendment and all other instruments and agreements required to be executed and delivered by such Loan Party in connection with the transactions contemplated hereby or referred to herein (collectively, the “Amendment Documents”), and the performance by each of the Obligors of any of its obligations and agreements under the Amendment Documents, the Loan and Security Agreement and the other Loan Documents, as amended hereby (i) have been duly authorized by all corporate, stockholder, partnership or limited liability company action required to be taken by the Obligors and (ii) will not require any consent or approval of any holders of Capital Stock of any Obligor, other than those already obtained; (1) contravene the Organic Documents of any Obligor; (2) violate or cause a material default under any Applicable Law or Material Contract; or (3) result in or require the imposition of any Lien (other than Permitted Liens and Liens granted under the Loan Documents) on any Property of any Obligor.

(b)                                 Enforceability.  Each of this Amendment, the other Amendment Documents, the Loan and Security Agreement and the other Loan Documents, as amended hereby, is a legal, valid and binding obligation of each Obligor party thereto, enforceable against each Obligor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(c)                                  Governmental Approvals.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Obligor of this Amendment, the other Amendment Documents, the Loan and Security Agreement, as amended hereby, or the consummation by the Obligors of the transactions among the parties contemplated hereby and thereby or referred to herein.

(d)                                 Representations and Warranties.  The representations and warranties set forth in Section 9 of the Loan and Security Agreement are true and correct in all material respects (except that such materiality qualifier shall not be applicable to the extent that any representation or warranty is already qualified or modified by materiality in the text thereof) as of the Fourth Amendment Closing Date, as though made on and as of such date (except to the extent that such representation or warranty relates to an earlier date or period, in which case as of such earlier date or period).

(e)                                  No Default. No Default or Event of Default has occurred and is continuing.

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(f)                                   No Material Adverse Effect. Since January 30, 2016, there have been no changes in the financial condition of any Obligor or Subsidiary that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

7.                                      Survival of Representations and Warranties.  All representations and warranties made in this Amendment or in any other Loan Document shall survive the execution and delivery of this Amendment.  Such representations and warranties have been or will be relied upon by the Agent and each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf and notwithstanding that the Agent or any Lender may have had notice or knowledge of any Default at the time of any extension of credit under the Loan and Security Agreement, and shall continue in full force and effect as long as any Loan or any other Obligation under the Loan and Security Agreement or any other Loan Document shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

8.                                      Amendment as Loan Document.  This Amendment constitutes a “Loan Document” under the Loan and Security Agreement.

9.                                      Amendment of Loan and Security Agreement.  On the Fourth Amendment Closing Date, this Amendment shall amend the Loan and Security Agreement.  On the Fourth Amendment Closing Date, the rights and obligations of the parties evidenced by the Loan and Security Agreement shall be evidenced by the Loan and Security Agreement, as amended by this Amendment, and the other Loan Documents, and the grant of a security interest in the Collateral by the relevant Obligors under the Loan and Security Agreement and the other Loan Documents shall continue under but as amended by this Amendment, and shall not in any event be terminated, extinguished or annulled but shall hereafter be governed by the Loan and Security Agreement, as amended by this Amendment, and the other Loan Documents.  All references to the Loan and Security Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to the Loan and Security Agreement as amended by this Amendment.  Nothing contained herein shall be construed as a novation of the Obligations outstanding under and as defined in the Loan and Security Agreement, which shall remain in full force and effect, except as modified hereby.

10.                               Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402 (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

11.                               Execution.  This Amendment may be executed in counterparts, each of which taken together shall constitute one instrument.  This Amendment may be executed and delivered by facsimile or electronic transmission (including .pdf file), and they shall have the same force and effect as manually signed originals.  The Agent may require confirmation by a manually-signed original, but failure to request or deliver same shall not limit the effectiveness or any facsimile or electronic transmission signature.

12.                               Limited Effect.  This Amendment relates only to the specific matters expressly covered herein, shall not be considered to be an amendment or waiver of any rights or remedies

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that the Agent or any Lender may have under the Loan and Security Agreement, under any other Loan Document (except as expressly set forth herein) or under Applicable Law, and shall not be considered to create a course of dealing or to otherwise obligate in any respect the Agent or any Lender to execute similar or other amendments or waivers or grant any amendments or waivers under the same or similar or other circumstances in the future.

13.                               Ratification by Guarantors.  Each of the Guarantors acknowledges that its consent to this Amendment is not required, but each of the undersigned nevertheless does hereby agree and consent to this Amendment and to the documents and agreements referred to herein.  Each of the Guarantors agrees and acknowledges that (i) notwithstanding the effectiveness of this Amendment, such Guarantor’s Guaranty shall remain in full force and effect without modification thereto and (ii) nothing herein shall in any way limit any of the terms or provisions of such Guarantor’s Guaranty or any other Loan Document executed by such Guarantor (as the same may be amended from time to time), all of which are hereby ratified, confirmed and affirmed in all respects.  Each of the Guarantors hereby agrees and acknowledges that no other agreement, instrument, consent or document shall be required to give effect to this Section 13.  Each of the Guarantors hereby further acknowledges that the Borrowers, the Agent and any Lender may from time to time enter into any further amendments, modifications, terminations and/or amendments of any provisions of the Loan Documents without notice to or consent from such Guarantor and without affecting the validity or enforceability of such Guarantor’s Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of such Guarantor’s Guaranty.

14.                               Reaffirmation of Grant of Security Interests, Etc.  Each Obligor hereby reaffirms its grant to Agent, for the benefit of Secured Parties, of a continuing security interest in and Lien upon the Collateral of such Obligor of every kind and nature, whether now owned or hereafter acquired or arising, and wherever located, all as provided in the Loan and Security Agreement and in the other Loan Documents, and each Obligor reaffirms that the Obligations are and shall continue to be secured by the continuing security interest and Lien granted by such Obligor to the Agent, for the benefit of Secured Parties, pursuant to the Loan and Security Agreement and the other Loan Documents.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to Second Amended and Restated Loan and Security Agreement to be executed and delivered as of the date first above written.

[Bon-Ton — Consent and Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Consent and Fourth Amendment to Loan and Security Agreement]

The following Persons are signatories to this Fourth Amendment to Second Amended and Restated Loan and Security Agreement in their capacity as Obligors and not as Borrowers:

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

[Bon-Ton — Fourth Amendment to Loan and Security Agreement]

Annex A

[Please See Attached]

Annex B

[Please See Attached]

Schedule 1.1(a)

Commitments of Lenders

Schedule 7.1(c)

Commercial Tort Claims

The Bon-Ton Department Stores, Inc. v. Utilityaccounts.com, Inc., et al, Case No. 2010-11550 (filed November 2010 in Supreme Court of New York, County of Erie). The suit arises out of the defendant’s failure to pay utility bills of the Company pursuant to a contract for such services between the parties. Judgment in the amount of $3.1 million was entered in favor of The Bon-Ton Department Stores, Inc.. The defendant has ceased operations and has no assets to pay the judgment.

Schedule 7.2.1

Secondary Operating Deposit Accounts*

Deposit Accounts for which daily funds consolidation into the Borrower’s account is not required:

* Account numbers have been provided to the Agent on the Closing Date.

Schedule 7.3

Mortgaged Real Estate

Schedule 8.2.1

Existing Credit Card Arrangements

1.              The Private Label Credit Card Program Agreement between Comenity Bank (formerly known as World Financial Network Bank) and The Bon-Ton Stores, Inc., dated December 16, 2011, as amended.

2.              The Bank Card Merchant Agreement between The Bon-Ton Department Stores, Inc. and Vantiv, LLC (formerly a segment of Fifth Third Bank), dated May 13, 2004, as amended.

3.              The Agreement for American Expressâ Card Acceptance between The Bon-Ton Department Stores, Inc. and American Express Travel Related Services Company, Inc., dated December 13, 2005, as amended.

4.              The Merchant Services Agreement between The Bon-Ton Department Stores, Inc. and Discover Financial Services LLC, dated March 3, 2006, as amended.

Schedule 8.5

Deposit Accounts*

* Account numbers have been provided to the Agent on the Closing Date.

Schedule 8.5(a)

Excluded Deposit and Disbursement Accounts*

(i)                                     Deposit Accounts used exclusively for payroll, payroll taxes and employee benefits:

(ii)                                  Disbursement accounts of the Obligors:

* Account numbers have been provided to the Agent on the Closing Date.

Schedule 8.5(b)

Excluded Trust Accounts

None.

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Schedule 8.6.1

Chief Executive Offices and Other Locations of Collateral

Chief Executive Offices:

Locations of Collateral: