EXHIBIT 10.3
AMENDMENT NO. 3
TO AMENDED AND RESTATED
SENIOR CONVERTIBLE LOAN AGREEMENT
AMENDMENT NO. 3, dated as of December 29, 2004 (this "Amendment"), by and
among Value City Department Stores LLC, an Ohio limited liability company ("VCDS
LLC" or the "Borrower"), Shonac Corporation, an Ohio corporation ("Shonac"), DSW
Shoe Warehouse, Inc., a Missouri corporation ("DSW"), Gramex Retail Stores,
Inc., a Delaware corporation ("Gramex"), Filene's Basement, Inc., a Delaware
corporation ("Filene's"), GB Retailers, Inc., a Delaware corporation ("GB"),
Value City of Michigan, Inc., a Michigan corporation ("VC Michigan"), ▇.▇.
▇▇▇▇▇▇▇▇ Delivery, Inc. ("Overland"), Value City Department Stores Services,
Inc. ("Services"), Retail Ventures, Inc., an Ohio corporation (the "Parent"),
Retail Ventures Jewelry, Inc., an Ohio corporation ("RV Jewelry"), Retail
Ventures Services, Inc., an Ohio corporation ("RV Services"), and Retail
Ventures Imports, Inc. (formerly known as VC Acquisition, Inc.), an Ohio
corporation ("Imports", and together with Shonac, DSW, Gramex, Filene's, GB, VC
Michigan, Overland, Services, the Parent, RV Jewelry and RV Services, each a
"Guarantor" and collectively, the "Guarantors", and together with the Borrower,
each a "Loan Party" and collectively, the "Loan Parties"), the lenders currently
party to the Loan Agreement (as defined below) (the "Lenders"), and Cerberus
Partners, L.P., a limited partnership formed under the laws of the State of
Delaware ("CPLP"), as agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the "Agent").
RECITALS
WHEREAS, Value City Department Stores, Inc., an Ohio corporation (the
"Existing Borrower"), the Guarantors and certain of their affiliates, the
Lenders and the Agent are parties to that certain Amended and Restated Senior
Convertible Loan Agreement dated as of June 11, 2002, as amended by Amendment
No. 1 to Amended and Restated Senior Convertible Loan Agreement, dated as of
June 11, 2002, and by Amendment No. 2 to Amended and Restated Senior Convertible
Loan Agreement, dated as of October 7, 2003 (as amended, supplemented, restated
or otherwise modified through the date hereof, the "Loan Agreement");
WHEREAS, the Loan Parties have advised the Agent that the directors of the
Parent and the Existing Borrower have approved a corporate reorganization (the
"2004 Reorganization") of the Loan Parties pursuant to the terms set forth on
the Supplement to Schedule 1.01(b) hereto and has been implemented subject to
the consent of the Lenders;
WHEREAS, the following actions, among others, have been taken pursuant to
the 2004 Reorganization:
(i) Westerville Road GP, Inc., and Westerville Road LP, Inc., each a
Delaware corporation, have merged into the Existing Borrower, with the Existing
Borrower being the surviving entity, and therefore, Westerville Road GP, Inc.
and Westerville Road LP, Inc. are no longer Guarantors party to the Loan
Agreement.
(ii) Value City Limited Partnership, an Ohio limited partnership,
has merged into the Existing Borrower, with the Existing Borrower being the
surviving entity.
Therefore, Value City Limited Partnership is no longer a Guarantor party to the
Loan Agreement.
(iii) The Parent has formed a new wholly-owned subsidiary in Ohio
named "Value City Department Stores LLC". The Existing Borrower has merged into
Value City Department Stores LLC, with Value City Department Stores LLC being
the surviving entity.
(iv) Value City Department Stores LLC has transferred or will
transfer all of the issued and outstanding shares of each class of capital stock
of Shonac and Filene's to the Parent.
WHEREAS, the Loan Parties have requested that the Agent and the Lenders
(i) consent to the 2004 Reorganization, and (ii) make certain related amendments
to the Loan Agreement;
WHEREAS, the Lenders have agreed to consent to the 2004 Reorganization,
and to modify and amend certain provisions of the Loan Agreement as provided
herein, provided that, among other things, the Loan Parties execute and deliver
this Third Amendment.
NOW THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Loan Agreement.
2. Joinder and Assumption of Liabilities by VCDS LLC. Effective as of the
date of this Third Amendment, VCDS LLC hereby acknowledges that it has received
and reviewed a copy of the Loan Agreement, and acknowledges and agrees to:
(a) join in the execution of, and become a party to, the Loan
Agreement as the Borrower and as a Loan Party, as indicated with its signature
below;
(b) be bound by all representations, warranties, covenants,
agreements, liabilities and acknowledgments of the Borrower and the Loan Parties
in the Loan Agreement, with the same force and effect as if VCDS LLC was a
signatory to the Loan Agreement and was expressly named as the Borrower and as a
Loan Party therein; and
(c) assume and perform all duties and Obligations of the Existing
Borrower, as a Borrower and as a Loan Party under the Loan Agreement.
3. Amendments to Loan Agreement.
(a) General.
(i) VCDS LLC shall be the Borrower and a Loan Party under the
Loan Agreement and, in furtherance thereof, (i) all references in the Loan
Agreement to the "Borrower" shall hereafter be deemed to refer to VCDS LLC, (ii)
all references in the Loan Agreement to the "Loan Parties" shall hereafter be
deemed to include VCDS LLC, and (iii) all
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references in the Loan Agreement to "Value City" shall hereafter be deemed to
refer to VCDS LLC.
(ii) All references in the Loan Agreement to the
"Reorganization" shall hereafter be deemed to include the 2004 Reorganization,
and all references to the "Reorganization Effective Date" shall hereafter be
deemed to include the 2004 Reorganization Effective Date.
(b) New Definitions. (i) The following new definitions are hereby
added to Section 1.01 of the Loan Agreement (in appropriate alphabetical order)
to read in their entirety as follows:
"Amendment No. 3" means Amendment No. 3 to this Agreement, dated as of
December 29, 2004, made by the Borrower, the Guarantors, the Lenders and
the Agent.
"2004 Reorganization" means the corporate reorganization of the Loan
Parties, as described on the supplement to Schedule 1.01(b) hereto.
"2004 Reorganization Effective Date" means the date on which the
transactions contemplated by the 2004 Reorganization are consummated.
(ii) The definition of "Term Loan Agreement" is hereby deleted
in its entirety and the following substituted in its stead:
"Term Loan Agreement" means the Financing Agreement, dated as of June 11,
2002, among the Loan Parties, the Term Loan Agent and the Term Loan
Lenders, as most recently amended on December 29, 2004.
(iii) The definition of "Revolving Credit Facility" is hereby
deleted in its entirety and the following substituted in its stead:
"Revolving Credit Facility" means the $350,000,000 working capital
facility, dated as of June 11, 2002, among the Loan Parties, the Revolving
Credit Facility Agent and the Revolving Credit Facility Lenders, as most
recently amended on December 29, 2004.
(iv) The definition of "Revolving Credit Facility Agent" is
hereby amended by deleting the reference to "National City Commercial Finance,
Inc." contained therein and substituting the words "National City Business
Credit, Inc." therefor.
(c) The sixth sentence in Section 5.01(q) is hereby amended by the
addition thereto of the phrase "except where such default or violation is not
reasonably likely to have a Material Adverse Effect" after the word
"Reorganization."
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(d) Security Interests. Section 5.01(ff) of the Loan Agreement is
hereby amended by adding the words "and by Amendment No. 3" after the words "and
the UCC financing statements and financing statement amendments contemplated by
Amendment No. 2" contained in the second sentence thereof.
(e) Events of Default. Section 8.01 of the Loan Agreement is hereby
amended by adding a new clause (q) thereto to read in its entirety as follows:
(q) the holder of the Promissory Note, dated January 1, 2005, made by the
Parent in favor of VCDS LLC fails to comply in any respect with any
subordination provision or any other intercreditor provision contained
therein or in any pledge agreement related thereto;
4. Amendments to Schedules to Loan Agreement. A new supplement to Schedule
1.01(b) (2004 Reorganization) is hereby added to Schedule 1.01(b) of the Loan
Agreement to read in its entirety in the form of Supplement to Schedule 1.01(b)
attached hereto and incorporated by reference herein.
5. Conditions to Effectiveness. This Amendment shall become effective upon
satisfaction in full of the following conditions precedent:
(a) Both before and immediately after giving effect to this
Amendment, (i) the representations and warranties contained in this Amendment
and Article V of the Loan Agreement (other than as described in Annex I hereto)
shall be correct on and as of the date of this Amendment as though made on and
as of such date (except where such representations and warranties relate to an
earlier date in which case such representations and warranties shall be true and
correct as of such earlier date); and (ii) no Default or Event of Default shall
have occurred and be continuing on the date of this Amendment or result from
this Amendment becoming effective in accordance with its terms.
(b) The Agent shall have received, on or before the 2004
Reorganization Effective Date, each of the following documents, in form and
substance satisfactory to the Agent and dated the 2004 Reorganization Effective
Date (unless otherwise specified herein or in such document), and all conditions
precedent to the effectiveness of such documents (where applicable) shall have
been satisfied:
(i) this Amendment, duly executed by the Loan Parties, the
Lenders and the Agent;
(ii) Joinder, Confirmation and Amendment of Ancillary
Documents, duly executed by each of the Loan Parties and the Agent, together
with the original stock certificates or other certificated securities or
instruments representing all of the Capital Stock of such Loan Parties'
subsidiaries, and all intercompany notes accompanied by undated stock powers
executed in blank and other proper instruments of transfer, in each case, to the
extent not previously delivered to the Agent;
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(iii) Assignment for Security (Copyrights) duly executed by
VCDS LLC;
(iv) Second Amendment to the Intercreditor Agreement, duly
executed by the Agent, the Revolving Credit Agent and the Term Loan Agent and
acknowledged by the Loan Parties;
(v) Endorsements to each Note, duly executed by the Borrower;
(vi) such Collection Account Agreements, Credit Card
Agreements and DDA Notifications as the Agent may reasonably require;
(vii) such UCC financing statements and UCC financing
statement amendments as the Agent may reasonably require;
(viii) an opinion of Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, LLP,
counsel to the Loan Parties, with respect to the 2004 Reorganization, the Loan
Documents and the transactions contemplated hereby and thereby;
(ix) a certificate of the appropriate official(s) of the state
of organization of the Borrower and the Parent certifying as to the subsistence
in good standing of, and the payment of taxes by, such Person in such state;
(x) a true and complete copy of the charter, certificate of
formation or other publicly filed organizational document of the Borrower and
the Parent certified as of the 2004 Reorganization Effective Date (except as
otherwise agreed by the Agent) by an appropriate official of the state of
organization of such Person, which shall set forth the same complete name of
such Person as is set forth herein;
(xi) a copy of the by-laws, limited liability company
agreement, operating agreement, or other organizational document of the Borrower
and the Parent, together with all amendments thereto, certified as of the 2004
Reorganization Effective Date by an Authorized Officer of such Person;
(xii) a copy of the resolutions of the Borrower and the
Parent, certified as of the date hereof by an Authorized Officer thereof,
authorizing (A) the transactions contemplated hereby, and (B) the execution,
delivery and performance by such Person of each Loan Document to which such
Person is or will be a party, included as amended hereby or by the documents
contemplated hereby, and the execution and delivery of the other documents to be
delivered by such Person in connection herewith and therewith, and (C) the 2004
Reorganization, and each of the documents contemplated thereby;
(xiii) a certificate of an Authorized Officer of the Borrower
and the Parent, certifying the names and true signatures of the representatives
of such Person authorized to sign each Loan Document to which such Person is or
will be a party and the other documents to be executed and delivered by such
Person in connection herewith and therewith, together with evidence of the
incumbency of such authorized officers; and
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(xiv) copies of the Revolving Credit Facility Documents and
Term Loan Documents, in each case, as amended as of December 29, 2004 and copies
of each of the documents executed in connection with the 2004 Reorganization, in
each case, duly executed by the parties thereto, which documents shall be in
form and substance satisfactory to the Agent;
(c) All consents, authorizations and approvals of, and filings and
registrations with, and all other actions in respect of, any Governmental
Authority or other Person required in connection with the 2004 Reorganization,
the amendment of the Loan Documents, or the conduct of the Loan Parties'
business shall have been obtained and shall be in full force and effect, except
as to the extent that the failure to obtain the same would not have a Material
Adverse Effect.
(d) The Agent shall have completed its business and legal due
diligence with respect to the 2004 Reorganization and the results thereof shall
be acceptable to the Agent, in its sole and absolute discretion. The Agent's
execution hereof shall constitute satisfaction of this subsection 5(d).
(e) All conditions precedent to the 2004 Reorganization and the
amendment of the Revolving Credit Facility and the Term Loan Agreement shall
have been met to the satisfaction of the Agent.
(f) The Agent shall have received such other agreements,
instruments, opinions and other documents as the Agent may reasonably request in
respect of the transactions contemplated hereby.
(g) All proceedings in connection with the transactions contemplated
by this Amendment, and all documents incidental thereto, shall be satisfactory
to the Agent and its counsel, and the Agent and its counsel shall have received
all such information and such counterpart originals or certified copies of
documents as the Agent or its counsel may reasonably request.
(h) All fees, expenses and taxes accrued and unpaid or otherwise due
and payable by the Borrowers or a Loan Party pursuant to either the Loan
Agreement or this Amendment (including, without limitation, the fees and other
client charges of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP in connection with this Amendment and
the related agreements, instruments and other documents) shall have been paid in
full.
6. Loan Parties' Representations and Warranties. Each Loan Party
(including VCDS LLC) represents and warrants to the Agent and the Lenders as
follows:
(a) Such Loan Party (i) is duly organized, validly existing and in
good standing under the laws of the state of its organization and (ii) has all
requisite power, authority and legal right to execute, deliver and perform this
Amendment and to perform the Loan Agreement, as amended hereby.
(b) The execution, delivery and performance by such Loan Party of
this Amendment and the performance by such Loan Party of the Loan Agreement, as
amended hereby and the consummation of the 2004 Reorganization (i) have been
duly authorized by all
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necessary action, (ii) do not and will not violate or create a default under
such Loan Party's organizational documents, any applicable law or any
contractual restriction binding on or otherwise affecting such Loan Party or any
of such Loan Party's properties (including, without limitation, any Leases)
except where such violation of default is not reasonably likely to have a
Material Adverse Effect, and (iii) except as provided in the Loan Documents, do
not and will not result in or require the creation of any Lien, upon or with
respect to such Loan Party's property.
(c) No authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority is required in connection with the
due execution, delivery and performance by such Loan Party of this Amendment or
the performance by such Loan Party of the Loan Agreement, as amended hereby,
except to the extent that the failure to obtain the same would not have a
Material Adverse Effect.
(d) This Amendment and the Loan Agreement, as amended hereby,
constitute the legal, valid and binding obligations of such Loan Party, as the
case may be, enforceable against such Loan Party, in accordance with their terms
except to the extent the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws from time to time in effect
affecting generally the enforcement of creditors' rights and remedies and by
general principles of equity.
(e) Both before and immediately after giving effect to this
Amendment, (i) the representations and warranties contained in Article V of the
Loan Agreement (other than as described on Annex I hereto) are correct on and as
of the date hereof as though made on and as of the date hereof (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date), and (ii) no Default or Event of Default has occurred and
is continuing on and as of the date hereof.
(f) Immediately prior to giving effect to this Amendment, VCDS LLC
had no assets and no liabilities.
(g) The 2004 Reorganization has been or will be consummated in
accordance with all requirements of applicable law.
7. Restatement of Representations, Warranties and Covenants in Loan
Agreement. The Loan Parties (including VCDS LLC) hereby restate all
representations, warranties, and covenants set forth in the Loan Agreement as of
the date hereof (other than as described on Annex I hereto). To the extent that
any changes in any representations, warranties, and covenants require any
amendments to the Schedules to the Loan Agreement, such Schedules are amended
and restated, as evidenced by Schedule 1.01(b) hereto or any replacement
Schedules annexed to this Third Amendment.
8. Continued Effectiveness of Loan Agreement. Each Loan Party hereby (a)
confirms and agrees that the Loan Agreement and each other Loan Document to
which it is a party is, and shall continue to be, in full force and effect and
is hereby ratified and confirmed in all respects except that on and after
December 29, 2004, all references in any such Loan Document to "the Loan
Agreement", the "Agreement", "hereto", "hereof", "hereunder", "thereto",
"thereof", "thereunder" or words of like import referring to the Loan Agreement
shall
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mean the Loan Agreement as amended by this Amendment, (b) confirms and agrees
that to the extent that any such Loan Document purports to assign or pledge to
the Agent, for the ratable benefit of the Lenders, or to grant to the Agent, for
the ratable benefit of the Lenders a security interest in or Lien on, any
Collateral as security for the Obligations of the Loan Parties, or any of their
respective Subsidiaries from time to time existing in respect of the Loan
Agreement and the Loan Documents, such pledge, assignment and/or grant of the
security interest or Lien is hereby ratified and confirmed in all respects, and
(c) confirms and agrees that no amendment of any terms or provisions of the Loan
Agreement or the amendments granted hereunder shall relieve any Loan Party from
complying with such terms and provisions other than as expressly amended hereby
or from complying with any other term or provision thereof or herein.
9. Reaffirmation by Guarantors. Each Guarantor hereby (a) consents to the
transactions contemplated by the Amendment; (b) acknowledges and reaffirms its
obligations owing to the Agent and the Lenders under any Loan Documents to which
it is a party; and (c) agrees that each of the Loan Documents to which it is a
party is and shall remain in full force and effect. Although each of the
Guarantors has been informed of the matters set forth herein and has
acknowledged and agreed to same, it understands that neither the Agent nor any
Lender has any obligation to inform it of such matters in the future or to seek
its acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty.
10. Consent to 2004 Reorganization. Upon the determination of the Agent
that all conditions precedent to the effectiveness of this Third Amendment have
been satisfied, consent to the 2004 Reorganization shall be deemed to have been
given by the Lenders, provided however, that nothing contained herein shall be
deemed a consent to any transactions regarding the public issuance of stock
described in Paragraphs 11, 12, and 13 of the Supplement to Schedule 1.01(b) to
the extent that the consummation of any such transactions described therein
would constitute or result in the occurrence of an Event of Default.
11. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment.
(b) Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(c) This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York. Each of the parties to this Amendment
hereby irrevocably waives all rights to trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Amendment.
(d) This Amendment is a Loan Document executed pursuant to the Loan
Agreement and shall be construed, administered and interpreted in accordance
with the terms thereof.
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12. JURY TRIAL WAIVER. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN
ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS
AMENDMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment, to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER: VALUE CITY DEPARTMENT STORES LLC,
an Ohio limited liability company
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
GUARANTORS: SHONAC CORPORATION,
an Ohio corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
DSW SHOE WAREHOUSE, INC.,
a Missouri corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GRAMEX RETAIL STORES, INC.,
a Delaware corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
FILENE'S BASEMENT, INC.,
a Delaware corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
VALUE CITY OF MICHIGAN, INC.,
a Michigan corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GB RETAILERS, INC.,
a Delaware corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
▇.▇. ▇▇▇▇▇▇▇▇ DELIVERY,
INC. a Delaware corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
VALUE CITY DEPARTMENT STORES SERVICES,
INC.
a Delaware corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
RETAIL VENTURES, INC.
an Ohio corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
RETAIL VENTURES JEWELRY, INC.
an Ohio corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
RETAIL VENTURES SERVICES, INC.
an Ohio corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
RETAIL VENTURES IMPORTS, INC.
(formerly known as VC Acquisition, Inc.),
an Ohio corporation
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
AGENT AND LENDER:
CERBERUS PARTNERS, L.P.,
a Delaware limited partnership
By: CERBERUS ASSOCIATES, L.L.C.
By: ___________________________________
Name:
Title:
LENDER:
SCHOTTENSTEIN STORES CORPORATION
a Delaware limited partnership
By: ___________________________________
Name:
Title:
