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EXHIBIT 4(a)(iii)
FORBEARANCE AND SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FORBEARANCE AND SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
("Agreement") is made as of the 10TH day of October, 2000, by and among ▇▇▇▇
▇▇▇▇▇▇ STORES, INC. ("▇▇▇▇ ▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
("Merchandising"), ▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC. ("Retailing"), ▇▇▇▇ ▇▇▇▇▇▇
DISTRIBUTING, INC. ("Distributing"), THE ▇. ▇▇▇▇▇▇▇▇ COMPANY("▇▇▇▇▇▇▇▇"),
▇▇▇▇▇▇▇▇ PROPERTY CORP. ("Property") and ▇▇▇▇▇▇▇▇ WORLDWIDE CORP. ("Worldwide"),
each an Indiana corporation except Property, which is a Delaware Corporation
(each, a "Borrower" and collectively, "Borrowers"), jointly and severally, and
LASALLE BANK NATIONAL ASSOCIATION, a national banking association ("Bank").
RECITALS
A. Bank and Borrowers are parties to that certain Amended and Restated
Loan and Security Agreement dated as of April 28, 2000, as amended by that
certain First Amendment to Loan and Security Agreement dated as of August 18,
2000 and that certain side letter dated August 18, 2000, amending the definition
of "Advance Ratio" (the "Existing Loan Agreement," and as amended by this
Agreement and as otherwise amended, supplemented, restated or otherwise modified
from time to time, the "Loan Agreement"), pursuant to which the Bank has made
certain Revolving Loans and issued certain Letters of Credit in an aggregate
amount not exceeding $45,000,000.
B. Borrowers have advised the Bank that subject to the Bank's consent,
they intend to enter into one or more transactions by which all or substantially
all of the assets of ▇▇▇▇▇▇▇▇, Property and Worldwide will be sold or otherwise
disposed of pursuant to documentation in form and substance satisfactory to the
Bank in its sole discretion (collectively, the "▇▇▇▇▇▇▇▇ Transaction Documents,"
and the transactions contemplated therein, collectively, the "▇▇▇▇▇▇▇▇
Transactions"), and to remit all of the gross proceeds from the ▇▇▇▇▇▇▇▇
Transactions to the Bank for application to the Borrowers' Liabilities.
C. In addition, certain Events of Default have occurred and are
continuing by virtue of the Borrowers' failure to comply with the Tangible Net
Worth, Minimum Sales Level and Minimum Collections Level covenants set forth in
Section 11.2(f) of the Loan Agreement (the "Specified Defaults"). The Borrowers
have advised the Bank that they intend to seek to cure these Specified Defaults
by, among other things, raising additional equity financing.
D. Borrowers have requested that (i) the Bank consent to the ▇▇▇▇▇▇▇▇
Transactions and release its liens on the assets being sold or otherwise
disposed of pursuant to the ▇▇▇▇▇▇▇▇ Transaction Documents, and (ii) the Bank
agree to forbear from exercising its default-related rights and remedies in
respect of the Specified Defaults through and including October 31, 2000, in
order to give the Borrowers an opportunity to consummate an equity financing
transaction.
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E. Subject to the terms and conditions set forth herein, the Bank has
agreed to consent to the ▇▇▇▇▇▇▇▇ Transactions and to forbear temporarily from
exercising its default-related rights and remedies in respect of the Specified
Defaults.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. AMENDMENTS TO THE EXISTING LOAN AGREEMENT. Subject to the
satisfaction of the conditions precedent set forth in Section 18 hereof, the
parties hereto hereby agree to amend the Existing Loan Agreement as follows:
(a) Section 1.1 of the Existing Loan Agreement is hereby amended by
adding the following definitions in the appropriate alphabetical order, and,
with respect to definitions currently included in Section 1.1, by amending and
restating such definitions as follows:
(i) "Revolving Loan Borrowing Base" means, as at any date of
determination thereof, an amount which is the sum of:
(A) the product of the amounts of (i) each component of
Eligible Inventory, (ii) outstanding and issued documentary letters of
credit, and (iii) Carryover Inventory, multiplied by the Advance
Ratio, subject to the maximum amount of each such product to be
included in the Revolving Loan Borrowing Base, as follows:
COMPONENT OF INVENTORY MAXIMUM AMOUNT
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Eligible Inventory on premises. None.
Eligible Inventory in transit. None.
Eligible Inventory in transit not
supported by a letter of credit. None.
Outstanding and issued documentary
letters of credit. $20,000,000
Carryover Inventory. $ 5,000,000
plus (B) the product of Non-Apparel Inventory multiplied by
thirty percent (30%);
plus (C) seventy percent (70%) of the fair market value of the
Mortgaged Property, which is the amount of Four Million Four Hundred
Eighty Thousand Dollars ($4,480,000), as cumulatively reduced on the
first day of each month commencing June, 2000 in the amount of
Eighteen Thousand Six Hundred Sixty-Seven Dollars ($18,667) (the
"Mortgaged Property Cap");
plus (D) the Special Advance available as described in
Paragraph 2.1(b) of this Agreement.
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For purposes hereof, "Advance Ratio" shall mean (i) up to Seventy-Five
Percent (75%) from the First Amendment Effective Date through October 31, 2000;
(ii) up to Seventy Percent (70%) from November 1, 2000 through November 8, 2000;
(iii) up to Sixty-Seven Percent (67%) from November 9, 2000 through November 15,
2000; (iv) up to Sixty-Four Percent (64% from November 16, 2000 through November
23, 2000; (v) up to Sixty Percent (60%) from November 24, 2000 through November
30, 2000; (vi) up to Fifty-Four Percent (54%) from December 1, 2000 through
December 8, 2000; (vii) up to Fifty Percent (50%) from December 9, 2000 through
December 15, 2000, (viii) up to Thirty-Five Percent (35%) from December 16, 2000
through December 31, 2000; (ix) up to Fifty Percent (50%) from January 1, 2001
through the Maturity Date; provided, however, that after receipt of projections
which cover the period January 1, 2001 through the Maturity Date, the Bank may
consider adjusting the advance rate, in its sole discretion.
(ii) "Second Amendment" means that certain Forbearance and
Second Amendment to Loan and Security Agreement dated as of October
10, 2000, among Bank and Borrowers.
(iii) "Second Amendment Effective Date" means the date on which
all of the conditions precedent set forth in Section 18 of the Second
Amendment are either satisfied or waived by Bank.
(b) Section 2.1(b) of the Existing Loan Agreement is hereby amended
and restated in its entirety to read as follows:
(iii) Special Advance. Subject to all of the terms and
conditions of this Agreement, Bank agrees to include as part of the
Revolving Credit Commitment, a special advance to Borrowers on the
First Amendment Effective Date in the principal amount of FOUR MILLION
DOLLARS ($4,000,000) (the "Special Advance"), which shall bear
interest in accordance with Section 4.1, shall be secured by all of
the Collateral as provided for herein, and shall be secured by all of
the Collateral as provided herein, and shall be due and payable as
follows: (i) $2,000,000 on the Second Amendment Effective Date, (ii)
$500,000 on the earlier of October 16, 2000 and the date on which any
payments are first made pursuant to any Schotteinstein Agreements,
(iv) $300,000 on October 20, 2000, (v) $300,000 on October 27, 2000,
(vi) $300,000 on November 3, 2000, (vi) $300,000 on November 10, 2000,
and (vii) $300,000 on November 17, 2000; provided, however, that any
unpaid portion of the Special Advance shall be due and payable at any
time all other Borrowers' Liabilities are due and payable pursuant to
Section 12.3 hereof.
(c) Schedule 11.2(f)(iv) of the Existing Loan Agreement is hereby
amended to change the maximum Revolving Loan amount (including all Letters of
Credit) for the month of October, 2000 from "$41,000" to "$45,000"
(d) Schedule 7.5 to the Existing Loan Agreement is hereby deleted and
the Amended Schedule 7.5 attached hereto is hereby substituted in lieu thereof.
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SECTION 2. CONFIRMATION BY BORROWERS OF BORROWERS' LIABILITIES AND
EXISTING EVENTS OF DEFAULT.
(a) Each Borrower acknowledges and agrees that as of October 10,
2000, the aggregate amount of the principal balance of the outstanding
Borrowers' Liabilities under the Loan Agreement included at least the following
amounts:
Revolving Loans $33,941,575.96
Letters of Credit $ 8,996,390.76
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$42,937,966.72
The foregoing amounts do not include all of the interest, fees, expenses, and
other amounts which are chargeable or otherwise reimbursable under the Loan
Agreement and the Other Agreements. Borrowers have no rights of offset, defense,
claim or counterclaim with respect to any of the Borrowers' Liabilities.
(b) Each of the Borrowers agrees and acknowledges (i) that each of
the Specified Defaults constitutes a material Event of Default that has occurred
and is continuing, (ii) that each Specified Default is presently uncured and is
not subject to any grace period, and (iii) except for the Specified Defaults, no
other Events of Default have occurred which remain continuing as of the date
hereof. Except as provided in Section 3 below from and after the Second
Amendment Effective Date, each Specified Default (i) relieves Bank from any
obligation to extend any Loan or provide other financial accommodations under
the Loan Agreement or Other Agreements, and (ii) permits Bank to, among other
things, (A) suspend or terminate any commitment to provide Revolving Loans or
make other extensions of credit under the Loan Agreement or the Other
Agreements, (B) declare all Borrowers' Liabilities to be immediately due and
payable and without notice or demand, (C) commence any legal or other action to
collect any or all of the Borrowers' Liabilities from Borrowers and/or any
Collateral or any other property (collectively, "Other Collateral") as to which
any other Person granted Bank a security interest as security for the Borrowers'
Liabilities or any guaranty thereof, (D) foreclose or otherwise realize on any
or all of the Collateral and the Other Collateral, and/or appropriate, set-off
and apply to the payment of any or all of the Borrowers' Liabilities, any or all
of the Collateral and the Other Collateral and/or (E) take any other enforcement
action or otherwise exercise any or all rights and remedies provided for by any
or all of the Loan Agreement or Other Agreements or applicable law.
SECTION 3. FORBEARANCE. (a) Subject to the satisfaction of the
conditions precedent set forth in Section 18 hereof, Bank agrees that until the
expiration of the "Forbearance Period" (as hereinafter defined), Bank will
temporarily forbear from the exercise of its default-related remedies against
any Borrower solely with respect to the Specified Defaults; provided, however,
(i) Bank shall be entitled, at any time in its sole discretion, to charge the
default rate of interest in respect of all Borrowers' Liabilities pursuant to
Section 4.1 of the Loan Agreement, (ii) the Borrowers shall comply during the
Forbearance Period with all limitations, restrictions or prohibitions that would
otherwise be effective or applicable under the Loan Agreement or any of
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the Other Agreements, during the continuance of any Events of Default, and (iii)
nothing herein shall restrict, impair or otherwise affect Bank's rights and
remedies under any agreements containing subordination provisions in favor of
Bank (including, without limitation, any rights or remedies available to Bank as
a result of the occurrence or continuation of the Specified Defaults) or amend
or modify any provision thereof. As used herein, "Forbearance Period" means the
period beginning on the date hereof and ending on the earlier to occur of (the
occurrence of clause (i) or (ii), a "Termination Event"): (i) October 31, 2000,
or (ii) the occurrence of any Forbearance Default. As used herein, "Forbearance
Default" means (A) the occurrence of any Event of Default other than the
Specified Defaults, (B) the failure of any Borrower to comply timely with any
term, condition, or covenant set forth in this Agreement, (C) the failure of any
representation or warranty made by any Borrower under or in connection with this
Agreement to be true and complete in all material respects as of the date when
made or any other breach of any such representation or warranty in any material
respect, or (D) any occurrence, event or change in facts or circumstances that
would have a material adverse effect on any Borrower or any of their respective
assets.
(b) Upon a Termination Event, Bank's agreement hereunder to forbear
from exercising its default-related remedies shall immediately terminate without
the requirement of any demand, presentment, protest, or notice of any kind, all
of which each of the Borrowers waives. Each of the Borrowers agrees that Bank
may at any time thereafter proceed to exercise any and all of its rights and
remedies under any or all of the Loan Agreement and Other Agreements and/or
applicable law, including, without limitation, its rights and remedies in
connection with the Specified Defaults. Without limiting the generality of the
foregoing, upon the occurrence of a Termination Event, Bank may, in its sole
discretion and without the requirement of any demand, presentment, protest, or
notice of any kind, (i) suspend or terminate any commitment to provide Revolving
Loans or other extensions of credit under any or all of the Loan Agreement and
Other Agreements, (ii) declare all Borrowers' Liabilities to be immediately due
and payable, (iii) commence any legal or other action to collect any or all of
the Borrowers' Liabilities from Borrowers and/or any Collateral or Other
Collateral, (iv) foreclose or otherwise realize on any or all of the Collateral
and Other Collateral, and/or appropriate, setoff and apply to the payment of any
or all of the Borrowers' Liabilities, any or all of the Collateral and Other
Collateral, and (v) take any other enforcement action or otherwise exercise any
or all rights and remedies provided for by any or all of the Loan Agreement and
Other Agreements and/or applicable law, all of which rights and remedies are
fully reserved by Bank.
(c) Any agreement by Bank to extend the Forbearance Period must be
set forth in writing and signed by an officer of Bank. Each of the Borrowers
acknowledges that Bank has not made any assurances concerning any possibility of
an extension of the Forbearance Period.
(d) Each of the Borrowers agrees and acknowledges that any Loan or
other financial accommodation which Bank makes on or after the date hereof has
been made by Bank in reliance upon, and is consideration for, among other
things, the general releases and indemnities contained in Section 6 and the
other covenants and agreements of Borrowers hereunder.
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SECTION 4. ▇▇▇▇▇▇▇▇ TRANSACTIONS. Subject to satisfaction of the
conditions precedent in Section 18 hereof, and subject to the remaining
provisions of this Section, the Bank consents to the consummation of the
▇▇▇▇▇▇▇▇ Transactions:
(a) The ▇▇▇▇▇▇▇▇ Transactions shall be consummated on terms and
conditions satisfactory to Bank in its sole discretion and pursuant to the
▇▇▇▇▇▇▇▇ Transaction Documents in form and substance and satisfactory to the
Bank in its sole discretion. The ▇▇▇▇▇▇▇▇ Transaction Documents shall include,
without limitation, (i) that certain Agency Agreement dated as of October 11,
2000 (the Agency Agreement"), by and among ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, The ▇▇▇▇
Group, LLC, Hilco Merchant Resources, LLC and Schottenstein ▇▇▇▇▇▇▇▇▇ Capital
Group, LLC (the latter three entities, collectively, the "Agent"), in form and
substance satisfactory to Bank, (ii) that certain Purchase Agreement dated as of
October 11, 2000, between Property and XYZ Corporation, in form and substance
satisfactory to Bank (the agreements referenced in clauses (i) and (ii), the
"Schottenstein Agreements"), and (iii) the Assignment and Assumption Agreement
and Lease Termination Agreement dated October 12, 2000 ("▇▇▇▇ Agreement"), among
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ Stores, Inc. and the designee of ▇▇▇▇▇▇▇ ▇▇▇▇ Productions,
Inc. (▇▇▇▇ Grand Central, Inc.) with respect to ▇▇▇▇▇▇▇▇'▇ Leasehold interest in
space in which it has operated its Grand Central Station Store and the store
fixtures therein, in form and substance satisfactory to Bank.
(b) All gross proceeds of the ▇▇▇▇▇▇▇▇ Transactions shall be remitted
to the Bank at the closing(s) of the ▇▇▇▇▇▇▇▇ Transactions for application to
the Borrowers' Liabilities in the manner set forth subparagraph (c) below, and
the Merchant LC (as defined in the Agency Agreement) shall be delivered
immediately to Bank.
(c) The proceeds of the ▇▇▇▇▇▇▇▇ Transactions to be remitted to the
Bank at the closing(s) of the ▇▇▇▇▇▇▇▇ Transactions shall be applied to the
Borrowers' Liabilities as follows:
(i) The first $2,500,000 shall be applied to the Special
Advance; and
(ii) the balance of such proceeds shall be applied to the
Borrowers' Liabilities (other than the Special Advance) in such manner as
determined by the Bank in its sole discretion. Any proceeds of the ▇▇▇▇▇▇▇▇
Transactions remitted to the Bank after the closing thereof shall be applied to
Borrowers' Liabilities in such manner as determined by the Bank in its sole
discretion.
(d) The aggregate amount of the proceeds from the ▇▇▇▇▇▇▇▇
Transactions to be remitted to the Bank at the closing(s) thereof shall be no
less than $ 4,300,000.
(e) The closing of the ▇▇▇▇▇▇▇▇ Transactions contemplated by the ▇▇▇▇
Agreement shall occur no later than October 13, 2000, and the closing of the
▇▇▇▇▇▇▇▇ Transactions contemplated by the Schottenstein Agreements shall occur
no later than October 16, 2000.
Upon satisfaction of the conditions set forth in subparagraphs (a) through (e)
of this Section, Bank shall execute and deliver to Borrowers or the applicable
buyers (i) UCC termination statements and other instruments and documents
reasonably necessary or appropriate to
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effectuate the release of Bank's liens on and security interests in the assets
of ▇▇▇▇▇▇▇▇, Property and Worldwide being sold pursuant to the ▇▇▇▇▇▇▇▇
Transaction Documents, and (ii) as contemplated in the Agency Agreement, an
Assignment of Security Interest in form and substance satisfactory to Bank in
its sole discretion. Each Borrower agrees and covenants to cause to occur, and
to comply with, each of the requirements set forth in subparagraphs (a) through
(e) above, and any breach of any such covenants shall constitute an immediate
Event of Default and Forbearance Default.
SECTION 5. AMENDMENT FEE. As consideration for the execution and
delivery of the Agreement, Borrowers shall pay to Bank a fee in the amount of
$20,000 ("Amendment Fee"), which fee shall be deemed fully earned and shall be
paid on the Second Amendment Effective Date.
SECTION 6. GENERAL RELEASE; INDEMNITY.
(a) In consideration of, among other things, Bank's execution and
delivery of this Agreement, and any other Loans or other financial
accommodations which Bank elects to extend to Borrowers, each Borrower, on
behalf of itself and its successors and assigns (collectively, "Releasors"),
hereby forever waives, releases and discharges to the fullest extent permitted
by law, and hereby agrees to hold each Releasee (as defined below) harmless
from, any and all claims (including, without limitation, crossclaims,
counterclaims, rights of set-off and recoupment), causes of action, demands,
suits, costs, expenses and damages (collectively, the "Claims"), that any
Releasor now has or hereafter may have, of whatsoever nature and kind, whether
known or unknown, whether now existing or hereafter arising, whether arising at
law or in equity, against any or all of Bank in any capacity and its affiliates,
shareholders and "controlling persons" (within the meaning of the federal
securities laws), and their respective successors and assigns and each and all
of the officers, directors, employees, agents, attorneys and other
representatives of each of the foregoing (collectively, the "Releasees"), based
in whole or in part on facts, whether or not now known, existing on or before
the execution of this Agreement. The receipt by any Borrower of any Loans or
other financial accommodations made by Bank after the date hereof shall
constitute a ratification, adoption, and confirmation by Borrowers of the
foregoing general release of all Claims against any Releasee which are based in
whole or in part on facts, whether or not now known or unknown, existing on or
prior to the date of receipt of any such Loans or other financial
accommodations. In entering into this Agreement, the Borrowers have consulted
with, and been represented by, legal counsel and expressly disclaim any reliance
on any representations, acts or omissions by any of the Releasees and hereby
agree and acknowledge that the validity and effectiveness of the release set
forth above do not depend in any way on any such representations, acts and/or
omissions or the accuracy, completeness or validity hereof. The provisions of
this Section shall survive the termination of the Loan Agreement and the Other
Agreements and payment in full of the Borrowers' Liabilities.
(b) Borrowers hereby agree that their obligation to indemnify and hold
the Releasees harmless as set forth in Section 6(a) hereof shall include an
obligation to indemnify and hold Releasees harmless with respect to any and all
liabilities, obligations, losses, penalties, actions, judgements, suits, costs,
expenses or disbursements of any kind or nature whatsoever
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incurred by the Releasees, or any of them, whether direct, indirect or
consequential, as a result of or arising from or relating to any proceeding by,
or on behalf of any Person, including, without limitation, officers, directors,
agents, trustees, creditors, partners or shareholders of Borrowers, whether
threatened or initiated, asserting any claim for legal or equitable remedy under
any statue, regulation or common law principle arising from or in connection
with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of this Agreement or any other document executed
in connection herewith. The foregoing indemnity shall survive the termination of
the Loan Agreement and the Other Agreements and the payment in full of the
Borrowers' Liabilities.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS.
To induce Bank to execute and deliver this Agreement, each Borrower represents,
warrants and covenants that:
(a) The execution, delivery and performance by each Borrower of
this Agreement and all documents and instruments delivered in
connection herewith and the Loan Agreement and all Other Agreements
have been duly authorized, and this Agreement and all documents and
instruments delivered in connection herewith and the Loan Agreement
and all Other Agreements are legal, valid and binding obligations of
each Borrower enforceable against each Borrower in accordance with
their respective terms, except as the enforcement thereof may be
subject to (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law);
(b) After taking into account the Specified Defaults, each of the
representations and warranties contained in the Loan Agreement and the
Other Agreements is true and correct on and as of the date hereof as
if made on the date hereof, except to the extent that 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 each of the agreements and
covenants in the Loan Agreement and the Other Agreements is hereby
reaffirmed with the same force and effect as if each were separately
stated herein and made as of the date hereof;
(c) Neither the execution, delivery and performance of this
Agreement and all documents and instruments delivered in connection
herewith nor the consummation of the transactions contemplated hereby
or thereby does or shall contravene, result in a breach of, or violate
(i) any provision of any Borrower's corporate charter or bylaws or
other governing documents, (ii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any
indenture, mortgage, deed of trust, lease, agreement or other
instrument to which any Borrower is a party or by which any Borrower
or any of its property is bound;
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(d) Bank's security interests in the Collateral and the Other
Collateral continue to be valid, binding, and enforceable
first-priority security interests which secure the Borrowers'
Liabilities (subject only to Permitted Liens), and no tax or judgment
liens are currently of record against any Borrower;
(e) The Bank has a first priority security interest in and lien
on all of each Borrower's right, title and interest in and to the
▇▇▇▇▇▇▇▇ Transaction Documents, including, without limitation, all of
each Borrower's rights, remedies, powers, options and privileges
thereunder and all consideration payable thereunder to any Borrower
(including, without limitation, the Guaranteed Amount and the Merchant
LC, as those terms are defined in the Agency Agreement), and each
Borrower jointly and severally agrees to cause all of the gross
proceeds from the ▇▇▇▇▇▇▇▇ Transactions (including any proceeds from
any drawing under the Merchant LC) to be remitted directly to Bank for
application to the Borrowers' Liabilities; and
(f) The recitals to this Agreement are true and correct.
SECTION 8. REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT.
(a) Except as specifically amended hereby, all terms, conditions,
covenants, representations and warranties contained in the Loan Agreement or any
Other Agreements, and all rights of Bank and all of Borrowers' Liabilities,
shall remain in full force and effect. Each Borrower hereby confirms that the
Loan Agreement and the Other Agreements are in full force and effect and that no
Borrower has any defenses, setoffs, claims or counterclaims to the Borrowers'
Liabilities under the Loan Agreement or any Other Agreements.
(b) Except as expressly set forth herein, the execution, delivery and
effectiveness of this Agreement and any consents and waivers set forth herein
shall not directly or indirectly (i) create any obligation to make any further
Loans or to continue to defer any enforcement action after a Termination Event,
(ii) constitute a consent or waiver of any past, present or future violations of
any provisions of the Loan Agreement or any Other Agreements, (iii) amend,
modify or operate as a waiver of any provision of the Loan Agreement or any
Other Agreements or any right, power or remedy of Bank thereunder, or (iv)
constitute a course of dealing or other basis for altering any Borrowers'
Liabilities or any other contract or instrument. Except as expressly set forth
herein, Bank reserves all of its rights, powers, and remedies under the Loan
Agreement and the Other Agreements, and/or applicable law. All of the provisions
of the Loan Agreement and the Other Agreements, including, without limitation,
the time of the essence provisions, are hereby reiterated, and if ever waived,
reinstated.
(c) Upon the effectiveness of this Agreement, each reference in the
Loan Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of
similar import shall mean and be a reference to the Loan Agreement as amended
hereby, and the term "Other Agreements" shall include, without limitation, this
Agreement.
SECTION 9. COSTS AND EXPENSES. As provided in Section 13.12 of the
Loan Agreement, Borrowers jointly and severally agree to promptly reimburse Bank
on demand for all
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fees, costs and expenses, including the fees, costs and expenses of counsel or
other advisors for advice, assistance, or other representation in connection
with this Agreement and the other agreements and documents executed in
connection herewith.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
SECTION 11. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes.
SECTION 12. CONSTRUCTION. This Agreement and all other agreements and
documents executed in connection herewith have been prepared through the joint
efforts of all of the parties. Neither the provisions of this Agreement or any
such other agreements and documents nor any alleged ambiguity shall be
interpreted or resolved against any party on the ground that such party's
counsel drafted this Agreement or such other agreements and documents, or based
on any other rule of strict construction. Each of the parties hereto represents
and declares that such party has carefully read this Agreement and all other
agreements and documents executed in connection therewith, and that such party
knows the contents thereof and signs the same freely and voluntarily. The
parties hereby acknowledge that they have been represented by legal counsel of
their own choosing in negotiations for and preparation of this Agreement and all
other agreements and documents executed in connection therewith and that each of
them has read the same and had their contents fully explained by such counsel
and is fully aware of their contents and legal effect. If any matter is left to
the decision, right, requirement, request, determination, judgment, opinion,
approval, consent, waiver, satisfaction, acceptance, agreement, option or
discretion of Bank, its employees, Bank's counsel, or any agent for or
contractor of Bank, in the Loan Agreement or any Other Agreement, such action
shall be deemed to be exercisable by Bank or such other person in its sole and
absolute discretion and according to standards established in its sole and
absolute discretion. Without limiting the generality of the foregoing, "option"
and "discretion" shall be implied by the use of the words "if" and "may."
SECTION 13. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart. Any party hereto may execute
and deliver a counterpart of this Agreement by delivering by facsimile
transmission a signature page of this Agreement signed by such party, and any
such facsimile signature shall be treated in all respects as having the same
effect as an original signature. Any party delivering by facsimile transmission
a counterpart executed by it shall promptly thereafter also deliver a manually
signed counterpart of this Agreement.
SECTION 14. SEVERABILITY. The invalidity, illegality, or
unenforceability of any provision in or obligation under this Agreement in any
jurisdiction shall not affect or impair the validity, legality, or
enforceability of the remaining provisions or Borrowers' Liabilities under this
Agreement or of such provision or obligation in any other jurisdiction.
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SECTION 15. TIME OF ESSENCE. Time is of the essence in the payment and
performance of each of the Borrowers' Liabilities of the Borrowers hereunder and
with respect to all conditions to be satisfied by the Borrowers.
SECTION 16. FURTHER ASSURANCES. Each Borrower agrees to take all
further actions and execute all further documents as Bank may from time to time
reasonably request to carry out the transactions contemplated by this Agreement.
SECTION 17. NOTICES. All notices, requests, and demands to or upon the
respective parties hereto shall be given in accordance with the Loan Agreement.
SECTION 18. EFFECTIVENESS. This Agreement shall become effective at
the time (the "Second Amendment Effective Date") that all of the following
conditions precedent have been met (or waived) as determined by Bank in its sole
discretion:
(a) Agreement. Duly executed signature pages for this Agreement
signed by Bank and Borrowers shall have been delivered to Bank.
(b) ▇▇▇▇▇▇▇▇ Transactions. The applicable Borrowers shall have
(i) executed and delivered the ▇▇▇▇ Agreement in form and substance
satisfactory to Bank in its sole discretion, (ii) consummated the
▇▇▇▇▇▇▇▇ Transactions contemplated by the ▇▇▇▇ Agreement on terms and
conditions satisfactory to Bank in its sole discretion on or before
October 13, 2000, (iii) remitted to Bank at the closing of the
▇▇▇▇▇▇▇▇ Transactions contemplated by the ▇▇▇▇ Agreement all gross
proceeds and (iv) the aggregate amount of proceeds so remitted to Bank
at closing shall be no less than $2,000,000.
(c) Due Authorization. Each Borrower shall have delivered to Bank
copies of valid resolutions of the Board of Directors of such Borrower
certified by the Secretary or Assistant Secretary of such Borrower
authorizing the execution, delivery, and performance of this Agreement
and all other agreements and documents executed in connection
therewith, and each Borrower shall have delivered to Bank any other
evidence requested by Bank concerning the due execution and
authorization of this Agreement and all other agreements and documents
executed in connection therewith.
(d) Amendment Fee. The Amendment Fee shall have been paid to
Bank.
(e) Representations. The representations and warranties contained
herein shall be true and correct in all respects, and no Event of
Default or event which with notice, the passage of time or both would
constitute an Event of Default, other than the Specified Defaults,
shall exist on the date hereof.
(f) No Material Adverse Change. There shall have occurred no
material adverse change in the business, operations, financial
conditions, profits or prospects, or in the Collateral of any
Borrower.
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(g) Other Corporate Proceedings. All corporate proceedings taken
in connection with the transactions contemplated by this Agreement and
all documents, instruments, and other legal matters incident thereto
shall be satisfactory to Bank and its legal counsel.
SECTION 19. WAIVERS BY BORROWERS. BORROWERS WAIVE (i) THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN AGREEMENT, ANY OF THE
OTHER AGREEMENTS, THE BORROWERS' LIABILITIES OR THE COLLATERAL; (ii)
PRESENTMENT, DEMAND AND PROTEST, AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT,
NONPAYMENT, MATURITY, RELEASE, COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY BANK ON
WHICH BORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY RATIFY AND CONFIRM WHATEVER
BANK MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL
OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING BANK TO EXERCISE ANY OF BANK'S REMEDIES; (iv) THE BENEFIT OF
ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS AND ALL RIGHTS WAIVABLE UNDER
ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE; (v) ANY RIGHT BORROWERS MAY HAVE UPON
PAYMENT IN FULL OF THE BORROWERS' LIABILITIES TO REQUIRE BANK TO TERMINATE ITS
SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF BORROWERS UNTIL
TERMINATION OF THE LOAN AGREEMENT IN ACCORDANCE WITH ITS TERMS AND THE EXECUTION
OF BORROWERS, AND BY ANY PERSON WHO PROVIDES FUNDS TO BORROWERS WHICH ARE USED
IN WHOLE OR IN PART TO SATISFY THE BORROWERS' LIABILITIES, OF AN AGREEMENT
INDEMNIFYING BANK FROM ANY LOSS OR DAMAGE BANK MAY INCUR AS THE RESULT OF
DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY BANK FROM BORROWERS OR
ANY ACCOUNT DEBTOR AND APPLIED TO THE BORROWERS' LIABILITIES AND RELEASING AND
INDEMNIFYING, IN THE SAME MANNER AS DESCRIBED IN SECTION 6 OF THIS AGREEMENT,
THE RELEASEES FROM ALL CLAIMS ARISING ON OR BEFORE THE DATE OF SUCH TERMINATION
STATEMENT; AND (vi) NOTICE OF ACCEPTANCE HEREOF, AND BORROWERS ACKNOWLEDGE THAT
THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO BANK'S ENTERING INTO THIS
AGREEMENT AND THAT BANK IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWERS. BORROWERS WARRANT AND REPRESENT THAT THEY HAVE REVIEWED
THE FOREGOING WAIVERS WITH THEIR LEGAL COUNSEL AND HAVE KNOWINGLY AND
VOLUNTARILY WAIVED THEIR JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
SECTION 20. ASSIGNMENTS; NO THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure to the benefit of each Borrower and Bank and
their respective successors and assigns; provided, that no Borrower may delegate
any of its duties hereunder and
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may not assign any of its rights or remedies set forth in this Agreement without
the prior written consent of Bank. No Person other than the parties hereto, and
in the case of Section 6 hereof, the Releasees, shall have any rights hereunder
or be entitled to rely on this Agreement and all third-party beneficiary rights
(other than the rights of the Releasees under Section 6 hereof) are hereby
expressly disclaimed.
SECTION 21. FINAL AGREEMENT. This Agreement, the Loan Agreement, the
Other Agreements, and the other written agreements, instruments, and documents
entered into in connection therewith (collectively, the "Borrower/Lender
Documents") set forth in full the terms of agreement between the parties and are
intended as the full, complete, and exclusive contract governing the
relationship between the parties, superseding all other discussions, promises,
representations, warranties, agreements, and understandings between the parties
with respect thereto. No term of the Borrower/Lender Documents may be modified
or amended, nor may any rights thereunder be waived, except in a writing signed
by the party against whom enforcement of the modification, amendment, or waiver
is sought. Any waiver of any condition in, or breach of, any of the foregoing in
a particular instance shall not operate as a waiver of other or subsequent
conditions or breaches of the same or a different kind. Bank's exercise or
failure to exercise any rights or remedies under any of the foregoing in a
particular instance shall not operate as a waiver of its right to exercise the
same or different rights and remedies in any other instances. There are no oral
agreements among the parties hereto.
[signature page follows]
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IN WITNESS WHEREOF, this Forbearance and Second Amendment to Loan and
Security Agreement has been executed by the parties hereto as of the date first
written above.
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
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▇▇▇▇▇▇▇▇ PROPERTY CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Senior VP - CFO
--------------------------------
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Its: F.V.P.
--------------------------------
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