Exhibit 10.7
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
VALUE CITY DEPARTMENT STORES LLC
THE LEAD BORROWER
FOR:
VALUE CITY DEPARTMENT STORES LLC
GRAMEX RETAIL STORES, INC.
FILENE'S BASEMENT, INC.
VALUE CITY OF MICHIGAN, INC.
GB RETAILERS, INC.
RETAIL VENTURES JEWELRY, INC.
THE BORROWERS
NATIONAL CITY BUSINESS CREDIT, INC.
ADMINISTRATIVE AGENT AND COLLATERAL AGENT FOR
THE REVOLVING CREDIT LENDERS REFERENCED HEREIN
NATIONAL CITY BANK
AS LETTER OF CREDIT ISSUER
THE CIT GROUP/BUSINESS CREDIT, INC.
BANK OF AMERICA, N.A.
AS CO-SYNDICATION AGENTS
GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇▇▇ FARGO RETAIL FINANCE II, LLC
AS CO-DOCUMENTATION AGENTS
NATIONAL CITY BANK
AS LEAD ARRANGER
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS:..................................................... 2
Article 2 - The Revolving Credit:............................................ 40
2.1. Establishment of Revolving Credit.................................. 40
2.2. Advances in Excess of Borrowing Base (OverLoans).................... 41
2.3. Risks of Value of Collateral........................................ 41
2.4. Commitment to Make Revolving Credit Loans and Support Letters of
Credit.............................................................. 41
2.5. Revolving Credit Loan Requests...................................... 42
2.6. Suspension of Revolving Credit...................................... 43
2.7. Making of Revolving Credit Loans.................................... 44
2.8. SwingLine Loans..................................................... 44
2.9. The Loan Account.................................................... 45
2.10. The Revolving Credit Notes.......................................... 46
2.11. Payment of The Loan Account......................................... 46
2.12. Interest on Revolving Credit Loans.................................. 48
2.13. Underwriting Fee; Collateral Monitoring Fee......................... 49
2.14. Unused Line Fee..................................................... 49
2.15. Concerning Fees..................................................... 49
2.16. Agent's and Revolving Credit Lenders' Discretion.................... 49
2.17. Procedures For Issuance of L/Cs and Banker's Acceptances............ 49
2.18. Fees For L/Cs and Banker's Acceptances.............................. 51
2.19. Concerning L/C's and Banker's Acceptances........................... 53
2.20. Changed Circumstances............................................... 54
2.21. Designation of Lead Borrower as Borrowers' Agent.................... 55
2.22. Revolving Credit Lenders' Commitments............................... 56
2.23. Payments............................................................ 57
Article 3 - Conditions Precedent:............................................ 58
3.1. Corporate Due Diligence............................................. 58
3.2. Opinions............................................................ 58
3.3. Additional Documents................................................ 58
3.4. Officers' Certificates.............................................. 58
3.5. Representations and Warranties...................................... 58
3.6. Minimum Day One Availability........................................ 58
3.7. Senior Non-convertible facility; Intercreditor Agreement............ 58
3.8. DSW Initial public offering......................................... 59
3.9. Repayment of Existing Indebtedness.................................. 59
3.10. Consents............................................................ 59
3.11. Appraisals and Commercial Finance Examinations...................... 59
3.12. Financial Information............................................... 59
3.13. Material Agreements................................................. 59
3.14. Litigation.......................................................... 59
3.15. Perfection of Encumbrances.......................................... 59
3.16. All Fees and Expenses Paid.......................................... 60
3.17. Cash Management..................................................... 60
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3.18. Insurance........................................................... 60
3.19. No Loan Party in Default............................................ 60
3.20. No Adverse Change................................................... 60
3.21. Certain Changes..................................................... 60
3.22. Benefit of Conditions Precedent..................................... 60
Article 4 - General Representations and Warranties:.......................... 61
4.1. Due Organization. Authorization. No Conflicts....................... 61
4.2. Trade Names......................................................... 62
4.3. Intellectual Property............................................... 62
4.4. Locations........................................................... 62
4.5. Encumbrances........................................................ 62
4.6. Indebtedness........................................................ 63
4.7. Insurance........................................................... 63
4.8. Licenses............................................................ 63
4.9. Leases.............................................................. 63
4.10. Requirements of Law................................................. 63
4.11. Labor Relations..................................................... 63
4.12. Taxes............................................................... 64
4.13. No Margin Stock..................................................... 65
4.14. Investment and Holding Company Status............................... 65
4.15. ERISA............................................................... 66
4.16. Hazardous Materials................................................. 66
4.17. Litigation.......................................................... 67
4.18. Adequacy of Disclosure.............................................. 67
4.19. Unrestricted Subsidiaries........................................... 67
4.20. No Bankruptcy Filing................................................ 67
4.21. Patriot Act......................................................... 67
4.22. Foreign Asset Control Regulations................................... 68
Article 5 - GENERAL COVENANTS:............................................... 68
5.1. Payment and Performance of Liabilities.............................. 68
5.2. Due Organization. Authorization. No Conflicts....................... 68
5.3. Trade Names......................................................... 69
5.4. Locations........................................................... 69
5.5. Encumbrances........................................................ 70
5.6. Indebtedness........................................................ 70
5.7. Insurance........................................................... 70
5.8. Licenses............................................................ 71
5.9. Requirements of Law................................................. 71
5.10. Labor Relations..................................................... 71
5.11. Maintain Properties................................................. 71
5.12. Taxes............................................................... 72
5.13. No Margin Stock..................................................... 72
5.14. ERISA............................................................... 72
5.15. Hazardous Materials................................................. 72
5.16. Dividends. Investments. Corporate Action............................ 73
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5.17. Loans............................................................... 74
5.18. Protection of Assets................................................ 75
5.19. Line of Business; Conduct of Business............................... 76
5.20. Affiliate Transactions.............................................. 76
5.21. Additional Subsidiaries............................................. 77
5.22. Further Assurances.................................................. 77
5.23. Adequacy of Disclosure.............................................. 78
5.24. No Restrictions on Liabilities...................................... 78
5.25. Restrictions on Payment of Senior Non-Convertible Facility.......... 78
5.26. Unrestricted Subsidiaries........................................... 79
5.27. Parent's Line of Business........................................... 79
Article 6 - Financial Reporting and Performance Covenants:................... 79
6.1. Maintain Records.................................................... 79
6.2. Access to Records................................................... 80
6.3. Prompt Notice to Administrative Agent............................... 81
6.4. Weekly Reports...................................................... 82
6.5. Monthly Reports..................................................... 83
6.6. Quarterly Reports................................................... 83
6.7. Annual Reports...................................................... 83
6.8. Officers' Certificates.............................................. 84
6.9. Inventories, Appraisals, and Audits................................. 84
6.10. Additional Financial Information.................................... 85
6.11. Information Delivered Pursuant to Article 6......................... 86
Article 7 - USE OF COLLATERAL:............................................... 86
7.1. Use of Inventory Collateral........................................ 86
7.2. Inventory Quality................................................... 87
7.3. Adjustments and Allowances.......................................... 87
7.4. Validity of Accounts................................................ 87
7.5. Notification to Account Debtors..................................... 87
Article 8 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:......................... 87
8.1. Depository Accounts................................................. 87
8.2. Credit Card Receipts................................................ 88
8.3. The Administrative Agent's, Collection, and Operating Accounts ..... 89
8.4. Proceeds and Collections ........................................... 89
8.5. Payment of Liabilities.............................................. 90
8.6. The Operating Account............................................... 91
Article 9 - GRANT OF SECURITY INTEREST:...................................... 91
9.1. Grant of Security Interest.......................................... 91
9.2. Extent and Duration of Security Interest............................ 93
Article 10 - COLLATERAL AGENT AS BORROWERS' ATTORNEY-IN-FACT:................ 93
10.1. Appointment as Attorney-In-Fact..................................... 93
10.2. No Obligation to Act................................................ 94
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Article 11 - Events of Default:.............................................. 94
11.1. Failure to Pay the Revolving Credit................................. 94
11.2. Failure To Make Other Payments...................................... 94
11.3. Failure to Perform Covenant or Liability (No Grace Period).......... 94
11.4. Financial Reporting Requirements.................................... 95
11.5. Failure to Perform Covenant or Liability (Grace Period)............. 95
11.6. Misrepresentation................................................... 95
11.7. Acceleration of Other Debt. Breach of Lease......................... 95
11.8. Default Under Other Agreements...................................... 96
11.9. Uninsured Casualty Loss............................................. 96
11.10. Attachment. Judgment. Restraint of Business......................... 96
11.11. Business Failure.................................................... 96
11.12. Bankruptcy.......................................................... 96
11.13. Termination of Guaranty............................................. 97
11.14. Challenge to Loan Documents......................................... 97
11.15. Change in Control................................................... 97
Article 12 - RIGHTS AND REMEDIES UPON DEFAULT:............................... 97
12.1. Acceleration........................................................ 97
12.2. Rights of Enforcement............................................... 97
12.3. Sale of Collateral.................................................. 98
12.4. Occupation of Business Location..................................... 99
12.5. Grant of Nonexclusive License....................................... 99
12.6. Assembly of Collateral.............................................. 99
12.7. Rights and Remedies................................................. 99
Article 13 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:.................... 99
13.1. Revolving Credit Funding Procedures................................. 99
13.2. SwingLine Loans..................................................... 100
13.3. Administrative Agent's Covering of Fundings......................... 101
13.4. Ordinary Course Distributions....................................... 103
Article 14 - ACCELERATION AND LIQUIDATION:................................... 103
14.1. Acceleration Notices................................................ 103
14.2. Acceleration........................................................ 104
14.3. Initiation of Liquidation........................................... 104
14.4. Actions At and Following Initiation of Liquidation................. 104
14.5. Collateral Agent's Conduct of Liquidation........................... 104
14.6. Distribution of Liquidation Proceeds................................ 105
14.7. Relative Priorities To Proceeds of Liquidation...................... 105
Article 15 - THE AGENT:...................................................... 106
15.1. Appointment of The Agent............................................ 106
15.2. Responsibilities of Agent........................................... 106
15.3. Concerning Distributions By the Agent............................... 107
15.4. Dispute Resolution.................................................. 108
15.5. Distributions of Notices and of Documents........................... 108
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15.6. Confidential Information............................................ 108
15.7. Reliance by Agent................................................... 109
15.8. Non-Reliance on Agent and Other Revolving Credit Lenders............ 109
15.9. Indemnification..................................................... 110
15.10. Resignation of Agent................................................ 110
15.11. Lead Arranger....................................................... 111
Article 16 - ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:.............. 111
16.1. Administration of Credit Facilities................................. 111
16.2. Actions Requiring or On Direction of Majority Lenders............... 111
16.3. Actions Requiring or On Direction of SuperMajority Lenders.......... 111
16.4. Action Requiring Certain Consent.................................... 112
16.5. Actions Requiring or Directed By Unanimous Consent.................. 113
16.6. Actions Requiring SwingLine Lender Consent.......................... 114
16.7. Actions Requiring Agent's Consent................................... 114
16.8. Miscellaneous Actions............................................... 114
16.9. Actions Requiring Lead Borrower's Consent........................... 115
16.10. NonConsenting Revolving Credit Lender............................... 116
Article 17 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:........................ 117
17.1. Assignments and Assumptions......................................... 117
17.2. Assignment Procedures............................................... 118
17.3. Effect of Assignment................................................ 118
Article 18 - NOTICES:........................................................ 119
18.1. Notice Addresses.................................................... 119
18.2. Notice Given........................................................ 120
18.3. Wire Instructions. Notice Given..................................... 120
Article 19 - TERM:........................................................... 121
19.1. Termination of Revolving Credit..................................... 121
19.2. Actions On Termination.............................................. 121
Article 20 - GENERAL:........................................................ 121
20.1. Protection of Collateral............................................ 121
20.2. Publicity........................................................... 122
20.3. Confidentiality..................................................... 122
20.4. Successors and Assigns.............................................. 122
20.5. Severability........................................................ 123
20.6. Amendments. Course of Dealing...................................... 123
20.7. Power of Attorney................................................... 123
20.8. Application of Proceeds............................................. 124
20.9. Increased Costs..................................................... 124
20.10. Replacement of Revolving Credit Lender.............................. 124
20.11. Costs and Expenses of the Agent and Issuer.......................... 125
20.12. Copies and Facsimiles............................................... 126
20.13. Ohio Law............................................................ 126
20.14. Consent to Jurisdiction............................................. 126
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20.15. Indemnification..................................................... 126
20.16. Rules of Construction............................................... 127
20.17. Agent's Consent..................................................... 128
20.18. Participations...................................................... 128
20.19. Right of Set-Off.................................................... 129
20.20. Pledges To Federal Reserve Banks.................................... 129
20.21. Maximum Interest Rate............................................... 129
20.22. Waivers............................................................. 129
20.23. Additional Waivers.................................................. 130
20.24. Patriot Act Notices................................................. 131
20.25. Existing Loan Agreement Amended and Restated........................ 131
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EXHIBITS
1.1 : Existing L/Cs and Banker's Acceptances
1.3 : Intercompany Notes
1.4 : Exempt DDA
1.5 : Unrestricted Subsidiaries
1.6 : Existing Investments
1.7 : Permitted Dispositions
2.5 : Form of Loan Request
2.8(c) : SwingLine Note
2.10 : Revolving Credit Note
2.22 : Revolving Credit Lenders' Commitments
3.3 : Additional Documents
4.1 : Corporate Information
4.2 : Trade Names
4.4 : Locations, Leases, and Landlords
4.5(a) : Encumbrances
4.5(b) : Consigned Property
4.6 : Indebtedness
4.7 : Insurance Policies
4.8 : Licenses
4.9 : Capital Leases
4.11 : Labor Contracts
: Taxes
4.16 : Hazardous Materials
4.17 : Litigation
5.17(e) : Existing Loans
5.17(f) : Intercompany Loans
6.4 : Borrowing Base Certificate
6.5 : Monthly Financial Reporting Requirements
8.1 : DDA's.
: Credit Card Arrangements
8.3 : Administrative Agent's Accounts; Collection
Account Banks; Operating Accounts
17.2 : Assignment / Assumption
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
As of 12:01 a.m. July 5, 2005
THIS AGREEMENT is made between
National City Business Credit, Inc., an Ohio corporation with
offices at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as administrative
agent (in such capacity, herein the "ADMINISTRATIVE AGENT"), for the
ratable benefit of the "REVOLVING CREDIT LENDERS", who are, at present,
those financial institutions identified on the signature pages of this
Agreement and who in the future are those Persons (if any) who become
"Revolving Credit Lenders" in accordance with the provisions hereof;
National City Business Credit, Inc., as Collateral Agent (in
such capacity, herein the "COLLATERAL AGENT"), for the ratable
benefit of the Revolving Credit Lenders,
and
The Revolving Credit Lenders;
and
Value City Department Stores LLC (in such capacity, the "LEAD
BORROWER"), an Ohio limited liability company with its principal executive
offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, as agent for
the following (individually, a "BORROWER" and collectively, the
"BORROWERS"):
Said Value City Department Stores LLC; and
Gramex Retail Stores, Inc. ("GRAMEX"), a Delaware corporation
with its principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; and
Filene's Basement, Inc. ("FILENE'S"), a Delaware corporation
with its principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; and
Value City of Michigan, Inc. ("VC MICHIGAN"), a Michigan
corporation with its principal executive offices at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
GB Retailers, Inc. ("GBR"), a Delaware corporation with its
principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; and
Retail Ventures Jewelry, Inc. ("JEWELRY"), an Ohio corporation
with its principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
in consideration of the mutual covenants contained herein and benefits to
be derived herefrom,
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WITNESSETH:
WHEREAS, the Lead Borrower and certain other affiliated Persons have
entered into a Loan and Security Agreement dated as of June 11, 2002 with the
Administrative Agent, the Revolving Credit Lenders party thereto and National
City Business Credit, Inc. and Fleet Retail Group, Inc., as collateral agents
for the Revolving Credit Lenders (as amended and in effect through the Effective
Date, the "EXISTING LOAN AGREEMENT"); and
WHEREAS, in connection with an initial public offering of the capital
stock of DSW, the Revolving Credit Lenders have agreed to release DSW and DSW
Shoe from their respective obligations under the Existing Loan Agreement and to
otherwise amend the provisions of the Existing Loan Agreement; and
WHEREAS, the Borrowers, the Revolving Credit Lenders and the Agent desire
to amend and restate the Existing Loan Agreement as provided herein.
NOW THEREFORE, it is hereby agreed that the Existing Loan Agreement is
hereby amended and restated as follows:
ARTICLE 1 - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"ACCELERATION": The making of demand or declaration that any
Indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Administrative Agent to the Revolving
Credit Lenders, as provided in Section 14.1(a).
(b) From the SuperMajority Lenders to the
Administrative Agent, as provided in Section 14.1(b).
"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
"ACCOUNTS": Include, without limitation, "accounts" as defined in the UCC,
and also all: accounts, accounts receivable, receivables, and rights
to payment (whether or not earned by performance) for: property that
has been or is to be sold, leased, licensed, assigned, or otherwise
disposed of; services rendered or to be rendered; a policy of
insurance issued or to be issued; a secondary obligation incurred or
to be incurred; arising out of the use of a credit or charge card or
information contained on or used with that card; winnings in a
lottery or other game of chance; and also all Inventory which gave
rise thereto, and all rights associated with such Inventory,
including the right of stoppage in transit; all reclaimed,
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returned, rejected or repossessed Inventory (if any) the sale of
which gave rise to any Account.
"ACH": Automated clearing house.
"ACQUISITION": The purchase or acquisition of all or substantially all of
the assets of any Person, the purchase of a controlling equity
interest in any Person, or the merger or consolidation of any Person
with any other Person, in any transaction or group of transactions
which are part of a common plan.
"ADMINISTRATIVE AGENT": NCBC, or its successors or assigns, in its
capacity as administrative agent for the Revolving Credit
Lenders hereunder.
"ADMINISTRATIVE AGENT'S ACCOUNT": Is defined in Section 8.3.
"ADMINISTRATIVE AGENT'S COVER": Is defined in Section 13.3(c)(i).
"AFFILIATE": The following:
(a) With respect to any Person, any other Person that directly
or, alone or with a group of related Persons whose interests taken
as a whole, indirectly through one of more intermediaries, Controls,
is Controlled by, or is under common Control with, such Person.
Notwithstanding anything to the contrary herein contained, in no
event shall the Agent, the Issuer, or any Revolving Credit Lender be
considered an "Affiliate" of a Loan Party.
(b) Any Person: which is a parent, brother-sister or
Subsidiary, of a Borrower; whose enterprise's tax returns or
financial statements are consolidated with those of a Borrower;
which is a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time) of
which any Borrower is a member; or Controls or is Controlled by any
Borrower.
(c) With respect to the Loan Parties, without limiting the
provisions of clauses (a) and (b) hereof, "Affiliate" includes
Schottenstein Stores Corporation.
"AGENT": Collectively, the Administrative Agent and the Collateral Agent.
"AGENT'S RIGHTS AND REMEDIES": Is defined in Section 12.7.
"APPLICABLE LAW": As to any Person: (i) All statutes, rules, regulations,
orders, or other requirements having the force of law and (ii) all
court orders and injunctions, arbitrator's decisions, and/or similar
rulings, in each instance ((i) and (ii)) of or by any federal,
state, municipal, and other governmental authority, or court,
tribunal, panel, or other body which has or claims jurisdiction over
such Person, or any property of such Person, or of any other Person
for whose conduct such Person would be responsible.
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"APPLICABLE MARGIN": The following percentages for Base Margin
Loans and LIBOR Loans based upon the following criteria:
LEVEL EXCESS AVAILABILITY APPLICABLE APPLICABLE MARGIN
MARGIN FOR FOR LIBOR LOANS
BASE MARGIN
LOANS
----- ------------------- ---------- -----------------
1 Greater than $160,000,000 0% 1.50%
2 Greater than $100,000,000, 0% 1.75%
but less than or equal to
$160,000,000
3 Greater than $60,000,000, 0.25% 2.00%
but less than or equal to
$100,000,000
4 Less than or equal to 0.50% 2.25%
$60,000,000
The Applicable Margin shall initially be established at Level 2.
Thereafter, the Applicable Margin shall be adjusted quarterly on the
first day of each calendar quarter, commencing January 1, 2006,
based upon the Average Excess Availability during the prior quarter,
provided that in no event shall the Applicable Margin be established
at Level 1 during the first six (6) months subsequent to the
Effective Date. Upon the occurrence and during the continuance of a
Specified Event of Default, the Applicable Margin may, at the option
of the Agent, be immediately increased to the percentages set forth
in Level 4 (even if the Excess Availability requirements for another
Level have been met) and interest shall be determined in the manner
set forth in Section 2.12(g).
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of
Eligible Inventory (net of Inventory Reserves) multiplied by (b)
that percentage, determined from the then most recent appraisal of
each Division's Inventory undertaken initially at the Lead
Borrower's request, and subsequently at the request of the
Collateral Agent, to reflect the appraiser's estimate of the net
recovery on such Division's Inventory in the event of an in-store
liquidation of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 87.5%.
"ASSIGNING REVOLVING CREDIT LENDER": Is defined in Section 17.1(a).
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"ASSIGNMENT AND ACCEPTANCE": Is defined in Section 17.2.
"AUTHORIZED OFFICER": Is defined in Section 6.8.
"AVAILABILITY": Gross Availability Minus the Excess Availability
Reserve.
"AVAILABILITY RESERVES": Without duplication, such reserves as the
Collateral Agent from time to time determines in the Collateral
Agent's reasonable, good faith discretion as being appropriate to
reflect the impediments to the Collateral Agent's ability to realize
upon the Collateral. The Collateral Agent shall furnish the Lead
Borrower with written notice two (2) Business Days prior to imposing
or changing any Availability Reserve (unless a Specified Event of
Default then exists and is continuing, in which event no prior
notice shall be required). Without limiting the generality of the
foregoing, Availability Reserves may include (but are not limited
to) reserves based on the following:
(i) rent (but only if a landlord's waiver, acceptable to the
Collateral Agent, has not been received by the
Collateral Agent).
(ii) Customer Credit Liabilities.
(iii) taxes and other governmental charges, including, ad
valorem, personal property, and such other taxes which
are reasonably likely to have priority over the
Collateral Interests of the Collateral Agent in the
Collateral.
(iv) L/C Landing Costs.
(v) Hedge Agreements.
Without limiting the rights of the Collateral Agent to establish or modify
Availability Reserves, the initial Availability Reserves on the Effective
Date shall be the following:
(a) gift certificates and merchandise credits (in an
amount equal to fifty percent (50%) of the
outstanding gift certificates and merchandise
credits reflected in the Borrowers' financial
statements (which amount shall be updated no less
frequently than every thirty (30) days and which
financial statements will be maintained
consistently with past practices)).
(b) landlord lien reserve equal to two months' rent for all
stores located in Pennsylvania and Virginia.
(c) layaway deposits (in an amount equal to one hundred
percent (100%) of the outstanding layaway deposits
reflected in the Borrowers' financial statements (which
amount shall be updated no less frequently than every
thirty (30) days and which financial statements will be
maintained consistently with past practices)).
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(d) Hedge Agreements.
"AVERAGE EXCESS AVAILABILITY": For any period, the sum of Excess
Availability for each day comprising such period divided by the
number of days in such period.
"BANKER'S ACCEPTANCE": A time draft or ▇▇▇▇ of exchange relating to a
documentary letter of credit which has been accepted by the Issuer.
Without limitation, Existing Banker's Acceptances shall be deemed to
be Banker's Acceptances issued under this Agreement and shall be
entitled to all of the benefits hereof.
"BANKER'S ACCEPTANCE FEES": The fees payable in respect of Banker's
Acceptances pursuant to Section 2.18.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BASE": For any day, a rate per annum equal to the higher of (a) the rate
of interest which is established from time to time by NCB at its
principal office in Cleveland, Ohio as its "prime rate" in effect,
such rate to be adjusted automatically, without notice, as of the
opening of business on the effective date of any change in such rate
(it being agreed that (i) such rate is not necessarily the lowest
rate of interest then available from NCB on fluctuating rate loans,
and (ii) such rate may be established by NCB by public announcement
or otherwise), and (b) the Federal Funds Effective Rate in effect on
such day plus one-half of one percent (0.50%) per annum.
"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing interest at
the Base Margin Rate.
"BASE MARGIN RATE": That per annum rate which is the aggregate of the Base
plus the Applicable Margin for Base Margin Loans.
"BORROWER" and "BORROWERS": Is defined in the Preamble.
"BORROWING BASE": The aggregate of the following with respect to all
Borrowers:
(a) The face amount of Eligible Credit Card Receivables
multiplied by the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory (net of
Inventory Reserves) multiplied by the Inventory Advance Rate or (b)
the Appraised Inventory Percentage of the Appraised Inventory
Liquidation Value.
"BORROWING BASE CERTIFICATE": Is defined in Section 6.4.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any day
on which banks in Cleveland, Ohio, generally are not open to the
general public for the purpose of conducting commercial banking
business; (c) a day on which the
6
principal office of the Administrative Agent is not open to the
general public to conduct business; or (d) when used in connection
with a LIBOR Loan, any day on which banks are not open for dealings
in dollar deposits in the London interbank market.
"BUSINESS PLAN": The business plan for the Loan Parties fiscal years 2005
through and including 2010 dated April 19, 2005, as set forth in
that certain confidential side letter from the Lead Borrower to the
Administrative Agent.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence
of liabilities which may be capitalized in accordance with
GAAP.
"CAPITAL LEASE": Any lease which may be capitalized in accordance with
GAAP.
"CASH CONTROL EVENT": Either (i) an Event of Default has occurred and is
continuing, or (ii) the Average Excess Availability for any five (5)
consecutive Business Days is less than Forty-Five Million Dollars
($45,000,000). For purposes hereof, the occurrence of a Cash Control
Event shall be deemed continuing notwithstanding that Average Excess
Availability may thereafter exceed the amount set forth in the
preceding sentence unless and until Average Excess Availability
exceeds such amounts for ninety (90) consecutive Business Days, in
which case a Cash Control Event shall no longer be deemed to be
continuing for purposes hereof; provided that a Cash Control Event
shall be deemed continuing (even if Average Excess Availability
exceeds the required amounts for ninety (90) consecutive Business
Days) if a Cash Control Event has occurred and been discontinued on
one (1) occasion during the preceding twelve month period.
"CCM": Cerberus Partners, L.P., a Delaware limited partnership with its
principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"CCM TERM LOAN FACILITIES": The term loan facilities entered into among
the Borrowers and CCM, as agent, pursuant to a Financing Agreement
dated June 11, 2002, in the aggregate principal amount of
$100,000,000.00, as amended and in effect.
"CHANGE IN CONTROL": The occurrence of any of the following:
(a) The acquisition, by any group of Persons (within the
meaning of the Securities Exchange Act of 1934, as amended) or by
any Person (other than by (x) a Person Controlled by Schottenstein
Stores Corporation, or (y) one or more Family Trusts) of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission) of 25% or more of the issued and outstanding
capital stock of the Parent having the right, under ordinary
circumstances, to vote for the election of directors of the Parent,
excluding from the foregoing any acquisition pursuant to warrants
issued under the exercise of conversion rights under the Senior
Non-Convertible Facility.
7
(b) Other than as a result of the exercise by CCM of board
representation rights under the Senior Non-Convertible Facility,
more than thirty percent (30%) of the Persons who were directors of
the Parent on the first day of any period consisting of twelve (12)
consecutive calendar months (the first of which twelve (12) month
periods commencing with the first day of May, 2005), cease to be
directors of the Parent for any reason, other than death,
disability, or replacement (in the ordinary course of business and
not as a result of any change in the equity ownership of the Parent)
by other Persons nominated by the nominating committee of the board
of directors of the Parent.
(c) The failure of the Parent to own, directly or indirectly,
95% of the capital stock of each of the other Loan Parties.
(d) The failure of Schottenstein Stores Corporation or one or
more Family Trusts to possess, directly or indirectly, the power to
cause the direction of the management and policies of the Parent and
the Borrowers.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"CLASS A COMMON SHARES" has the meaning set forth for such term in the
Articles of Incorporation of DSW as in effect on the Effective Date.
"CLASS B COMMON SHARES" has the meaning set forth for such term in the
Articles of Incorporation of DSW as in effect on the Effective Date.
"CLOSING DATE": June 11, 2002.
"COLLATERAL": Is defined in Section 9.1.
"COLLATERAL AGENT": NCBC, or its successors or assigns, in its capacity as
Collateral Agent for the Revolving Credit Lenders hereunder.
"COLLATERAL INTEREST": Any interest in property to secure an obligation,
including, without limitation, a security interest, mortgage, and
deed of trust.
"COLLATERAL MONITORING FEE": Is defined in Section 2.13.
"COLLECTION ACCOUNT": Any DDA into which the proceeds of Collateral are
transferred and concentrated, including, without limitation,
transfers from other DDAs, credit card processors, checks, and
accounts receivables. The Collection Accounts as of the Effective
Date are set forth on EXHIBIT 8.3 hereto.
"COLLECTION ACCOUNT AGREEMENT": An agreement, in form satisfactory to the
Collateral Agent, which agreement recognizes the Collateral Agent's
Collateral Interest in the contents of the DDA which is the subject
of such agreement and agrees that, after and during the continuance
of a Cash Control Event, such contents shall be transferred only to
the Administrative Agent's Account or as otherwise instructed by the
Administrative Agent.
8
"COMMERCIAL TORT CLAIM": Has the meaning given that term in the UCC.
"COMPETITIVE BUSINESS": Any business or enterprise consisting of any of
the following:
(a) Operation of off-price discount department stores.
(b) Operation of retail furniture stores and related
accessories.
(c) Operation of designer and name brand shoe stores.
(d) Operation of licensed shoe departments.
(e) Furniture manufacturing.
(f) Bedding manufacturing.
"CONSENT": Actual consent given by the Revolving Credit Lender from whom
such consent is sought; or the passage of seven (7) Business Days
from receipt of written notice to a Revolving Credit Lender from the
Agent of a proposed course of action to be followed by the Agent
without such Revolving Credit Lender's giving the Agent written
notice of that Revolving Credit Lender's objection to such course of
action, provided that the Agent may rely on such passage of time as
consent by a Revolving Credit Lender only if such written notice
states that consent will be deemed effective if no objection is
received within such time period.
"CONSOLIDATED": When used to modify a financial term, test, statement, or
report, refers to the application or preparation of such term, test,
statement or report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating
results of the Parent and its Subsidiaries.
"CONTROL": The possession, direct or indirect, of the power to cause the
direction of the management and policies of a Person whether through
the ownership of voting securities, by contract or otherwise. A
Person shall be deemed to have control of another Person if it is a
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 of the Securities Exchange Act of 1934, as amended) or a
member of a "group" that is the beneficial owner, directly or
indirectly, of 20% or more of the voting stock or equity interest in
such Person. The terms "Controlled" and "Controlling" as used herein
are intended to have the same meaning as "Control."
"COST": The lower of cost or market, determined in each case in accordance
with GAAP.
"COSTS OF COLLECTION": Includes, without limitation, all reasonable
attorneys' fees and reasonable out-of-pocket expenses incurred by
the Agent's and Issuer's attorneys, and all reasonable out-of-pocket
costs incurred by the Agent and the Issuer in the administration of
the Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with travel on
behalf of the Agent and Issuer, where such costs and expenses are
related to or
9
in respect of the Agent's and Issuer's: administration and
management of the Liabilities; negotiation, documentation, and
amendment of any Loan Document; or efforts to preserve, protect,
collect, or enforce the Collateral, the Liabilities, and/or the
Agent's Rights and Remedies and/or any of the rights and remedies of
the Agent and Issuer against or in respect of any guarantor or other
Person liable in respect of the Liabilities (whether or not suit is
instituted in connection with such efforts). "Costs of Collection"
also includes the reasonable fees and expenses of Lenders' Special
Counsel. The Costs of Collection are Liabilities, and at the
Administrative Agent's option may bear interest at the then
effective Base Margin Rate after such time as they have been added
to the Loan Account.
"CREDIT CARD ADVANCE RATE": 85%
"CUSTOMER CREDIT LIABILITY": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Borrower to its retail
customers and prospective customers.
"DDA": Any checking or other demand daily depository account maintained by
any Borrower other than any Exempt DDA.
"DEFAULT": Any occurrence, circumstance, or state of facts with respect to
a Borrower which (a) is an Event of Default; or (b) would become an
Event of Default if any requisite notice were given and/or any
requisite period of time were to run and such occurrence,
circumstance, or state of facts were not cured within any applicable
grace period.
"DELINQUENT REVOLVING CREDIT LENDER": Is defined in Section 13.3(c).
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC and also
includes all demand, time, savings, passbook, or similar accounts
maintained with a bank.
"DIVISION(S)": The various business segments of the Borrowers, such being
the Filene's Business and the Value City Business.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"DSW": DSW Inc., an Ohio corporation with its principal executive offices
at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
"DSW COMMON STOCK" means the Capital Stock of DSW consisting of Class A
Common Shares and Class B Common Shares.
"DSW SHOE": DSW Shoe Warehouse, Inc., a Missouri corporation with its
principal executive offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇.
10
"EFFECTIVE DATE": The date upon which the conditions precedent set forth
in Article 3 hereof have been satisfied or waived and the first
Revolving Credit Loans are to be made and L/Cs to be issued
hereunder.
"ELIGIBLE ASSIGNEE": A bank, insurance company, or company engaged in the
business of making commercial loans having a combined capital and
surplus in excess of $500,000,000 or any domestic Affiliate of any
Revolving Credit Lender, or any Person to whom a Revolving Credit
Lender assigns its rights and obligations under this Agreement as
part of a programmed assignment and transfer of such Revolving
Credit Lender's rights in and to a material portion of such
Revolving Credit Lender's portfolio of asset based credit
facilities. In no event shall an "Eligible Assignee" include a
Person who is engaged in a Competitive Business with any Loan Party,
and as long as Schottenstein Stores Corporation remains in Control
of the Borrowers, an "Eligible Assignee" shall in no event include a
Person which is engaged in a Competitive Business or a Related
Business with Schottenstein Stores Corporation.
"ELIGIBLE CREDIT CARD RECEIVABLES": Accounts due on a non-recourse basis
from major or private label credit card processors, which have been
outstanding for less than five (5) Business Days.
"ELIGIBLE INVENTORY": Such of the Borrowers' Inventory, inclusive of
Eligible L/C Inventory, at such locations, and of such types,
character, qualities and quantities, as the Collateral Agent in its
reasonable, good faith discretion from time to time determines to be
acceptable for borrowing, as to which Inventory, the Collateral
Agent has a perfected security interest which is prior and superior
to all security interests, claims, and Encumbrances. Without
limiting the foregoing, Inventory acquired in a Permitted
Acquisition (other than a Permitted Acquisition involving the merger
of one or more Loan Parties) shall not be deemed Eligible Inventory
unless the Collateral Agent otherwise agrees.
"ELIGIBLE L/C INVENTORY": Without duplication of other Eligible Inventory,
Inventory not yet delivered to the Borrowers, the purchase of which
is supported by a documentary L/C or Banker's Acceptance then having
an initial expiry of sixty (60) or less days, provided that
(a) Such Inventory is of such types, character, qualities and
quantities (net of Inventory Reserves) as the Collateral Agent in
its reasonable, good faith discretion from time to time determines
to be eligible for borrowing and it would otherwise constitute
Eligible Inventory; and
(b) The documentary L/C supporting such purchase names the
Collateral Agent as consignee of the subject Inventory or the
Collateral Agent has control over the documents which evidence
ownership of the subject Inventory (such as by the providing to the
Collateral Agent of a customs brokers agreement in form reasonably
satisfactory to the Collateral Agent).
11
"EMPLOYEE BENEFIT PLAN": An employee pension benefit plan that is covered
by Title IV of ERISA or is subject to the minimum finding standards
under Section 412 of the Internal Revenue Code of 1986, as amended
from time to time, and as to which a Borrower or any ERISA Affiliate
may have any liability.
"ENCUMBRANCE": Each of the following:
(a) A Collateral Interest or agreement to create or grant a
Collateral Interest; a security interest; the interest of a lessor
under a Capital Lease; conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets of
another Person or the income or profits of such other Person; each
of the foregoing whether consensual or non-consensual and whether
arising by way of agreement, operation of law, legal process or
otherwise.
(b) The filing of any financing statement under the UCC or
comparable law of any jurisdiction, unless such financing statement
is terminated promptly upon any Loan Party's knowledge thereof.
"END DATE": The date upon which all of the following conditions are met:
(a) all payment Liabilities described in Section 19.2(a) have been
paid in full (b) satisfactory arrangements with respect to L/Cs and
Banker's Acceptances have been made in accordance with the
provisions of Section 19.2(b), and (c) all obligations of any
Revolving Credit Lender to make loans and advances and to provide
other financial accommodations to the Borrowers hereunder shall have
been irrevocably terminated.
"ENVIRONMENTAL ACTIONS": Any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication
from any Person or Governmental Authority involving violations of
Environmental Laws or Releases of Hazardous Materials (i) from any
assets, properties or businesses owned or operated by any Loan Party
or any of its Subsidiaries or any predecessor in interest; or (ii)
onto any facilities which received Hazardous Materials generated by
any Loan Party or any of its Subsidiaries or any predecessor in
interest.
"ENVIRONMENTAL LAWS": The Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C.Section 9601, et seq.), the
Hazardous Materials Transportation Act (49 U.S.C.Section 1801, et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.Section
6901, et seq.), the Federal Clean Water Act (33 U.S.C.Section 1251
et seq.), the Clean Air Act (42 U.S.C.Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.Section 2601 et seq.) and the
Occupational Safety and Health Act (29 U.S.C.Section 651 et seq.),
as such laws may be amended or otherwise modified from time to time,
and any other present or future federal, state, local or foreign
statute, ordinance, rule, regulation, order, judgment, decree,
permit, license or other binding determination of any Governmental
Authority imposing liability or establishing standards of conduct
12
for protection of the environment or other government restrictions
relating to the protection of the environment or the Release,
deposit or migration of any Hazardous Materials into the
environment.
"ENVIRONMENTAL LIABILITIES AND COSTS": All liabilities, monetary
obligations, remedial actions, losses, damages, punitive damages,
consequential damages, treble damages, reasonable costs and expenses
(including all reasonable fees, disbursements and expenses of
counsel, experts and consultants and costs of investigations and
feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any environmental
condition or a Release of Hazardous Materials from or onto (i) any
property presently or formerly owned by any Loan Party or any of its
Subsidiaries or (ii) any facility which received Hazardous Materials
generated by any Loan Party or any of its Subsidiaries.
"ENVIRONMENTAL LIEN": Any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.
"EQUIPMENT": Includes, without limitation, "equipment" as defined in the
UCC, and also all furniture, store fixtures, motor vehicles, rolling
stock, machinery, office equipment, plant equipment, tools, dies,
molds, and other goods, property, and assets which are used and/or
were purchased for use in the operation or furtherance of a
Borrowers' business, and any and all accessions or additions
thereto, and substitutions therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA AFFILIATE": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is part of a
group which includes any Borrower and which would be treated as a
single employer under Section 414 of the Internal Revenue Code of
1986, as amended from time to time.
"EUROCURRENCY RESERVE PERCENTAGE": For any Interest Period with respect to
a LIBOR Loan, as of any date of determination, the aggregate of the
then stated maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves), expressed as a
decimal, applicable to such Interest Period (if more than one such
percentage is applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentages
shall be so applicable) by the Board of Governors of the Federal
Reserve System, any successor thereto, or any other banking
authority, domestic or foreign, to which the Administrative Agent or
any Revolving Credit Lender may be subject in respect of
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Federal Reserve Board) or in
respect of any other category of liabilities including deposits by
reference to which the rate of interest on LIBOR Loans is determined
or any category or extension of credit or other assets that include
LIBOR Loans, as defined in such regulations. For purposes hereof,
such reserve requirements shall include, without limitation, those
imposed under Regulation D of the Federal Reserve Board and
13
the LIBOR Loans shall be deemed to constitute Eurocurrency
Liabilities subject to reserve requirements without benefit of
credits for proration, exceptions or offsets which may be available
to any Revolving Credit Lender under Regulation D.
"EVENTS OF DEFAULT": Is defined in Article 11. An "Event of Default" shall
be deemed to have occurred and to be continuing unless and until
that Event of Default has been duly waived by the Administrative
Agent in writing or cured to the satisfaction of the Administrative
Agent.
"EXCESS AVAILABILITY": As of any date of determination, Gross Availability
less all then held checks, accounts payable which are beyond
customary payment terms consistent with past practice (other than
accounts payable which are being disputed in good faith and for
which the Borrowers have adequate reserves), and overdrafts (other
than daylight overdrafts, as defined in the Federal Reserve Daylight
Credit Policies in effect from time to time).
"EXCESS AVAILABILITY RESERVE": $27,500,000.
"EXCLUDED PROPERTY": Shall mean the following:
(a) the Equipment that is subject to a "purchase money
security interest", as such term is now or hereafter defined in the
UCC, which (x) constitutes a Permitted Encumbrance under this
Agreement and (y) prohibits the creation by a Loan Party of a junior
security interest therein, unless the holder thereof has consented
to the creation of such a junior security interest; or
(b) any General Intangibles, other than Payment Intangibles,
if and only to the extent that (i) in the case of any such General
Intangible, (x) any contract evidencing such General Intangible
contains a valid and effective contractual restriction or limitation
which prohibits the grant or creation of a security interest
therein, or (y) a valid and effective restriction or limitation
imposed by applicable law, regulation, rule, order or other
directive of any governmental body, agency or authority, or the
order of any court of competent jurisdiction, prohibits the grant or
creation of a security interest in such General Intangible, or (ii)
in the case of any such General Intangible, such General Intangible
would be subject to loss or forfeiture upon the grant or creation of
a security interest therein by reason of (x) a valid and effective
contractual restriction or limitation contained in any contract
evidencing such General Intangible, or (y) a valid and effective
restriction or limitation imposed by applicable law, regulation,
rule, order or other directive of any governmental body, agency or
authority, or the order of any court of competent jurisdiction; or
(c) Inventory or other property held pursuant to consignment
(other than between Loan Parties) arrangements in which a Borrower
is the consignee to the extent that the consignor has properly
perfected its interest therein; or
(d) all motor vehicles owned by any Loan Party;
14
(e) any Exempt DDA; or
(f) all capital stock of DSW, DSW Shoe or any
Subsidiary of either of the foregoing,
provided that the Proceeds realized from any of the foregoing shall not be
deemed Excluded Property but shall constitute Collateral.
"EXEMPT DDA": Those depository accounts described on EXHIBIT 1.4 hereto,
and, in addition, any depository account maintained by any Borrower,
the only contents of which may be transfers from the Operating
Account and actually used solely (i) for ▇▇▇▇▇ cash purposes; (ii)
for payroll; (iii) for charitable contributions; or (iv) for
medical, pension, benefits, VEBA, employees, taxes, stock options
and like special purpose accounts.
"EXISTING BANKER'S ACCEPTANCES": Those Banker's Acceptances described on
EXHIBIT 1.1 hereto which have been issued by NCB under the
Borrowers' existing credit facility with, among others, NCB.
"EXISTING L/CS": Those letters of credit described on EXHIBIT 1.1 hereto
which have been issued by NCB under the Borrowers' Existing Loan
Agreement with, among others, NCB.
"EXISTING LOAN AGREEMENT": Is defined in the Recitals.
"FACILITY GUARANTEE": The Amended and Restated Guaranty executed by the
Facility Guarantors in favor of the Agent, the Issuer and the
Revolving Credit Lenders.
"FACILITY GUARANTORS": The Parent, each Borrower, and all other
Subsidiaries of the Parent now existing or hereafter created, other
than DSW, DSW Shoe, any direct or indirect Subsidiary of DSW or DSW
Shoe, and the Unrestricted Subsidiaries.
"FACILITY GUARANTORS COLLATERAL DOCUMENTS": All security agreements,
mortgages, pledge agreements, deeds of trust, and other instruments,
documents or agreements executed and delivered by any Facility
Guarantor to secure the Facility Guarantee.
"FAMILY TRUST": One or more trusts established for the benefit of any of
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, any of their respective
spouses, children or lineal descendants, or any Person Controlled by
any such trust or trusts.
"FARM PRODUCTS": Has the meaning given that term in the UCC.
"FEDERAL FUNDS EFFECTIVE RATE": For any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the
15
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Effective Rate
for such day shall be such rate on such transactions on the
immediately preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so published
for any Business Day, the Federal Funds Effective Rate for such day
shall be the average of quotations for such day on such transactions
received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.
"FEE LETTER": That letter dated ____________, 2005 and styled "Fee Letter"
between the Lead Borrower and the Administrative Agent, as such
letter may from time to time be amended.
"FILENE'S": Has the meaning given that term in the Preamble hereto.
"FILENE'S AVAILABILITY": The lesser of:
(a) the result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The Filene's Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan Account
attributable to Revolving Credit Loans made to
Filene's.
Minus
(iii) The aggregate undrawn Stated Amount of all then
outstanding L/Cs and Banker's Acceptances issued
for the account of Filene's.
Minus
(iv) The aggregate of the Availability Reserves
attributable to Filene's.
or
(b) Availability.
"FILENE'S BORROWING BASE": The aggregate of the following:
16
(a) The face amount of Eligible Credit Card Receivables of
Filene's multiplied by the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory (net of
Inventory Reserves) of Filene's multiplied by the Inventory Advance
Rate or (b) the Appraised Inventory Percentage of the Appraised
Inventory Liquidation Value of the Inventory of Filene's.
"FILENE'S BUSINESS": The businesses operated by Filene's Basement, Inc.
"FISCAL": When followed by "month", "quarter" or "year", the relevant
fiscal period based on the Borrowers' fiscal year and accounting
conventions.
"FIXTURES": Has the meaning given that term in the UCC.
"GAAP": Generally accepted accounting principles in effect from time to
time in the United States, applied on a consistent basis, provided
that "GAAP" shall mean generally accepted accounting principles
consistent with those used in the preparation of the financial
statements described herein.
"GBR": Has the meaning given that term in the Preamble hereto.
"GENERAL INTANGIBLES": Includes, without limitation, "general intangibles"
as defined in the UCC; and also all: rights to payment for credit
extended; deposits (other than DDAs); amounts due to any Borrower;
credit memoranda in favor of any Borrower; warranty claims; tax
refunds and abatements; insurance refunds and premium rebates; all
means and vehicles of investment or hedging, including, without
limitation, options, warrants, and futures contracts; records;
customer lists; telephone numbers; goodwill; causes of action;
judgments; payments under any settlement or other agreement;
literary rights; rights to performance; royalties; license and/or
franchise fees; rights of admission; licenses; franchises; license
agreements, including all rights of any Borrower to enforce same;
permits, certificates of convenience and necessity, and similar
rights granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual property;
internet addresses and domain names; developmental ideas and
concepts; proprietary processes; blueprints, drawings, designs,
diagrams, plans, reports, and charts; catalogs; manuals; technical
data; computer software programs (including the source and object
codes therefor), computer records, computer software, rights of
access to computer record service bureaus, service bureau computer
contracts, and computer data; tapes, disks, semi-conductors chips
and printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user, technical
reference, and other manuals and materials; trade names, trademarks,
service marks, and all goodwill relating thereto; applications for
registration of the foregoing; and all other general intangible
property of any Borrower in the nature of intellectual property;
proposals; cost estimates, and reproductions on paper, or otherwise,
of any and all
17
concepts or ideas, and any matter related to, or connected with, the
design, development, manufacture, sale, marketing, leasing, or use
of any or all property produced, sold, or leased, by any Borrower or
credit extended or services performed, by any Borrower, whether
intended for an individual customer or the general business of any
Borrower, or used or useful in connection with research by any
Borrower.
"GOODS": Has the meaning given that term in the UCC, and also includes all
things movable when a security interest therein attaches and also
all computer programs embedded in goods and any supporting
information provided in connection with a transaction relating to
the program if (i) the program is associated with the goods in such
manner that it customarily is considered part of the goods or (ii)
by becoming the owner of the goods, a Person acquires a right to use
the program in connection with the goods.
"GOVERNMENTAL AUTHORITY": Any nation or government, any federal, state,
city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"GRAMEX": Has the meaning given that term in the Preamble hereto.
"GROSS AVAILABILITY": The result of the following in the aggregate with
respect to all Borrowers:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan
Account.
Minus
(iii) The aggregate undrawn Stated Amount of all then
outstanding L/Cs and Banker's Acceptances.
Minus
(v) The aggregate of the Availability Reserves.
"HAZARDOUS MATERIALS": (a) Any element, compound or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant,
toxic pollutant, toxic or
18
hazardous substance, extremely hazardous substance or chemical,
hazardous waste, special waste, or solid waste under Environmental
Laws or that is reasonably likely to cause immediately, or at some
reasonably foreseeable future time, harm to or have an adverse
effect on, the environment or risk to human health or safety,
including, without limitation, any pollutant, contaminant, waste,
hazardous waste, toxic substance or dangerous good which is defined
or identified in any Environmental Law and which is present in the
environment in such quantity or state that it contravenes any
Environmental Law; (b) petroleum and its refined products; (c)
polychlorinated biphenyls; (d) any substance exhibiting a hazardous
waste characteristic, including, without limitation, corrosivity,
ignitability, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any raw materials, building components
(including, without limitation, asbestos-containing materials) and
manufactured products containing hazardous substances listed or
classified as such under Environmental Laws.
"HEDGEAGREEMENTS": All obligations of any Person in respect of interest
rate swap agreements, currency swap agreements and other similar
agreements designed to hedge against fluctuations in interest rates
or foreign exchange rates.
"INDEBTEDNESS": Without duplication, all obligations, contingent and
otherwise, that in accordance with GAAP should be classified upon
the balance sheet of any Borrower and/or the consolidated balance
sheet of the Parent as liabilities, other than trade payables,
deferred rent, or accrued expenses incurred in the ordinary course
of business or to which reference should be made by footnotes
thereto, including in any event and whether or not so classified:
(a) All obligations in respect of money borrowed (including
any indebtedness which is non-recourse to the credit of such Person
but which is secured by an Encumbrance on any asset of such Person)
whether or not evidenced by a promissory note, bond, debenture or
other written obligation to pay money.
(b) All obligations evidenced by bonds, notes, debentures or
other similar instruments.
(c) All obligations in connection with Hedge Agreements.
(d) All obligations in connection with any letter of credit or
acceptance transaction (including, without limitation, the face
amount of all letters of credit and acceptances issued for the
account of such Person or reimbursement on account of which such
Person would be obligated).
(e) All obligations in connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(f) All obligations on account of deposits or advances other
than deferred rent incurred in the ordinary course of business.
19
(g) All obligations as lessee under Capital Leases; and
(h) All obligations in connection with any sale and leaseback
transaction.
"Indebtedness" also includes:
(x) Indebtedness of others secured by an Encumbrance on
any asset of such Person, whether or not such Indebtedness is
assumed by such Person.
(y) Any guaranty, endorsement, suretyship or other
undertaking pursuant to which that Person may be liable in
respect of Indebtedness of any third party; and
(z) The Indebtedness of a partnership or joint venture
for which such Person is liable as a general partner or joint
venturer.
"INDEMNIFIED PERSON": Is defined in Section 20.15.
"INFORMATION": Is defined in Section 20.3.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTERCOMPANY NOTES": The promissory notes and other evidences of
Indebtedness among the Loan Parties outstanding from time to time.
The Intercompany Notes outstanding as of the Effective Date are set
forth on EXHIBIT 1.3 hereto.
"INTERCREDITOR AGREEMENT": The Amended and Restated Intercreditor and Lien
Subordination Agreement dated as of the Effective Date entered into
among the Agent, on behalf of the Revolving Credit Lenders, and CCM,
as agent under the Senior Non-Convertible Facility.
"INTEREST PAYMENT DATE": With reference to:
Each LIBOR Loan: The last day of the Interest Period relating
thereto (and on the last day of the third month for any such loan
which has a six month Interest Period); the Termination Date; and
the End Date.
Each Base Margin Loan: The first day of each [August,
November, February and May]; the Termination Date; and the End
Date.
"INTEREST PERIOD": The following:
(a) With respect to each LIBOR Loan: Subject to Subsection
(c), below, the period commencing on the date of the making or
continuation of, or conversion to, the subject LIBOR Loan and ending
one, two, three, or six months thereafter, as the Lead Borrower may
elect by notice (pursuant to Section 2.5) to the Administrative
Agent
20
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of the
making or continuation of or conversion to such Base Margin Loan and
ending on that date (i) as of which the subject Base Margin Loan is
converted to a LIBOR Loan, as the Lead Borrower may elect by notice
(pursuant to Section 2.5) to the Administrative Agent, or (ii) on
which the subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all instances
subject to the following:
(i) Any Interest Period for a Base Margin Loan which
would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day.
(ii) Any Interest Period for a LIBOR Loan which would
otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day, unless that
succeeding Business Day is in the next calendar month, in
which event such Interest Period shall end on the last
Business Day of the month during which the Interest Period
ends.
(iii) Subject to Subsection (iv), below, any Interest
Period applicable to a LIBOR Loan, which Interest Period
begins on a day for which there is no numerically
corresponding day in the calendar month during which such
Interest Period ends, shall end on the last Business Day of
the month during which that Interest Period ends.
(iv) Any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(v) The number of Interest Periods in effect at any one
time is subject to Section 2.12(e) hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in the
UCC and also all: (a) Goods which are leased by a Person as lessor;
are held by a Person for sale or lease or to be furnished under a
contract of service; are furnished by a Person under a contract of
service; or consist of raw materials, work in process, or materials
used or consumed in a business; (b) Goods of said description in
transit; (c) Goods of said description which are returned,
repossessed and rejected; (d) packaging, advertising, and shipping
materials related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated thereto;
and (f) Documents and Documents of Title which represent any of the
foregoing.
"INVENTORY ADVANCE RATE": As to any Borrower, the following percentages of
the Cost of Eligible Inventory of such Borrower specified below for
the periods indicated:
21
Borrower Period Inventory Advance Rate
-------- ------ ----------------------
Filene's Basement, Inc. December 15 through 68%
August 31 of each year
September 1 through 78%
December 14 of each year
All other Borrowers December 15 through 67%
October 31 of each year
November 1 through 78%
December 14 of each year
Any Inventory Advance Rate may be increased by the Collateral Agent from
time to time in its sole discretion by an amount not to exceed two percent
(2%) from the rates set forth above. Without limiting the generality of
the Collateral Agent's discretion, the increase of an Inventory Advance
Rate by the Collateral Agent shall not obligate the Collateral Agent to
maintain such increased Inventory Advance Rate for any specific period of
time and the Collateral Agent may reduce the Inventory Advance Rate (but
not below the levels set forth in the above table) at any time in their
sole discretion. The increase of the Inventory Advance Rate by the
Collateral Agent on any one occasion shall not obligate them to increase
the Inventory Advance Rate on any other occasion.
"INVENTORY RESERVES": Without duplication, such Reserves as may be
established from time to time by the Collateral Agent in the
Collateral Agent's reasonable, good faith discretion with respect to
the determination of the saleability, at retail, of the Eligible
Inventory or which reflect such other factors as affect the market
value of the Eligible Inventory. The Collateral Agent shall furnish
the Lead Borrower with notice two (2) Business Days prior to
imposing or changing any Inventory Reserve (unless a Specified Event
of Default then exists and is continuing, in which event no prior
notice shall be required). Without limiting the rights of the
Collateral Agent to establish or modify Inventory Reserves, the
initial Inventory Reserves on the Effective Date shall be the
following:
(a) shrinkage;
(b) consigned Inventory; and
(b) damaged Goods.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"IPO" means the proposed initial public offering of Class A Common Shares
of DSW under the Securities Act, completed substantially as
described in DSW's Form S-1 Registration Statement, as filed with
the SEC on March 14, 2005, as amended from time to time, which
offering shall be completed as a primary offering by DSW.
22
"IPO EFFECTIVE DATE" means the date on which the IPO is consummated in
accordance with the terms of the Underwriting Agreement in the form
attached to the Form S-1 Registration Statement as filed with the
SEC on March 14, 2005, as amended from time to time.
"IPO PRICE" means the price at which each Class A Common Share is offered
to the public in a Qualifying IPO as set forth on the cover page to
the prospectus in such IPO.
"ISSUER": The issuer of any L/C or Banker's Acceptance. The Issuer shall
be NCB or such other Revolving Credit Lender (or Affiliate of a
Revolving Credit Lender) as the Lead Borrower (with the consent of
the Administrative Agent, which consent shall not be unreasonably
withheld) may select.
"JEWELRY": Retail Ventures Jewelry, Inc., an Ohio corporation.
"L/C":Any letter of credit issued pursuant to this Agreement. Without
limitation, Existing L/Cs shall be deemed to be L/Cs issued under
this Agreement and shall be entitled to all of the benefits hereof.
"L/C LANDING COSTS": To the extent not included in the Stated Amount of
an L/C or a Banker's Acceptance, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to "land"
the Inventory, the purchase of which is supported by such L/C or
Banker's Acceptance.
"L/C FEES": The fees payable in respect of L/Cs pursuant to Section 2.18.
"LEAD ARRANGER": NCB.
"LEAD BORROWER": Defined in the Preamble.
"LEASE": Any lease or other agreement, no matter how styled or structured,
pursuant to which a Borrower is entitled to the use or occupancy of
any space.
"LEASEHOLD INTEREST": Any interest of a Borrower as lessee under any
Lease.
"LENDERS' SPECIAL COUNSEL": A single counsel, selected by the Majority
Lenders following the occurrence of an Event of Default, to
represent the interests of the Revolving Credit Lenders in
connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any other
Loan Document, as well as in connection with any "workout",
forbearance, or restructuring of the credit facility contemplated
hereby.
"LETTER-OF-CREDIT RIGHT": Has the meaning given that term in UCC and also
refers to any right to payment or performance under an L/C, whether
or not the beneficiary has demanded or is at the time entitled to
demand payment or performance.
"LIABILITIES": Includes, without limitation, the following:
23
(a) All and each of the following, arising under this
Agreement or under any of the other Loan Documents, whether now
existing or hereafter arising:
(i) Any and all direct and indirect liabilities, debts,
and obligations of each Borrower to the Agent or any Revolving
Credit Lender, each of every kind, nature, and description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to the Agent or any Revolving
Credit Lender (including all future advances whether or not
made pursuant to a commitment by the Agent or any Revolving
Credit Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which the
Agent or any Revolving Credit Lender may hold against any
Borrower.
(iii) All notes and other obligations of each Borrower
now or hereafter assigned to or held by the Agent or any
Revolving Credit Lender, each of every kind, nature, and
description.
(iv) All interest, fees, and charges and other amounts
which may be charged by the Agent or any Revolving Credit
Lender to any Borrower and/or which may be due from any
Borrower to the Agent or any Revolving Credit Lender from time
to time.
(v) All reasonable costs and expenses incurred or paid
by the Agent or any Revolving Credit Lender in respect of any
agreement between any Borrower and the Agent or any Revolving
Credit Lender or instrument furnished by any Borrower to the
Agent or any Revolving Credit Lender (including, without
limitation, Costs of Collection, reasonable attorneys' fees,
and all court and litigation costs and expenses).
(vi) Any and all covenants of each Borrower to or with
the Agent or any Revolving Credit Lender and any and all
obligations of each Borrower to act or to refrain from acting
in accordance with any agreement between that Borrower and the
Agent or any Revolving Credit Lender or instrument furnished
by that Borrower to the Agent or any Revolving Credit Lender.
(vii) Each of the foregoing as if each reference to the
"the Agent or any Revolving Credit Lender" were to each
Affiliate of the Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to the Agent or any Affiliate of the
Agent, each of every kind, nature, and description owing on account
of any service or accommodation provided to, or for the account of
any Borrower pursuant to this or any other Loan
24
Document, including cash management services, Hedge Agreements,
and the issuances of L/C's and Banker's Acceptances.
"LIBOR BUSINESS DAY": Any day which is both a Business Day and a day on
which the London interbank market in which NCB participates is open
for dealings in United States Dollar deposits.
"LIBOR LOAN": Any Revolving Credit Loan which bears interest at a LIBOR
Rate.
"LIBOR MARGIN": The Applicable Margin for LIBOR Loans.
"LIBOR OFFER RATE": For any Interest Period for LIBOR Loans, the quotient
(rounded upwards, if necessary, to the next 1/100 of 1%) of : (x)
the per annum rate of interest determined by the Administrative
Agent in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) as of approximately 11:00
a.m. (London time) two LIBOR Business Days prior to the beginning of
such Interest Period pertaining to such LIBOR Loan, as provided by
Bloomberg's or Reuters (or any other similar company or service that
provides rate quotations comparable to those currently provided by
such companies as the rate in the London interbank market) as the
rate in the London interbank market for deposits in U.S. Dollars in
immediately available funds with a maturity comparable to such
Interest Period divided by (y) a number equal to 1.00 minus the
Eurocurrency Reserve Percentage. In the event that such rate
quotation is not available for any reason, then the rate (for
purposes of clause (x) hereof) shall be the rate, determined by the
Administrative Agent as of approximately 11:00 a.m. (London time)
two LIBOR Business Days prior to the beginning of such Interest
Period pertaining to such LIBOR Loan, to be the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the per annum
rates at which deposits in U.S. Dollars in immediately available
funds in an amount comparable to NCBC's Revolving Credit Commitment
Percentage of such LIBOR Loan and with a maturity comparable to such
Interest Period are offered to the prime banks by leading banks in
the London interbank market. The LIBOR Offer Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurocurrency Reserve Percentage.
"LIBOR RATE": That per annum rate which is the aggregate of the LIBOR
Offer Rate plus the LIBOR Margin.
"LIQUIDATION": The exercise, by the Collateral Agent, of those rights
accorded to the Collateral Agent under the Loan Documents as a
creditor of the Borrowers following and on account of the occurrence
and continuance of an Event of Default looking towards the
realization on the Collateral. Derivations of the word "Liquidation"
(such as "Liquidate") are used with like meaning in this Agreement.
"LOAN ACCOUNT": Is defined in Section 2.9.
25
"LOAN COMMITMENT": With respect to each Revolving Credit Lender, that
respective Revolving Credit Lender's Revolving Credit Dollar
Commitment.
"LOAN DOCUMENTS": This Agreement, the Facility Guarantee, the Facility
Guarantors Collateral Documents, the Intercreditor Agreement, and
each other instrument or document from time to time executed and/or
delivered in connection with the arrangements contemplated hereby or
in connection with any transaction with the Agent or any Affiliate
of the Agent related to this Agreement, including, without
limitation, any transaction which arises out of any cash management,
depository, investment, banker's acceptance, letter of credit,
interest rate protection, Hedge Agreement, or other services
provided by the Agent or any Affiliate of the Agent, as each may be
amended from time to time.
"LOAN PARTY OR LOAN PARTIES": Collectively, the Borrowers and the Facility
Guarantors.
"MAJORITY LENDERS": (a) If there are two or fewer Revolving Credit Lenders
who are not Delinquent Revolving Credit Lenders: All Revolving
Credit Lenders who are not Delinquent Revolving Credit Lenders.
(b) If there are three or more Revolving Credit Lenders who
are not Delinquent Revolving Credit Lenders: Revolving Credit
Lenders (other than Delinquent Revolving Credit Lenders) holding at
least 51% of the Revolving Credit Commitment Percentages of the
Revolving Credit Dollar Commitments of Revolving Credit Lenders who
are not Delinquent Revolving Credit Lenders.
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to accounting
periods subsequent to the Parent's fiscal year most recently
completed prior to the execution of this Agreement, which change has
a material effect on the Parent's Consolidated financial condition
or operating results, as reflected on financial statements and
reports prepared by or for the Parent and its Subsidiaries, when
compared with such condition or results as if such change had not
taken place.
"MATERIAL ADVERSE EFFECT": A material adverse effect on (a) the business,
operations, property, assets, or financial condition of (i) the Loan
Parties taken as a whole, or (ii) the Value City Business taken as a
whole, or (b) the validity or enforceability of this Agreement or
any of the other Loan Documents or any of the material rights or
remedies of the Agent or the Revolving Credit Lenders hereunder or
thereunder.
"MATURITY DATE": The earlier of (a) July 5, 2009, or (b) the day
which is 91 days prior to the maturity date under the Senior
Non-Convertible Facility.
"NCB": National City Bank, a national banking association.
"NCBC": National City Business Credit, Inc., an Ohio corporation.
26
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the Collateral Agent to own or manage any
Post Foreclosure Asset.
"NON-CONVERTIBLE SENIOR COLLATERAL": All assets of the Loan Parties other
than Accounts (excluding any right to payment arising from any
license by a Borrower or any other Loan Party of any intellectual
property and excluding any insurance proceeds of any real estate or
Equipment); Inventory; Chattel Paper, Instruments, and Documents
related to any Accounts or Inventory; Payment Intangibles (including
tax refunds, but excluding any Payment Intangibles that are proceeds
of the Non-Convertible Senior Collateral); marketable securities;
licenses related to department store concessions and the fees
associated therewith; all Intercompany Notes of the Borrowers and
Loan Parties other than those described in the Intercreditor
Agreement; Collection Accounts, DDAs, and credit card proceeds of
the Borrowers; books and records of the Borrowers and the Loan
Parties relating to any of the foregoing; and all products and
Proceeds of the foregoing, including, without limitation, proceeds
of insurance policies to the extent such proceeds relate to any of
the foregoing.
"OPERATING ACCOUNT": Is defined in Section 8.3.
"OVERLOAN": A loan, advance, or providing of credit support (such as the
issuance of any L/C) to the extent that, immediately after its
having been made, Availability, Filene's Availability or VC
Availability, as applicable, is less than zero.
"PARENT": Retail Ventures, Inc., an Ohio corporation.
"PARTICIPANT": Is defined in Section 20.18, hereof.
"PAYMENT INTANGIBLE": As defined in the UCC and also any general
intangible under which the Account Debtor's primary obligation is a
monetary obligation.
"PERMITTED ACQUISITION": (i) Any Acquisition the cash consideration for
which is less than $3,000,000 in the aggregate in any fiscal year of
the Parent and its Subsidiaries and which satisfies the conditions
set forth in clauses (f), (g), (h), and (i) below, and (ii) any
other Acquisition in which each of the following conditions are
satisfied:
(a) No Default or Event of Default then exists or would arise
from the consummation of such Acquisition.
(b) Such Acquisition shall have been approved by the Board of
Directors of the Person (or similar governing body if such Person is
not a corporation) which is the subject of such Acquisition and such
Person shall not have announced that it will oppose such Acquisition
or shall not have commenced any action which alleges that such
Acquisition will violate applicable law.
(c) The Lead Borrower shall have furnished the Collateral
Agent with ten (10) days prior notice of such intended Acquisition
and shall have furnished
27
the Collateral Agent with a current draft of the acquisition
agreement and other acquisition documents, a summary of any due
diligence undertaken by the Parent and/or the Borrowers in
connection with such Acquisition, appropriate financial statements
of the Person which is the subject of such Acquisition, pro forma
projected financial statements for the twelve month period following
such Acquisition after giving effect to such Acquisition (including
balance sheets, cash flows and income statements by month for the
acquired Person, individually, and on a consolidated basis with all
Loan Parties), and such other information as the Collateral Agent
may reasonably require, each of which shall be reasonably
satisfactory to the Collateral Agent.
(d) The structure of the Acquisition shall be acceptable to
the Collateral Agent in its reasonable judgment. If an Acquisition
of capital stock or other equity interests, after consummation of
such Acquisition, the Parent or a Borrower shall own directly or
indirectly a majority of the equity interests in the Person being
acquired and shall control a majority of any voting interests,
and/or shall otherwise Control the Person being acquired.
(e) The Collateral Agent shall have received (i) the results
of appraisals of the assets (or the assets of the Person) to be
acquired in such Acquisition and of a commercial finance examination
of the Person which is (or whose assets are) being acquired, and
(ii) such other due diligence as the Collateral Agent may reasonably
require, all of the results of the foregoing to be reasonably
satisfactory to the Collateral Agent.
(f) Any assets acquired shall be utilized in, and if the
Acquisition involves a merger, consolidation or stock acquisition,
the Person which is the subject of such Acquisition shall be engaged
in, only those businesses permitted under Section 5.19, below.
(g) If the Person which is the subject of such Acquisition is
a Subsidiary of the Parent or a Borrower, such Subsidiary shall have
executed such documents as may be necessary to be joined as a
"Borrower" or "Facility Guarantor" hereunder , as determined by the
Collateral Agent, and the Collateral Agent shall have received a
first priority security and mortgage interest (subject to Permitted
Encumbrances) in such Subsidiary's capital stock, inventory,
accounts, equipment, real estate, leaseholds, and other property of
the same nature as constitutes Collateral under this Agreement in
order to secure the Liabilities.
(h) The total consideration paid for all Acquisitions (whether
in cash, tangible property, notes or other property (other than
capital stock of the Parent)) after the Effective Date, shall not
exceed in the aggregate the sum of $20,000,000.
(i) Excess Availability immediately prior to such Acquisition,
immediately after giving effect thereto, and projected Excess
Availability on a pro forma projected basis for the twelve months
immediately following such Acquisition, shall not be less than
$70,000,000.
28
"PERMITTED DISPOSITION": Shall mean any of the following:
(a) Licenses of intellectual property or licensed or leased
departments of a Loan Party or any of its Subsidiaries in the
ordinary course of business or to any other Loan Party;
(b) Leases or subleases of Leases, to the extent at any point
in time such Lease or subleases have anticipated minimum fixed
annual rental payments of not more than $3,000,000 in the aggregate;
(c) Sales, assignments, transfers, conveyances or other
dispositions of any or all of the property specified in EXHIBIT 1.7
hereof; provided that in connection with a sale or similar
disposition of any such property, if a Loan Party receives a note or
similar obligations as all or part of the consideration therefor,
such Loan Party shall secure such note or obligation with a mortgage
or similar Lien on such property and pledge such note or other
obligation to the Collateral Agent as security for the Liabilities
pursuant to the terms of the Loan Documents;
(d) Sales of Inventory and Equipment in connection with store
closures permitted in accordance with the provisions of Section
5.4(c) hereof, provided that all sales of Inventory in connection
with store closings (1) after the occurrence and during the
continuance of an Event of Default, or (2) consisting of more than
fifteen (15) retail stores at the same time, shall be in accordance
with liquidation agreements and with liquidators reasonably
acceptable to the Collateral Agent;
(e) the sale, lease or transfer of any property to the Parent
or to any Loan Party;
(f) as long as no Event of Default then exists or would arise
therefrom, the dividend, distribution or other transfer of the
capital stock of DSW owned by the Parent to the stockholders of the
Parent;
(g) as long as no Event of Default then exists or would arise
therefrom, the sale or other transfer of the capital stock of DSW
owned by the Parent in order to pay taxes of the Parent and its
Subsidiaries then due (or resulting from such sale) or to pay the
Indebtedness owed by the Parent to the Lead Borrower pursuant to the
promissory note date January 1, 2005, made by the Parent payable to
the order of the Lead Borrower in the principal amount of
$240,000,000 (the "RVI Note"), with such payments to be applied by
the Lead Borrower first, to the payment of amounts owed under the
Senior Non-Convertible Facility, and then, after all such amounts
under the Senior Non-Convertible Facility have been paid in full, to
the payment of the Liabilities hereunder; and
(h) (i) the sale of any property, land or building (including
any related receivables or other intangible assets) to DSW, DSW Shoe
or any Person which is not a Subsidiary of the Parent, or (ii) in
addition to the transfers
29
described in clauses (f) and (g) of this definition, the sale of the
entire capital stock (or other equity interests) and Indebtedness of
any Subsidiary owned by a Loan Party to any Person which is not a
Subsidiary of a Borrower, or (iii) the consummation of any other
asset sale with a Person who is not a Subsidiary of a Borrower,
provided that, in each case ((i)-(iii)):
A. the consideration for such transaction represents fair
value, and at least 90% of such consideration consists
of cash, provided that in connection with a sale or
similar disposition of any such Property, if a Loan
Party receives a note or similar obligations as all or
part of the consideration therefor, such Loan Party
shall secure such note or obligation with a mortgage or
similar Lien on such Property and pledge such note or
other obligation to the Collateral Agent as security for
the Liabilities pursuant to the terms of the Loan
Documents;
B. the aggregate consideration for all such transactions
completed in any fiscal year does not exceed $500,000,
C. the aggregate consideration for all such transactions
completed after the Effective Date does not exceed
$1,500,000, and
D. other than in connection with a transaction, the
aggregate consideration for which is equal to an amount
less than $500,000, at least five (5) Business Days
prior to the date of completion of such transaction such
Loan Party shall have delivered to the Agent an
officer's certificate executed on behalf of such Loan
Party by an Authorized Officer of such Loan Party, which
certificate shall contain a description of the proposed
transaction, the date such transaction is scheduled to
be consummated, the estimated purchase price or other
consideration for such transaction, financial
information pertaining to compliance with the preceding
clause (A), and which shall (if requested by the Agent)
include a certified copy of the draft or definitive
documentation pertaining thereto.
"PERMITTED ENCUMBRANCES": Shall mean any of the following:
(a) Encumbrances for taxes not yet delinquent or which are
being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the
books of the Borrowers in accordance with GAAP, and provided further
that, no notice of tax lien has been filed with respect thereto;
(b) Encumbrances in respect of property or assets imposed by
law in the ordinary course of business, such as carrier's,
warehousemen's, mechanics', materialmen's, repairmen's, landlord's
or similar Encumbrances arising in the ordinary course of business
which (i) are not overdue in accordance with customary business
practices and consistent with the applicable Loan Party's prior
30
practices, and do not in the aggregate materially detract from the
value of such property or assets or materially impair the use
thereof in the operation of the business of the Loan Parties, or
(ii) are being contested in good faith by a Loan Party, by
appropriate proceedings diligently instituted and conducted and
without danger of any material risk to the Collateral and adequate
reserves or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor;
(c) Encumbrances, pledges or deposits in connection with
workers' compensation, unemployment insurance and other types of
social security;
(d) Deposits to secure the performance of tenders, bids,
sales, trade and government contracts, leases, statutory
obligations, surety, appeal, and supersedeas bonds, warranty,
advance payment, customs, performance and return-of-money bonds and
other obligations of a like nature in the ordinary course of
business (exclusive of obligations in respect of the payment of
borrowed money) whether pursuant to statutory requirements, common
law or consensual arrangements;
(e) Easements, rights of way, leases, zoning or deed
restrictions, licenses, covenants, building, restrictions, minor
defects or irregularities in title and other similar real estate
encumbrances incurred in the ordinary course of business that in the
aggregate do not materially interfere with the conduct of the
business of the Loan Parties; defects and irregularities in titles,
survey exceptions, encumbrances, easements or reservations of others
for rights-of-way, roads, pipelines, railroad crossings, services,
utilities or other similar purposes; outstanding mineral rights or
reservations (including rights with respect to the removal of
material resource) which do not materially diminish the value of the
surface estate, assuming usage of such surface estate similar to
that being carried on by any Loan Party as of the effective date;
(f) Any interest or title of a lessor under any lease entered
into by any Loan Party in the ordinary course of business not in
violation of the Loan Documents;
(g) Any interest or title of any lessee under any leases or
subleases of real property of a Loan Party not in violation of the
requirements of the Loan Documents, provided that all such
Encumbrances do not in the aggregate materially detract from the
value of such Loan Party's property or materially impair the use
thereof in the operation of such Loan Party's business;
(h) Encumbrances arising from financing statements regarding
property subject to Capital Leases not in violation of the
requirements of the Loan Documents, provided that such Encumbrances
are only in respect of the property subject to, and secure only, the
respective lease;
(i) Rights of consignors of goods to a Loan Party as
consignee;
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(j) Encumbrances arising from judgments, decrees or
attachments in existence less than 30 days after the entry thereof,
with respect to which execution has been stayed and with respect to
which payment in full above any applicable deductible is covered by
insurance or a bond, or in circumstances not constituting an Event
of Default under Section 11.10(a);
(k) Encumbrances created by this Agreement or the other Loan
Documents;
(l) Encumbrances (i) listed on EXHIBIT 4.5(A), annexed hereto,
or (ii) arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any such Encumbrances,
provided that the principal amount of such Indebtedness is not
increased and such Indebtedness is not secured by any additional
assets;
(m) Encumbrances which are placed upon Equipment or
improvements to real property (including the associated real
property) used in the ordinary course of business of a Loan Party or
any Subsidiary (other than DSW, DSW Shoe and their Subsidiaries) (i)
at the time of (or within 90 days after) the acquisition of such
Equipment or the completion of such improvements by such Loan Party
or any such Subsidiary (other than DSW, DSW Shoe and their
Subsidiaries) to secure Indebtedness incurred to pay or finance all
or a portion of the purchase price or other cost thereof, provided
that the Encumbrance on the Equipment so acquired or the real
property so improved does not encumber any other asset of such Loan
Party or any such Subsidiary; or (ii) are existing on Equipment or
real property at the time acquired by a Loan Party or any Subsidiary
or on assets of a Person at the time such Person first becomes a
Subsidiary of the Borrower; provided that (A) any such Encumbrances
were not created at the time of or in contemplation of the
acquisition of such assets or Person by a Loan Party or any
Subsidiaries; (B) in the case of any such acquisition of a Person,
any such Encumbrance attaches only to the Equipment or real estate,
as applicable, of such Person; and (C) in the case of any such
acquisition of Equipment or real estate by a Loan Party or any
Subsidiary, any such Encumbrance attaches only to the property and
assets so acquired and not to any other property or assets of such
Loan Party or any such Subsidiary; provided that the Encumbrances
outstanding from time to time under this clause (m) shall not secure
any Indebtedness other than Permitted Indebtedness described in
clause (c) of such definition;
(n) Encumbrances securing Indebtedness assumed in connection
with, or continuing to exist after, but not incurred in connection
with, or contemplation of, a Permitted Acquisition, which
Encumbrances were in effect prior to the consummation of the
Permitted Acquisition, provided that such Encumbrances may not
extend to any Accounts, Inventory, or General Intangibles of the
Loan Parties or of the Person so acquired;
(o) An Encumbrance granted by any Loan Party in connection
with the Senior Non-Convertible Facility; and
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(p) An Encumbrance granted by the Parent in favor of the Lead
Borrower on the capital stock of DSW and Filene's.
The inclusion of the foregoing as "Permitted Encumbrances" shall not limit
or impair the right of the Collateral Agent to impose Reserves on account
thereof in accordance with the provisions of this Agreement.
"PERMITTED INDEBTEDNESS": Shall mean any of the following:
(a) Indebtedness incurred under this Agreement and the other
Loan Documents including any Indebtedness on account of the
Revolving Credit.
(b) Any Indebtedness incurred under the Senior
Non-Convertible Facility.
(c) Indebtedness on account of Equipment or improvements to
real property acquired in compliance with the requirements of
subparagraph (m) of the definition of Permitted Encumbrances, the
incurrence of which would not otherwise be prohibited by this
Agreement; provided that such Indebtedness shall not exceed
$10,000,000 in the aggregate at any time outstanding for all Loan
Parties and, with respect to the Parent only, shall not exceed
$5,000,000 in the aggregate outstanding at any time;
(d) (i) Indebtedness consisting of all obligations of a Loan
Party or any Subsidiary (other than DSW, DSW Shoe and their
Subsidiaries) as lessee under Capital Leases, and
(ii) Indebtedness consisting of all obligations of a
Loan Party or any Subsidiary (other than DSW, DSW Shoe and their
Subsidiaries) under any lease (i) which is accounted for by the
lessee as an operating lease and (ii) under which the lessee is
intended to be the "owner" of the leased property for Federal income
tax purposes;
provided that (A) at the time of any incurrence thereof after the
date hereof, and after giving effect thereto, no Event of Default
shall have occurred and be continuing or would result therefrom; and
(B) the aggregate outstanding principal amount (using the
obligations in lieu of principal amount, in the case of any Capital
Lease, or present value, based on the implicit interest rate, in
lieu of principal amount, in the case of any lease described above
in part (ii)) of Indebtedness permitted by this clause (d) shall not
exceed $10,000,000 in the aggregate principal amount outstanding at
any time for all Loan Parties and, with respect to the Parent only,
shall not exceed $5,000,000 in the aggregate principal amount
outstanding at any time.
(e) Indebtedness of the Loan Parties and any Subsidiary (other
than DSW, DSW Shoe and their Subsidiaries) under Hedge Agreements
other than for speculative purposes with any Revolving Credit Lender
or an Affiliate of a Revolving Credit Lender to which the agent
under the Senior Non-Convertible
33
Facility has consented in accordance with agreements evidencing the
Senior Non-Convertible Facility.
(f) The Indebtedness listed on EXHIBIT 4.6, annexed
hereto;
(g) Indebtedness to sellers in connection with Permitted
Acquisitions;
(h) Intercompany indebtedness between and among the Loan
Parties (other than the Parent) pursuant to loans and advances
permitted in accordance with Subsection 5.17(f), below, and
intercompany Indebtedness due to the Parent by any other Loan Party
to the extent permitted hereunder;
(i) Indebtedness with respect to indemnities, warranties,
statutory obligations, and surety, appeal and supersedeas bonds
incurred in the ordinary course of business;
(j) Indebtedness in respect of overdraft protections and
otherwise in connection with deposit accounts;
(k) Indebtedness arising out of the refinancing, extension,
renewal or refunding of any Indebtedness permitted under this
Agreement, provided that the principal amount of such Indebtedness
is not increased from the amount outstanding at the time of such
refinancing;
(l) Indebtedness owed by the Parent to any of the other Loan
Parties in an amount not to exceed $5,000,000 (less amounts paid
under Section 5.16(a) hereof) in the aggregate at any time
outstanding; and
(m) Intercompany Indebtedness between and among the Loan
Parties, as evidenced by the Intercompany Notes.
"PERMITTED INVESTMENTS": Shall mean each of the following:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing not more than one year
from the date of acquisition thereof;
(b) investments in commercial paper maturing not more than one
year from the date of acquisition thereof and having, at such date
of acquisition, the highest credit rating obtainable from Standard &
Poors or from ▇▇▇▇▇'▇ Investment Services, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing not more than one year from
the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any
domestic office of any financial institution organized under the
laws of the United States of America or any State thereof that
34
has a combined capital and surplus and undivided profits of not less
than $500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
(without regard to the limitation on maturity contained in such
clause) and entered into with a financial institution satisfying the
criteria described in clause (c) above;
(e) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from
either Standard & Poors or from ▇▇▇▇▇'▇ Investment Services, Inc.;
(f) investments in money market funds, substantially all the
assets of which are comprised of securities of the types described
in clauses (a) through (e) above;
(g) investments acquired by a Loan Party or any of its
Subsidiaries (i) in exchange for any other investment held by such
Loan Party or any such Subsidiary in connection with or as a result
of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other investment, or (ii) as a result of a
foreclosure by such Loan Party or any of its Subsidiaries with
respect to any secured investment or other transfer of title with
respect to any secured investment in default;
(h) investments by a Loan Party in the capital of any
wholly-owned Subsidiary of such Loan Party, including without
limitation, any Permitted Acquisitions, provided that such Loan
Party has complied with the provisions of Section 5.21 hereof with
respect to such Subsidiary;
(i) to the extent not permitted by the foregoing clauses,
existing investments in any Subsidiaries (and any increases thereof
attributable to increases in retained earnings);
(j) to the extent not permitted by the foregoing clauses,
the existing investments described on EXHIBIT 1.6 hereto;
(k) investments of a Loan Party and any Subsidiary in Hedge
Agreements other than for speculative purposes, to which the agent
under the Senior Non-Convertible Facility has consented in
accordance with agreements evidencing the Senior Non-Convertible
Facility;
(l) investments of any Person which are outstanding at the
time such Person becomes a Subsidiary of a Loan Party as a result of
a Permitted Acquisition, but not any increase in the amount thereof
unless otherwise permitted by this Agreement;
35
(m) any other investments (whether in the form of cash or
contribution of property, and if in the form of a contribution of
property, such property shall be valued for purposes of this clause
at the fair value thereof) in any corporation, partnership, limited
liability company, joint venture or other business entity, which is
not itself a Subsidiary of the Parent or a Borrower or owned or
Controlled by any director, officer or employee of the Parent or a
Borrower or any of its Subsidiaries, not otherwise permitted by the
foregoing clauses, made after the Effective Date, shall be permitted
to be incurred if (i) no Event of Default shall have occurred and be
continuing, or would result therefrom, and (ii) the aggregate
cumulative amount of such investments (together with any loans and
advances permitted under Sections 5.6 and 5.17) does not exceed
$6,000,000; and
(n) investments by the Parent in the capital stock of DSW
existing on the Effective Date and increases thereof due to
retained earnings;
provided that, except for Excluded Property and loans to officers
and directors, all such Permitted Investments are subject to a
perfected Encumbrance in favor of the Collateral Agent.
"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other enterprise
or entity.
"POST FORECLOSURE ASSET": All or any part of the Collateral, ownership of
which is acquired by the Collateral Agent or a Nominee on account of
the "bidding in" at a disposition as part of a Liquidation or by
reason of a "deed in lieu" type of transaction.
"PROTECTIVE OVERADVANCES": Revolving Credit Loans which are OverLoans, but
as to which each of the following conditions is satisfied: (a) when
aggregated with all other Revolving Credit Loans, SwingLine Loans,
Protective OverAdvances and the Stated Amount of L/Cs and Banker's
Acceptances, the Revolving Credit Ceiling is not exceeded; and (b)
when aggregated with all other Protective OverAdvances, such
Revolving Credit Loans do not aggregate more than $13,750,000; (c)
such Protective OverAdvances shall not remain outstanding for more
than forty-five (45) days in any period of one hundred eighty (180)
consecutive days, and (d) such Revolving Credit Loans are made or
undertaken in the Administrative Agent's reasonable, good faith
discretion (or as directed by the Collateral Agent) to protect and
preserve the interests of the Revolving Credit Lenders. Overadvances
on account of circumstances beyond the control of the Agent (such as
a drop in collateral value) shall not be deemed "Protective
Overadvances" and shall not be subject to the limitations contained
herein.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in the
UCC.
"QUALIFYING IPO": means an IPO that satisfies each of the following
conditions:
36
(a) Not more than 40% of the value (as of the IPO Effective
Date calculated by reference to the IPO Price) of all issued and
outstanding DSW Common Stock shall be sold in connection with the
IPO;
(b) Immediately following the IPO and the application of the
net cash proceeds thereof, DSW Common Stock having not less than 60%
of the value (as of the IPO Effective Date calculated by reference
to the IPO Price) of all issued and outstanding DSW Common Stock,
shall be held (directly or indirectly) by Parent, free and clear of
all Encumbrances, other than (i) Encumbrances in favor of the agent
under the Senior Non-Convertible Facility, and (ii) Encumbrances
permitted by clause (p) of the definition of Permitted Encumbrances;
(c) The sale price of the Class A Common Shares sold in the
IPO shall reflect the fair market value of such Class A Common
Shares on the IPO Effective Date;
(d) The Net Cash Proceeds from the IPO shall be sufficient to
repay in full in cash all obligations outstanding under the CCM Term
Loan Facilities; and
(e) The IPO Effective Date shall be on or prior to December
31, 2005.
"RECEIPTS": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral.
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists of
Accounts, Payment Intangibles, Chattel Paper, Instruments, Documents
of Title, Documents, Investment Property, Payment Intangibles,
Letter-of-Credit Rights, bankers' acceptances, and all other rights
to payment.
"RELATED BUSINESS": Any business or enterprise consisting of any
of the following:
(a) asset maximization services; or
(b) asset valuation services.
"RELEASE": Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Material (including the
abandonment or discarding of barrels, containers and other closed
receptacles containing any Hazardous Material) into the indoor or
outdoor environment, including, without limitation, the movement of
Hazardous Materials through or in the ambient air, soil, surface or
ground water, or property, which is in violation of any
Environmental Laws.
"REGISTER": Is defined in Section 17.2(c).
"REQUIREMENTS OF LAW": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
37
(c) That Person's by-laws and/or other instruments which deal
with corporate or similar governance, as applicable.
"RESERVES": The following: Availability Reserves and Inventory Reserves.
"REVOLVING CREDIT": Is defined in Section 2.1.
"REVOLVING CREDIT CEILING": $275,000,000.00.
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT 2.22,
annexed hereto (as such amounts may change in accordance with the
provisions of this Agreement).
"REVOLVING CREDIT LENDERS": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any other
Person who becomes a "Revolving Credit Lender" in accordance with
the provisions of this Agreement.
"REVOLVING CREDIT LOANS": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with reference
to available interest rates applicable to the loans under the
Revolving Credit, it refers to so much of the unpaid principal
balance of the Loan Account as bears the same rate of interest for
the same Interest Period. (See Section 2.12(d)).
"REVOLVING CREDIT NOTE": Is defined in Section 2.10.
"REVOLVING CREDIT COMMITMENT PERCENTAGE": As set forth on EXHIBIT 2.22,
annexed hereto (as such amounts may change in accordance with the
provisions of this Agreement).
"RVI NOTE": Has the meaning set forth in clause (g) of the definition of
Permitted Dispositions.
"SEC": The Securities and Exchange Commission.
"SENIOR NON-CONVERTIBLE FACILITY": The credit facility set forth in the
Senior Subordinated Convertible Loan Agreement dated as of March 15,
2000, amended from time to time prior to the Effective Date and as
amended and restated June 11, 2002, in the present principal amount
of $75,000,000.00, and as most recently amended and restated on the
Effective Date.
"SPECIFIED EVENT OF DEFAULT": An Event of Default arising under
any of the following sections of this Agreement:
(a) SECTION 11.1.
(b) SECTION 11.2.
(c) SECTION 11.3 (with respect to Sections 5.16, 5.17, 5.20,
and Article 8 only).
38
(d) SECTION 11.5 (with respect to a breach of Sections
4.5, and 5.26 only).
(e) SECTION 11.6.
(f) SECTION 11.11.
(g) SECTION 11.12.
(h) SECTION 11.15.
"STATED AMOUNT": The maximum amount for which an L/C or Banker's
Acceptance may be honored.
"SUBSIDIARY": Any corporation, association, partnership, limited liability
company, trust, or other business entity of which the designated
parent shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes
or Controlling interests) of the outstanding voting interests.
"SUPERMAJORITY LENDERS": Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 66-2/3% or more of the Revolving
Credit Commitment Percentages (calculated without regard to any
Revolving Credit Commitment Percentage of any Delinquent Revolving
Credit Lender).
"SUPPORTING OBLIGATION": Has the meaning given that term in the UCC and
also refers to a Letter-of-Credit Right or secondary obligation
which supports the payment or performance of an Account, Chattel
Paper, a Document, a General Intangible, an Instrument, or
Investment Property.
"SWINGLINE": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine Loan
Ceiling.
"SWINGLINE LENDER": NCBC.
"SWINGLINE LOAN CEILING": $25,000,000.00 (subject to increase as
provided in Section 16.4(e)).
"SWINGLINE LOANS": Defined in Section 2.8.
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the date
of the occurrence of any event described in Section , below; or (c)
the date designated as the Termination Date in the Administrative
Agent's notice to the Lead Borrower setting the Termination Date on
account of the occurrence of any Event of Default other than as
described in Section , below; or (d) that date designated as the
Termination Date, thirty (30) days irrevocable written notice of
which is provided by the Lead Borrower to the Administrative Agent.
"TRANSFER": Wire transfer pursuant to the wire transfer system maintained
by the Board of Governors of the Federal Reserve Board, or as
otherwise may be agreed to
39
from time to time by the Administrative Agent making such Transfer
and the subject Revolving Credit Lender. Wire instructions may be
changed in the same manner that Notice Addresses may be changed
(Section 18.1), except that no change of the wire instructions for
Transfers to any Revolving Credit Lender shall be effective without
the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in the
State of Ohio.
"UNANIMOUS CONSENT": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% of the Loan
Commitments (other than Loan Commitments held by a Delinquent
Revolving Credit Lender).
"UNDERWRITING FEE": Is defined in Section 2.13.
"UNRESTRICTED SUBSIDIARY": Those Subsidiaries of the Lead Borrower
described on EXHIBIT 1.5 hereto.
"UNUSED LINE FEE": As defined in Section 2.14.
"VALUE CITY BUSINESS": The Borrowers' business other than the Filene's
Business.
"VALUE CITY ENTITIES": VCDS LLC, Gramex, VC Michigan, GBR and
Jewelry.
"VC AVAILABILITY": The lesser of:
(a) the result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The VC Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan Account
attributable to Revolving Credit Loans made to the
Value City Entities.
Minus
(iii) The aggregate undrawn Stated Amount of all then
outstanding L/Cs and Banker's Acceptances issued
for the account of the Value City Entities.
Minus
40
(iv) The aggregate of the Availability Reserves
attributable to the Value City Entities.
or
(b) Availability.
"VC BORROWING BASE": The aggregate of the following:
(a) The face amount of Eligible Credit Card Receivables
of the Value City Entities multiplied by the Credit Card Advance
Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory (net of
Inventory Reserves) of the Value City Entities multiplied by the
Inventory Advance Rate or (b) the Appraised Inventory Percentage of
the Appraised Inventory Liquidation Value of the Inventory of the
Value City Entities.
"VC MICHIGAN": Has the meaning given that term in the Preamble hereto.
"VCDS LLC": Value City Department Stores LLC, an Ohio limited liability
company.
ARTICLE 2 - THE REVOLVING CREDIT:
2.1. ESTABLISHMENT OF REVOLVING CREDIT.
(a) The Revolving Credit Lenders hereby establish a revolving line
of credit (the "REVOLVING CREDIT") in the Borrowers' favor pursuant to which
each Revolving Credit Lender, subject to, and in accordance with, this
Agreement, acting through the Administrative Agent, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made (i) with respect to Filene's, with reference to
the Filene's Borrowing Base and shall be subject to Filene's Availability, and
(ii) with respect to the Value City Entities, with reference to the VC Borrowing
Base and shall be subject to VC Availability, and (iv) with respect to all
Borrowers, with reference to Availability. The Borrowing Base, the Filene's
Borrowing Base, the VC Borrowing Base, Availability, Filene's Availability and
VC Availability shall be determined by the Administrative Agent by reference to
Borrowing Base Certificates furnished as provided in Section 6.4, below, and
shall be subject to the following:
(A) Such determination shall take into account such
Reserves as the Administrative Agent may determine as being
applicable thereto.
(B) The Cost of Eligible Inventory will be determined in
a manner consistent with current tracking practices of the Borrowers
as in effect on the date hereof and as previously disclosed to the
Administrative Agent, based on the Borrowers' stock ledgers
inventory.
41
(c) The commitment of each Revolving Credit Lender to provide such
loans, advances, and financial accommodations is subject to Section 2.22.
(d) The proceeds of borrowings under the Revolving Credit shall be
used for the Borrowers' working capital and general corporate purposes
(including, intercompany loans), all solely to the extent permitted by this
Agreement. No proceeds of a borrowing under the Revolving Credit may be used,
nor shall any be requested, with a view towards the accumulation of any general
fund or funded reserve of the Borrowers other than in the ordinary course of the
Borrowers' business and consistent with the provisions of this Agreement.
2.2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) Except as provided in Section 16.3(a), no Revolving Credit
Lender has any obligation to any Borrower to make any loan or advance, or
otherwise to provide any credit to or for the benefit of any Borrower where the
result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among themselves, are
subject to (among other provisions of this Agreement) Section 13.3(a) (which
relates to each Revolving Credit Lender's making amounts available to the
Administrative Agent) and (which relates to Protective OverAdvances).
(c) The Revolving Credit Lenders' providing of an OverLoan on any
one occasion does not affect the obligations of each Borrower hereunder
(including each Borrower's obligation to immediately repay any amount which
otherwise constitutes an OverLoan) nor obligate the Revolving Credit Lenders to
do so on any other occasion.
2.3. RISKS OF VALUE OF COLLATERAL. The Agent's reference to a given asset
in connection with the making of loans, credits, and advances and the providing
of financial accommodations under the Revolving Credit and/or the monitoring of
compliance with the provisions hereof shall not be deemed a determination by the
Agent or any Revolving Credit Lender relative to the actual value of the asset
in question. All risks concerning the value of the Collateral are and remain
upon the Borrowers. All Collateral secures the prompt, punctual, and faithful
performance of the Liabilities whether or not relied upon by the Administrative
Agent in connection with the making of loans, credits, and advances and the
providing of financial accommodations under the Revolving Credit.
2.4. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Revolving Credit
Lenders shall make a loan or advance under the Revolving Credit and the
Administrative Agent shall endeavor to have an L/C or Banker's Acceptance issued
for the account of one or more of the Loan Parties, in each instance if duly and
timely requested by the Lead Borrower as provided herein provided that:
(a) No OverLoan is then outstanding and none will result therefrom.
(b) No Borrower is then in Default and none will thereby become in
Default.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, L/C's and Bankers Acceptances issued for the account of the Parent
shall be limited to those L/Cs required to support the ▇▇▇▇▇▇▇'▇ compensation
obligations of the Parent and its Subsidiaries (other than DSW, DSW Shoe and
their Subsidiaries) and for no other purpose.
2.5. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving Credit or
for the continuance or conversion of an interest rate applicable to a Revolving
Credit Loan may be requested by the Lead Borrower in accordance with the
provisions of Sections 2.5(b) through and including 2.5(d) hereof, by written or
telephonic notice (in the case of telephonic notice, promptly confirmed in
writing if so requested by the Administrative Agent). Such notice of borrowing
shall be substantially in the form of EXHIBIT 2.5 hereto, signed by the Lead
Borrower and transmitted to the Administrative Agent by telecopier. Each such
notice shall be irrevocable and shall specify (i) the proposed Borrower (i.e.
Filene's or one of the Value City Entities, as applicable), (ii) the amount of
the proposed borrowing and the date thereof (which shall be a Business Day) and
(iii) whether the borrowing then being requested is to be a borrowing of Base
Margin Loans or LIBOR Loans and, if LIBOR Loans, the Interest Period with
respect thereto. If no election is made as to the type of Loan or no election of
Interest Period is specified in any such notice for a borrowing of LIBOR Loans,
such notice shall be deemed a request for borrowing of Base Margin Loans. The
Administrative Agent may rely on any telephonic request for a borrowing to the
same extent that the Administrative Agent may rely on a written request. The
Borrowers shall bear all risks related to the giving of borrowing requests
telephonically.
(b) Subject to the provisions of this Agreement, the Lead Borrower
may, on behalf of any Borrower, request a Revolving Credit Loan and elect an
interest rate and Interest Period to be applicable to that Revolving Credit Loan
by giving notice to the Administrative Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to be
converted to a Base Margin Loan: By 2:00 p.m. on the Business Day on which
the subject Revolving Credit Loan is to be made or is to be so converted
(provided that if notice is furnished after 12:00 noon on any Business
Day, the Revolving Credit Loan so requested shall be deemed a request for
a SwingLine Loan). Base Margin Loans requested by the Lead Borrower, other
than those resulting from the conversion of a LIBOR Loan, shall not be
less than $250,000 and in increments of $10,000 in excess of such minimum.
(ii) If such Revolving Credit Loan is to be, or is to be
continued as, or converted to, a LIBOR Loan: By 2:00 p.m. three (3) LIBOR
Business Days before the commencement of any new Interest Period or the
end of the then applicable Interest Period. LIBOR Loans and conversions to
LIBOR Loans shall each be not less than $3,000,000 and in increments of
$1,000,000 in excess of such minimum.
(iii) Any LIBOR Loan which matures while any Borrower is in
Default shall be converted, at the option of the Administrative Agent, to
a Base Margin Loan notwithstanding any notice from the Lead Borrower that
such Loan is to be continued as a LIBOR Loan.
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(iv) LIBOR Loans may not be converted or continued as LIBOR
Loans at any time other than the end of the Interest Period applicable
thereto unless the Borrowers shall pay, upon demand, any amounts due
pursuant to Section 2.11(f) hereof.
(c) Any request for a Revolving Credit Loan or for the continuance
or conversion of an interest rate applicable to a Revolving Credit Loan which is
made after the applicable deadline therefor, as set forth above, shall be deemed
to have been made at the opening of business on the then next Business Day or
LIBOR Business Day, as applicable.
(d) The Lead Borrower may, on behalf of any Loan Party, request that
the Administrative Agent cause the issuance by the Issuer of L/Cs or Banker's
Acceptances for the account of the Borrowers as provided in Section 2.17.
Notwithstanding anything to the contrary contained in this Agreement, L/C's and
Bankers Acceptances issued for the account of the Parent shall be limited to
those L/Cs required to support the ▇▇▇▇▇▇▇'▇ compensation obligations of the
Parent and its Subsidiaries (other than DSW, DSW Shoe and their Subsidiaries)
and for no other purpose.
(e) The Administrative Agent may rely on any request for a loan or
advance, or other financial accommodation under the Revolving Credit which the
Administrative Agent, in good faith, believes to have been made by a Person duly
authorized to act on behalf of the Lead Borrower and may decline to make any
such requested loan or advance, or issuance, or to provide any such financial
accommodation pending the Administrative Agent's being furnished with such
documentation concerning that Person's authority to act as may be satisfactory
to the Administrative Agent.
(f) A request by the Lead Borrower for loan or advance, or other
financial accommodation under the Revolving Credit shall be irrevocable and
shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:
(i) There has been no material adverse change in the
Borrowers' financial condition from the most recent financial information
furnished the Agent or any Revolving Credit Lender pursuant to this
Agreement.
(ii) Each representation which is made herein or in any of the
Loan Documents is then true and complete in all material respects as of
and as if made on the date of such request except to the extent that any
of the same relates expressly to a different date.
(iii) Unless accompanied by a written certificate of the Lead
Borrower's President or its Chief Financial Officer describing (in
reasonable detail) the facts and circumstances of any Default then
existing and the steps (if any) being taken to remedy such condition, that
no Default has occurred and is continuing.
2.6. SUSPENSION OF REVOLVING CREDIT. If, at any time or from time to
time, any Borrower is in Default:
(a) The Administrative Agent may, and at the direction of the
SuperMajority Lenders shall, suspend the Revolving Credit immediately, in which
event, neither the
44
Administrative Agent nor any Revolving Credit Lender shall be obligated, during
such suspension, to make any loans or advance to any Borrower, or to provide any
financial accommodation hereunder or to seek the issuance of any L/C or of any
Banker's Acceptance for the account of any Loan Party. Nothing contained herein
shall limit the right of the Administrative Agent to make Protective
OverAdvances or the obligation of the Revolving Credit Lenders with respect to
SwingLine Loans, Protective OverAdvances, L/Cs and Banker's Acceptances during
such suspension period.
(b) The Administrative Agent may, and at the direction of the
SuperMajority Lenders shall, suspend the right of the Lead Borrower to request
any LIBOR Loan or to convert any Base Margin Loan to a LIBOR Loan.
2.7. MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made by
the transfer of the proceeds of such loan or advance to the Operating Account of
the applicable Division. The proceeds of any Revolving Credit Loan shall be made
available before 3:00 p.m. on the date requested in accordance with Section 2.5
hereof.
(b) A loan or advance shall be deemed to have been made under the
Revolving Credit (and the Borrowers shall be indebted to the Administrative
Agent and the Revolving Credit Lenders for the amount thereof immediately) at
the following:
(i) The Administrative Agent's initiation of the transfer of
the proceeds of such loan or advance in accordance with the Lead
Borrower's instructions (if such loan or advance is of funds requested by
the Lead Borrower).
(ii) The charging of the amount of such loan to the Loan
Account (in all other circumstances).
(c) Absent gross negligence, bad faith or willful misconduct, there
shall not be any recourse to or liability of the Administrative Agent or any
Revolving Credit Lender, on account of:
(i) Any delay in the making of any loan or advance
requested under the Revolving Credit.
(ii) Any delay by any bank or other depository institution in
treating the proceeds of any such loan or advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds
which constitute a loan or advance under the Revolving Credit, the wire
transfer of which was properly initiated by the Administrative Agent in
accordance with wire instructions provided to the Administrative Agent by
the Lead Borrower.
2.8. SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made by the
SwingLine Lender (in the aggregate, the "SWINGLINE LOANS") in accordance with
the procedures
45
set forth in this Agreement for the making of loans and advances under the
Revolving Credit. The aggregate unpaid principal balance of the SwingLine Loans
shall not, as to all Borrowers, at any one time be in excess of the lesser of
(i) as to all Borrowers, the SwingLine Loan Ceiling, or (ii) as to any Division,
Filene's Availability, or VC Availability, as applicable. The SwingLine Lender
shall not make a SwingLine Loan if the SwingLine Lender has received notice from
the Administrative Agent that the Administrative Agent has suspended, or the
Administrative Agent has received written notice from the SuperMajority Lenders
instructing the Administrative Agent to suspend, the Revolving Credit in
accordance with the terms hereof. Absent such notification, the SwingLine Lender
(x) shall not otherwise be required to determine whether the conditions
precedent to such SwingLine Loan have been satisfied or whether the requested
borrowing would cause Availability, Filene's Availability or VC Availability, as
applicable, to be exceeded, and (y) shall be entitled in all cases to have each
Revolving Credit Lender make Revolving Credit Loans in settlement of such
SwingLine Loans in accordance with the provisions of Section 13.2 hereof.
(b) The aggregate unpaid principal balance of SwingLine Loans shall
bear interest at the rate applicable to Base Margin Loans (or a money market
based rate quoted by the Agent and accepted by the Lead Borrower) and shall be
repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall be
evidenced by a Note in the form of EXHIBIT 2.8(C), annexed hereto, executed by
the Borrowers, and payable to the SwingLine Lender. Neither the original nor a
copy of that Note shall be required, however, to establish or prove any
Liability. Upon receipt of an affidavit of an officer of, and a customary
indemnity from, a SwingLine Lender as to the loss, theft, destruction or
mutilation of the SwingLine Note, the Borrowers will issue in lieu thereof a
replacement SwingLine Note in the same principal amount thereof and of like
tenor.
(d) For all purposes of this Loan Agreement, the SwingLine Loans and
the Borrowers' obligations to the SwingLine Lender constitute Revolving Credit
Loans and are secured as "Liabilities".
(e) SwingLine Loans shall be subject to periodic settlement with the
Revolving Credit Lenders as provided in this Agreement.
2.9. THE LOAN ACCOUNT.
(a) An account ("LOAN ACCOUNT") shall be opened on the books of the
Administrative Agent in which a record shall be kept of all loans and advances
made under the Revolving Credit (including, without limitation, Swingline
Loans). The Loan Account shall also contain separate entries for loans and
advances made to each Division.
(b) The Administrative Agent shall also keep a record (either in the
Loan Account or elsewhere, as the Administrative Agent may from time to time
elect) of all interest, fees, service charges, costs, expenses, and other debits
owed to the Agent and each Revolving Credit Lender on account of the Liabilities
from each Borrower and from each Division and of all credits against such
amounts so owed.
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(c) All credits against the Liabilities shall be conditional upon
final payment to the Administrative Agent for the account of the Agent or
Revolving Credit Lender entitled thereto of the items giving rise to such
credits. The amount of any item credited against the Liabilities which is
charged back against the Agent or any Revolving Credit Lender or is disgorged
for any reason or is not so paid shall be a Liability and shall be added to the
Loan Account, whether or not the item so charged back or not so paid is
returned.
(d) Except as otherwise provided herein, all fees, service charges,
costs, and expenses for which any Borrower is obligated hereunder are payable on
demand.
(e) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any interest, fee, service
charge, or other payment to which the Agent or any Revolving Credit Lender is
entitled from any Borrower pursuant hereto and may charge the same to the Loan
Account notwithstanding that an OverLoan may result thereby; provided that the
Administrative Agent shall not charge the Loan Account for any third-party
expenses incurred by the Agent (such as fees for attorneys, appraisers and
commercial finance examinations) without first having furnished the Lead
Borrower with a copy of the invoice therefor two (2) Business Days prior to the
date that the Loan Account is to be so charged.. Any such advance shall be
deemed a Base Margin Loan. Such action on the part of the Administrative Agent
shall not constitute a waiver of the Administrative Agent's rights and each
Borrower's obligations under Section 2.11(b). Any amount which is added to the
principal balance of the Loan Account as provided in this Section shall bear
interest at the interest rate then and thereafter applicable to Base Margin
Loans. The Administrative Agent shall promptly furnish the Lead Borrower with a
detailed statement itemizing any amounts so charged to the Loan Account.
(f) Any statement rendered by the Administrative Agent or any
Revolving Credit Lender to the Lead Borrower concerning the Liabilities shall be
considered correct and accepted by each Borrower and shall, absent manifest
error, be conclusively binding upon each Borrower unless the Lead Borrower
provides the Administrative Agent with written objection thereto within twenty
(20) days from the receipt by the Lead Borrower of such statement, which written
objection shall indicate, with particularity, the reason for such objection. The
Loan Account and the Administrative Agent's books and records concerning the
loan arrangement contemplated herein and the Liabilities shall be prima facie
evidence and proof of the items described therein.
2.10. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay loans
and advances under the Revolving Credit, with interest as provided herein, shall
be evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of EXHIBIT
2.10, annexed hereto, executed by each Borrower, one payable to each Revolving
Credit Lender. Neither the original nor a copy of any Revolving Credit Note
shall be required, however, to establish or prove any Liability. Upon receipt of
an affidavit of an officer of, and a customary indemnity from, a Revolving
Credit Lender as to the loss, theft, destruction or mutilation of the Revolving
Credit Note, the Borrowers will issue in lieu thereof a replacement Revolving
Credit Note in the same principal amount thereof and of like tenor.
2.11. PAYMENT OF THE LOAN ACCOUNT.
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(a) The Borrowers may repay all or any portion of the principal
balance of the Loan Account from time to time until the Termination Date.
(b) Each Borrower, without notice or demand from the Administrative
Agent or any Revolving Credit Lender, shall immediately pay the Administrative
Agent that amount, from time to time, which is necessary so that there is no
OverLoan outstanding.
(c) Subject to Section 8.4, during the continuance of a Cash Control
Event, the Borrowers shall repay the Revolving Credit:
(i) subject to the terms of the Intercreditor Agreement, in an
amount equal to the proceeds realized from the sale, refinancing, or other
disposition of, or realization upon, any Collateral; and
(ii) in accordance with the provisions of Article 8 hereof.
All amounts prepaid under this Section 2.11 may be reborrowed under the
Revolving Credit, subject to and in accordance with, the terms of this
Agreement.
(d) The Borrowers shall repay the then entire unpaid balance of the
Loan Account and all other Liabilities on the Termination Date.
(e) The Administrative Agent shall endeavor to cause the application
of payments (if any), pursuant to Sections 2.11(a) and 2.11(b) against LIBOR
Loans then outstanding in such manner as results in the least cost to the
Borrowers, but shall not have any affirmative obligation to do so nor liability
on account of the Administrative Agent's failure to have done so. In no event
shall action or inaction taken by the Administrative Agent excuse any Borrower
from any indemnification obligation under Section 2.11(f).
(f) The Borrowers shall indemnify the Administrative Agent and each
Revolving Credit Lender and hold the Administrative Agent and each Revolving
Credit Lender harmless from and against any loss, cost or expense (including
loss of anticipated profits and amounts payable by the Administrative Agent or
such Revolving Credit Lender on account of "breakage fees" (so-called)) which
the Administrative Agent or such Revolving Credit Lender may sustain or incur
(including, without limitation, by virtue of acceleration after the occurrence
of any Event of Default) as a consequence of the following:
(i) Failure by any Borrower to pay any of the principal amount
of or any interest on any LIBOR Loan as and when due and payable,
including any such loss or expense arising from interest or fees payable
by such Revolving Credit Lender in order to maintain its LIBOR Loans.
(ii) Failure by any Borrower to make a borrowing or conversion
after the Lead Borrower has given (or is deemed to have given) a request
for a Revolving Credit Loan or a request to convert a Revolving Credit
Loan from one applicable interest rate to another.
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(iii) The making of any payment on a LIBOR Loan or the making
of any conversion of any such Loan to a Base Margin Loan on a day that is
not the last day of the applicable Interest Period with respect thereto.
(g) Upon at least two (2) Business Days' prior written notice to the
Administrative Agent, the Borrowers may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Revolving Credit
Dollar Commitments. Each such reduction shall be in the principal amount of
$5,000,000 or any integral multiple thereof. Each such reduction or termination
shall (i) be applied ratably to the Revolving Credit Dollar Commitments of each
Revolving Credit Lender and (ii) be irrevocable when given. At the effective
time of each such termination, the Borrowers shall pay to the Administrative
Agent for application as provided herein any amount by which the unpaid balance
of the Loan Account and aggregate undrawn Stated Amount of all then outstanding
L/Cs and Banker's Acceptances outstanding on such date exceeds the amount to
which the Revolving Credit Dollar Commitments are so reduced. Any such reduction
or termination of the Revolving Credit Dollar Commitments may not be reinstated.
2.12. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2.5) that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted
to, a LIBOR Loan.
(b) Each Revolving Credit Loan which consists of a LIBOR Loan shall
bear interest at the applicable LIBOR Rate.
(c) Subject to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
LIBOR Rate as specified from time to time by the Lead Borrower by notice to the
Administrative Agent.
(d) For ease of reference and administration, each part of the Loan
Account which bears interest at the same rate of interest and for the same
Interest Period is referred to herein as if it were a separate "Revolving Credit
Loan".
(e) The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition to interest at
the Base Margin Rate, there are more than ten (10) Interest Periods for LIBOR
Loans in the aggregate for all Borrowers applicable to the Revolving Credit
Loans at any one time.
(f) The Borrowers shall pay accrued and unpaid interest on each
Revolving Credit Loan to its Division in arrears as follows:
(i) On the applicable Interest Payment Date for that
Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
49
(iii) Following the occurrence of any Event of Default, with
such frequency as may be determined by the Administrative Agent.
(g) Following the occurrence of any Event of Default (and whether or
not the Agent exercises its rights on account thereof), all Revolving Credit
Loans shall bear interest, at the option of the Administrative Agent or at the
instruction of the SuperMajority Lenders, at a rate which is the aggregate of
the applicable rate (including the Applicable Margin) for Base Margin Loans
and/or LIBOR Loans, as applicable, plus two percent (2%) per annum.
2.13. UNDERWRITING FEE; COLLATERAL MONITORING FEE. In addition to any
other fee or expense to be paid by the Borrowers on account of the Revolving
Credit, the Borrowers shall pay the Administrative Agent the "UNDERWRITING FEE",
THE "STRUCTURING FEE" and the "COLLATERAL MONITORING FEE" at the times and in
the amounts as set forth the Fee Letter.
2.14. UNUSED LINE FEE. In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Administrative Agent, for the account of the Revolving Credit Lenders, the
"UNUSED LINE FEE" (so referred to herein) of 0.25% per annum of the average
difference, during the month just ended (or relevant period with respect to the
payment being made on the Termination Date) between the Revolving Credit Ceiling
and the aggregate of the unpaid principal balance of the Loan Account and the
undrawn Stated Amount of L/Cs and Banker's Acceptances outstanding during the
relevant period. The Unused Line Fee shall be paid in arrears, on the first day
of each month after the execution of this Agreement and on the Termination Date.
2.15. CONCERNING FEES. The Borrowers shall not be entitled to any credit,
rebate or repayment of any fee earned by the Administrative Agent or any
Revolving Credit Lender pursuant to this Agreement or any Loan Document
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Revolving Credit Lender's respective
obligation to make loans and advances hereunder.
2.16. AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
reasonable, good faith discretion or the like by the Agent or any Revolving
Credit Lender shall be to such Person's exercise of its judgment, in good faith,
based upon such information of which that Person then has actual knowledge.
(b) The burden of establishing the failure of the Agent or any
Revolving Credit Lender to have acted in a reasonable manner in such Person's
exercise of such discretion shall be the Borrowers'.
2.17. PROCEDURES FOR ISSUANCE OF L/CS AND BANKER'S ACCEPTANCES.
(a) The Lead Borrower may request, either directly or, as provided
in Section 2.21(a), through Retail Ventures Imports, Inc., that an Issuer cause
the issuance of L/Cs or Banker's Acceptances for the account of any Loan Party.
Requests for L/Cs and Banker's Acceptances shall be given by the Lead Borrower
to the Administrative Agent and the Issuer not later than 2:00 p.m. three (3)
Business Days prior to the specified date for the issuance of the
50
requested L/C or Banker's Acceptance. Requests for L/Cs and Banker's Acceptances
may be requested by the Lead Borrower by written or telephonic notice (in the
case of telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent or the Issuer). Each such notice shall be irrevocable and
shall specify with respect to each L/C and Banker's Acceptance requested (i) the
Borrower which is to be the account party for whose benefit the L/C or Banker's
Acceptance is being issued, (ii) the face amount of the proposed L/C or Banker's
Acceptance, which shall be denominated in dollars and the intended date of
issuance thereof (which shall be a Business Day), (iii) the beneficiary, and
(iv) the terms (including the anticipated expiry date) of the L/C or Banker's
Acceptance. The Administrative Agent and the Issuer may rely on any telephonic
request for the issuance of a L/C or Banker's Acceptance to the same extent that
the Administrative Agent and the Issuer may rely on a written request. The
Borrowers shall bear all risks related to the giving of requests for the
issuance of L/Cs or Banker's Acceptances telephonically. Notwithstanding
anything to the contrary contained in this Agreement, (i) L/C's and Bankers
Acceptances issued for the account of the Parent shall be limited to those L/Cs
required to support the ▇▇▇▇▇▇▇'▇ compensation obligations of the Parent and its
Subsidiaries (other than DSW, DSW Shoe and their Subsidiaries) and for no other
purpose, and (ii) no L/C or Banker's Acceptance shall be issued by any Issuer
which is not also the Administrative Agent unless such Issuer shall have
received notice from the Administrative Agent that the conditions to such
issuance have been met. Any Issuer shall notify the Administrative Agent in
writing on each Business Day of all L/Cs or Bankers Acceptances issued on the
prior Business Day by such Issuer.
(b) The Administrative Agent and/or the applicable Issuer will,
subject to the terms of this Agreement, issue any L/C or Banker's Acceptance so
requested by the Lead Borrower from and including the Effective Date until the
thirtieth (30th) Business Day prior to the Maturity Date, provided that, at the
time that the request is made, the Revolving Credit has not been suspended as
provided in Section 2.6 and if so issued:
(i) The aggregate Stated Amount of all L/Cs and Banker's
Acceptances then outstanding, does not exceed $75,000,000;
(ii) The expiry of the L/C or Banker's Acceptance is not later
than the earlier of thirty (30) days prior to the Maturity Date or the
following:
(A) As to standby L/Cs: one (1) year from initial
issuance (or in the case of renewal or extension thereof, one year
after such renewal or extension), provided that each standby L/C
may, upon the request of the Lead Borrower, include a provision
whereby, subject to the approval of the Issuer, such standby L/C may
be renewed for additional consecutive periods of twelve (12) months
or less (but not beyond the date that is thirty Business Days prior
to the Maturity Date) unless the Issuer notifies the beneficiary
thereof at least 30 days prior to the then applicable expiration
date that such L/C will not be renewed.
(B) As to documentary L/Cs: ninety (90) days from
issuance.
(C) As to Banker's Acceptances: ninety (90) days from
issuance.
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(iii) If, notwithstanding the foregoing, the Administrative
Agent causes the issuance of an L/C or Banker's Acceptance, the expiry of
which is later than the Maturity Date, it shall be 105% cash
collateralized at its issuance; and
(iv) An OverLoan will not result from the issuance of the
subject L/C or Banker's Acceptance.
(c) Concurrently with requesting the issuance of a L/C or a Banker's
Acceptance, the applicable Borrower shall execute and deliver to the Issuer in
respect of such requested L/C or Banker's Acceptance a reimbursement or similar
agreement in the Issuer's then standard form of application for and
reimbursement agreement with respect to letters of credit and banker's
acceptances; provided however that in the event of any conflict between the
provisions of such reimbursement agreement and this Agreement, the provisions of
this Agreement shall govern.
(d) Absent gross negligence, bad faith or willful misconduct, there
shall not be any recourse to, nor liability of, the Administrative Agent or any
Revolving Credit Lender on account of
(i) Any delay or refusal by an Issuer to issue an L/C or
a Banker's Acceptance;
(ii) Any action or inaction of an Issuer on account of or in
respect to, any L/C or any Banker's Acceptance.
(e) Immediately upon the issuance of any L/C or any Banker's
Acceptance by the Issuer (or the amendment of a L/C or Banker's Acceptance
increasing the amount thereof), and without any further action on the part of
the Issuer, the Issuer shall be deemed to have sold to each Revolving Credit
Lender, and each such Revolving Credit Lender shall be deemed unconditionally
and irrevocably to have purchased from the Issuer, without recourse or warranty,
an undivided interest and participation, to the extent of such Revolving Credit
Lender's Revolving Credit Commitment Percentage, in such L/C and Banker's
Acceptance, each drawing thereunder and the obligations of the Borrowers under
this Agreement and the other Loan Documents with respect thereto. In
consideration thereof, each Revolving Credit Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent for the account of the
Issuer its Revolving Credit Commitment Percentage of each disbursement made by
the Issuer with respect to a L/C or Banker's Acceptance which is not reimbursed
by the Borrowers. Each Revolving Credit Lender acknowledges and agrees that its
obligations hereunder are absolute and unconditional and shall not be effected
by any event or circumstance whatsoever, including the existence of a Default or
the suspension of the Revolving Credit. Any action taken or omitted by the
Issuer under or in connection with a L/C or Banker's Acceptance, if taken or
omitted in the absence of gross negligence, actual bad faith, or willful
misconduct, shall not create for the Issuer any resulting liability to any
Revolving Credit Lender.
(f) The Borrowers shall reimburse the Issuer for the amount of any
honoring of a drawing under an L/C or Banker's Acceptance on the same day on
which such honoring takes place in immediately available funds in U.S. dollars.
The Administrative Agent, without the request of any Borrower, may advance under
the Revolving Credit (and charge to the Loan
52
Account) the amount of any honoring of any L/C or Banker's Acceptance and other
amount for which any Borrower, the Issuer, or the Revolving Credit Lenders
become obligated on account of, or in respect to, any L/C or Banker's
Acceptance. Such advance shall be a Base Margin Loan and shall be made whether
or not any Borrower is in Default or such advance would result in an OverLoan.
Such action shall not constitute a waiver of the Administrative Agent's rights
under Section 2.11(b) hereof.
2.18. FEES FOR L/CS AND BANKER'S ACCEPTANCES.
(a) The applicable Borrowers shall pay the Administrative Agent, for
the account of the Revolving Credit Lenders, on the first day of each calendar
month, in arrears, a fee (each, an "L/C Fee") equal to the following per annum
percentages of the average Stated Amount of the following categories of L/Cs
outstanding during the subject month for such Borrowers' Division:
(i) As to standby L/Cs: the Applicable Margin for LIBOR
Loans.
(ii) As to documentary L/Cs: the Applicable Margin for
LIBOR Loans minus 0.50%.
(iii) After the occurrence and during the continuance of an
Event of Default, at the option of the Administrative Agent (or at the
instruction of the SuperMajority Lenders), the L/C Fee shall be increased
for any L/Cs which from time to time are not cash collateralized in the
amounts required in accordance with the provisions of this Agreement by an
amount equal to two percent (2%) per annum.
(b) The applicable Borrowers shall pay the Administrative Agent, for
the account of the Revolving Credit Lenders, on the first day of each month, in
arrears, a fee (each, a "BANKER'S ACCEPTANCE FEE") equal to the Applicable
Margin for LIBOR Loans minus 0.50% of the average Stated Amount of the Banker's
Acceptances outstanding during the subject month for such Borrowers' Division.
After the occurrence and during the continuance of an Event of Default, at the
option of the Administrative Agent (or at the instruction of the SuperMajority
Lenders), the Banker's Acceptance Fee shall be increased for any Banker's
Acceptances which from time to time are not cash collateralized in the amounts
required in accordance with the provisions of this Agreement by an amount equal
to two percent (2%) per annum.
(c) In addition to the fees to be paid as provided in Subsections
2.18(a) and 2.18(b), above, the Borrowers shall pay to the Administrative Agent
(or to the Issuer, if so requested by Administrative Agent), on demand, all
issuance, processing, negotiation, amendment, and administrative fees and other
amounts charged by the Issuer on account of, or in respect to, any L/C or
Banker's Acceptance issued for its Division.
(d) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirements against letters of credit heretofore or
hereafter issued by any Issuer or with respect to which any Revolving
Credit Lender or any Issuer has an obligation to lend to fund drawings
under any L/C or any Banker's Acceptance; or
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(ii) impose on any Issuer any other condition or
requirements relating to any such letters of credit or banker's
acceptance;
and the result of any event referred to in Section 2.18(d)(i) or 2.18(d)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or to any
Issuer of issuing or maintaining any L/C or Banker's Acceptance (which increase
in cost shall be the result of such Issuer's reasonable allocation among that
Revolving Credit Lender's or Issuer's letter of credit customers of the
aggregate of such cost increases resulting from such events), then, upon demand
by the Administrative Agent and delivery by the Administrative Agent to the Lead
Borrower of a certificate of an officer of the subject Revolving Credit Lender
or the subject Issuer describing such change in law, executive order,
regulation, directive, or interpretation thereof, its effect on such Revolving
Credit Lender or such Issuer, and the basis for determining such increased costs
and their allocation, the Borrowers shall immediately pay to the Administrative
Agent, from time to time as specified by the Administrative Agent, such amounts
as shall be sufficient to compensate the subject Revolving Credit Lender or the
subject Issuer for such increased cost. Any Revolving Credit Lender's or any
Issuer's determination of costs incurred under Section 2.18(d)(i) or
2.18(d)(ii), above, and the allocation, if any, of such costs among the
Borrowers and other letter of credit customers of such Revolving Credit Lender
or such Issuer, if done in good faith and made on an equitable basis and in
accordance with such officer's certificate, shall, absent manifest error, be
presumed to be accurate.
2.19. CONCERNING L/C'S AND BANKER'S ACCEPTANCES.
(a) None of the Issuer, the Issuer's correspondents, any Revolving
Credit Lender, the Administrative Agent, or any advising, negotiating, or paying
bank with respect to any L/C or Banker's Acceptance shall be responsible in any
way for:
(i) The performance by any beneficiary under any L/C or
Banker's Acceptance of that beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any Person signing; falsification; or the legal effect of;
any documents called for under any L/C or Banker's Acceptance if (with
respect to the foregoing) such documents on their face appear to be in
order.
(b) The Issuer may honor, as complying with the terms of any L/C or
any Banker's Acceptance and of any drawing thereunder, any drafts or other
documents otherwise in order, but signed or issued by an administrator,
executor, conservator, trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, liquidator, receiver, or other legal representative of
the party authorized under such L/C or Banker's Acceptance to draw or issue such
drafts or other documents.
(c) The Issuer may reject any drafts and documents presented under
any L/C or any Banker's Acceptance which are discrepant in any manner,
notwithstanding any prior course of dealing by the Issuer in honoring drafts
under L/Cs or Banker's Acceptances.
(d) Unless otherwise agreed to, in the particular instance, each
Borrower hereby authorizes any Issuer to:
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(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(e) All directions, correspondence, and funds transfers relating to
any L/C or any Banker's Acceptance are at the risk of the Borrowers. The Issuer
shall have discharged the Issuer's obligations under any L/C or Banker's
Acceptance which, or the drawing under which, includes payment instructions, by
the initiation of the method of payment called for in, and in accordance with,
such instructions (or by any other commercially reasonable and comparable
method). None of the Administrative Agent, any Revolving Credit Lender, or the
Issuer shall have any responsibility for any inaccuracy, interruption, error, or
delay in transmission or delivery by post, telegraph or cable, or for any
inaccuracy of translation.
(f) The Administrative Agent's, each Revolving Credit Lender's, and
the Issuer's rights, powers, privileges and immunities specified in or arising
under this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(g) Except to the extent otherwise expressly provided hereunder or
agreed to in writing by the Issuer and the Lead Borrower, documentary L/Cs will
be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and standby L/Cs will be
governed by International Standby Practices ISP98 (adopted by the International
Chamber of Commerce on April 6, 1998) and any respective subsequent revisions
thereof.
(h) The obligations of the Borrowers under this Agreement with
respect to L/Cs and Banker's Acceptances are absolute, unconditional, and
irrevocable and shall be performed strictly in accordance with the terms hereof
under all circumstances, whatsoever including, without limitation, the
following:
(i) Any lack of validity or enforceability or restriction,
restraint, or stay in the enforcement of this Agreement, any L/C, any
Banker's Acceptance, or any other agreement or instrument relating
thereto.
(ii) Any Borrower's consent to any amendment or waiver of, or
consent to the departure from, any L/C or any Banker's Acceptance.
(iii) The existence of any claim, set-off, defense, or other
right which any Borrower may have at any time against the beneficiary of
any L/C or Banker's Acceptance.
(iv) Any good faith honoring of a drawing under any L/C or
Banker's Acceptance, which drawing possibly could have been dishonored
based upon a strict construction of the terms of the L/C or Banker's
Acceptance.
2.20. CHANGED CIRCUMSTANCES.
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(a) The Administrative Agent may advise the Lead Borrower that the
Administrative Agent has made the good faith determination (which determination
shall be final and conclusive) of any of the following:
(i) Adequate and fair means do not exist for ascertaining
the rate for LIBOR Loans.
(ii) The continuation of or conversion of any Revolving Credit
Loan to a LIBOR Loan has been made impracticable or unlawful by the
occurrence of a contingency that materially and adversely affects the
applicable market or the compliance by the Administrative Agent or any
Revolving Credit Lender in good faith with any Applicable Law.
(iii) The indices on which the interest rates for LIBOR Loans
are based shall no longer represent the effective cost to the
Administrative Agent or any Revolving Credit Lender for U.S. dollar
deposits in the interbank market for deposits in which it regularly
participates.
(b) In the event that the Administrative Agent advises the Lead
Borrower of an occurrence described in Section 2.20(a), then, until the
Administrative Agent notifies the Lead Borrower that the circumstances giving
rise to such notice no longer apply:
(i) The obligation of the Administrative Agent or each
Revolving Credit Lender to make loans of the type affected by such changed
circumstances or to permit the Lead Borrower to select the affected
interest rate as otherwise applicable to any Revolving Credit Loans shall
be suspended.
(ii) Any notice which the Lead Borrower had given the
Administrative Agent with respect to any LIBOR Loan, the time for action
with respect to which has not occurred prior to the Administrative Agent's
having given notice pursuant to Section 2.20(a), shall be deemed at the
option of the Administrative Agent to not having been given.
2.21. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower's agent to obtain loans and advances under the
Revolving Credit, the proceeds of which shall be available to each Borrower for
those uses as those set forth in Section 2.1(d) and to request the issuance of
L/Cs and Banker's Acceptances for such Borrower. The Value City Entities and
Filene's further irrevocably designate and appoint Retail Ventures Imports, Inc.
as their agent to request the issuance of L/Cs and Banker's Acceptances for such
Borrower (to the extent that the Lead Borrower does not make such request). As
the disclosed principal for its agent, each Borrower shall be obligated to the
Agent and each Revolving Credit Lender on account of loans and advances so made
to, and L/Cs and Banker's Acceptances so issued for, its Division under the
Revolving Credit as if made directly by the Revolving Credit Lenders to that
Borrower, notwithstanding the manner by which such loans and advances are
recorded on the books and records of the Lead Borrower and of any Borrower.
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(b) Each Borrower recognizes that credit available to it under the
Revolving Credit is in excess of and on better terms than it otherwise could
obtain on and for its own account and that one of the reasons therefor it is
joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes and agrees to fully, faithfully, and
punctually discharge all Liabilities of all of the Borrowers and hereby
guarantees the payment and performance of all Liabilities of all other
Borrowers. In any action or proceeding with respect to any Borrower involving
any Applicable Law, including, without limitation, state or federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of such Borrower as a guarantor hereunder would
otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability hereunder, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by such
Borrower, any Lender, the Agent or any other Person, be automatically limited
and reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding after taking into account such Borrower's right of indemnification
and contribution from each other Borrower under Section 20.23(d) hereof.
(c) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be deposited into
the Operating Account of the applicable Division. Neither the Administrative
Agent nor any Revolving Credit Lender shall have any obligation to see to the
application of such proceeds.
2.22. REVOLVING CREDIT LENDERS' COMMITMENTS.
(a) Subject to Section 17.1 (which provides for assignments and
assumptions of commitments), each Revolving Credit Lender's "REVOLVING CREDIT
COMMITMENT PERCENTAGE", and "REVOLVING CREDIT DOLLAR COMMITMENT" (respectively
so referred to herein) is set forth on EXHIBIT 2.22, annexed hereto.
(b) The obligations of each Revolving Credit Lender are several and
not joint. No Revolving Credit Lender shall have any obligation to make any loan
under the Revolving Credit in excess of either of the following:
(i) That Revolving Credit Lender's Revolving Credit Commitment
Percentage of the subject loan or advance or of Availability, Filene's
Availability or VC Availability, as applicable.
(ii) Any loan which, when aggregated with all other loans made
by that Revolving Credit Lender under the Revolving Credit and then
outstanding, exceed that Revolving Credit Lender's Revolving Credit Dollar
Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
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(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders may be
changed, from time to time by the reallocation or assignment of Revolving Credit
Dollar Commitments and Revolving Credit Commitment Percentages among the
Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event of Default has
occurred and is continuing (in which event, no consent of any Borrower is
required) any assignment to a Person (other than to another Lender or to any
domestic Affiliate of any Lender) shall be subject to the prior consent of the
Lead Borrower (not to be unreasonably withheld or delayed), which consent will
be deemed given unless the Lead Borrower provides the Administrative Agent with
written objection, not more than five (5) Business Days after the Administrative
Agent shall have given the Lead Borrower written notice of a proposed
assignment), provided that the Lead Borrower's consent shall in no event be
required with respect to the following: (i) an assignment to another Revolving
Credit Lender; or (ii) an assignment to a transferee of a Revolving Credit
Lender's rights in and to a material portion of such Revolving Credit Lender's
portfolio of asset based credit facilities.
(e) Upon written notice given the Lead Borrower from time to time by
the Administrative Agent, of any assignment or allocation referenced in Section
2.22(d):
(i) Each Borrower shall execute one or more replacement
Revolving Credit Notes to reflect such changed Revolving Credit Dollar
Commitments, Revolving Credit Commitment Percentages, and identities and
shall deliver such replacement Revolving Credit Notes to the
Administrative Agent (which promptly thereafter shall deliver to the Lead
Borrower the Revolving Credit Notes so replaced) provided however, in the
event that a Revolving Credit Note is to be exchanged following its
acceleration or the entry of an order for relief under the Bankruptcy Code
with respect to any Borrower, the Administrative Agent, in lieu of causing
the Borrowers to execute one or more new Revolving Credit Notes, may issue
the Administrative Agent's certificate confirming the resulting Revolving
Credit Dollar Commitments and Revolving Credit Commitment Percentages.
(ii) Such change shall be effective from the effective date
specified in such written notice and any Person added as a Revolving
Credit Lender shall have all rights and privileges of a Revolving Credit
Lender hereunder thereafter as if such Person had been a signatory to this
Agreement and any other Loan Document to which a Revolving Credit Lender
is a signatory and any Person removed as a Revolving Credit Lender shall
be relieved of any obligations or responsibilities of a Revolving Credit
Lender hereunder thereafter.
2.23. PAYMENTS.
(a) The Borrowers shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of drawings under L/Cs, Banker's Acceptances, or otherwise)
prior to 2:00 p.m. on the date when due, in immediately available funds, without
setoff or counterclaim. Any amounts received after such time on any date may, in
the reasonable, good faith discretion of the Administrative Agent, be deemed to
have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative
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Agent at its offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ (or such other
address as to which the Lead Borrower shall have been advised by the
Administrative Agent), except payments to be made directly to the Issuer as
expressly provided herein. If any payment under any Loan Document shall be due
on a day that is not a Business Day, except with respect to LIBOR Loans, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If and to the extent that any payment owed by the Borrowers to
the Administrative Agent, any Revolving Credit Lender or the Issuer is not made
when due, each Borrower authorizes the Administrative Agent, the Revolving
Credit Lenders and the Issuer, as the case may be, to charge from time to time
against any or all of the deposit accounts of the Borrowers any amount so due.
Notice of such charge shall be given promptly to the Lead Borrower.
ARTICLE 3 - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the establishment
of the Revolving Credit, and the making of the first loan under the Revolving
Credit, each of the documents respectively described in Sections 3.1 through and
including 3.4, (each in form and substance satisfactory to the Administrative
Agent) shall have been delivered to the Administrative Agent, and the conditions
respectively described in Sections 3.5 through and including 3.21, shall have
been satisfied:
3.1. CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing or full force and
effect, as applicable, for each Loan Party, respectively issued by the Secretary
of State for the state in which that Loan Party is incorporated.
(b) Certificates of due qualification, in good standing, issued by
the Secretary(ies) of State of each State for each Borrower reasonably required
by the Administrative Agent.
(c) Certificates of each Loan Party's Secretary of the due adoption,
continued effectiveness, and setting forth the texts of, each corporate
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
3.2. OPINIONS. Opinions of counsel to the Loan Parties in form and
substance satisfactory to the Administrative Agent.
3.3. ADDITIONAL DOCUMENTS. Such additional instruments and documents
as the Agent or its counsel may reasonably require or request including,
without limitation, the documents described on EXHIBIT 3.3 hereto.
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3.4. OFFICERS' CERTIFICATES. Certificates executed by the Chief
Executive Officer and the Chief Financial Officer of the Lead Borrower in
form and substance satisfactory to the Administrative Agent.
3.5. REPRESENTATIONS AND WARRANTIES. Each of the representations made by
or on behalf of each Loan Party in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Loan Party shall be true and complete as of the date as of
which such representation or warranty was made.
3.6. MINIMUM DAY ONE AVAILABILITY. After giving effect to the first
funding under the Revolving Credit, any charges to the Loan Account made in
connection with the establishment of the credit facility contemplated hereby,
L/Cs and Banker's Acceptances to be issued at, or immediately subsequent to,
such establishment, Excess Availability shall not be less than $90,000,000.00.
3.7. SENIOR NON-CONVERTIBLE FACILITY; INTERCREDITOR AGREEMENT. The Senior
Non-Convertible Facility shall be fully funded on the Effective Date. All
documentation entered into with respect to the Senior Non-Convertible Facility
shall be satisfactory to the Lead Arranger, in its sole reasonable, good faith
discretion. The Agent shall have entered into the Intercreditor Agreement on
terms reasonably satisfactory to the Lead Arranger.
3.8. DSW INITIAL PUBLIC OFFERING.
A Qualifying IPO of the Class A Common Shares of DSW shall have been
consummated and proceeds sufficient to repay in full all Indebtedness
outstanding under the CCM Term Loan Facilities shall have been received and
applied to such Indebtedness pursuant to Section 3.9 below, all of which shall
be satisfactory in form and substance to the Agent.
3.9. REPAYMENT OF EXISTING INDEBTEDNESS. The Administrative Agent shall
have received a payoff letter from CCM as agent under the CCM Term Loan
Facilities as well as a tender of releases and discharges of all collateral
security for the CCM Term Loan Facilities, each in form and substance
satisfactory to the Administrative Agent. Such Indebtedness shall be repaid on
the Effective Date.
3.10. CONSENTS. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
satisfactory to the Administrative Agent.
3.11. APPRAISALS AND COMMERCIAL FINANCE EXAMINATIONS. The Collateral Agent
shall have received (a) appraisals of the Borrowers' Inventory by a third party
appraiser acceptable to the Collateral Agent, and (b) a commercial finance
examination with respect to the Lead Borrower and its Subsidiaries, including a
review of the Borrowers' books and records, each in form and substance
satisfactory to the Collateral Agent.
3.12. FINANCIAL INFORMATION.
The Administrative Agent shall have received such financial information
and projections as the Agent may reasonably request, including, without
limitation, monthly financial projections
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of the Borrowers for the subsequent three fiscal years and annual financial
projections of the Borrowers through the Maturity Date. All such financial
information shall be reasonably satisfactory to the Agent and shall reflect the
Borrowers' ability to perform their obligations hereunder.
3.13. MATERIAL AGREEMENTS. The consummation of the transactions
contemplated hereby shall not (a) violate any applicable law, statute, rule or
regulation or (b) conflict with, or result in a default or event of default
under, any material agreement of any Loan Party. There shall not have occurred
any default of any material contract or agreement of any Loan Party. The Agent
shall be satisfied with the corporate structure and organizational documents of
the Borrowers and the Parent.
3.14. LITIGATION. There shall not be pending any litigation or other
proceeding, the result of which could reasonably be expected to have a
Material Adverse Effect.
3.15. PERFECTION OF ENCUMBRANCES.
(a) The Collateral Agent shall have received results of searches or
other evidence reasonably satisfactory to the Collateral Agent (in each case
dated as of a date reasonably satisfactory to the Collateral Agent) indicating
the absence of Encumbrances, except for Permitted Encumbrances, on the assets of
the Loan Parties, except for which termination statements and releases
reasonably satisfactory to the Collateral Agent are being tendered concurrently
with such extension of credit.
(b) The Collateral Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements, required by
law or reasonably requested by the Collateral Agent to be filed, registered or
recorded to create or perfect the first priority Encumbrances intended to be
created under the Loan Documents (subject to Permitted Encumbrances having
priority over the Encumbrance of the Collateral Agent pursuant to operation of
law) and all such documents and instruments shall have been so filed (or
provision made therefor), registered or recorded to the satisfaction of the
Collateral Agent.
3.16. ALL FEES AND EXPENSES PAID. All fees due at or immediately after the
first funding under the Revolving Credit and all costs and expenses incurred by
the Agent and the Lead Arranger in connection with the establishment of the
credit facility contemplated hereby (including the fees and expenses of counsel
to the Agent and the Lead Arranger) shall have been paid in full.
3.17. CASH MANAGEMENT. The Loan Parties shall have established cash
management systems reasonably acceptable to the Agent, including, without
limitation, compliance with the provisions of Sections 8.1(b), 8.2(b), and
8.3(a).
3.18. INSURANCE. The Agent shall be reasonably satisfied with the
insurance maintained by the Loan Parties and the Agent shall have received an
endorsement to such insurance policies naming the Agent as loss payee and/or
additional insured and otherwise satisfactory in form and substance to the
Agent.
3.19. NO LOAN PARTY IN DEFAULT. No Loan Party is in Default.
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3.20. NO ADVERSE CHANGE. The Agent shall be reasonably satisfied that any
financial statements delivered to it fairly present the business and financial
condition of the Borrowers and their Subsidiaries, and that there has been no
material adverse change in the assets, business, financial condition, or income
of the Borrowers and their Subsidiaries since the April, 2005 financial
information delivered to the Agent.
3.21. CERTAIN CHANGES.
(a) No material changes in governmental regulations or policies
affecting the Loan Parties, the Agent, the Lead Arranger or any Revolving Credit
Lender involved in this transaction shall have occurred prior to the Effective
Date.
(b) There shall not have occurred prior to the Efective Date any
disruption or material adverse change in the financial or capital markets in
general that would, in the reasonable opinion of the Administrative Agent, have
a material adverse effect on the market for loan syndications or adversely
affecting the syndication of the Revolving Credit Loans.
3.22. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 3 are for the sole benefit of the Agent and each Revolving Credit Lender
and may be waived by the Administrative Agent in whole or in part without
prejudice to the Agent or any Revolving Credit Lender.
No document shall be deemed delivered to the Agent or any Revolving Credit
Lender until received and accepted by the Administrative Agent at its offices in
Cleveland, Ohio. Under no circumstances shall this Agreement take effect until
executed and accepted by the Agent.
ARTICLE 4 - GENERAL REPRESENTATIONS AND WARRANTIES:
To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide loans
and advances under the Revolving Credit (each of which loans shall be deemed to
have been made in reliance thereupon) the Loan Parties, in addition to all other
representations and warranties made by any Loan Party in any other Loan
Document, make those representations and warranties set forth below.
4.1. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Loan Party presently is in good standing as a corporation
or other entity under the laws of the state in which it is organized, and,
except as described on EXHIBIT 4.1, annexed hereto, is duly qualified and in
good standing in every other state in which, by reason of the nature or location
of each Loan Parties' assets or operation of each of their respective business,
such qualification may be necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
(b) Each Loan Party's respective organizational identification
number assigned to it by the state of its incorporation and its respective
federal employer identification number, as of the Effective Date, is listed on
EXHIBIT 4.1, annexed hereto.
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(c) Each Loan Party has all requisite power and authority to execute
and deliver all Loan Documents to which that Loan Party is a party and has all
requisite power to perform all Liabilities.
(d) The execution and delivery by each Loan Party of each Loan
Document to which it is a party; each Loan Party's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Loan Party to secure the
Liabilities); and each Loan Party's performance under those of the Loan
Documents to which it is a party:
(i) Have been duly authorized by all necessary action.
(ii) Do not contravene in any material respect any provision
of any Requirement of Law or obligation of that Loan Party.
(iii) Will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of that
Loan Party pursuant to any Requirement of Law or obligation, except
pursuant to the Loan Documents.
(e) The Loan Documents have been duly executed and delivered by each
Loan Party and are the legal, valid and binding obligations of each Loan Party,
enforceable against each Loan Party in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
4.2. TRADE NAMES.
(a) EXHIBIT 4.2, annexed hereto, is a listing as of the
Effective Date, of:
(i) All names under which, to the knowledge of the Lead
Borrower, any Loan Party has conducted its business in the past five (5)
years.
(ii) All Persons with whom any Loan Party has consolidated or
merged, or from whom any Loan Party has acquired in a single transaction
or in a series of related transactions substantially all of such Person's
assets in the past five (5) years.
4.3. INTELLECTUAL PROPERTY.
(a) Each Loan Party owns and possesses, or has the right to use all
material patents, industrial designs, trademarks, trade names, trade styles,
brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, and other intellectual or proprietary property of any
third Person necessary for that Loan Party's conduct of that Loan Party's
business.
(b) The conduct by each Loan Party of that Loan Party's business
does not, to the knowledge of the Loan Parties, presently infringe (nor will any
Loan Party conduct its business in the future so as to infringe) the patents,
industrial designs, trademarks, trade names, trade styles, brand names, service
marks, logos, copyrights, trade secrets, know-how,
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confidential information, or other intellectual or proprietary property of any
third Person, except where such infringement is not reasonably likely to have a
Material Adverse Effect.
4.4. LOCATIONS.
(a) The Collateral, and the books, records, and papers of the Loan
Parties pertaining thereto, are kept and maintained solely (i) at those
locations which are listed on EXHIBIT 4.4, annexed hereto (or as supplemented
pursuant to the terms of this Agreement), which Exhibit includes, with respect
to each such location, the name and address of the landlord on the Lease which
covers such location (or an indication that a Loan Party owns the subject
location) and of all service bureaus with which any such records are maintained
or (ii) at such other locations as to which the Lead Borrower has provided ten
(10) days prior written notice to the Administrative Agent of the intended
location of the Collateral, books, records, and papers thereat.
(b) No tangible personal property of any Loan Party is in the care
or custody of any third party or stored or entrusted with a bailee or other
third party, except (i) as otherwise disclosed pursuant to, or permitted by,
this Section 4.4, or (ii) for Inventory in an amount not to exceed $1,000,000 at
Cost in the aggregate at any time in the ordinary course of business.
4.5. ENCUMBRANCES.
(a) The Loan Parties are the owners of the Collateral free and clear
of all Encumbrances other than any Permitted Encumbrance.
(b) No Loan Party has possession of any property on consignment to
that Loan Party from a third party that is not a Loan Party except (i) as of the
Effective Date, those listed on EXHIBIT 4.5(B), annexed hereto and (ii) those as
to which the Loan Parties notify the Administrative Agent in accordance with the
provisions of Section 6.3 hereof.
4.6. INDEBTEDNESS. The Loan Parties do not have any Indebtedness
other than:
(a) Permitted Indebtedness; and
(b) A Loan Party's guaranty of Permitted Indebtedness of
another Loan Party.
4.7. INSURANCE.
EXHIBIT 4.7, annexed hereto, is a schedule of all insurance policies
owned by the Loan Parties or under which any Loan Party is the named insured as
of the Effective Date. Each of such policies is in full force and effect. To the
best of such Loan Party's knowledge, neither the issuer of any such policy nor
any Loan Party is in default or violation of any such policy.
4.8. LICENSES. Each material license, distributorship, franchise, and
similar agreement issued to, or to which any Loan Party is a party is in full
force and effect. Each material license agreement to which a Loan Party is a
party as of the Effective Date is listed on EXHIBIT 4.8, annexed hereto. No
party to any such license or agreement is in default or violation thereof,
except where such default or failure is not reasonably likely to have a Material
64
Adverse Effect. No Loan Party has received any notice or threat of cancellation
of any such license or agreement.
4.9. LEASES. EXHIBIT 4.9, annexed hereto, is a schedule of all presently
effective Capital Leases as of the Effective Date. (EXHIBIT 4.4 includes a list
of all other presently effective Leases). Each of such Leases and Capital Leases
is in full force and effect. No Loan Party, to the best of its knowledge, is in
default or violation of any such Lease or Capital Lease, except where such
violation is not reasonably likely to have a Material Adverse Effect. No Loan
Party has received any notice or threat of cancellation of any such Lease or
Capital Lease, which cancellation (together with all other similar
cancellations) is reasonably likely to have a Material Adverse Effect.
4.10. REQUIREMENTS OF LAW. Each Loan Party and each of its Subsidiaries is
in compliance with all Requirements of Law except where the failure of such
compliance will not have a Material Adverse Effect. No Loan Party has received
any notice of any violation of any Requirement of Law (other than of a violation
which does not have a Material Adverse Effect), which violation has not been
cured or otherwise remedied.
4.11. LABOR RELATIONS.
(a) As of the Effective Date, no Loan Party is a party to any
collective bargaining or other labor contract except as listed on EXHIBIT 4.11,
annexed hereto.
(b) There is not presently pending and, to any Loan Party's
knowledge, there is not threatened any of the following except to the extent any
of the following is not reasonably likely to have a Material Adverse Effect:
(i) Any strike, slowdown, picketing, work stoppage, or
employee grievance process.
(ii) Except as described on EXHIBIT 4.17 annexed hereto, any
proceeding against or affecting any Loan Party relating to the alleged
violation of any Applicable Law pertaining to labor relations or before
National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational activity,
or other labor or employment dispute against or affecting any Loan Party,
which, if determined adversely to that Loan Party is reasonably likely to
have a Material Adverse Effect on that Loan Party.
(iii) Any lockout of any employees by any Loan Party (and no
such action is contemplated by any Loan Party).
(iv) Any application for the certification of a collective
bargaining agent.
(c) No event has occurred or circumstance exists which could provide
the basis for any work stoppage or other labor dispute which would be reasonably
likely to have a Material Adverse Effect.
(d) Each Loan Party:
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(i) Has complied with all Applicable Law relating to
employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health, and plant
closing, except where such non-compliance is not reasonably likely to have
a Material Adverse Effect.
(ii) Is not liable for the payment of compensation, damages,
taxes, fines, penalties, or other amounts, however designated, for that
Loan Party's failure to comply with any Applicable Law referenced in
Section 4.11(d)(i) which is reasonably likely to have a Material Adverse
Effect.
4.12. TAXES.
(a) With respect to the Loan Parties' federal, state, and local
tax liability and obligations:
(i) To the best of its knowledge, the Lead Borrower, in
compliance with all Applicable Law, has properly filed all material
returns due to be filed up to the date of this Agreement.
(ii) Except as described on EXHIBIT :
(A) Currently, no Loan Party has received from any
taxing authority any request to perform any examination of or with
respect to any Loan Party nor any other written or verbal notice in
any way relating to any claimed failure by any Loan Party to comply
with all Applicable Law concerning payment of any taxes or other
amounts in the nature of taxes in excess of $500,000 in any one
instance.
(B) No agreement exists which waives or extends any
statute of limitations applicable to the right of any taxing
authority to assert a deficiency or make any other claim for or in
respect to federal income taxes.
(C) No issue has been raised in any tax examination of
any Loan Party which reasonably could be expected to result in the
assertion of a deficiency for any fiscal year open for examination,
assessment, or claim by any taxing authority in excess of $500,000
in the aggregate for all Loan Parties.
(b) The Loan Parties have paid, as they become due and payable, all
taxes and unemployment contributions and other charges of any kind or nature
levied, assessed or claimed against any Loan Party or the Collateral by any
Person whose claim could result in an Encumbrance upon any asset of any Loan
Party or by any governmental authority except for (i) taxes, contributions and
charges which are being contested in good faith by such Loan Party, by
appropriate proceedings diligently instituted and conducted, without danger to
any material risk to the Collateral, and adequate reserves or appropriate
provision, if any, as shall be required in conformity with GAAP, shall have been
made therefor, and provided that no Encumbrance has been filed on account
thereof, and (ii) taxes, contributions, and other charges which the Loan Parties
have inadvertently not paid when due as long as (A) the aggregate amount thereof
does
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not exceed $500,000, and (B) no Encumbrance has been filed on account thereof,
and (C) promptly upon the date an Authorized Officer obtains knowledge or should
have obtained knowledge thereof, the Borrowers make payment of such taxes,
contributions or charges; has properly exercised any trust responsibilities
imposed upon any Loan Party by reason of withholding from employees' pay or by
reason of any Loan Parties' receipt of sales tax or other funds for the account
of any third party; has timely made all contributions and other payments as may
be required pursuant to any Employee Benefit Plan now or hereafter established
by any Loan Party; and has timely filed all tax and other returns and other
reports with each Governmental Authority to whom any Loan Party is obligated to
so file, except for such returns or reports which the Loan Parties have
inadvertently not paid when due as long as (A) the aggregate amount of taxes,
assessments or charges with respect to such returns does not exceed $500,000,
and (B) no Encumbrance has been filed on account thereof, and (C) promptly upon
the date an Authorized Officer obtains knowledge or should have obtained
knowledge thereof, the Borrowers file such returns and/or reports and make
payment of any amounts required to be paid on account thereof.
4.13. NO MARGIN STOCK. No Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States).
4.14. INVESTMENT AND HOLDING COMPANY STATUS. No Loan Party is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
4.15. ERISA. Except to the extent that such action is not reasonably
likely to have a Material Adverse Effect, neither any Loan Party nor any
ERISA Affiliate has within the past three (3) years:
(i) Violated or failed to be in full compliance with any Loan
Party's Employee Benefit Plan.
(ii) Failed timely to file all reports and filings required by
ERISA to be filed by any Loan Party.
(iii) Engaged in any nonexempt "prohibited transactions" or
"reportable events" (respectively as described in ERISA).
(iv) Engaged in, or committed, any act such that a tax or
penalty reasonably could be imposed upon any Loan Party on account thereof
pursuant to ERISA.
(v) Incurred any material accumulated funding deficiency
within the meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such that a lien
could be asserted against any assets of any Loan Party on account thereof
pursuant to ERISA.
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(vii) Failed to make any required contribution or payment to,
or made a complete or partial withdrawal from, any Employee Benefit Plan
which is a multiemployer plan within the meaning of Section 4001(a) of
ERISA.
4.16. HAZARDOUS MATERIALS. Except as set forth on EXHIBIT 4.16 hereto, (i)
the operations of each Loan Party are in material compliance with all
Environmental Laws; (ii) to the best of each Loan Party's knowledge, there has
been no Release at any of the properties owned or operated by any Loan Party or
a predecessor in interest, or at any disposal or treatment facility which
received Hazardous Materials generated by any Loan Party or any predecessor in
interest which is reasonably likely to have a Material Adverse Effect; (iii) no
Environmental Action has been asserted against any Loan Party or any predecessor
in interest nor does any Loan Party have knowledge or notice of any threatened
or pending Environmental Action against any Loan Party or any predecessor in
interest which is reasonably likely to have a Material Adverse Effect; (iv) no
Loan Party has knowledge of any Environmental Actions that have been asserted
against any facilities that may have received Hazardous Materials generated by
any Loan Party or any predecessor in interest which are reasonably likely to
have a Material Adverse Effect; (v) to the best of such Loan Party's knowledge,
no property now or formerly owned or operated by a Loan Party has been used as a
treatment or disposal site for any Hazardous Material; (vi) no Loan Party has
failed to report to the proper Governmental Authority any Release which is
required to be so reported by any Environmental Laws which is reasonably likely
to have a Material Adverse Effect; (vii) each Loan Party holds all licenses,
permits and approvals required under any Environmental Laws in connection with
the operation of the business carried on by it, except for such licenses,
permits and approvals as to which a Loan Party's failure to maintain or comply
with is not reasonably likely to have a Material Adverse Effect; and (viii) no
Loan Party has received any notification pursuant to any Environmental Laws that
(A) any work, repairs, construction or Capital Expenditures are required to be
made in respect as a condition of continued compliance with any Environmental
Laws, or any license, permit or approval issued pursuant thereto or (B) any
license, permit or approval referred to above is about to be reviewed, made,
subject to limitations or conditions, revoked, withdrawn or terminated, in each
case, except as is not reasonably likely to have a Material Adverse Effect.
4.17. LITIGATION. Except as described in EXHIBIT 4.17, annexed hereto,
there is not presently pending or threatened by or against any Loan Party any
suit, action, proceeding, or investigation which, if determined adversely to any
Loan Party, would have a Material Adverse Effect. As of the Effective Date, no
Loan Party is the holder of any Commercial Tort Claim other than as described on
EXHIBIT 4.17.
4.18. ADEQUACY OF DISCLOSURE.
(a) All quarterly and annual financial statements furnished to the
Administrative Agent and to each Revolving Credit Lender by the Loan Parties on
a consolidated basis have been prepared in accordance with GAAP consistently
applied (provided however, that unaudited financial statements are subject to
normal year end adjustments and to the absence of footnotes). All financial
statements furnished to the Administrative Agent and to each Revolving Credit
Lender by the Loan Parties present fairly the condition of the Loan Parties at
the date(s) thereof and the results of operations and cash flows for the
period(s) covered (provided however, that unaudited financial statements are
subject to normal year end adjustments and to the absence of footnotes). There
has been no change in the Consolidated financial condition, results of
68
operations, or cash flows of the Loan Parties since the date(s) of such
financial statements, other than changes which are not reasonably likely to have
a Material Adverse Effect.
(b) No Loan Party has any material contingent obligation or material
obligation under any Lease or Capital Lease which is not noted in the Loan
Parties' annual Consolidated financial statements furnished to the
Administrative Agent and to each Revolving Credit Lender prior to the execution
of this Agreement.
(c) No document, instrument, agreement, or paper given to the Agent
or to any Revolving Credit Lender by or on behalf of each Loan Party or any
guarantor of the Liabilities in connection with the execution of this Agreement
by the Agent and to each Revolving Credit Lender contains any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements therein not misleading. There is no fact known to
any Loan Party which has, or which, in the foreseeable future is reasonably
likely to have a Material Adverse Effect.
4.19. UNRESTRICTED SUBSIDIARIES. Each of the Unrestricted Subsidiaries
is inactive or in the process of being liquidated or dissolved.
4.20. NO BANKRUPTCY FILING. No Loan Party is contemplating, or has
any knowledge of any other Person contemplating, taking any of the actions
described in Section 11.11 or 11.12 hereof. No Loan Party is contemplating
the liquidation of all or a major portion of such Loan Party's assets.
4.21. PATRIOT ACT. Each Borrower is in compliance, in all material
respects, with the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the "Patriot Act"). No part of the proceeds of the Loans
will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
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4.22. FOREIGN ASSET CONTROL REGULATIONS. Neither of the advance of the
Loans nor the use of the proceeds of any thereof will violate the Trading With
the Enemy Act (50 U.S.C. Section 1 et seq., as amended) (the "Trading With the
Enemy Act") or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the
"Foreign Assets Control Regulations") or any enabling legislation or executive
order relating thereto (which for the avoidance of doubt shall include, but
shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the "Executive Order")
and (b) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).
Furthermore, none of the Borrowers or their Affiliates (a) is or will become a
"blocked person" as described in the Executive Order, the Trading With the Enemy
Act or the Foreign Assets Control Regulations or (b) engages or will engage in
any dealings or transactions, or be otherwise associated, with any such "blocked
person" or in any manner violative of any such order.
ARTICLE 5 - GENERAL COVENANTS:
5.1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Loan Parties shall
pay each payment Liability when due (or when demanded, if payable on demand)
and shall promptly, punctually, and faithfully perform each other Liability.
5.2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Loan Party shall remain in good standing as a corporation
or other entity under the laws of the state in which it is organized, and shall
hereafter remain duly qualified and in good standing in every other state in
which, by reason of the nature or location of each Loan Parties' assets or
operation of each of their respective business, such qualification may be
necessary, except where the failure to so qualify would not have a Material
Adverse Effect.
(b) No Loan Party shall change its state of organization; any
organizational identification number assigned to that Loan Party by that state;
or that Loan Party's federal taxpayer identification number, without the prior
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld.
(c) Except where the failure to observe, maintain, or perform the
following is not reasonably likely to have a Material Adverse Effect:
(i) All customary formalities regarding the corporate
existence of each Loan Party will be observed.
(ii) In accordance with its present practices, each Loan Party
will accurately maintain its organizational documents separate from those
of any Affiliate of such Loan Party and any other Person.
5.3. TRADE NAMES.
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The Lead Borrower will provide the Administrative Agent with not
less than ten (10) days prior written notice (with reasonable particularity) of
any change to any Loan Party's name from that under which that Loan Party is
conducting its business at the execution of this Agreement and will not effect
such change unless each Loan Party is then in compliance with all provisions of
this Agreement.
5.4. LOCATIONS.
(a) The Collateral, and the books, records, and papers of the Loan
Parties pertaining thereto, will be kept and maintained solely (i) at those
locations which are listed on Exhibit 4.4, annexed hereto (or as supplemented
pursuant to the terms of this Agreement), which Exhibit includes, with respect
to each such location, the name and address of the landlord on the Lease which
covers such location (or an indication that a Loan Party owns the subject
location) and of all service bureaus with which any such records are maintained
or (ii) at such other locations as to which the Lead Borrower has provided ten
(10) days prior written notice to the Administrative Agent of the intended
location of the Collateral, books, records, and papers thereat.
(b) No Loan Party shall remove any of the Collateral from those
locations described in Section 4.4(a) except for the following purposes:
(i) To accomplish sales of Inventory in the ordinary
course of business.
(ii) To move Inventory or other Collateral from one such
location to another such location.
(iii) To utilize such of the Collateral as is removed from
such locations in the ordinary course of business.
(c) No Loan Party will:
(i) Alter, modify, or amend any Lease in a manner which is
reasonably likely to have a Material Adverse Effect.
(ii) Other than leased departments and similar arrangements
with third parties, commit to open or close, or open or close, any
location at which any Loan Party maintains, offers for sales, or stores
any of the Collateral, in any fiscal year such that the actual number of
stores of all Borrowers in the aggregate (A) exceeds by ten (10) the
number of stores reflected on the Business Plan for such fiscal year, or
(B) is more than ten (10) fewer than the number of stores reflected on the
Business Plan for such fiscal year (without giving effect to any new
stores which the Business Plan projected to be opened or closed, but which
have not in fact been opened or closed)
(d) No tangible personal property of any Loan Party shall hereafter
be placed under such care, custody, storage, or entrustment, except (i) as
otherwise disclosed pursuant to, or permitted by, this Section 5.5, or (ii) for
Inventory in an amount not to exceed $1,000,000 at Cost in the aggregate at any
time in the ordinary course of business.
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5.5. ENCUMBRANCES.
(a) The Loan Parties shall remain, the owners of the Collateral free
and clear of all Encumbrances other than any Permitted Encumbrance.
(b) No Loan Party shall have possession of any property on
consignment to that Loan Party from a third party that is not a Loan Party
except (i) those listed on EXHIBIT 4.5(B), annexed hereto and (ii) those as to
which the Loan Parties notify the Administrative Agent in accordance with the
provisions of Section 6.3 hereof.
5.6. INDEBTEDNESS. The Loan Parties shall not hereafter have any
Indebtedness other than:
(a) Permitted Indebtedness; and
(b) A Loan Party's guaranty of Permitted Indebtedness of
another Loan Party.
5.7. INSURANCE.
(a) The Lead Borrower shall provide the Administrative Agent with
prompt written notice of any change in the insurance policies owned by the Loan
Parties or under which any Loan Party is the named insured from those in effect
as of the Closing Date.
(b) The Loan Parties shall have and maintain at all times insurance
covering such risks, in such amounts, containing such terms, in such form, for
such periods, and written by the companies presently providing such insurance,
or such other companies as may be selected by the Lead Borrower and are
satisfactory to the Agent (whose consent shall not be unreasonably withheld).
(c) All insurance carried by the Loan Parties shall provide for a
minimum of thirty (30) days' prior written notice of cancellation to the
Administrative Agent and all such insurance which covers the Collateral shall
(i) Include an endorsement in favor of the Collateral Agent,
which endorsement shall provide that the insurance, to the extent of the
Collateral Agent's interest therein, shall not be impaired or invalidated,
in whole or in part, by reason of any act or neglect of any Loan Party or
by the failure of any Loan Party to comply with any warranty or condition
of the policy.
(ii) Not include an endorsement in favor of any other Person
(other than the agents for the holders of the Senior Non-Convertible
Facility, those Persons intended as beneficiaries of any builder's risk
insurance, and the holder of any Permitted Encumbrances).
(d) The Lead Borrower shall furnish the Collateral Agent from time
to time, upon request of the Collateral Agent, with certificates or other
evidence satisfactory to the Collateral Agent regarding compliance by the Loan
Parties with the foregoing requirements.
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(e) In the event of the failure by the Loan Parties to maintain
insurance as required herein, the Agent, at its option and the Loan Parties'
expense, may obtain such insurance at the expense of the Loan Parties, provided,
however, the Agent's obtaining of such insurance shall not constitute a cure or
waiver of any Event of Default occasioned by the Loan Parties' failure to have
maintained such insurance.
5.8. LICENSES. The Loan Parties shall (a) with respect to existing
licensors and licensees, use its best efforts to, and (b) with respect to
license agreements entered into after the Effective Date, shall, cause the
licensors and licensees to enter into such tri-party or estoppel agreements as
the Agent may reasonably request.
5.9. REQUIREMENTS OF LAW. Each Loan Party shall and shall cause its
Subsidiaries to be in compliance with, and shall hereafter comply with and use
its assets in compliance with, all Requirements of Law except where the failure
of such compliance will not have a Material Adverse Effect.
5.10. LABOR RELATIONS.
The Lead Borrower shall provide the Administrative Agent with prompt
written notice of any additional or amended collective bargaining or other labor
contract entered into after the Effective Date.
5.11. MAINTAIN PROPERTIES. The Loan Parties shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy of
insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The use of Inventory in compliance with this
Agreement.
(ii) The disposal of Equipment which is obsolete, worn out, or
damaged beyond repair, or no longer useful in the Loan Parties'
businesses.
(iii) Permitted Dispositions.
(iv) The turning over to the Administrative Agent of all
Receipts as provided herein.
(v) The use of the Collateral to pay Liabilities arising
in the ordinary course.
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5.12. TAXES.
The Loan Parties shall: pay, as they become due and payable, all
taxes and unemployment contributions and other charges of any kind or nature
levied, assessed or claimed against any Loan Party or the Collateral by any
Person whose claim could result in an Encumbrance upon any asset of any Loan
Party or by any governmental authority, provided, however, that (i) no such
taxes, contributions and charges are required to be paid if being contested in
good faith by such Loan Party, by appropriate proceedings diligently instituted
and conducted, without danger to any material risk to the Collateral, and
adequate reserves or appropriate provision, if any, as shall be required in
conformity with GAAP, shall have been made therefor, and provided that no
Encumbrance has been filed on account thereof, and (ii) the inadvertent failure
of a Loan Party to pay any such taxes, contributions, and other charges when due
shall not constitute an Event of Default hereunder as long as (A) the aggregate
amount thereof does not exceed $500,000, and (B) no Encumbrance has been filed
on account thereof, and (C) promptly upon the date an Authorized Officer obtains
knowledge or should have obtained knowledge thereof, the Borrowers make payment
of such taxes, contributions or charges; properly exercise any trust
responsibilities imposed upon any Loan Party by reason of withholding from
employees' pay or by reason of any Loan Parties' receipt of sales tax or other
funds for the account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by any Loan Party; and timely file all tax and other
returns and other reports with each Governmental Authority to whom any Loan
Party is obligated to so file, provided that the inadvertent failure of a Loan
Party to file any such returns or reports when due shall not constitute an Event
of Default hereunder as long as (A) the aggregate amount of taxes, assessments
or charges with respect to such returns does not exceed $500,000, and (B) no
Encumbrance has been filed on account thereof, and (C) promptly upon the date an
Authorized Officer obtains knowledge or should have obtained knowledge thereof,
the Borrowers file such returns and/or reports and make payment of any amounts
required to be paid on account thereof.
5.13. NO MARGIN STOCK. No part of the proceeds of any borrowing
hereunder will be used at any time to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any
such margin stock.
5.14. ERISA.
Neither any Loan Party nor any ERISA Affiliate shall ever engage in
any action of the type described in Section 4.15, if as a result thereof, such
Loan Party or ERISA Affiliate will, or could reasonably be expected to, incur
liability that could reasonably likely have a Material Adverse Effect.
5.15. HAZARDOUS MATERIALS.
(a) Each Loan Party shall, except where a violation or failure is
not reasonably likely to have a Material Adverse Effect: (i) keep any property
either owned or operated by it or any of its Subsidiaries free of any
Environmental Liens; (ii) comply, and cause each of its Subsidiaries to comply,
in all material respects with Environmental Laws and provide to the Collateral
Agent any documentation of such compliance which the Collateral Agent may
reasonably request; (iii) provide the Collateral Agent written notice within
five (5) days of any
74
Release of a Hazardous Material in excess of any reportable quantity from or
onto property at any time owned or operated by it or any of its Subsidiaries and
take any remedial actions required to ▇▇▇▇▇ said Release; (iv) provide the
Collateral Agent with written notice within ten (10) days of the receipt of any
of the following: (A) notice that an Environmental Lien has been filed against
any property of any Loan Party or any of its Subsidiaries; (B) commencement of
any Environmental Action or notice that an Environmental Action will be filed
against any Loan Party or any of its Subsidiaries; and (C) notice of a
violation, citation or other administrative order which, to the extent that any
of the foregoing are reasonably likely to have a Material Adverse Effect and (v)
defend, indemnify and hold harmless the Agent and the Revolving Credit Lenders
and their transferees, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation, attorney
and consultant fees, investigation and laboratory fees, court costs and
litigation expenses) arising out of (A) the generation, presence, disposal,
Release or threatened Release of any Hazardous Materials on, under, in,
originating or emanating from any property at any time owned or operated by any
Loan Party or any of its Subsidiaries (or its predecessors in interest or
title), (B) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to the presence or Release of such
Hazardous Materials, (C) any request for information, investigation, lawsuit
brought or threatened, settlement reached or order by a Governmental Authority
relating to the presence or Release of such Hazardous Materials, (D) any
violation of any Environmental Law and/or (E) any Environmental Action filed
against the Agent or any Revolving Credit Lender, to the extent that any of the
foregoing is reasonably likely to have a Material Adverse Effect.
(b) No Loan Party shall knowingly or negligently permit the use,
handling, generation, storage, treatment, Release or disposal of Hazardous
Materials at any property owned or leased by it or any of its Subsidiaries,
except in compliance with Environmental Laws and so long as such use, handling,
generation, storage, treatment, Release or disposal of Hazardous Materials is
not reasonably likely to result in a Material Adverse Effect.
5.16. DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Loan Party shall:
(a) Pay any cash dividend or make any other distribution in respect
of any class of that Loan Party's capital stock (other than dividends payable to
another Loan Party or payable solely in the capital stock of such paying Loan
Party). Notwithstanding anything to the contrary contained herein, dividends
(other than dividends payable solely in the capital stock of another Loan Party)
shall only be payable to the Parent by any other Loan Party to the extent not
otherwise in violation of the Loan Documents and in any event in an amount not
to exceed $5,000,000 (less loans and advances to the Parent made under clause
(l) of the definition of Permitted Indebtedness) in the aggregate after the date
hereof.
(b) Own, redeem, retire, purchase, or acquire any of any Loan
Party's capital stock; provided that the Loan Parties may make cash payments for
any such purposes if:
(i) no Default or Event of Default shall have occurred
and be continuing at the time of declaration or payment thereof; and
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(ii) after giving effect to the making any such cash payment,
the aggregate amount so expended for such purposes subsequent to the
Closing Date does not exceed $1,500,000; and
(iii) after giving effect to the making any such cash payment,
the aggregate amount so expended for such purposes in any fiscal year of
the Borrowers does not exceed $500,000.
(c) Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any Person other than a Permitted
Investment, or a Permitted Acquisition.
(d) Merge or consolidate or be merged or consolidated with or into
any other corporation or other entity, other than in connection with a Permitted
Acquisition (provided that a Loan Party is the surviving, continuing or
resulting corporation) or of one Loan Party into another Loan Party; provided
that, if no Default or Event of Default shall have occurred and be continuing or
would result therefrom, the following shall be permitted:
(i) With the prior written consent of the agent under the
Senior Non-Convertible Facility, the merger, consolidation or amalgamation
of any wholly-owned Subsidiary with or into a Borrower or with or into
another wholly-owned Subsidiary of a Borrower, so long as in any merger,
consolidation or amalgamation involving a Borrower, the Borrower is the
surviving, continuing or resulting corporation;
(ii) The liquidation or dissolution of any Unrestricted
Subsidiary.
(iii) Any acquisition which is a Permitted Acquisition,
provided that all of the applicable conditions contained in the definition
of the term Permitted Acquisition are satisfied.
Notwithstanding the foregoing, the Parent may not merge or consolidate or
be merged or consolidated with or into any other Person without the prior
written consent of the Administrative Agent.
(e) Subordinate any debts or obligations owed to that Loan Party by
any third party to any other debts owed by such third party to any other Person.
(f) Enter into leases of property or assets not constituting
Permitted Acquisitions, unless such leases are not otherwise in violation of
this Agreement.
(g) Organize or create any Affiliate other than in connection with a
Permitted Acquisition or in compliance with the provisions of Section 5.21
hereof with respect to such Subsidiary.
(h) Acquire any assets other than in the ordinary course and conduct
of that Loan Party's business as conducted at the execution of this Agreement,
other than in connection with a Permitted Acquisition or as otherwise permitted
in this Agreement.
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5.17. LOANS. No Loan Party shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing
does not prohibit any of the following:
(a) Advance payments made to that Loan Party's suppliers in the
ordinary course;.
(b) Advances to that Loan Party's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Loan Party, which
expenses are properly substantiated by the Person seeking such advance and
properly reimbursable by that Loan Party;
(c) Loans and advances to employees for business-related moving
expenses, costs of replacement homes, business machines or supplies, automobiles
and other similar expenses, in each case incurred in the ordinary course of
business not to exceed (together with loans and advances under Section 5.17(d)
and investments permitted under clause (m) of the definition of Permitted
Investments) $6,000,000 in the aggregate outstanding to all employees at any one
time;
(d) Loans and advances to that Loan Party's officers, employees, and
salespersons in connection with any employment agreements or arrangements, or
any stock options or option plans not to exceed $6,000,000 (together with loans
and advances under Section 5.17(c) and investments permitted under clause (m) of
the definition of Permitted Investments) in the aggregate outstanding to all
employees at any one time;
(e) To the extent not permitted by the foregoing clauses, the
existing loans and advances, described on EXHIBIT 5.17(E) hereto;
(f) Intercompany loans and advances or other intercompany
Indebtedness (i) existing on the date hereof and described on EXHIBIT 5.17(F)
hereof, (ii) hereafter made among any Loan Parties within the same Division,
(iii) hereafter made by any Borrower to any other Borrower, (iv) hereafter made
by any Loan Party to any of its wholly owned Subsidiaries which are also Loan
Parties; and (v) hereafter made to the Parent by any other Loan Party to the
extent any of the same constitutes Permitted Indebtedness under clause (l) of
the definition of Permitted Indebtedness or to any Loan Party by the Parent,
provided that (x) such intercompany loans shall be evidenced by such
documentation as the Collateral Agent may require, and (y) after the occurrence
of a Cash Control Event, no such intercompany loans may be made under clause
(iii) hereof unless there is no VC Availability or Filene's Availability, as
applicable, immediately prior to the making of such loan to the Division to whom
such loan is being made.
(g) Loans and advances of a Person outstanding at the time such
Person becomes a Subsidiary as a result of a Permitted Acquisition, provided
that any such loans or advances were not made at the time of or in contemplation
of the acquisition of such Person by a Loan Party or any Subsidiaries.
(h) Any other loans and advances to or for the benefit of any Person
which (i) is not itself a Loan Party, (ii) are not otherwise permitted by the
foregoing clauses, and (iii) are
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made after the Effective Date, which loans and advances have been approved in
advance by the Administrative Agent.
5.18. PROTECTION OF ASSETS. The Administrative Agent, in the
Administrative Agent's reasonable, good faith discretion, and from time to time,
may discharge any tax or Encumbrance on any of the Collateral, or take any other
action which the Administrative Agent may deem reasonably necessary or desirable
to repair, insure, maintain, preserve, collect, or realize upon any of the
Collateral. The Administrative Agent shall not have any obligation to undertake
any of the foregoing and shall have no liability on account of any action so
undertaken except where there is a specific finding in a judicial proceeding (in
which the Administrative Agent has had an opportunity to be heard), from which
finding no further appeal is available, that the Administrative Agent had acted
in actual bad faith, in willful misconduct, or in a grossly negligent manner.
The Loan Parties shall pay to the Administrative Agent, on demand, or the
Administrative Agent, in its reasonable, good faith discretion, may add to the
Loan Account, all amounts paid or incurred by the Administrative Agent pursuant
to this Section 5.18.
5.19. LINE OF BUSINESS; CONDUCT OF BUSINESS.
(a) No Loan Party shall engage in any business other than the
business in which it is currently engaged or a business reasonably related
thereto, or any retail lease department operation.
(b) The Loan Parties shall conduct their business substantially in
accordance with the Business Plan, or as otherwise approved by the
Administrative Agent pursuant to Section 6.10, below. The foregoing shall not
obligate the Borrowers to achieve any specific financial performance and no
financial performance covenants are intended to be imposed thereby.
5.20. AFFILIATE TRANSACTIONS.
(a) Except as set forth in that certain confidential side letter
from the Lead Borrower to the Administrative Agent and for loans which may be
made between Loan Parties permitted pursuant to Section 5.17, above, no Loan
Party shall make any payment, nor give any value to any Affiliate except for
leases, goods and services with such Affiliate for a price and on terms which
shall be in the ordinary course of business at prices and on terms and
conditions no less favorable to that Loan Party than those which would have been
charged and imposed in an arms length transaction from unrelated third parties,
except (i) sales of goods to an Affiliate for use or distribution outside of the
United States of America which complies with the any applicable legal
requirements of the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended from time to time, provided that such sales shall not exceed
$500,000 in the aggregate in any fiscal year of the Borrowers, (ii) loans,
advances and other payments to officers and directors as part of their
compensation which are entered into in the ordinary course of business and which
are not otherwise prohibited under the Loan Documents, (iii) other dividends and
distributions to officers, directors and shareholders otherwise permitted under
this Agreement, or (iv) transactions between or among the Loan Parties not
prohibited hereunder and not involving any other Affiliate.
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(b) The Loan Parties shall not (i) without the prior written consent
of the Administrative Agent, amend, modify or waive any of the provisions of the
instruments, documents or agreements described in the confidential side letter
referred to in clause (a) above, the effect of which is to increase the payments
or value to be furnished by a Loan Party to any Affiliate (other than for
ordinary increases under such instruments, documents and agreements in the
ordinary course of business, for which the Loan Parties are presently obligated
to make payment in such instrument, document or agreement as in effect on the
Effective Date) or which would cause such instruments, documents or agreements
to be at prices and on terms and conditions less favorable to that Loan Party
than those which would have been charged and imposed in an arms length
transaction from unrelated third parties, or (ii) make any payments under such
instruments, documents or agreements in advance of the date when due (other than
payments made to Affiliates to fund obligations or anticipated claims under
workers' compensation, medical plans, employee benefit plans or agreements, and
other similar plans, all in accordance with current practices).
(c) The Borrowers shall use their best efforts to cause their
Affiliates to execute and deliver to the Agent and the Revolving Credit Lenders
such documentation as the Administrative Agent may reasonably require to
evidence the Affiliates' agreement with the provisions of this Section 5.20.
5.21. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary (other than of
DSW, DSW Shoe and their Subsidiaries) is formed or acquired after the Effective
Date, the Lead Borrower will notify the Collateral Agent thereof and (a) the
Loan Parties will cause such Subsidiary to become a Borrower or Facility
Guarantor hereunder, as determined by the Collateral Agent, within three (3)
Business Days after such Subsidiary is formed or acquired and promptly take such
actions to create and perfect Encumbrances on such Subsidiary's assets to secure
the Liabilities as the Collateral Agent or the Majority Lenders shall reasonably
request and (b) if any shares of capital stock or Indebtedness of such
Subsidiary are owned by or on behalf of any Loan Party, the Loan Parties will
cause such shares and promissory notes evidencing such Indebtedness to be
pledged within three (3) Business Days after such Subsidiary is formed or
acquired. Nothing contained herein shall be deemed a modification of any other
provisions of this Agreement restricting the formation or acquisition of
Subsidiaries by the Loan Parties.
5.22. FURTHER ASSURANCES.
(a) No Loan Party will hereafter acquire any asset or any interest
in property (other than Leasehold Interests not required to be pledged under the
Senior Non-Convertible Facility) which is not, immediately upon such
acquisition, subject to such a perfected Collateral Interest in favor of the
Collateral Agent to secure the Liabilities (subject only to Permitted
Encumbrances).
(b) Each Loan Party shall execute and deliver to the Collateral
Agent such instruments, documents, and papers, and shall do all such things from
time to time hereafter as the Collateral Agent may reasonably request to carry
into effect the provisions and intent of this Agreement; to protect and perfect
the Collateral Agent's Collateral Interests in the Collateral; and to comply
with all applicable statutes and laws, and facilitate the collection of the
Receivables Collateral. Each Loan Party shall execute all such instruments as
may be reasonably
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required by the Collateral Agent with respect to the recordation and/or
perfection of the Collateral Interests created or contemplated herein.
(c) Each Loan Party hereby designates the Collateral Agent as and
for that Loan Party's true and lawful attorney, with full power of substitution,
to sign and file any financing statements in order to perfect or protect the
Collateral Agent's Collateral Interests in the Collateral.
(d) This Agreement constitutes an authenticated record which
authorizes the Collateral Agent to file such financing statements as the
Collateral Agent determine as appropriate to perfect or protect the Collateral
Interests created by this Agreement.
5.23. ADEQUACY OF DISCLOSURE.
No document, instrument, agreement, or paper hereafter given to the
Agent or to any Revolving Credit Lender by or on behalf of each Loan Party or
any guarantor of the Liabilities in connection with the execution of this
Agreement by the Agent and to each Revolving Credit Lender contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements therein not misleading.
5.24. NO RESTRICTIONS ON LIABILITIES. No Loan Party shall enter into
or directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Loan Party's:
(a) Creation of, and granting of Collateral Interests in favor
of the Collateral Agent.
(b) Incurrence of Liabilities.
5.25. RESTRICTIONS ON PAYMENT OF SENIOR NON-CONVERTIBLE FACILITY.
(a) The Senior Non-Convertible Facility may be paid only as
follows:
(i) Except as permitted pursuant to clauses (i)(B) and (ii)(B)
hereof, interest and fees on the Senior Non-Convertible Facility may be
paid in cash in the ordinary course in accordance with the terms of the
documents evidencing the Senior Non-Convertible Facility as long as (A) no
Specified Event of Default has occurred and is continuing, and (B) Average
Excess Availability for the thirty (30) day period prior to the making of
such payment is equal to or greater than Thirty-Five Million Dollars
($35,000,000.00), plus the amount of the proposed payment, and Excess
Availability immediately after giving effect to such payment is equal to
or greater than Thirty-Five Million Dollars ($35,000,000.00). If such
Excess Availability requirements are not satisfied, no interest or fee
payments may be made on the Senior Non-Convertible Facility in cash (i.e.
partial payments of interest or fees on the Senior Non-Convertible
Facility in cash shall not be permitted);
(ii) Subject to the terms of the Intercreditor Agreement,
principal on the Senior Non-Convertible Facility may be paid only as
follows:
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(A) From the net cash proceeds of the
Non-Convertible Senior Collateral; or
(B) So long as no Event of Default then exists or would
arise therefrom, from payments made on account of the RVI Note in
accordance with the provisions of clause (g) of the definition of
Permitted Dispositions; or
(C) Upon satisfaction of each of the following
conditions and only to the extent that the following conditions are
not breached as a result of such payment:
(I) The Borrowers shall have achieved at least 85%
of Consolidated EBITDA set forth in the most receipt forecasts
furnished pursuant to Section 5.10(b) hereof for the twelve
months ending on the last day of the month immediately
preceding such payment; and
(II) After giving effect to such payment, Excess
Availability shall be at least $90,000,000, as determined by
the Collateral Agent; and
(III) After giving effect to such payment, pro
forma projected Excess Availability for each of the ninety
(90) days subsequent to the date of such payment must be at
least $90,000,000, as determined by the Collateral Agent;
(IV) Prior to, at the time of, and after giving
effect to such payment, no Specified Event of Default then
exists; or
(D) On the scheduled maturity date of the Senior
Non-Convertible Facility (but not any accelerated maturity date).
(b) The Loan Parties shall not hereafter effect or permit any
changes in or amendment to (i) the terms relating to the repayment of the Senior
Non-Convertible Facility, or (ii) except as provided in the Intercreditor
Agreement, any of the instruments, documents or agreements evidencing the Senior
Non-Convertible Facility. If, notwithstanding the foregoing, CCM, as agent under
the Senior Non-Convertible Facility, hereafter imposes any additional or more
restrictive covenants (financial or otherwise) or events of default with respect
to the Senior Non-Convertible Facility (including by amendment or an existing
covenant or event of default, by waiver, consent or otherwise) than is imposed
on the Effective Date under this Agreement or any Loan Party grants to CCM, as
agent under the Senior Non-Convertible Facility, a new covenant or event of
default that is not contained in this Agreement as of the Effective Date, the
Lead Borrower shall promptly notify, and furnish a copy thereof to the
Administrative Agent.
5.26. UNRESTRICTED ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇ Unrestricted Subsidiary shall, at
any time, have assets in excess of $500,000 in the aggregate.
5.27. PARENT'S LINE OF BUSINESS. The Parent shall not engage in any
business, and shall not own any property or assets, other than acquiring and
owning (a) the capital stock of any
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other Loan Party, DSW or the Unrestricted Subsidiaries, and (b) any investments
permitted to be made by the Parent hereunder, and (c) otherwise incidental to
the operation of the business of a holding company.
ARTICLE 6 - FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6.1. MAINTAIN RECORDS. The Loan Parties shall:
(a) At all times, keep proper books of account, in which full, true,
and accurate entries shall be made of all of the Loan Parties' financial
transactions, all in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition of the Loan
Parties at the close of, and its results of operations for, the periods in
question.
(b) Timely provide the Administrative Agent with those financial
reports, statements, and schedules required by this Article 6 or otherwise, each
of which reports, statements and schedules shall be prepared, to the extent
applicable, in accordance with GAAP applied consistently with prior periods to
fairly reflect the Consolidated financial condition of the Loan Parties at the
close of, and the results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the Collateral
including, without limitation, accurate current stock, cost, and sales records
of its Inventory for each Division, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times, retain (i) Deloitte and Touche, LLP, or such other
nationally recognized independent certified public accountants who are
reasonably satisfactory to Schottenstein Stores Corporation (as long as it
remains in Control of the Borrowers) or (ii) or such other independent certified
public accountants who are reasonably satisfactory to Schottenstein Stores
Corporation (as long as it remains in Control of the Borrowers) and the
Administrative Agent, and instruct such accountants, subject to the terms of
such accountants' internal policies, and subject to the confidentiality
provisions of this Agreement, to fully cooperate with, and be available to, the
Administrative Agent to discuss the Loan Parties' financial performance,
financial condition, operating results, controls, and such other matters, within
the scope of the retention of such accountants, as may be raised by the
Administrative Agent.
(e) Not change any Loan Party's fiscal year.
6.2. ACCESS TO RECORDS.
(a) Each Loan Party shall accord the Agent with reasonable access
during normal business hours from time to time as each Agent may require to all
properties owned by or over which any Loan Party has control. The Agent shall
have the right, and each Loan Party will permit the Agent from time to time as
the Agent may request, to examine, inspect, copy, and make extracts from any and
all of the Loan Parties' books, records, electronically stored data, papers, and
files. Each Loan Party shall make that Loan Party's copying facilities available
to the Agent.
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(b) Each Loan Party hereby authorizes the Agent to:
(i) Inspect, copy, duplicate, review, cause to be reduced to
hard copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any Loan Party.
Each Loan Party shall request full cooperation with the Agent from any
service bureau, contractor, accountant, or other Person.
(ii) Verify at any time the Collateral or any portion thereof,
including verification with Account Debtors, and/or with each Loan Party's
computer billing companies, collection agencies, and accountants.
(c) The Agent from time to time may designate one or more
representatives to exercise the Agent's rights under this Section 6.2 as fully
as if the Agent were doing so, provided that the Agent shall not designate a
Person which is in a Competitive Business.
6.3. PROMPT NOTICE TO ADMINISTRATIVE AGENT.
(a) The Lead Borrower shall provide the Administrative Agent with
written notice promptly upon the occurrence of any of the following events,
which written notice shall be with reasonable particularity as to the facts and
circumstances in respect of which such notice is being given:
(i) Any change in any Loan Party's President, chief executive
officer, chief operating officer, and chief financial officer (without
regard to the title(s) actually given to the Persons discharging the
duties customarily discharged by officers with those titles).
(ii) Any ceasing of any Loan Party's payment of the debts of
that Loan Party generally as they mature, in the ordinary course, to its
creditors (other than its ceasing of making of such payments on account of
a dispute which, if adversely determined to the Loan Parties is not
reasonably likely to have a Material Adverse Effect).
(iii) Any failure by any Loan Party to pay rent at any of that
Loan Party's locations, which failure continues for more than three (3)
days following the last day on which such rent was payable unless such
failure is not reasonably likely to have a Material Adverse Effect.
(iv) Any material adverse change in the business, operations,
or financial affairs of any Borrower.
(v) The occurrence of any Default.
(vi) Any intention on the part of any Loan Party to discharge
that Loan Party's present independent accountants or any withdrawal or
resignation by such independent accountants from their acting in such
capacity (as to which, see Subsection 6.1(d)).
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(vii) Any litigation which, if determined adversely to any
Loan Party, is reasonably likely to have a Material Adverse Effect.
(viii) Any intention of a Borrower to enter into a consignment
arrangement or licensing or other similar agreement (whether for
intellectual property, leased departments in stores or otherwise) with any
other Person (other than a Loan Party).
(ix) Any Material Accounting Changes.
(x) Any event, occurrence or circumstance not specifically
described herein which is reasonably likely to have a Material Adverse
Effect.
(xi) Any Loan Party's entering into a license agreement after
the Effective Date.
(xii) Any Loan Party's entering into a Capital Lease after
the Effective Date.
(b) The Lead Borrower shall:
(i) Provide the Administrative Agent, when so distributed,
with copies of any materials distributed to all shareholders of the Lead
Borrower (qua such shareholders).
(ii) Provide the Administrative Agent:
(A) When filed, copies of all filings with the SEC. Such
copies may be provided in electronic format.
(B) When received, copies of all correspondence from the
SEC, other than routine general communications from the SEC.
(C) Should any of the information on any of the Exhibits
hereto become misleading in any material respect, the Borrower shall
promptly advise the Administrative Agent in writing with such
revisions or updates as may be necessary or appropriate to update or
correct the same; provided however that no such Exhibit shall be
deemed to have been amended, modified or superseded by any such
correction or update, nor shall any breach of representation or
warranty resulting from the inaccuracy or incompleteness of such
Exhibit be deemed to have been cured or waived, unless and until the
Administrative Agent, in its discretion shall have accepted in
writing such revisions.
(iii) At the request of the Administrative Agent, from time to
time, provide the Administrative Agent with copies of all advertising
(including copies of all print advertising and duplicate tapes of all
video and radio advertising).
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(iv) Provide the Administrative Agent, when received by any
Loan Party, with a copy of any management letter or similar communications
from any independent accountant of any Loan Party.
6.4. WEEKLY REPORTS. Weekly, on Friday of each week (as of the then
immediately preceding Saturday) the Lead Borrower shall provide the
Administrative Agent with borrowing base certificates (each, a "BORROWING BASE
CERTIFICATE") in the form of EXHIBIT 6.4 annexed hereto (as such form may be
revised from time to time by the Administrative Agent), prepared separately for
each Division and combined for all Borrowers, and sales audit reports and flash
collateral reports (each in such form as may be specified from time to time by
the Collateral Agent) prepared separately for each Division and combined for all
Borrowers. Such reports may be sent to the Administrative Agent by facsimile
transmission, provided that the original thereof is forwarded to the
Administrative Agent on the date of such transmission.
6.5. MONTHLY REPORTS. Monthly, the Lead Borrower shall provide the
Administrative Agent with those financial statements and reports described in
EXHIBIT 6.5, annexed hereto, at the times set forth in such exhibit.
6.6. QUARTERLY REPORTS. Quarterly, within forty-five (45) days
following the end of each of the Loan Parties' fiscal quarters, the Lead
Borrower shall provide the Administrative Agent with the following:
(a) An original counterpart of a management prepared financial
statement (which shall be prepared in the same manner and using the same
assumptions as set forth in the forecasts furnished to, and approved by, the
Administrative Agent pursuant to the provisions of Section 6.10(c) hereof) for
(i) the Loan Parties on a consolidated basis, (ii) the Filene's Business, and
(iii) the Value City Business, in each case for the fiscal quarter most recently
ended, and for the period from the beginning of the Loan Parties' then current
fiscal year through the end of the subject quarter, with comparative information
for the same period of the previous fiscal year, which statement shall include a
balance sheet, statement of operations, and cash flows and comparisons for the
corresponding quarter of the then immediately previous year, as well as to the
Loan Party's forecast.
(b) The officer's compliance certificate described in Section
6.8.
6.7. ANNUAL REPORTS.
(a) Annually, within ninety (90) days following the end of the Loan
Parties' fiscal year, the Lead Borrower shall furnish the Administrative Agent
with the following:
(i) An original signed counterpart of the Loan Parties'
Consolidated annual financial statement, which statement shall have been
prepared by, and bear the unqualified opinion of, the Lead Borrower's
independent certified public accountants (i.e. said statement shall be
"certified" by such accountants) and shall include, at a minimum (with
comparative information for the then prior fiscal year) a balance sheet,
statement of operations, statement of changes in shareholders' equity, and
cash flows.
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(ii) A consolidating annual financial statement for (i) the
Filene's Business, and (ii) the Value City Business which shall include
(with comparative information for the then prior fiscal year) a balance
sheet and statement of operations.
(iii) The officer's compliance certificate described in
Section 6.8.
(b) No later than fifteen (15) days prior to the end of each of the
Loan Parties' fiscal years, the Lead Borrower shall give written notice to such
independent certified accountants (with a copy of such notice, when sent, to the
Administrative Agent) that such annual financial statement will be delivered by
the Lead Borrower to the Administrative Agent (for subsequent distribution to
each Revolving Credit Lender), and that the Lead Borrower has been advised that
the Administrative Agent and each Revolving Credit Lender will rely thereon with
respect to the administration of, and transactions under, the credit facility
contemplated by this Agreement.
6.8. OFFICERS' CERTIFICATES. The Lead Borrower shall cause either the Lead
Borrower's Chief Executive Officer, President, Executive Vice President, Chief
Financial Officer, Controller, or Treasurer (collectively, an "AUTHORIZED
OFFICER"), in each instance, to provide such Person's certificate with the
monthly, quarterly and annual financial statements to be provided pursuant to
this Agreement, which certificate shall:
(a) Indicate that (i) with respect to the Consolidated financial
statement, the subject statement was prepared in accordance with GAAP
consistently applied, and (ii) with respect to all financial statements,
presents fairly the financial condition of the applicable Loan Parties at the
close of, and the results of the applicable Loan Parties' operations and cash
flows (where such cash flows are required to be provided) for, the period(s)
presented, subject, however to the following:
(A) Usual year end adjustments (this exception shall not
be included in the certificate which accompanies such annual statement).
(B) Material Accounting Changes (in which event, such
certificate shall include a schedule (in reasonable detail) of the effect
of each such Material Accounting Change.
(b) Indicate either that (i) no Default has occurred and is
continuing, or (ii) if such an event has occurred, its nature (in reasonable
detail) and the steps (if any) being taken or contemplated by the Loan Parties
to be taken on account thereof.
6.9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Collateral Agent, at the reasonable expense of the Loan
Parties, may participate in and/or observe each scheduled physical count of
Inventory which is undertaken on behalf of any Loan Party.
(b) The Loan Parties, at their own expense, shall cause not less
than one (1) physical inventory of each of Division to be undertaken in each
twelve (12) month period during which this Agreement is in effect conducted by
such inventory takers as are reasonably
86
satisfactory to the Collateral Agent and following such methodology as may be
reasonably satisfactory to the Collateral Agent.
(i) The Lead Borrower, within forty-five (45) days following
the completion of such inventory, shall provide the Collateral Agent with
a reconciliation of the results of each such inventory (as well as of any
other physical inventory undertaken by any Loan Party) and shall post such
results to the Loan Parties' stock ledger and, as applicable to the Loan
Parties' other financial books and records .
(ii) The Collateral Agent, in their reasonable, good faith
discretion, if any Event of Default has occurred and is continuing, may
cause such additional inventories to be taken as the Collateral Agent
determine (each, at the expense of the Loan Parties).
(c) The Collateral Agent may obtain appraisals of the Collateral
(copies of which, subject to the approval of the appraiser, shall be provided to
the Lead Borrower promptly upon receipt thereof), from time to time (in all
events, at the Loan Parties' expense) conducted by Hilco Appraisal Services, LLC
or such appraisers as are satisfactory to the Collateral Agent. The Collateral
Agent may conduct up to two (2) appraisals (in each event, at the Loan Parties'
expense) of the Collateral during any twelve (12) month period during which this
Agreement is in effect, but in their reasonable, good faith discretion, during
the occurrence and continuance of an Event of Default, may undertake additional
such appraisals (likewise at the Loan Party's expense) during such period.
(d) The Collateral Agent may conduct up to two (2) commercial
finance field examinations (in each event, at the Loan Parties' expense) of the
Loan Parties' books and records during any twelve (12) month period during which
this Agreement is in effect, but in their reasonable, good faith discretion
during the occurrence and continuance of an Event of Default, may undertake
additional such audits (likewise at the Loan Party's expense) during such
period.
(e) Notwithstanding anything to the contrary herein contained, upon
the occurrence of any event or circumstance which is reasonably likely to have a
material adverse effect on the business, operations, property, assets, or
financial condition of any Division, the limitations set forth in clauses (c)
and (d) on the number of appraisals and commercial finance examinations which
the Agent may cause to be undertaken for such Division only shall be
inapplicable and the Agent may undertake as many appraisals and commercial
finance examinations of such Division with such frequency as the Agent may deem
reasonably appropriate and necessary (none of which shall be included in
determining the number of appraisals and commercial finance examinations the
Agent may undertake with respect to other Divisions).
(f) Pursuant to the terms of the Intercreditor Agreement, CCM, as
agent under the Senior Non-Convertible Facility, may require the Collateral
Agent to undertake appraisals of the Collateral by appraisers selected in
accordance with the provisions of Section 6.9(c) hereof. Any such appraisals
undertaken by the Collateral Agent at the requirement of CCM shall not reduce
the number of appraisals permitted to be undertaken by the Collateral Agent
under Section 6.9(c) hereof. To the extent that the results of any such
appraisal reflect a reduction in the Appraised Inventory Liquidation Value, the
Collateral Agent may in their reasonable, good
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faith discretion reduce the Inventory Advance Rates in a manner consistent with
the reduced Appraised Inventory Liquidation Value. In no event shall such
Inventory Advance Rates be subject to increase as a result of such appraisals,
provided that nothing contained herein shall impair the right of the Collateral
Agent to increase the Inventory Advance Rate as set forth in the definition of
such term..
(g) The Collateral Agent from time to time may undertake "mystery
shopping" (so-called) visits to all or any of the Loan Parties' business
premises.
6.10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be provided
pursuant to this Article 6, the Lead Borrower promptly shall provide the Agent
with such other and additional information concerning the Loan Parties, the
Collateral, the operation of the Loan Parties' business, and the Loan Parties'
financial condition, including original counterparts of financial reports and
statements, as the Agent may from time to time reasonably request from the Lead
Borrower.
(b) The Lead Borrower shall, upon the Administrative Agent's
request, provide the Administrative Agent, from time to time hereafter, with
updated forecasts of the Loan Parties' anticipated performance and operating
results for the current fiscal year. Such forecasts shall be in a format
consistent with the format previously provided to the Administrative Agent.
(c) In all events, the Lead Borrower, no sooner than ninety (90) nor
later than sixty (60) days prior to the end of each of the Loan Parties' fiscal
years, shall provide the Administrative Agent with an updated and extended
forecast which shall go out at least through the end of the then next fiscal
year and shall include a statement of operations, balance sheet, and statement
of cash flow, by month, each Consolidated (with consolidating schedules by
Division) and each prepared in conformity with GAAP and consistent with the Loan
Parties' then current accounting practices.
(d) When available the "Annual Budget", as approved by the Lead
Borrowers' Board of Directors, shall be provided to the Administrative Agent.
The Annual Budget shall be subject to the approval of the Administrative Agent
(whose approval shall not be unreasonably withheld) only if the Annual Budget
varies in a material way from the Business Plan for such fiscal year.
(e) Each Loan Party recognizes that all commercial finance
examinations, inventories, analysis, financial information, and other materials
which the Agent may obtain, develop, or receive with respect to the Loan Parties
(other than appraisals and inventories received from third parties) are
confidential to the Agent and that, except as otherwise provided herein, no Loan
Party is entitled to receipt of any of such commercial finance examinations,
inventories, analysis, financial information, and other materials, nor copies or
extracts thereof or therefrom.
6.11. INFORMATION DELIVERED PURSUANT TO ARTICLE 6.
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All information required to be delivered pursuant to Article 6 may be
delivered by and in electronic format.
ARTICLE 7 - USE OF COLLATERAL:
7.1. USE OF INVENTORY COLLATERAL.
(a) No Loan Party shall engage in any of the following with respect
to its Inventory:
(i) Any sale other than for fair consideration in the conduct
of the Loan Parties' business in the ordinary course.
(ii) Sales or other dispositions to creditors, except returns
in the ordinary course of business.
(iii) Sales or other dispositions in bulk except in the
ordinary course of business consistent with past practices.
(iv) Sales in breach of any provision of this Agreement.
(v) Sales other than in connection with Permitted
Dispositions.
(b) Without the prior written consent of the Collateral Agent, no
sale of Inventory shall be on consignment (other than between Loan Parties),
approval, or under any other circumstances such that, with the exception of the
Loan Parties' customary return policy applicable to the return of inventory
purchased by the Loan Parties' retail customers in the ordinary course, such
Inventory may be returned to a Loan Party without the consent of the Collateral
Agent.
7.2. INVENTORY QUALITY. All Inventory now owned or hereafter acquired by
each Loan Party is and will be of good and merchantable quality, consistent with
past practices.
7.3. ADJUSTMENTS AND ALLOWANCES. Each Loan Party may grant such allowances
or other adjustments to that Loan Party's Account Debtors as that Loan Party may
reasonably deem to accord with sound business practice and which are normal and
customary extensions and adjustments in the ordinary course of business,
provided, however, the authority granted the Loan Parties pursuant to this
Section 7.3 may be limited or terminated by the Administrative Agent at any time
in the Administrative Agent's reasonable, good faith discretion after the
occurrence and during the continuance of an Event of Default.
7.4. VALIDITY OF ACCOUNTS.
(a) Except for adjustments and disputes in the ordinary course of
business, the amount of each Account shown on the books, records, and invoices
of the Loan Parties represented as owing by each Account Debtor is the correct
amount actually owing by such Account Debtor and shall have been fully earned by
performance by the Loan Parties.
89
(b) No Loan Party has any knowledge of any impairment of the
validity or collectibility of any of the Accounts, other than returns, reserves,
unauthorized use of credit cards, bad checks, adjustments and disputes which
occur in the ordinary course of business. The Lead Borrower shall notify the
Administrative Agent of any such impairment immediately after any Loan Party
becomes aware of any such impairment.
(c) No Loan Party shall post any bond to secure any Loan Party's
performance under any agreement to which any Loan Party is a party nor cause any
surety, guarantor, or other third party obligee to become liable to perform any
obligation of any Loan Party (other than to the Collateral Agent) in the event
of any Loan Party's failure so to perform, if, as a result of the surety,
guarantor or third party obligee's performance, such Person would obtain a
Encumbrance on any Collateral having priority to the Encumbrance of the
Collateral Agent.
7.5. NOTIFICATION TO ACCOUNT DEBTORS. The Collateral Agent shall have the
right (after the occurrence of a Cash Control Event) to notify any of the Loan
Parties' Account Debtors to make payment directly to the Administrative Agent
and to collect all amounts due on account of the Collateral.
ARTICLE 8 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8.1. DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 8.1 is a listing of all present DDA's,
which listing includes, with respect to each depository of the Loan Parties, the
following: (i) the name and address of that depository; (ii) the account
number(s) of the account(s) maintained with such depository; and (iii) a contact
person at such depository.
(b) The Lead Borrower shall deliver the following to the
Administrative Agent, as a condition to the effectiveness of this Agreement:
(i) Notifications, executed on behalf of each Borrower, to
each depository institution with which any DDA is maintained (other than
any Exempt DDA and the Collection Accounts), in form satisfactory to the
Administrative Agent of the Collateral Agent's interest in such DDA. Such
Notifications shall be held in escrow by the Administrative Agent until
the occurrence of a Cash Control Event at which time they may be delivered
to the applicable depositary institutions.
(ii) A Collection Account Agreement with any depository
institution at which a Collection Account is maintained, including those
listed on EXHIBIT 8.1.
(c) No Borrower will establish any DDA hereafter (other than an
Exempt DDA) unless, contemporaneous with such establishment, the Lead Borrower
delivers the following to the Administrative Agent:
(i) A notification for the depository at which such DDA is
established if the same would have been required pursuant to Section
8.1(b)(i) if the subject DDA were open at the execution of this Agreement.
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(ii) A Collection Account Agreement executed on behalf of the
depository at which such DDA is established if the same would have been
required pursuant to Section 8.1(b)(ii) if the subject DDA were open at
the execution of this Agreement.
8.2. CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 8.2 is a Schedule which describes all
arrangements to which any Borrower is a party with respect to the payment to
that Borrower of the proceeds of credit card charges for sales by that Borrower.
(b) The Lead Borrower shall deliver to the Administrative Agent, as
a condition to the effectiveness of this Agreement, an agreement executed on
behalf of each Borrower with each of each Borrower's credit card clearinghouses
and processors (in form satisfactory to the Administrative Agent), which
agreement provides that, during the existence of a Cash Control Event, payment
of all credit card charges submitted by that Borrower to that clearinghouse or
other processor and any other amount payable to that Borrower by such
clearinghouse or other processor shall be directed to the Administrative Agent's
Account or as otherwise designated from time to time by the Administrative
Agent. No Borrower shall change such direction or designation except upon and
with the prior written consent of the Administrative Agent and no Borrower will
enter into any agreements with a new credit card clearinghouse or processor
hereafter unless, contemporaneous with such establishment, the Lead Borrower
delivers to the Administrative Agent an agreement with such credit card
clearinghouse or processor of like terms to those required hereunder on the
Closing Date.
8.3. THE ADMINISTRATIVE AGENT'S, COLLECTION, AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be established
(and are so referred to herein):
(i) The "ADMINISTRATIVE AGENT'S ACCOUNT(S)" (so referred to
herein): Established by the Administrative Agent with NCB for each
Division as more specifically described on EXHIBIT 8.3 hereto.
(ii) The "COLLECTION ACCOUNTS" (so referred to herein):
Established by the Lead Borrower with those financial institutions
described on EXHIBIT 8.3 hereof.
(iii) The "OPERATING ACCOUNTS" (so referred to herein):
Established by each Division with NCB as more specifically described on
EXHIBIT 8.3 hereto.
(b) The contents of each DDA and of each Collection Account
constitutes Collateral and Proceeds of Collateral. The contents of each
Administrative Agent's Account constitutes the Administrative Agent's property.
(c) The Borrowers shall pay all fees and charges of, and maintain
such impressed balances as may be required by the depository in which any
account is opened as required hereby (even if such account is opened by and/or
is the property of the Agent).
8.4. PROCEEDS AND COLLECTIONS.
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(a) All Receipts constitute Collateral and proceeds of
Collateral.
(b) Absent a Cash Control Event, the Borrowers may collect all
Receipts and use such Receipts in the ordinary course of business.
(c) During a Cash Control Event, the Borrowers for each Division
shall cause all Receipts to be deposited or transferred to the Administrative
Agent's Account for such Division.
(d) Subject to this Section 8.4, upon notice from the Administrative
Agent to the Lead Borrower that a Cash Control Event has occurred:
(i) All Receipts:
(A) Shall be held in trust by the Borrowers for the
Collateral Agent.
(B) Shall not be commingled with any of any Borrower's
other funds.
(C) Shall be deposited and/or transferred only to a
Collection Account or the applicable Administrative Agent's
Accounts, and the Borrowers shall not have any authority to withdraw
any amounts from such accounts and the Administrative Agent shall
have no obligation to deposit such Receipts in the applicable
Operating Account.
(ii) The Lead Borrower shall cause the ACH transfer or wire
transfer to the Collection Account or the applicable Administrative
Agent's Account (except in those instances in which such transfer is not
within the control of the Lead Borrower or any other Borrower), no less
frequently than daily (and whether or not there is then an outstanding
balance in the Loan Account) of the following:
(A) The then contents of each DDA (other than any Exempt
DDA), each such transfer to be net of any minimum balance, not to
exceed $2,000.00, as may be required to be maintained in the subject
DDA by the bank at which such DDA is maintained.
(B) The proceeds of all credit card charges not
otherwise provided for pursuant hereto.
(iii) In the event that, notwithstanding the provisions of
this Section 8.4(d), any of the Borrowers receives or otherwise has
dominion and control of any Receipts, or any proceeds or collections of
any Collateral, such Receipts, proceeds, and collections shall be held in
trust by that Borrower for the Agent and shall not be commingled with any
of that Borrower's other funds or deposited in any account of any Borrower
other than as instructed by the Administrative Agent.
(iv) The Borrowers shall not disburse any funds in the DDAs,
Collection Accounts or other deposit accounts (other than Exempt DDAs and
the
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Operating Accounts in the ordinary course of business consistent with past
practices) other than in accordance with the provisions of this Section
8.4.
8.5. PAYMENT OF LIABILITIES.
(a) On each Business Day after the occurrence and during the
continuance of a Cash Control Event, the Administrative Agent shall apply the
then collected balance of each Administrative Agent's Account (net of fees
charged, and of such impressed balances as may be required by the bank at which
such Administrative Agent's Account is maintained) First, towards the SwingLine
Loans of the applicable Division, Second, towards the unpaid balance of the Loan
Account for such Division, and Third, to all other Liabilities in such order as
the Administrative Agent may determine.
(b) The following rules shall apply to deposits and payments under
and pursuant to this Section 8.5:
(i) Funds shall be deemed to have been deposited to an
Administrative Agent's Account on the Business Day on which deposited,
provided that notice of such deposit is available to the Administrative
Agent by 1:00PM on that Business Day.
(ii) Funds paid to the Administrative Agent, other than by
deposit to an Administrative Agent's Account, shall be deemed to have been
received on the Business Day when they are good and collected funds,
provided that notice of such payment is available to the Administrative
Agent by 1:00PM on that Business Day.
(iii) If notice of a deposit to an Administrative Agent's
Account (Section 8.5(b)(i)) or payment (Section 8.5(b)(ii)) is not
available to the Administrative Agent until after 1:00PM on a Business
Day, such deposit or payment shall be deemed to have been made at 9:00AM
on the then next Business Day.
(iv) All deposits to an Administrative Agent's Account and
other payments to the Administrative Agent are subject to clearance and
collection.
(c) The Administrative Agent shall transfer to the Operating Account
of the applicable Division any surplus in the Administrative Agent's Account for
such Division remaining after the application towards the Liabilities referred
to in Section 8.5(a), above (less those amounts which are to be netted out, as
provided therein) provided, however, in the event that
(i) any Default has occurred and is continuing; and
(ii) one or more L/Cs and Banker's Acceptances are then
outstanding,
then the Administrative Agent may, and at the direction of the SuperMajority
Lenders shall, establish a funded reserve of up to 105% of the aggregate Stated
Amounts of such L/C's and such Banker's Acceptances. Such funded reserve shall
either be (i) returned to the applicable Borrower provided that no Borrower is
in Default or (ii) applied towards the Liabilities in the manner set forth
herein following the occurrence of any Event of Default described in Section or
acceleration following the occurrence of any other Event of Default.
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8.6. THE OPERATING ACCOUNT.
(a) Except as otherwise specifically provided in, or permitted by,
this Agreement, funds in the Operating Account of each Division shall be
utilized to fund disbursements made by such Division, including, without
limitation, from any expense accounts maintained by such Division, provided that
funds in the Operating Account for the Filene's Business may be distributed to
the Lead Borrower in the ordinary course to the extent necessary in order that
the Lead Borrower may pay the expenses of the Filene's Business consistent with
the parties' prior practices.
(b) After the occurrence and during the continuance of any Event of
Default or at any time that Average Excess Availability for any five (5)
consecutive Business Days is less than $48,000,000.00, NCB shall not be
obligated to permit any outgoing ACH transfers unless the amount of the proposed
transfer is fully prefunded in accordance with the requirements and practices of
NCB.
ARTICLE 9 - GRANT OF SECURITY INTEREST:
9.1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Collateral Agent, for the ratable benefit of the
Revolving Credit Lenders, the Issuer, the Agent, and the Affiliates of each of
them, a continuing security interest in and to, and assigns to the Collateral
Agent, for the ratable benefit of the Revolving Credit Lenders, the following,
and each item thereof, whether now owned or now due, or in which that Borrower
has an interest, or hereafter acquired, arising, or to become due, or in which
that Borrower obtains an interest, and all products, Proceeds, substitutions,
and accessions of or to any of the following, but excluding the Excluded
Property (all of which, together with any other property in which the Collateral
Agent may in the future be granted a security interest, is referred to herein as
the "COLLATERAL"):
(a) All Accounts.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
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(k) All Supporting Obligations.
(l) The Commercial Tort Claim described on EXHIBIT 4.17 hereto.
(m) All books, records, and information relating to the Collateral
and/or to the operation of each Borrowers' business, and all rights of access to
such books, records, and information, and all property in which such books,
records, and information are stored, recorded, and maintained.
(n) All Leasehold Interests (other than Leasehold Interests not
required to be pledged under the Senior Non-Convertible Facility).
(o) All Investment Property, Instruments, Documents, Deposit
Accounts, money, policies and certificates of insurance, deposits, impressed
accounts, compensating balances, cash, or other property.
(p) All insurance proceeds, refunds, and premium rebates, including,
without limitation, proceeds of fire and credit insurance, whether any of such
proceeds, refunds, and premium rebates arise out of any of the foregoing. (9.1
through 9.1(o)) or otherwise.
(q) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing (9.1 through 9.1(p)), including the right of
stoppage in transit.
9.2. EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created and granted herein is in addition
to, and supplemental of, any security interest previously granted by any
Borrower to the Collateral Agent (including, without limitation, under any
mortgages and deeds of trust) and shall continue in full force and effect
applicable to all Liabilities until
(i) the Termination Date has occurred; and
(ii) all Liabilities have been paid or satisfied in full in
cash and satisfactory arrangements with respect to L/Cs and Banker's
Acceptances as provided in Section 19.2 hereof have been made; and
(iii) the security interest created herein is specifically
terminated in writing by duly authorized officers of the Collateral Agent
as provided in Section 19.2(d) hereof.
(b) It is intended that the Collateral Interests created herein
extend to and cover all assets of each Borrower, except for Excluded Property.
(c) If a Borrower shall at any time acquire a Commercial Tort Claim,
the Lead Borrower shall promptly notify the Administrative Agent in writing of
the details thereof and the Borrowers shall take such actions as the Collateral
Agent shall request in order to grant to the Collateral Agent, for the ratable
benefit of the Revolving Credit Lenders, the Issuer, the Agent, and the
Affiliates of each of them, a perfected and first priority security interest
therein and in the Proceeds thereof.
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ARTICLE 10 - COLLATERAL AGENT AS BORROWERS' ATTORNEY-IN-FACT:
10.1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Collateral Agent (acting through any officer of the
Collateral Agent) as that Borrower's true and lawful attorney, with full power
of substitution, following the occurrence of an Event of Default, to convert the
Collateral into cash at the sole risk, cost, and expense of that Borrower, but
for the sole benefit of the Agent and the Revolving Credit Lenders. The rights
and powers granted the Collateral Agent by this appointment include but are not
limited to the right and power to:
(a) Prosecute, defend, compromise, or release any action relating to
the Collateral.
(b) Sign change of address forms to change the address to which each
Borrowers' mail is to be sent to such address as the Collateral Agent shall
designate (after which copies of all such mail shall be promptly furnished to
the Lead Borrower); receive and open each Borrowers' mail; remove any
Receivables Collateral and Proceeds of Collateral therefrom and turn over the
balance of such mail either to the Lead Borrower or to any trustee in bankruptcy
or receiver of the Lead Borrower, or other legal representative of a Borrower
whom the Collateral Agent determine to be the appropriate Person to whom to so
turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the
Collateral Agent upon any and all checks, drafts, notes, acceptances, or other
items or instruments; sign and endorse the name of the relevant Borrower on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents of title respectively relating to the
Collateral.
(d) Sign the name of the relevant Borrower on any notice to that
Borrowers' Account Debtors or verification of the Receivables Collateral; sign
the relevant Borrowers' name on any Proof of Claim in Bankruptcy against Account
Debtors, and on notices of lien, claims of mechanic's liens, or assignments or
releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment
of any letter of credit and/or banker's acceptance of which any Borrower is a
beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver, alter
or supply goods, if any, necessary to fulfill in whole or in part the purchase
order of any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of each
Borrower.
10.2. NO OBLIGATION TO ACT. The Collateral Agent shall not be obligated to
do any of the acts or to exercise any of the powers authorized by Section 10.1
herein, but if the Collateral Agent elect to do any such act or to exercise any
of such powers, they shall not be accountable for more than they actually
receive as a result of such exercise of power, and shall not be responsible to
any Borrower for any act or omission to act except for any act or omission to
act as to which there is a final determination made in a judicial proceeding (in
which
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proceeding the Collateral Agent have had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission to
act had been grossly negligent or in actual bad faith, or willful misconduct.
ARTICLE 11 - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 11 respectively
shall constitute an "EVENT OF DEFAULT" herein. The occurrence of any Event of
Default shall also constitute, without notice or demand, a default under all
other agreements between the Agent or any Revolving Credit Lender and any Loan
Party and instruments and papers heretofore, now, or hereafter given the Agent
or any Revolving Credit Lender by any Loan Party in connection with any of the
Loan Documents.
11.1. FAILURE TO PAY THE REVOLVING CREDIT. The failure by any Loan
Party to pay when due any principal of, interest on, or fees in respect
of, the Revolving Credit.
11.2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Loan Party to pay
when due (or upon demand, if payable on demand) any payment Liability other than
any payment liability on account of the principal of, or interest on, or fees in
respect of, the Revolving Credit.
11.3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by any Loan Party to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability included in any of
the following provisions hereof:
Section Relates to:
------- -----------
5.6 Indebtedness
5.12 Pay taxes
5.16 Dividends. Investments. Other Corporate Actions
5.17 Loans and Advances
5.18 Affiliate Transactions
5.26 Parent's Line of Business
Article 6 Reporting Requirements (except as set forth in Section 11.4, below)
Article 8 Cash Management
11.4. FINANCIAL REPORTING REQUIREMENTS. The failure by the Borrower to
promptly, punctually, faithfully and timely perform, discharge, or comply with
the financial reporting requirements included in Section 6.4, subject, however,
to the following limited number of grace periods applicable to certain of those
requirements:
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE
SECTION PERIODS
------------------ ----------- ------------ ---------------
Weekly Report 5.4 Two (2) Business Twice in any twelve
Days (12) consecutive months
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11.5. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The failure
by any Loan Party, within twenty (20) days following the earlier of any
Authorized Officer's knowledge of a breach of any covenant or Liability not
described in any of Sections 11.1, 11.2, 11.3, or 11.4 or of its receipt of
written notice from the Administrative Agent of the breach of any of such
covenants or Liabilities, provided that if such failure cannot be reasonably
cured within such twenty (20) day period and the Loan Parties have diligently
proceeded, and continue to diligently proceed, to effectuate a cure of such
failure, such failure shall not be an Event of Default hereunder unless (a) such
failure is not cured within twenty (20) days after the expiration of such
initial twenty (20) day period, or (b) such failure, in the reasonable judgment
of the Collateral Agent, is reasonably likely to have a Material Adverse Effect.
11.6. MISREPRESENTATION. The determination by the Administrative Agent
that any representation or warranty at any time made by any Loan Party to the
Agent or any Revolving Credit Lender was not true or complete in all material
respects when given.
11.7. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence and
continuance of any event of default or other event, which with the giving of
notice, the passage of time or both, would be an event of default under (i) the
Senior Non-Convertible Facility, or (ii) any other Indebtedness of any Loan
Party equal to or in excess of One Million Dollars ($1,000,000.00) to any
creditor other than the Agent or any Revolving Credit Lender, (whether or not
such Indebtedness has been accelerated), or, Leases aggregating more than five
percent (5%) of all Leases of the Loan Parties existing from time to time could
be terminated due to a default by a Loan Party thereunder (whether or not the
subject creditor or lessor takes any action on account of such occurrence).
11.8. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach of any
covenant or Liability imposed by, or of any default under, any agreement between
the Agent or any Revolving Credit Lender and any Loan Party or instrument given
by any Loan Party to the Agent or any Revolving Credit Lender relating to
Indebtedness of any Loan Party in excess of $1,000,000 in the aggregate and the
expiration, without cure, of any applicable grace period (notwithstanding that
the Agent or Revolving Credit Lender may not have exercised all or any of its
rights on account of such breach or default).
11.9. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Collateral.
11.10. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The entry of any judgment in excess of Two Million Five Hundred
Thousand Dollars ($2,500,000.00) against any Loan Party, which judgment (i) is
not covered by insurance (as to which the insurer has not notified the
applicable Loan Party of the insurer's reservation of rights) or (ii) is not
satisfied, stayed (if a money judgment) or appealed from (with execution or
similar process stayed) within thirty (30) days of its entry.
(b) The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain the conduct by any
Borrower of its business in the ordinary course and which is reasonably likely
to have a Material Adverse Effect.
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11.11. BUSINESS FAILURE. Any act by, against, or relating to any Loan
Party, or its property or assets, which act constitutes the determination, by
any Loan Party, to initiate a program of substantial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other Person, pursuant to court action or otherwise, over all, or
any part of any Loan Party's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Loan Party,
or the occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for any Loan Party; the offering by or entering into by any
Loan Party of any composition, extension, or any other arrangement seeking
relief generally from or extension of the debts of any Loan Party; or the
initiation of any judicial or non-judicial proceeding or agreement by, against,
or including any Loan Party which seeks or intends to accomplish a
reorganization or arrangement with creditors; and/or the initiation by or on
behalf of any Loan Party of the liquidation or winding up of all or any part of
any Loan Party's business or operations except that any of the foregoing actions
which are commenced against a Loan Party shall not be deemed an Event of Default
hereunder as long as such action is timely contested in good faith by that Loan
Party by appropriate proceedings and is dismissed within sixty (60) days of the
institution of the foregoing.
11.12. BANKRUPTCY. The failure by any Loan Party to generally pay the
debts of that Loan Party as they mature; adjudication of bankruptcy or
insolvency relative to any Loan Party; the entry of an order for relief or
similar order with respect to any Loan Party in any proceeding pursuant to the
Bankruptcy Code or any other federal bankruptcy law; the filing of any
complaint, application, or petition by any Loan Party initiating any matter in
which any Loan Party is or may be granted any relief from the debts of that Loan
Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Loan Party initiating any matter in which that Loan Party is or may be granted
any relief from the debts of that Loan Party pursuant to the Bankruptcy Code or
any other insolvency statute or procedure, which complaint, application, or
petition is not timely contested in good faith by that Loan Party by appropriate
proceedings or, if so contested, is not dismissed within sixty (60) days of when
filed.
11.13. TERMINATION OF GUARANTY. The termination or attempted termination
of any Facility Guarantee by any Facility Guarantor.
11.14. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Loan Party to the validity
of any Loan Document or the applicability or enforceability of any Loan Document
strictly in accordance with the subject Loan Document's terms or which seeks to
void, avoid, limit, or otherwise adversely affect any security interest created
by or in any Loan Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
11.15. CHANGE IN CONTROL. Any Change in Control.
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ARTICLE 12 - RIGHTS AND REMEDIES UPON DEFAULT:
12.1. ACCELERATION. Upon the occurrence of any Event of Default as
described in Section , all Indebtedness of the Loan Parties to the Revolving
Credit Lenders shall be immediately due and payable. Upon the occurrence and
continuance of any Event of Default other than as described in Section , the
Administrative Agent may (and on the issuance of Acceleration Notice(s)
requisite to the causing of Acceleration, the Administrative Agent shall)
declare all Indebtedness of the Borrowers to the Revolving Credit Lenders to be
immediately due and payable and the Agent may exercise all of the Agent's Rights
and Remedies as the Agent from time to time thereafter determine as appropriate.
12.2. RIGHTS OF ENFORCEMENT. Subject to the terms of the Intercreditor
Agreement, the Collateral Agent shall have all of the rights and remedies of a
secured party upon default under the UCC, in addition to which the Collateral
Agent shall have all and each of the following rights and remedies:
(a) To give notice to any bank at which any DDA or Collection
Account is maintained and in which Proceeds of Collateral are deposited, to turn
over such Proceeds directly to the Agent.
(b) To give notice to any customs broker of any of the Borrowers to
follow the instructions of the Collateral Agent as provided in any written
agreement or undertaking of such broker in favor of the Collateral Agent.
(c) To collect the Receivables Collateral with or without the taking
of possession of any of the Collateral.
(d) To take possession of all or any portion of the Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Collateral Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which include
the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
12.3. SALE OF COLLATERAL.
After the occurrence and during the continuance of an Event of Default:
(a) Any sale or other disposition of the Collateral may be at public
or private sale upon such terms and in such manner as the Collateral Agent deem
advisable, having due
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regard to compliance with any statute or regulation which might affect, limit,
or apply to the Collateral Agent' disposition of the Collateral.
(b) The Collateral Agent, in the exercise of the Collateral Agent's
rights and remedies upon default, may conduct one or more going out of business
sales, in the Collateral Agent's own right or by one or more agents and
contractors. Such sale(s) may be conducted upon any premises owned, leased, or
occupied by any Borrower. The Collateral Agent and any such agents or
contractors, in conjunction with any such sale, may augment the Inventory with
other goods (all of which other goods shall remain the sole property of the
Collateral Agent or such agents or contractors). Any amounts realized from the
sale of such goods which constitute augmentations to the Inventory (net of an
allocable share of the costs and expenses incurred in their disposition) shall
be the sole property of the Collateral Agent or such agents or contractors and
neither any Borrower nor any Person claiming under or in right of any Borrower
shall have any interest therein. Upon request of the Lead Borrower, the
Collateral Agent shall promptly furnish, or cause to be furnished, to the Lead
Borrower a reconciliation of the amounts received from the augmentation of the
Inventory and the allocation of costs and expenses thereto.
(c) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event the Collateral Agent shall provide the Lead Borrower such notice as
may be practicable under the circumstances), the Collateral Agent shall give the
Lead Borrower at least ten (10) days prior notice, by authenticated record, of
the date, time, and place of any proposed public sale, and of the date after
which any private sale or other disposition of the Collateral may be made. Each
Borrower agrees that such written notice shall satisfy all requirements for
notice to that Borrower which are imposed under the UCC or other applicable law
with respect to the exercise of the Collateral Agent's rights and remedies upon
default.
(d) The Agent and any Revolving Credit Lender may purchase the
Collateral, or any portion of it at any sale held under this Article.
(e) The Collateral Agent shall deliver the proceeds of the
Collateral Agent' exercise of its rights and remedies upon default to the
Administrative Agent for application pursuant to Section 14.6 hereof.
12.4. OCCUPATION OF BUSINESS LOCATION. In connection with the Collateral
Agent's exercise of the Collateral Agent's rights under this Article 12, the
Collateral Agent may enter upon, occupy, and use any premises owned or occupied
by each Borrower, and may exclude each Borrower from such premises or portion
thereof as may have been so entered upon, occupied, or used by the Collateral
Agent. The Collateral Agent shall not be required to remove any of the
Collateral from any such premises upon the Collateral Agent's taking possession
thereof, and may render any Collateral unusable to the Borrowers. In no event
shall the Collateral Agent be liable to any Borrower for use or occupancy by the
Collateral Agent of any premises pursuant to this Article 12, nor for any charge
(such as wages for any Borrowers' employees and utilities) incurred in
connection with the Collateral Agent's exercise of the Agent's Rights and
Remedies.
12.5. GRANT OF NONEXCLUSIVE LICENSE. In connection with the Collateral
Agent's exercise of the Collateral Agent's rights under this Article 12, each
Borrower hereby grants to
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the Collateral Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, trade name, logo, or the like in which any
Borrower now or hereafter has rights, such license being with respect to the
Collateral Agent's exercise of the rights hereunder including, without
limitation, in connection with any completion of the manufacture of Inventory or
sale or other disposition of Inventory.
12.6. ASSEMBLY OF COLLATERAL. In connection with the Collateral Agent's
exercise of the Collateral Agent's rights under this Article 12, the Collateral
Agent may require any Borrower to assemble the Collateral and make it available
to the Collateral Agent at the Borrowers' sole risk and expense at a place or
places which are reasonably convenient to both the Collateral Agent and the Lead
Borrower.
12.7. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges, and
discretions of the Agent hereunder (herein, the "AGENT'S RIGHTS AND REMEDIES")
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No delay or omission by the Agent in exercising or enforcing any
of the Agent's Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by the Agent of any Event of Default or of any default under
any other agreement shall operate as a waiver of any other default hereunder or
under any other agreement. No single or partial exercise of any of the Agent's
Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Agent and any Person, at any time,
shall preclude the other or further exercise of the Agent's Rights and Remedies.
No waiver by the Agent of any of the Agent's Rights and Remedies on any one
occasion shall be deemed a waiver on any subsequent occasion, nor shall it be
deemed a continuing waiver. The Agent's Rights and Remedies may be exercised at
such time or times and in such order of preference as the Agent may determine.
The Agent's Rights and Remedies may be exercised without resort or regard to any
other source of satisfaction of the Liabilities.
ARTICLE 13 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13.1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 13.2:
(a) The Administrative Agent shall advise each Revolving Credit
Lender, no later than 12:30 p.m. on a date on which any Revolving Credit Loan
(other than a SwingLine Loan) is to be made on that date. Such advice, in each
instance, may be by telephone or facsimile transmission, provided that if such
advice is by telephone, it shall be confirmed in writing. Advice of a Revolving
Credit Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Dollar Commitment, each Revolving Credit Lender, by no later than 3:00 p.m. on
the day on which the subject Revolving Credit Loan is to be made, shall Transfer
that Revolving Credit Lender's Revolving Credit Commitment Percentage of the
subject Revolving Credit Loan to the Administrative Agent in immediately
available funds.
13.2. SWINGLINE LOANS.
(a) In the event that, when a Base Margin Rate Revolving Credit Loan
is requested, the aggregate unpaid balance of the SwingLine Loan is less than
the SwingLine Loan
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Ceiling, then the SwingLine Lender may advise the Administrative Agent that the
SwingLine Lender has determined to include up to the amount of the requested
Revolving Credit Loan as part of the SwingLine Loan. In such event, the
SwingLine Lender shall Transfer the amount of the requested Revolving Credit
Loan to the Administrative Agent.
(b) The SwingLine Loan shall be converted to a Revolving Credit Loan
in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, but no less frequently
than once during each five (5) Business Day period, the SwingLine Lender
may advise the Administrative Agent that all, or any part of the SwingLine
Loan is to be converted to a Revolving Credit Loan in which all Revolving
Credit Lenders participate.
(ii) At the times set forth in Section 13.4, the then entire
unpaid principal balance of the SwingLine Loan shall be converted to a
Revolving Credit Loan in which all Revolving Credit Lenders participate.
(iii) At the initiation of a Liquidation, the then entire
unpaid principal balance of the SwingLine Loan shall be converted to a
Revolving Credit Loan in which all Revolving Credit Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if such
conversion were the making of a Revolving Credit Loan as provided in Section
9.1.
(c) The SwingLine Lender, in separate capacities, may also be the
Administrative Agent and a Revolving Credit Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender, is
not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the relevant
Section, any distribution pursuant to Section 14.6.
(ii) Determination of whether the requisite Loan Commitments
have Consented to action requiring such Consent.
13.3. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS.
(a) Each Revolving Credit Lender shall make available to the
Administrative Agent, as provided herein, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of the following:
(i) Each Revolving Credit Loan, up to the maximum amount of
that Revolving Credit Lender's Revolving Credit Dollar Commitment of the
Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving Credit
Lender's Revolving Credit Dollar Commitment of each drawing under a L/C
and Banker's
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Acceptance (to the extent that such drawing under a L/C or Banker's
Acceptance is not "covered" by a Revolving Credit Loan as provided
herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject to
Section 13.3(a), timely shall make available to the Administrative Agent
that Revolving Credit Lender's Revolving Credit Commitment Percentage of
each Revolving Credit Loan, notice of which is provided pursuant to
Section 9.1 and shall make available, to the extent not "covered" by a
Revolving Credit Loan, that Revolving Credit Lender's Revolving Credit
Commitment Percentage of any honoring of an L/C or a Banker's Acceptance.
(ii) In reliance upon such assumption, make available the
corresponding amount to the Borrowers (but the Administrative Agent shall
not be obligated to make such amount available to the Borrowers until
actual receipt thereof from the Revolving Credit Lenders).
(iii) Assume that each Revolving Credit Lender timely shall
pay, and shall make available, to the Administrative Agent all other
amounts which that Revolving Credit Lender is obligated to so pay and/or
make available hereunder or under any of the Loan Documents.
(c) In the event that, in reliance upon any of such assumptions, the
Administrative Agent makes available a Revolving Credit Lender's Revolving
Credit Commitment Percentage of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "DELINQUENT REVOLVING CREDIT LENDER") fails
to provide to the Administrative Agent within one (1) Business Day of written
notice of such failure, then:
(i) The amount which had been made available by the
Administrative Agent is an "ADMINISTRATIVE AGENT'S COVER" (and is so
referred to herein).
(ii) All interest paid by the Borrowers on account of the
Revolving Credit Loan or coverage of the subject drawing of a L/C or
Banker's Acceptance which consist of the Administrative Agent's Cover
shall be retained by the Administrative Agent until the Administrative
Agent's Cover, with interest, has been paid.
(iii) The Delinquent Revolving Credit Lender shall pay to the
Administrative Agent, on demand, interest at a rate equal to the
prevailing Federal Funds Effective Rate on any Administrative Agent's
Cover in respect of that Delinquent Revolving Credit Lender.
(iv) The Administrative Agent shall have succeeded to all
rights to payment to which the Delinquent Revolving Credit Lender
otherwise would have been entitled hereunder in respect of those amounts
paid by or in respect of the Borrowers on account of the Administrative
Agent's Cover together with interest until it is repaid. Such payments
shall be deemed made first towards the amounts in respect of which the
Administrative Agent's Cover was provided and only then towards amounts in
which the
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Delinquent Revolving Credit Lender is then participating. For purposes of
distributions to be made pursuant to Section 13.4(a) (which relates to
ordinary course distributions) or Section 14.6 (which relates to
distributions of proceeds of a Liquidation) below, amounts shall be deemed
distributable to a Delinquent Revolving Credit Lender (and consequently,
to the Administrative Agent to the extent to which the Administrative
Agent is then entitled) at the highest level of distribution (if
applicable) at which the Delinquent Revolving Credit Lender would
otherwise have been entitled to a distribution.
(v) Subject to Subsection 13.3(c)(iv), the Delinquent
Revolving Credit Lender shall be entitled to receive any payments from the
Borrowers to which the Delinquent Revolving Credit Lender is then
entitled, provided however there shall be deducted from such amount and
retained by the Administrative Agent any interest to which the
Administrative Agent is then entitled on account of Section 13.3(c)(ii),
above.
(d) A Delinquent Revolving Credit Lender shall not be relieved of
any obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status as a
Delinquent Revolving Credit Lender by paying the Administrative Agent the
aggregate of the following:
(i) The Administrative Agent's Cover (to the extent not
previously repaid by the Borrowers and retained by the Administrative
Agent in accordance with Subsection 13.3(c)(iv), above) with respect to
that Delinquent Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under Subsection
13.3(c)(iii), above (which relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be incurred by the
Administrative Agent in the enforcement of the Administrative Agent's
rights against such Delinquent Revolving Credit Lender.
13.4. ORDINARY COURSE DISTRIBUTIONS. (This Section 13.4 applies
unless the provisions of Section 14.6 (which relates to distributions in
the event of a Liquidation) becomes operative).
(a) Weekly, on each Thursday (or more frequently at the
Administrative Agent's option) the Administrative Agent and each Revolving
Credit Lender shall settle up on amounts advanced under the Revolving Credit and
payments received on account of the Revolving Credit (including, without
limitation, collected funds received in the Administrative Agent's Accounts and
not released to the Operating Accounts as provided herein).
(b) The Administrative Agent shall distribute to the SwingLine
Lender and to each Revolving Credit Lender, such Person's respective pro-rata
share of payments of interest and fees on account of the Revolving Credit when
actually received and collected by the
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Administrative Agent. For purposes of calculating interest due to a Revolving
Credit Lender, that Revolving Credit Lender shall be entitled to receive
interest on the actual amount contributed by that Revolving Credit Lender
towards the principal balance of the Revolving Credit Loans outstanding during
the applicable period covered by the interest payment made by the Borrowers. Any
net principal reductions to the Revolving Credit Loans received by the
Administrative Agent in accordance with the Loan Documents during such period
shall not reduce such actual amount so contributed, for purposes of calculation
of interest due to that Revolving Credit Lender, until the Administrative Agent
has distributed to that Revolving Credit Lender its pro-rata share thereof.
(c) No Revolving Credit Lender shall have any interest in, or right
to receive any part of, the Underwriting Fee, the Structuring Fee or the
Collateral Monitoring Fee to be paid by the Borrowers to the Administrative
Agent pursuant to this Agreement.
(d) Any amount received by the Administrative Agent as reimbursement
for any cost or expense (including without limitation, reasonable attorneys'
fees) shall be distributed by the Administrative Agent to that Person which is
entitled to such reimbursement as provided in this Agreement (and if such
Person(s) is (are) the Revolving Credit Lenders, pro-rata based upon their
respective Revolving Credit Commitment Percentages at the date on which the
expense, in respect of which such reimbursement is being made, was incurred).
(e) Each distribution pursuant to this Section 13.4 is subject to
Section 13.3(c), above.
ARTICLE 14 - ACCELERATION AND LIQUIDATION:
14.1. ACCELERATION NOTICES.
(a) The Administrative Agent may give the Revolving Credit Lenders
an Acceleration Notice at any time following the occurrence of an Event of
Default.
(b) The SuperMajority Lenders may give the Administrative Agent an
Acceleration Notice at any time following the occurrence of an Event of Default.
Such notice may be by multiple counterparts, provided that counterparts executed
by the requisite Revolving Credit Lenders are received by the Administrative
Agent within a period of five (5) consecutive Business Days.
14.2. ACCELERATION. Unless stayed by judicial or statutory process, the
Administrative Agent shall Accelerate the Liabilities on account of the
Revolving Credit within a commercially reasonable time following:
(a) The Administrative Agent's giving of an Acceleration Notice to
the Revolving Credit Lenders as provided in Section 14.1(a).
(b) The Administrative Agent's receipt of an Acceleration Notice
from the SuperMajority Lenders, in compliance with Section 14.1(b).
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14.3. INITIATION OF LIQUIDATION. Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Administrative Agent within a
commercially reasonable time following Acceleration of Liabilities on account of
the Revolving Credit.
14.4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION.
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine Loan (if
any) shall be converted, pursuant to Section 13.2(b)(iii), to a Revolving
Credit Loan in which all Revolving Credit Lenders participate.
(ii) The Administrative Agent and the Revolving Credit Lenders
shall "net out" each Revolving Credit Lender's respective contributions
towards the Revolving Credit Loans, so that each Revolving Credit Lender
holds that Revolving Credit Lender's Revolving Credit Commitment
Percentage of the Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving Credit
Lender shall contribute, towards any L/C and Banker's Acceptance thereafter
honored and not immediately reimbursed by the Borrowers, that Revolving Credit
Lender's Revolving Credit Commitment Percentage of such honoring.
14.5. COLLATERAL AGENT'S CONDUCT OF LIQUIDATION.
(a) Any Liquidation shall be conducted by the Collateral Agent,
subject to the direction of the SuperMajority Lenders.
(b) The Collateral Agent may establish one or more Nominees to "bid
in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agent shall manage the Nominee and manage and
dispose of any Post Foreclosure Assets with a view towards the realization of
the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Collateral Agent and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Collateral Agent determine as appropriate under the circumstances.
(d) The Collateral Agent may decline to undertake or to continue
taking a course of action or to execute an action plan (whether proposed by the
Collateral Agent or any Revolving Credit Lender) unless indemnified to the
Collateral Agent's satisfaction by the Revolving Credit Lenders against any and
all liability and expense which may be incurred by the Collateral Agent by
reason of taking or continuing to take that course of action or action plan.
(e) Each Revolving Credit Lender shall execute all such instruments
and documents not inconsistent with the provisions of this Agreement as the
Collateral Agent and/or the Nominee reasonably may request with respect to the
creation and governance of any Nominee, the conduct of the Liquidation, and the
management and disposition of any Post Foreclosure Asset.
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14.6. DISTRIBUTION OF LIQUIDATION PROCEEDS.
(a) The Collateral Agent may establish one or more reasonably funded
reserve accounts into which proceeds of the conduct of any Liquidation may be
deposited in anticipation of future expenses which may be incurred by the
Collateral Agent in the exercise of rights as a secured creditor of the
Borrowers and prior claims which the Collateral Agent anticipate may need to be
paid.
(b) The Collateral Agent shall distribute the net proceeds of
Liquidation to the Administrative Agent for application in accordance with the
relative priorities set forth in Section 14.7, but subject to the terms of the
Intercreditor Agreement.
(c) Each Revolving Credit Lender, on the written request of the
Collateral Agent and/or any Nominee, not more frequently than once each month,
shall reimburse the Collateral Agent and/or any Nominee, pro-rata, for any cost
or expense reasonably incurred by the Collateral Agent and/or the Nominee in the
conduct of a Liquidation, which amount is not covered out of current proceeds of
the Liquidation, which reimbursement shall be paid over to and distributed by
the Collateral Agent.
14.7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION.
(a) All distributions of proceeds of a Liquidation shall be net of
payment over to the Collateral Agent as reimbursement for all reasonable third
party costs and expenses incurred by the Collateral Agent and to Lenders'
Special Counsel and to any funded reserve established pursuant to Section
14.6(a).
(b) Subject to the terms of the Intercreditor Agreement and the
provisions of Section 14.7(c) below, the proceeds of a Liquidation, net of those
amounts described in Section 13.3(c)(iv), shall be distributed based on the
following priorities:
(i) To the SwingLine Lender, on account of any SwingLine loans
not converted to Revolving Credit Loans pursuant to Section 14.4(a)(i);
and then
(ii) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to the unpaid principal
balance of the Revolving Credit; and then
(iii) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to accrued interest on the
Revolving Credit; and then
(iv) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to those fees distributable
hereunder to the Revolving Credit Lenders; and then
(v) To the Collateral Agent, an amount equal to 105% of the
Stated Amount of all L/Cs and Bankers' Acceptances then outstanding; and
then
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(vi) To any Delinquent Revolving Credit Lenders, pro-rata to
amounts to which such Delinquent Revolving Credit Lenders otherwise would
have been entitled pursuant to Sections 14.7(b)(ii), 14.7(b)(iii),
14.7(b)(iv); and then
(vii) To any other Liabilities, including any obligations due
on account of Hedge Agreements.
(c) Notwithstanding anything to the contrary herein contained, all
proceeds received from the Collateral of a Division shall first be applied to
the Revolving Credit Loans, L/Cs, Banker's Acceptances, interest, fees and other
Liabilities of such Division before application to any other Liabilities.
ARTICLE 15 - THE AGENT:
15.1. APPOINTMENT OF THE AGENT.
(a) Each Lender appoints and designates NCBC as the "Administrative
Agent" hereunder and under the Loan Documents.
(b) Each Lender appoints and designates NCBC as the "Collateral
Agent" hereunder and under the Loan Documents.
(c) Each Revolving Credit Lender authorizes the Agent:
(i) To execute those of the Loan Documents and all other
instruments relating thereto to which the Agent is a party.
(ii) To take such action on behalf of the Revolving Credit
Lenders and to exercise all such powers as are expressly delegated to the
Agent hereunder and in the Loan Documents and all related documents,
together with such other powers as are reasonably incident thereto.
15.2. RESPONSIBILITIES OF AGENT.
(a) The Agent shall not have any duties or responsibilities to, or
any fiduciary relationship with, any Revolving Credit Lender except for those
expressly set forth in this Agreement.
(b) Neither the Agent nor any of its Affiliates shall be
responsible to any Revolving Credit Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by any Borrower or any other Person.
(ii) Any appraisals or other assessments of the assets of any
Borrower or of any other Person responsible for or on account of the
Liabilities.
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(iii) The value, validity, effectiveness, genuineness,
enforceability, or sufficiency of the Loan Agreement, the Loan Documents
or any other document referred to or provided for therein.
(iv) Any failure by any Borrower or any other Person (other
than the Agent) to perform its respective obligations under the Loan
Documents.
(c) The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the Agent with
reasonable care. No such attorney, accountant, other professional, agents, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(d) Neither the Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance upon
advice of its counsel nor, in any other event except for any action taken or
omitted to be taken as to which a final judicial determination has been or is
made (in a proceeding in which such Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.
(e) The Agent shall not have any responsibility in any event for
more funds than the Agent actually receives and collects.
(f) The Agent, in its separate capacity as a Lender, shall have the
same rights and powers hereunder as any other Lender.
15.3. CONCERNING DISTRIBUTIONS BY THE AGENT.
(a) The Administrative Agent in its reasonable discretion based upon
the Agent's determination of the likelihood that additional payments will be
received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.
(b) The Administrative Agent may disburse funds prior to determining
that the sums which the Agent expects to receive have been finally and
unconditionally paid to the Agent. If and to the extent that the Administrative
Agent does disburse funds and it later becomes apparent that the Agent did not
then receive a payment in an amount equal to the sum paid out, then any
Revolving Credit Lender to whom the Administrative Agent made the funds
available, on demand from the Administrative Agent, shall refund to the
Administrative Agent the sum paid to that Person.
(c) If, in the opinion of the Agent, the distribution of any amount
received by the Agent might involve the Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then the Administrative
Agent may refrain from making distribution until the Agent's right to make
distribution has been adjudicated by a court of competent jurisdiction.
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(d) The proceeds of any Revolving Credit Lender's exercise of any
right of, or in the nature of, set-off shall be deemed, First, to the extent
that a Revolving Credit Lender is entitled to any distribution hereunder, to
constitute such distribution and Second, shall be shared with the other
Revolving Credit Lenders as if distributed pursuant to (and shall be deemed as
distributions under) Section 14.7.
(e) Each Revolving Credit Lender recognizes that the crediting of
the Borrowers with the "proceeds" of any transaction in which a Post Foreclosure
Asset is acquired is a non-cash transaction and that, in consequence, no
distribution of such "proceeds" will be made by the Administrative Agent to any
Revolving Credit Lender.
(f) In the event that (x) a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid or
disgorged or (y) those Lenders adversely affected thereby determine to effect
such repayment or disgorgement, then each Revolving Credit Lender to which any
such distribution shall have been made shall repay, to the Agent which had made
such distribution, that Revolving Credit Lender's pro-rata share of the amount
so adjudged or determined to be repaid or disgorged.
15.4. DISPUTE RESOLUTION. Any dispute among the Revolving Credit Lenders
and/or the Agent concerning the interpretation, administration, or enforcement
of the financing arrangements contemplated by this or any other Loan Document or
the interpretation or administration of this or any other Loan Document which
cannot be resolved amicably shall be resolved in the United States District
Court for the District of Ohio, sitting in Cleveland, Ohio, or in the courts of
Cuyahoga County, Ohio, to the jurisdiction of which courts each Revolving Credit
Lender hereto hereby submits.
15.5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS. The Administrative Agent
will forward to each Revolving Credit Lender, promptly after the Administrative
Agent's receipt thereof, a copy of each notice or other document furnished to
the Administrative Agent pursuant to this Agreement, including monthly,
quarterly, and annual financial statements received from the Lead Borrower
pursuant to Article 6 of this Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/Cs and Banker's Acceptances.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to
be furnished directly to the Revolving Credit Lenders by the Lead Borrower.
(d) Any notice or document of which the Administrative Agent has
knowledge that such notice or document had been forwarded to the Revolving
Credit Lenders other than by the Administrative Agent.
15.6. CONFIDENTIAL INFORMATION.
(a) Each Revolving Credit Lender will maintain, as confidential in
accordance with the provisions of Section 20.3 hereof, all of the following:
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(i) Proprietary approaches, techniques, and methods of
analysis which are applied by the Agent in the administration of the
credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the Agent in
providing reports to the Revolving Credit Lenders pursuant hereto, which
forms or formats are not of general currency.
(b) Nothing included herein shall prohibit the disclosure of any
such information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
15.7. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by the Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of attorneys, accountants and other experts selected
by the Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, the Agent shall
in all events be fully protected in acting, or in refraining from acting, in
accordance with the applicable Consent required by this Agreement. Instructions
given with the requisite Consent shall be binding on all Revolving Credit
Lenders.
15.8. NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS.
(a) Each Revolving Credit Lender represents to all other Revolving
Credit Lenders and to the Agent that such Revolving Credit Lender:
(i) Independently and without reliance on any representation
or act by the Agent or by any other Revolving Credit Lender, and based on
such documents and information as that Revolving Credit Lender has deemed
appropriate, has made such Revolving Credit Lender's own appraisal of the
financial condition and affairs of the Borrowers and decision to enter
into this Agreement.
(ii) Has relied upon that Revolving Credit Lender's review of
the Loan Documents by that Revolving Credit Lender and by counsel to that
Revolving Credit Lender as that Revolving Credit Lender deemed appropriate
under the circumstances.
(b) Each Revolving Credit Lender agrees that such Revolving Credit
Lender, independently and without reliance upon the Agent or any other Revolving
Credit Lender, and based upon such documents and information as such Revolving
Credit Lender shall deem appropriate at the time, will continue to make such
Revolving Credit Lender's own appraisals of the financial condition and affairs
of the Borrowers when determining whether to take or not to take any
discretionary action under this Agreement.
(c) The Agent, in the discharge of the Agent's duties hereunder,
shall not be required to make inquiry of, or to inspect the properties or books
of, any Person.
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(d) Except for notices, reports, and other documents and information
expressly required to be furnished to the Revolving Credit Lenders by the
Administrative Agent hereunder (as to which, see Section 15.5), the Agent shall
have no affirmative duty or responsibility to provide any Lender with any credit
or other information concerning any Person, which information may come into the
possession of the Agent or any Affiliate of the Agent.
(e) Each Revolving Credit Lender, at such Revolving Credit Lender's
request, shall have reasonable access to all nonprivileged documents in the
possession of the Agent, which documents relate to the Agent's performance of
its respective duties hereunder.
15.9. INDEMNIFICATION. Without limiting the liabilities of the Borrowers
under this Agreement or any of the other Loan Documents, each Revolving Credit
Lender shall indemnify the Agent, pro-rata, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including attorneys'
reasonable fees and expenses and other out-of-pocket expenditures) which may at
any time be imposed on, incurred by, or asserted against the Agent and in any
way relating to or arising out of this Agreement or any other Loan Document or
any documents contemplated by or referred to therein or the transactions
contemplated thereby or the enforcement of any of terms hereof or thereof or of
any such other documents, provided, however, no Revolving Credit Lender shall be
liable for any of the foregoing to the extent that any of the foregoing arises
from any action taken or omitted to be taken by the Agent as to which a final
judicial determination has been or is made (in a proceeding in which the Agent
has had an opportunity to be heard) that the Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.
15.10. RESIGNATION OF AGENT.
(a) The Agent may resign at any time by giving 30 days prior written
notice thereof to the Revolving Credit Lenders. Upon receipt of any such notice
of resignation, the SuperMajority Lenders shall have the right to appoint a
successor to the Agent (and if no Event of Default has occurred and is
continuing, with the consent of the Lead Borrower, not to be unreasonably
withheld and, in any event, deemed given by the Lead Borrower if no written
objection is provided by the Lead Borrower to the (resigning) Agent within ten
(10) Business Days notice of such proposed appointment). If a successor Agent
shall not have been so appointed and accepted such appointment within 30 days
after the giving of notice by the resigning Agent, then the resigning Agent may
appoint a successor Agent, which shall be a financial institution having a
combined capital and surplus in excess of $500,000,000. The consent of the Lead
Borrower otherwise required by this Section 15.10(a) shall not be required if an
Event of Default has occurred and is continuing.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor shall thereupon succeed to, and become vested
with, all the rights, powers, privileges, and duties of the (resigning) Agent so
replaced, and the (resigning) Agent shall be discharged from the (resigning)
Agent's duties and obligations hereunder, other than on account of any
responsibility for any action taken or omitted to be taken by the (resigning)
Agent as to which a final judicial determination has been or is made (in a
proceeding in which the (resigning) Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner or in bad faith, or in
willful misconduct.
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(c) After any retiring Agent's resignation, the provisions of this
Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.
15.11. LEAD ARRANGER, CO-SYNDICATION AGENTS AND CO-DOCUMENTATION AGENTS.
Notwithstanding the provisions of this Agreement or any of the other Loan
Documents, none of the Lead Arranger, the Co-Syndication Agents or the
Co-Documentation Agents shall have any powers, rights, duties, responsibilities
or liabilities with respect to this Agreement and the other Loan Documents other
than confidentiality provisions contained herein.
ARTICLE 16 - ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:
16.1. ADMINISTRATION OF CREDIT FACILITIES.
(a) Except as otherwise specifically provided in this Agreement, the
Agent may take any action with respect to the credit facility contemplated by
the Loan Documents as the Agent determines to be appropriate, provided, however,
the Agent is under no affirmative obligation to take any action which it is not
required by this Agreement or the Loan Documents specifically to so take.
(b) Except as specifically provided in the following Sections of
this Agreement, whenever a Loan Document or this Agreement provides that action
may be taken or omitted to be taken in the Agent's reasonable, good faith
discretion, the Agent shall have the sole right to take, or refrain from taking,
such action without, and notwithstanding, any vote of the Revolving Credit
Lenders:
Actions Described in Section Required Type of Consent
------------------------------------- ---------------
16.2 Majority Lenders
16.3 SuperMajority Lenders
16.4 Certain Consent
16.5 Unanimous Consent
16.6 Consent of SwingLine Lender
16.7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders in those
sections referenced in Section 16.1(b) shall not otherwise limit or impair the
Agent's exercise of its reasonable, good faith discretion under the Loan
Documents.
16.2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS.
Except as otherwise provided in this Agreement, the Consent or direction
of the Majority Lenders is required for any amendment, waiver, or modification
of any Loan Document.
16.3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS.
The Consent or direction of the SuperMajority Lenders is required as
follows:
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(a) The SuperMajority Lenders may direct the Administrative Agent to
permit Protective OverAdvances to be outstanding for more than 45 consecutive
Business Days or more than twice in any twelve month period (the Revolving
Credit Lenders recognizing that, except as described in this Section , any loan
or advance under the Revolving Credit which results in a Protective OverAdvance
may be made by the Administrative Agent in its reasonable, good faith discretion
without the Consent of the Revolving Credit Lenders, whether or not a Default
exists, and that each Revolving Credit Lender shall be bound thereby).
(b) The SuperMajority Lenders may direct the Administrative Agent to
suspend the Revolving Credit, if any Default is then occurring, following which
direction, and for as long as a Default is then occurring, the only Revolving
Credit Loans which may be made are the following:
(i) Protective OverAdvances not otherwise prohibited as
provided in.
(ii) Revolving Credit Loans made to "cover" the honoring of
L/C's and Banker's Acceptances.
(iii) Revolving Credit Loans made with Consent of the
SuperMajority Lenders.
(c) The SuperMajority Lenders may undertake the following if an
Event of Default has occurred and is continuing:
(i) Give the Administrative Agent an Acceleration Notice in
accordance with Section 14.1(b).
(ii) Direct the Administrative Agent to increase the rate of
interest to the default rate of interest as provided in, and to the extent
permitted by, this Agreement.
16.4. ACTION REQUIRING CERTAIN CONSENT. The Consent or direction of
the following is required for the following actions:
(a) Any forgiveness of all or any portion of any payment Liability:
All Revolving Credit Lenders whose payment Liability is being so forgiven:
(other than any Delinquent Revolving Credit Lender).
(b) Any decrease in any interest rate or fee payable under any of
the Loan Documents (other than any fee payable to the Administrative Agent (for
which the consent of the Administrative Agent shall be required): All Revolving
Credit Lenders adversely affected thereby (other than any Delinquent Revolving
Credit Lender).
(c) Any postponement of the scheduled time for payment of any amount
payable under any of the Loan Documents: All Revolving Credit Lenders adversely
affected thereby (other than any Delinquent Revolving Credit Lender).
(d) Volitional Disgorgement as described in 15.3(f): Each Revolving
Credit Lender (other than any Delinquent Revolving Credit Lender) which is
adversely affected thereby.
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(e) Increase in the SwingLine Ceiling: The consent of the SwingLine
Lender and the Majority Lenders.
16.5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT. None of
the following may take place except with Unanimous Consent:
(a) Any release of a material portion of the Collateral, but such
Consent to such release is not required if any of the following conditions is
satisfied:
(i) Such release is otherwise required or provided for in the
Loan Documents.
(ii) Such release is being made to facilitate a Liquidation.
(iii) No OverLoan exists immediately after giving effect to
the application to the Loan Account of the net proceeds received on
account of the transaction in which such release is made (but such
release shall require the consent of the Majority Lenders).
(b) Any amendment of the Definitions of "Borrowing Base", "Filene's
Borrowing Base", "VC Borrowing Base", "Excess Availability Reserve",
"Availability", "Filene's Availability" or "VC Availability" or of any
Definition of any component thereof, such that more credit would be available to
a Borrower, based on the same assets, as would have been available to such
Borrower immediately prior to such amendment , it being understood, however,
that:
(i) The foregoing shall not limit the adjustment by the
Collateral Agent of any Reserve (other than the Excess Availability
Reserve) or the Inventory Advance Rate in the Collateral Agent's
administration of the Revolving Credit as otherwise permitted by this
Agreement.
(ii) The foregoing shall not prevent the Administrative Agent,
in its administration of the Revolving Credit, from restoring any
component of the Borrowing Base, Filene's Borrowing Base, or VC Borrowing
Base which had been lowered by the Administrative Agent back to the value
of such component, as stated in this Agreement or to an intermediate
value.
(c) Any waiver, amendment, or modification which has the effect of
increasing any Revolving Credit Dollar Commitment, Revolving Credit Commitment
Percentage, or the Revolving Credit Ceiling, except that no Consent shall be
required for any such increase which is the result of the application of the
following Sections of this Agreement:
(i) Section 16.10 (which relates to NonConsenting Revolving
Credit Lenders).
(ii) Section 17.1 (which relates to assignments and
assumptions).
(d) Any release of any Person obligated on account of the
Liabilities.
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(e) The making of any Revolving Credit Loan which, when made,
exceeds Availability and is not a Protective OverAdvance, subject, however, to
the following:
(i) No Consent is required in connection with the making of
any Revolving Credit Loan to "cover" any honoring of a drawing under any
L/C or any Banker's Acceptance.
(ii) Each Lender recognizes that subsequent to the making of a
Revolving Credit Loan which does not constitute a Protective OverAdvance,
the unpaid principal balance of the Loan Account may exceed Borrowing Base
on account of changed circumstances beyond the control of the Agent (such
as a drop in collateral value).
(f) Any amendment which has the effect of modifying the
Administrative Agent's right or ability to make Protective OverAdvances.
(g) The waiver of the obligation of the Borrowers to reduce the
unpaid principal balance of loans under the Revolving Credit to an amount so
that no OverLoan (other than a Protective OverAdvance) is outstanding.
(h) Any amendment of this Article 16.
(i) Any subordination of the Liabilities to any material obligation
of any Borrower, unless such subordination is otherwise required pursuant to
this or is permitted by this Agreement.
(j) Amendment of any of the following Definitions:
"Majority Lender"
"Maturity Date"
"Protective OverAdvance"
"SuperMajority Lenders
"Unanimous Consent"
16.6. ACTIONS REQUIRING SWINGLINE LENDER CONSENT. No action, amendment, or
waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.
16.7. ACTIONS REQUIRING AGENT'S CONSENT.
No action referenced herein which modifies the rights, duties, and
obligations of the Agent shall be effective without the written consent of the
Agent.
16.8. MISCELLANEOUS ACTIONS.
(a) Notwithstanding any other provision of this Agreement, no single
Revolving Credit Lender independently may exercise any right of action or
enforcement against or with respect to any Borrower.
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(b) The Agent shall be fully justified in failing or refusing to
take action under this Agreement or any Loan Document on behalf of any Revolving
Credit Lender unless the Agent shall first
(i) receive such clear, unambiguous, written instructions as
the Agent deem appropriate; and
(ii) be indemnified to the Agent's satisfaction by the
Revolving Credit Lenders against any and all liability and expense which
may be incurred by the Agent by reason of taking or continuing to take any
such action, unless such action had been grossly negligent, in willful
misconduct, or in bad faith.
(c) The Agent may establish reasonable procedures for the providing
of direction and instructions from the Revolving Credit Lenders to the Agent,
including its reliance on multiple counterparts, facsimile transmissions, and
time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Lenders have
provided their direction, Consent, or instructions.
16.9. ACTIONS REQUIRING LEAD BORROWER'S CONSENT.
(a) The Lead Borrower's consent is required for any amendment of
this Agreement, except that each of the following Articles of this Agreement may
be amended without the consent of the Lead Borrower:
Article Title of Article
------- ----------------
13 Revolving Credit Fundings and Distributions
14 Acceleration and Liquidation (other than any
modifications to the requisite percentage of Revolving
Credit Lenders which may furnish an Acceleration Notice
under Section 14.1(b))
15.1 The Agent (provided that the provisions of Section
15.10(a) relating to the Lead Borrower's consent to a
successor Agent in certain circumstances may not be
amended without the Lead Borrower's consent).
16 Action By Agent - Consents - Amendments - Waivers
(other than as provided in Section 16.9(b))
17 Assignments and Participations (provided that the
provisions of Section 17.1(a)(i) relating to the Lead
Borrower's consent to an assignment in certain
circumstances may not be amended without the Lead
Borrower's consent).
(b) Subject to Section 16.9(c), the following Sections of Article 16
may not be amended without the consent of the Lead Borrower:
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Actions Described in Section Type of Consent Required
---------------------------- ------------------------
16.3 SuperMajority Lenders
16.5 Unanimous Consent
16.9 Actions Requiring Lead Borrower's Consent
and further provided that no provision of any Article listed in Section 16.9(a)
that (i) obligates the Agent to exercise reasonable, good faith discretion, or
(ii) imposes liability on any Person for acting in a grossly negligent manner,
in actual bad faith or willful misconduct, or (iii) imposes any confidentiality
obligation under this Agreement on any Person, may be amended without the
consent of the Lead Borrower.
(c) The Lead Borrower's consent to the amendment of those provisions
referenced in Section 16.9(b)
(i) Shall be deemed given unless written objection is made,
within seven (7) Business Days following the Administrative Agent's giving
notice to the Lead Borrower of the proposed amendment; and
(ii) shall not be required following the occurrence of any
Event of Default.
16.10. NONCONSENTING REVOLVING CREDIT LENDER.
(a) In the event that a Revolving Credit Lender (in this Section
16.10, a "NONCONSENTING REVOLVING CREDIT LENDER") does not provide its Consent
to a proposal by the Agent to take action which requires consent under this
Article 16, then one or more Revolving Credit Lenders who provided Consent to
such action may require the assignment, without recourse and in accordance with
the procedures outlined in Section 17.1, below, of the NonConsenting Revolving
Credit Lender's Loan Commitment hereunder on fifteen (15) days written notice to
the Administrative Agent and to the NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that the
NonConsenting Revolving Credit Lender delivers the Revolving Credit Note held by
the NonConsenting Revolving Credit Lender to the Administrative Agent (or a lost
note affidavit and indemnity reasonably acceptable to the Administrative Agent),
the Revolving Credit Lenders who have given such written notice shall Transfer
the following to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's pro-rata
share of the principal and interest of the Revolving Credit Loans to the
date of such assignment.
(ii) All fees distributable hereunder to the NonConsenting
Revolving Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which the
NonConsenting Revolving Credit Lender is entitled to reimbursement from
the Borrowers.
(c) In the event that the NonConsenting Revolving Credit Lender
fails to deliver to the Administrative Agent the Revolving Credit Note held by
the NonConsenting
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Revolving Credit Lender (or a lost note affidavit and indemnity) as
provided in Section 16.10(b), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be Transferred to the
Administrative Agent and held by the Administrative Agent, without
interest, to be turned over to the NonConsenting Revolving Credit Lender
upon delivery of the Revolving Credit Note held by that NonConsenting
Revolving Credit Lender (or a lost note affidavit and indemnity).
(ii) The Revolving Credit Note held by the NonConsenting
Revolving Credit Lender shall have no force or effect whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall cease to
be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have Transferred the
amount to the Administrative Agent as described above shall have succeeded
to all rights and become subject to all of the obligations of the
NonConsenting Revolving Credit Lender as "Revolving Credit Lender".
(d) In the event that more than one (1) Revolving Credit Lender
wishes to require such assignment, the NonConsenting Revolving Credit Lender's
Loan Commitment hereunder shall be divided among such Revolving Credit Lenders,
pro-rata based upon their respective Revolving Credit Commitment Percentages,
with the Administrative Agent coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement of the
Revolving Credit Note held by the NonConsenting Revolving Credit Lender and the
issuance of Revolving Credit Notes to those Revolving Credit Lenders which
"take-out" such NonConsenting Revolving Credit Lender, provided, however, no
processing fee otherwise to be paid as provided in Section 17.2(b) shall be due
under such circumstances.
ARTICLE 17 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
17.1. ASSIGNMENTS AND ASSUMPTIONS.
(a) Except as provided herein, each Revolving Credit Lender (in this
Section 17.1(a), an "ASSIGNING REVOLVING CREDIT LENDER") may assign to one or
more Eligible Assignees (in this Section 17.1(a), each an "ASSIGNEE REVOLVING
CREDIT LENDER") all or a portion of that Revolving Credit Lender's interests,
rights and obligations under this Agreement and the Loan Documents (including
all or a portion of its Revolving Credit Dollar Commitment) and the same portion
of the Revolving Credit Loans at the time owing to it, and of the Revolving
Credit Note held by the Assigning Revolving Credit Lender, provided that:
(i) The Administrative Agent and, subject to the provisions of
Section 2.22(d) hereof, the Lead Borrower, shall have given its prior
written consent to such assignment, which consent shall not be
unreasonably withheld, but need not be given if the proposed assignment
would result in any resulting Revolving Credit Lender's having
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a Revolving Credit Dollar Commitment of less than the "minimum hold"
amount specified in Section 17.1(a)(iii).
(ii) Each such assignment shall be of a constant, and not a
varying, percentage of all the Assigning Revolving Credit Lender's rights
and obligations under this Agreement.
(iii) Following the effectiveness of such assignment, the
Assigning Revolving Credit Lender's Revolving Credit Dollar Commitment (if
not an assignment of all of the Assigning Revolving Credit Lender's Loan
Commitment) shall not be less than $5,000,000.00.
17.2. ASSIGNMENT PROCEDURES. (This Section 17.2 describes the
procedures to be followed in connection with an assignment effected
pursuant to this Article 17 and permitted by Section 17.1).
(a) The parties to such an assignment shall execute and deliver to
the Administrative Agent, for recording in the Register, an Assignment and
Acceptance substantially in the form of EXHIBIT 17.2, annexed hereto (each, an
"ASSIGNMENT AND ACCEPTANCE").
(b) The Assigning Revolving Credit Lender shall deliver to the
Administrative Agent, with such Assignment and Acceptance, the Revolving Credit
Note held by the subject Assigning Revolving Credit Lender and the
Administrative Agent's processing fee of $3,500.00.
(c) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"REGISTER") for the recordation of the names and addresses of the Revolving
Credit Lenders and of the Revolving Credit Dollar Commitment and Revolving
Credit Commitment Percentage of each Revolving Credit Lender. The Register shall
be available for inspection by the Revolving Credit Lenders at any reasonable
time and from time to time upon reasonable prior notice. In the absence of
manifest error, the entries in the Register shall be conclusive and binding on
all Revolving Credit Lenders. The Administrative Agent and the Revolving Credit
Lenders may treat each Person whose name is recorded in the Register as a
"Revolving Credit Lender" hereunder for all purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee Revolving
Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
17.3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an Assignment and
Acceptance which has been executed, delivered, and recorded (which effective
date the Administrative Agent may delay by up to five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
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(A) Shall be a party to this Agreement and the Loan
Documents (and to any amendments thereof) as fully as if the
Assignee Revolving Credit Lender had executed each..
(B) Shall have the rights of a Revolving Credit Lender
hereunder to the extent of the Revolving Credit Dollar Commitment
and Revolving Credit Commitment Percentage assigned by such
Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be released
from the Assigning Revolving Credit Lender's obligations under this
Agreement and the Loan Documents to the extent of the Loan Commitment
assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to obtain and
distribute replacement Revolving Credit Notes to the subject Assigning
Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance, the
parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 18 - NOTICES:
18.1. NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or advance
or other financial accommodation under the Revolving Credit) shall be made to
the following addresses, each of which may be changed upon seven (7) days
written notice to all others given by certified mail, return receipt requested:
If to the Administrative Agent:
National City Business Credit, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lead Borrower
And All Borrowers:
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Value City Department Stores LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇. ▇. ▇▇▇▇▇▇▇
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Schottenstein Stores Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention : ▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention :▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
18.2. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices shall
be deemed made and correspondence received, as follows (all times being local to
the place of delivery or receipt):
(i) By certified mail, return receipt requested: the date when
actually received.
(ii) By recognized overnight express delivery: the Business
Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM
and no later than three (3) hours prior to the close of customary business
hours of the recipient, when delivered. Otherwise, at the opening of the
then next Business Day.
(iv) By Facsimile transmission (which must include a header on
which the party sending such transmission is indicated): If sent on a
Business Day after 9:00 AM and no later than three (3) hours prior to the
close of customary business hours of the recipient, one (1) hour after
being sent. Otherwise, at the opening of the then next Business Day.
18.3. WIRE INSTRUCTIONS. NOTICE GIVEN. Subject to change in the same
manner that a notice address may be changed (as to which, see Section 18.1),
wire transfers to the Administrative Agent shall be made in accordance with the
following wire instructions:
National City Bank.
ABA Number : ▇▇▇▇▇▇▇▇▇
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Account Name : National City Business Credit, Inc.
Account Number : ▇▇▇▇▇▇▇
Reference : Value City
ARTICLE 19 - TERM:
19.1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2.6 hereof)
until the Termination Date.
19.2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the
Administrative Agent (whether or not then due), in immediately available funds,
all Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including the
unpaid principal balance of the Revolving Credit Loans, and the SwingLine
Loan ).
(ii) Any then remaining installments of the Collateral
Monitoring Fee.
(iii) Any payments due on account of the indemnification
obligations included in Section 2.11(f).
(iv) Any accrued and unpaid Unused Line Fee.
(v) All unreimbursed costs and expenses of the Agent and of
Lenders' Special Counsel for which each Borrower is responsible.
(vi) All other Liabilities.
(b) On the Termination Date, the Borrowers shall also shall make
such arrangements concerning any L/Cs and Banker's Acceptances then outstanding
as are reasonably satisfactory to the Administrative Agent.
(c) Until such payment (Section 19.2(a)) and arrangements concerning
L/Cs and Banker's Acceptances (Section 19.2(b)), all provisions of this
Agreement, other than those included in Article 2 which place any obligation on
the Administrative Agent or any Revolving Credit Lender to make any loans or
advances or to provide any financial accommodations to any Borrower shall remain
in full force and effect until all Liabilities shall have been paid in full.
(d) On the Termination Date, and upon satisfaction by the Loan
Parties of the terms of Section 19.2(a) and (b), above, the Collateral Agent
shall release the Collateral Interests granted the Collateral Agent by the
Borrowers hereunder, which may be upon such conditions and indemnifications as
the Collateral Agent may reasonably require.
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ARTICLE 20 - GENERAL:
20.1. PROTECTION OF COLLATERAL. The Agent has no duty as to the collection
or protection of the Collateral beyond the safe custody of such of the
Collateral as may come into the possession of the Agent.
20.2. PUBLICITY. Subject to the prior approval of the Lead Borrower (which
approval shall not be unreasonably withheld or delayed), the Administrative
Agent may issue a "tombstone" notice of the establishment of the credit facility
contemplated by this Agreement and may make reference to each Borrower (and may
utilize any logo or other distinctive symbol associated with each Borrower) in
connection with any advertising, promotion, or marketing (including reference in
any "case study" of the creditor facility contemplated hereby) undertaken by the
Administrative Agent.
20.3. CONFIDENTIALITY. Each of the Agent, the Issuer, the Lead Arranger,
the Revolving Credit Lenders, the SwingLine Lender, and any Person subject to
this Section 20.3 by the terms of this Agreement (or behalf of itself, and each
of its directors, officers, and employees) agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement and any actual or prospective
counterparty or advisors to any swap or derivative transactions relating to the
Loan Parties and the Liabilities (subject to an agreement executed for the
benefit of the Lead Borrower which contains provisions substantially the same as
those of this Section 20.3, (g) with the consent of the Loan Parties or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes legally available to the
Agent, the Issuer, the Lead Arranger or any Revolving Credit Lender on a
nonconfidential basis from a source other than the Loan Parties. For the
purposes of this Section, the term "Information" means all information received
from the Loan Parties relating to their business, other than any such
information that is available to the Agent, the Issuer, the Lead Arranger or any
Revolving Credit Lender on a nonconfidential basis prior to disclosure by the
Loan Parties, provided that, in the case of information received from the Loan
Parties after the date hereof, such information is identified at the time of
delivery as confidential or of the type of information, such as business plans
or financial information as is customarily confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information that
is of a similar nature. The confidentiality provisions contained in this
Agreement shall survive the termination, assignment or invalidation of this
Agreement, or of any of the rights and obligations contained herein or therein.
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20.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers and their respective representatives, successors, and assigns and
shall enure to the benefit of the Agent and each Revolving Credit Lender and
their respective successors and assigns, provided, however, no trustee or other
fiduciary appointed with respect to any Borrower shall have any rights
hereunder. In the event that the Agent or any Revolving Credit Lender assigns or
transfers its rights under this Agreement, the assignee shall thereupon succeed
to and become vested with all rights, powers, privileges, and duties of such
assignor hereunder and such assignor shall thereupon be discharged and relieved
from its duties and obligations hereunder.
20.5. SEVERABILITY. Any determination that any provision of this Agreement
or any application thereof is invalid, illegal, or unenforceable in any respect
in any instance shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement.
20.6. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate all
discussions and negotiations between each Borrower and the Agent and each
Revolving Credit Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or otherwise affect
the provisions hereof or thereof. No failure by the Agent or any Revolving
Credit Lender to give notice to the Lead Borrower of any Borrower's having
failed to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document. No change made by the Agent to the manner by which
Borrowing Base is determined shall obligate the Agent to continue to determine
Borrowing Base in that manner.
(b) Each Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Administrative Agent. Subject to
Article 16, no consent, modification, amendment, or waiver of any provision of
any Loan Document shall be effective unless executed in writing by or on behalf
of the party to be charged with such modification, amendment, or waiver (and if
such party is the Administrative Agent then by a duly authorized officer
thereof). Any modification, amendment, or waiver provided by the Administrative
Agent shall be in reliance upon all representations and warranties theretofore
made to the Administrative Agent by or on behalf of the Borrowers (and any
guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.
20.7. POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement (which may be exercised only after the occurrence and
during the continuance of an Event of Default), each Borrower hereby grants unto
the Administrative Agent (acting through any of its officers) full power to do
any and all things necessary or appropriate in connection with the exercise of
such powers as fully and effectually as that Borrower might or could do, hereby
ratifying all that said attorney shall do or cause to be done by virtue of this
Agreement. No power of attorney set forth in this Agreement shall be affected by
any disability or incapacity suffered by any Borrower and each shall survive the
same. All powers conferred upon the Agent
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by this Agreement, being coupled with an interest, shall be irrevocable until
this Agreement is terminated by a written instrument executed by a duly
authorized officer of the Agent. The Administrative Agent, as agent for the
Borrowers under any power of attorney included in this Agreement and the other
Loan Documents, is not a fiduciary for any Borrower, but instead, in exercising
any one or more rights with respect to such powers of attorney, may do so for
the sole and exclusive benefit of the Revolving Credit Lenders, and not for the
benefit of any Borrower. The Borrowers acknowledge and agree that the provisions
of Title 20, Pennsylvania Consolidated Statutes Section 5601 et seq., as amended
(including, without limitation, Act 39 of 1999) shall not be applicable to any
one or more powers of attorney contained in any Loan Document previously,
concurrently or in the future executed and delivered by the Borrowers.
20.8. APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the
Administrative Agent determines in its sole reasonable, good faith discretion,
consistent, however, with Sections 14.6 and 14.7 and any other applicable
provisions of this Agreement. The Borrowers shall remain liable for any
deficiency remaining following such application.
20.9. INCREASED COSTS. If, after the date hereof, as a result of any
change in any Requirement of Law, or change of the interpretation or application
thereof by any court or by any governmental or other authority or entity charged
with the administration thereof, whether or not having the force of law, which:
(a) subjects any Revolving Credit Lender to any taxes or changes the
basis of taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by any Borrower to the Agent or any Revolving
Credit Lender under this Agreement (except for taxes on the Agent or any
Revolving Credit Lender based on net income or capital imposed by the
jurisdiction in which the principal or lending offices of the Agent or that
Revolving Credit Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash margin,
special deposit or similar requirements against assets held by, or deposits in
or for the account of or loans by or any other acquisition of funds by the
relevant funding office of any Revolving Credit Lender;
(c) imposes on any Revolving Credit Lender any other condition with
respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement to maintain
or allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Revolving Credit Lender's
reasonable opinion, is to increase the cost to that Revolving Credit Lender of
making or maintaining any loan, advance or financial accommodation or to reduce
the income receivable by that Revolving Credit Lender in respect of any loan,
advance or financial accommodation by an amount which that Revolving Credit
Lender deems to be material, then upon written notice from the Administrative
Agent, from time to time, to the Lead Borrower (such notice to set out in
reasonable detail the facts giving rise to and a summary calculation of such
increased cost or reduced income), the
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Borrowers shall forthwith pay to the Administrative Agent, for the benefit of
the subject Revolving Credit Lender, upon receipt of such notice, that amount
which shall compensate the subject Revolving Credit Lender for such additional
cost or reduction in income.
20.10. REPLACEMENT OF REVOLVING CREDIT LENDER. If (a) any Revolving Credit
Lender incurs increased costs and requests compensation under Section 2.18(d) or
Section 20.9, (b) any Revolving Credit Lender is a Delinquent Revolving Credit
Lender, then the Lead Borrower may
(a) request such Revolving Credit Lender or Issuer to use reasonable
efforts to designate a different lending office for funding or booking its loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches, or Affiliates, if in the judgment of such Revolving Credit
Lender or Issuer, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.18(d) or Section 20.9 hereof, and (ii)
would not subject such Revolving Credit Lender or Issuer to any unreimbursed
cost or expense, and would not otherwise be disadvantageous to such Revolving
Credit Lender or Issuer. The Lead Borrower shall pay all reasonable costs and
expenses incurred by such Revolving Credit Lender or Issuer in connection with
any such designation of assignment; and
(b) at its sole expense and effort, upon notice to such Revolving
Credit Lender and the Administrative Agent, require such Revolving Credit Lender
to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Article 17), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Revolving Credit Lender, if a Revolving Credit Lender
accepts such assignment), provided that (i) if such assignee is not an existing
Revolving Credit Lender, the Lead Borrower shall have received the prior written
consent of the Administrative Agent, which consent shall not unreasonably be
withheld, (ii) such Revolving Credit Lender shall have received payment of an
amount equal to the outstanding principal of its Revolving Credit Loans and
participations in unreimbursed drawings under L/Cs and Banker's Acceptances and
SwingLine Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Lead Borrower (in the case of
all other amounts) and (iii) such assignment will result in a reduction in such
compensation, payments or costs. A Revolving Credit Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Revolving Credit Lender or otherwise, the circumstances entitling
the Lead Borrower to require such assignment and delegation cease to apply.
20.11. COSTS AND EXPENSES OF THE AGENT AND ISSUER.
(a) The Borrowers shall pay from time to time on demand all Costs of
Collection and all reasonable costs, expenses, and disbursements (including
reasonable attorneys' fees and expenses) which are incurred by the Agent or the
Issuer in connection with the preparation, negotiation, execution, and delivery
of this Agreement and of any other Loan Documents, and all other reasonable
costs, expenses, and disbursements which may be incurred in connection with or
in respect to the credit facility contemplated hereby or which otherwise are
incurred with respect to the Liabilities.
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(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) incurred, following the occurrence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Administrative Agent to pay all
such fees and expenses and in the Administrative Agent's reasonable, good faith
discretion, to add such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this Section
20.11 shall survive payment of the Liabilities and/or any termination, release,
or discharge executed by the Agent in favor of any Borrower, other than a
termination, release, or discharge which makes specific reference to this
Section 20.11.
20.12. COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished the
Agent or any Revolving Credit Lender may be reproduced by that Revolving Credit
Lender or by the Agent by any photographic, microfilm, xerographic, digital
imaging, or other process, and such Person making such reproduction may destroy
any document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile which
bears proof of transmission shall be binding on the party which or on whose
behalf such transmission was initiated and likewise shall be so admissible in
evidence as if the original of such facsimile had been delivered to the party
which or on whose behalf such transmission was received.
20.13. OHIO LAW. This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance, shall be governed
by the law of State of Ohio.
20.14. CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding, case, or
controversy against any Borrower with respect to any Loan Document may be
brought in the courts of Franklin County, Ohio or in the United States District
Court, District of Ohio, sitting in Columbus, Ohio, as the Administrative Agent
may elect in the Administrative Agent's sole reasonable, good faith discretion.
By execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES any objection based on forum non conveniens
and any objection to venue of any action or proceeding instituted under any of
the Loan Documents and consents to the granting of such legal or equitable
remedy as is deemed appropriate by the Court.
(c) Nothing herein shall affect the right of the Agent to bring
legal actions or proceedings in any other competent jurisdiction.
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(d) Each Borrower agrees that any action commenced by any Borrower
asserting any claim arising under or in connection with this Agreement or any
other Loan Document shall be brought solely in the courts of Franklin County,
Ohio or in the United States District Court, District of Ohio, sitting in
Columbus, Ohio, and that such Courts shall have exclusive jurisdiction with
respect to any such action.
20.15. INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold
the Agent, the Issuer, and each Revolving Credit Lender and any Participant and
any of their respective employees, officers, agents, Subsidiaries, and
Affiliates (each, an "INDEMNIFIED PERSON") harmless of and from any claim
brought or threatened against any Indemnified Person by any Borrower, any
guarantor or endorser of the Liabilities, or any other Person (as well as from
reasonable attorneys' fees, expenses, and disbursements in connection therewith)
on account of the relationship of the Borrowers or of any guarantor or endorser
of the Liabilities, including all costs, expenses, liabilities, and damages as
may be suffered by any Indemnified Person in connection with (x) the Collateral;
(y) the occurrence of any Event of Default; or (z) the exercise of any rights or
remedies under any of the Loan Documents (each of claims which may be defended,
compromised, settled, or pursued by the Indemnified Person with counsel of the
Lender's selection, but at the expense of the Borrowers) other than any claim as
to which a final determination is made in a judicial proceeding (in which the
Agent and any other Indemnified Person has had an opportunity to be heard),
which determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual bad
faith or in willful misconduct. This indemnification shall survive payment of
the Liabilities and/or any termination, release, or discharge executed by the
Agent in favor of the Borrowers, other than a termination, release, or discharge
duly executed on behalf of the Agent which makes specific reference to this
Section 20.15.
20.16. RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein (and then only
to the extent so provided), interest and any fee or charge which is stated as a
per annum percentage shall be calculated based on a 360 day year and actual days
elapsed for LIBOR Loans and based on a 365/366 day year and actual days elapsed
for Base Margin Loans.
(b) Words in the singular include the plural and words in the
plural include the singular.
(c) Unless otherwise specifically provided for herein or in a
specific Loan Document (and then only to the extent so provided), as between the
parties hereto or to any Loan Document, the definitions of the following terms,
as included in the UCC, are deemed to be as follows for purposes of the
performance of obligations arising under or in respect of any Loan Document:
(i) "Authenticate" means "signed".
(ii) "Record" means written information in a tangible form.
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(d) Titles, headings (indicated by being underlined or shown in
SMALL CAPITALS) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.
(e) The words "includes" and "including" are not limiting.
(f) Text which follows the words "including, without limitation" (or
similar words) is illustrative and not limitational.
(g) Text which is shown in italics (except for parenthesized
italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(h) The words "may not" are prohibitive and not permissive.
(i) Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).
(j) Terms which are defined in one section of any Loan Document are
used with such definition throughout the instrument in which so defined.
(k) The term "Dollars" and the symbol "$" each refers to United
States Dollars.
(l) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(m) References to "this Agreement" or to any other Loan Document is
to the subject instrument as amended to the date on which application of such
reference is being made.
(n) Except as otherwise specifically provided, all references
to time are to Cleveland, Ohio time.
(o) In the determination of any notice, grace, or other period of
time prescribed or allowed hereunder:
(i) Unless otherwise provided (A) the day of the act, event,
or default from which the designated period of time begins to run shall
not be included and the last day of the period so computed shall be
included unless such last day is not a Business Day, in which event the
last day of the relevant period shall be the then next Business Day and
(B) the period so computed shall end at 5:00 PM on the relevant Business
Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but
excluding".
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(iv) The word "through" means "to and including".
(p) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section 20.17
hereof, provided, however, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.
20.17. AGENT'S CONSENT. Unless otherwise explicitly provided herein, the
Agent's or any Revolving Credit Lender's consent to any action of any Borrower
which is prohibited unless such consent is given may be given or refused by the
Agent or such Revolving Credit Lender in its sole reasonable, good faith
discretion and without reference to Section 2.16 hereof.
20.18. PARTICIPATIONS. Each Revolving Credit Lender may sell
participations to one or more financial institutions (each, a "PARTICIPANT") in
that Revolving Credit Lender's interests herein provided that no such
participation shall include any provision which accords that Participant with
any rights, vis a vis the Agent, with respect to any requirement herein for
approval by a requisite number or proportion of the Revolving Credit Lenders. No
such sale of a participation shall relieve a Revolving Credit Lender from that
Revolving Credit Lender's obligations hereunder nor obligate the Agent to any
Person other than a Revolving Credit Lender.
20.19. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from the Agent or any Revolving Credit Lender
or any Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Borrower in the possession of
any of the foregoing (other than in Exempt DDA accounts), whether for
safekeeping or otherwise (regardless of the reason such Person had received the
same) shall at all times constitute security for all Liabilities and for any and
all obligations of each Borrower to the Agent and such Revolving Credit Lender
or any Participant or such Affiliate, and (a) after the occurrence and during
the continuance of an Event of Default, or (b) after the service of process upon
the Agent or any Revolving Credit Lender or any Participant seeking to attach,
by trustee, mesne, or other process, any funds of any Loan Party on deposit
with, or assets of any Loan Party in the possession of, the Agent or that
Revolving Credit or such Participant, in excess of Five Hundred Thousand Dollars
($500,000.00), may be applied or set off against the Liabilities and against
such obligations at any time, whether or not such are then due and whether or
not other collateral is then available to the Agent or that Revolving Credit
Lender.
20.20. PLEDGES TO FEDERAL RESERVE BANKS. Nothing included in this
Agreement shall prevent or limit any Revolving Credit Lender, to the extent that
such Revolving Credit Lender is subject to any of the twelve Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act (12 U.S.C. Section
341) from pledging all or any portion of that Lender's interest and rights under
this Agreement, provided, however, neither such pledge nor the enforcement
thereof shall release the pledging Revolving Credit Lender from any of its
obligations hereunder or under any of the Loan Documents.
20.21. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither the Agent nor any Revolving Credit Lender shall be entitled to
contract for, charge, receive, collect, or apply as interest on any Liability,
any amount in excess of the maximum rate
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imposed by Applicable Law. Any payment which is made which, if treated as
interest on a Liability would result in such interest's exceeding such maximum
rate shall be held, to the extent of such excess, as additional collateral for
the Liabilities as if such excess were "Collateral."
20.22. WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and sureties of
the Liabilities) make each of the waivers included in Section 20.22(b), below,
knowingly, voluntarily, and intentionally, and understands that the Agent and
each Revolving Credit Lender, in establishing the facilities contemplated hereby
and in providing loans and other financial accommodations to or for the account
of the Borrowers as provided herein, whether not or in the future, is relying on
such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND
SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby, notice
of non-payment, demand, presentment, protest and all forms of demand and
notice, both with respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the
right to notice and/or hearing prior to the Agent's exercising of the
Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS OR
BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST THE AGENT OR ANY REVOLVING CREDIT LENDER OR IN WHICH THE AGENT OR
ANY REVOLVING CREDIT LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONG OR
BETWEEN ANY BORROWER OR ANY OTHER PERSON AND THE AGENT AND EACH REVOLVING
CREDIT LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH
CASE OR CONTROVERSY).
(iv) Any defense, counterclaim, set-off, recoupment, or other
basis on which the amount of any Liability, as stated on the books and
records of the Agent, could be reduced or claimed to be paid otherwise
than in accordance with the tenor of and written terms of such Liability.
(v) Any claim to consequential, special, or punitive
damages.
20.23. ADDITIONAL WAIVERS.
(a) The Liabilities are the joint and several obligations of each
Loan Party. To the fullest extent permitted by applicable law, the obligations
of each Loan Party hereunder shall not be affected by (i) the failure of the
Agent or any Revolving Credit Lender to assert any claim or demand or to enforce
or exercise any right or remedy against any other Loan Party under the
133
provisions of this Agreement, any other Loan Document or otherwise, (ii) any
rescission, waiver, amendment or modification of, or any release from any of the
terms or provisions of, this Agreement, any other Loan Document, or any other
agreement, including with respect to any other Borrower of the Liabilities, or
(iii) the failure to perfect any security interest in, or the release of, any of
the security held by or on behalf of the Collateral Agent or any Revolving
Credit Lender.
(b) The obligations of each Loan Party hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than the indefeasible payment in full in cash of the Liabilities),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Liabilities, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Liabilities or otherwise. Without limiting
the generality of the foregoing, the obligations of each Loan Party hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agent or any Revolving Credit Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any other Loan Document or any other agreement,
by any waiver or modification of any provision of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Liabilities,
or by any other act or omission that may or might in any manner or to any extent
vary the risk of any Loan Party or that would otherwise operate as a discharge
of any Loan Party as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Liabilities).
(c) To the fullest extent permitted by applicable law, each Loan
Party waives any defense based on or arising out of any defense of any other
Loan Party or the unenforceability of the Liabilities or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the indefeasible payment in full in cash of all the
Liabilities. The Agent and the Revolving Credit Lenders may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Liabilities, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Liabilities have been indefeasibly paid in full in cash. Pursuant to
applicable law, each Loan Party waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Loan Party against any other Loan Party, as the case may be,
or any security.
(d) Upon payment by any Loan Party of any Liabilities, all rights of
such Loan Party against any other Loan Party arising as a result thereof by way
of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Liabilities, as more
particularly set forth in an Indemnity, Subrogation and Contribution Agreement
to be entered into among the Loan Parties. In addition, any indebtedness of any
Loan Party now or hereafter held by any other Loan Party is hereby subordinated
in right of payment to the prior payment in full of the Liabilities. None of the
Loan Parties will demand, ▇▇▇ for, or otherwise attempt to collect any such
indebtedness. If any amount shall erroneously be paid to
134
any Loan Party on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Loan Party, such
amount shall be held in trust for the benefit of the Agent and the Revolving
Credit Lenders and shall forthwith be paid to the Administrative Agent to be
credited against the payment of the Liabilities, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
20.24. PATRIOT ACT NOTICES. Each Lender hereby notifies the Borrowers that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the name and address of each Borrower and other information that will
allow such Lender to identify such Borrower in accordance with the Patriot Act.
20.25. EXISTING LOAN AGREEMENT AMENDED AND RESTATED. This Agreement shall
amend and restate the Existing Loan Agreement in its entirety. On the Effective
Date, the rights and obligations of the parties under the Existing Loan
Agreement shall be subsumed within and be governed by this Agreement; provided,
however, that, except as specifically provided herein, each of the "Revolving
Credit Loans" (as such term is defined in the Existing Loan Agreement)
outstanding under the Existing Loan Agreement on the Effective Date shall, for
purposes of this Agreement, be included as Revolving Credit Loans hereunder and
each of the "L/Cs" and "Bankers Acceptances" (as such terms are defined in the
Existing Loan Agreement) outstanding under the Existing Loan Agreement on the
Effective Date shall, for purposes of this Agreement, be included as L/Cs and
Bankers Acceptances hereunder.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
135
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
VALUE CITY DEPARTMENT STORES LLC
("LEAD BORROWER")
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
"OTHER BORROWERS":
GRAMEX RETAIL STORES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
FILENE'S BASEMENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
VALUE CITY OF MICHIGAN, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GB RETAILERS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
RETAIL VENTURES JEWELRY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
VCDS-1
NATIONAL CITY BUSINESS CREDIT, INC.
(ADMINISTRATIVE AGENT, COLLATERAL AGENT
AND REVOLVING CREDIT LENDER)
By: /s/
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
VCDS-2
NATIONAL CITY BANK
(ISSUER AND LEAD ARRANGER)
By: /s/
--------------------------------
Name: ______________________________
Title: _______________________________
VCDS-3
BANK OF AMERICA, N.A. (CO-SYNDICATION AGENT
AND REVOLVING CREDIT LENDER)
By: /s/
--------------------------------
Name: ______________________________
Title: _______________________________
VCDS-4
▇▇▇▇▇ FARGO RETAIL FINANCE II, LLC
(CO-DOCUMENTATION AGENT AND REVOLVING
CREDIT LENDER)
By: /s/
--------------------------------
Name:________________________________
Title:________________________________
VCDS-5
THE CIT GROUP/BUSINESS CREDIT, INC.
(CO-SYNDICATION AGENT AND REVOLVING
CREDIT LENDER)
By: /s/
--------------------------------
Name:_______________________________
Title:________________________________
VCDS-6
GENERAL ELECTRIC CAPITAL CORPORATION
(CO-DOCUMENTATION AGENT AND REVOLVING
CREDIT LENDER)
By: /s/
--------------------------------
Name:_______________________________
Title:________________________________
VCDS-7
LASALLE BANK NATIONAL ASSOCIATION
(REVOLVING CREDIT LENDER)
By: /s/
--------------------------------
Name:_______________________________
Title:________________________________
VCDS-8
WACHOVIA CAPITAL FINANCE CORPORATION
(CENTRAL) (REVOLVING CREDIT LENDER)
By: /s/
--------------------------------
Name:_______________________________
Title:________________________________
VCDS-9
HSBC BUSINESS CREDIT (USA) INC.
(REVOLVING CREDIT LENDER)
By: /s/
--------------------------------
Name:_______________________________
Title:________________________________
VCDS-10