Exhibit 10.11
LOAN AND SECURITY AGREEMENT
DSW INC.
THE LEAD BORROWER
FOR:
DSW INC.
DSW SHOE WAREHOUSE, 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
NATIONAL CITY BANK
AS LEAD ARRANGER
TABLE OF CONTENTS
LOAN AND SECURITY AGREEMENT..................................................i
Article 1 - Definitions......................................................1
Article 2 - The Revolving Credit:...........................................39
2.1. Establishment of Revolving Credit.................................39
2.2. Advances in Excess of Borrowing Base (OverLoans)...................40
2.3. Risks of Value of Collateral.......................................40
2.4. Commitment to Make Revolving Credit Loans and Support Letters of
Credit.............................................................41
2.5. Revolving Credit Loan Requests.....................................41
2.6. Suspension of Revolving Credit.....................................43
2.7. Making of Revolving Credit Loans...................................43
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.................................47
2.13. Underwriting Fee; Collateral Monitoring Fee........................48
2.14. Unused Line Fee....................................................48
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....................................59
3.8. Shonac Initial public offering.....................................59
3.9. Repayment of Existing Indebtedness.................................59
3.10. Consents...........................................................59
3.11. Appraisals and Commercial Finance Examinations.....................59
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3.12. Financial Information..............................................59
3.13. Material Agreements................................................59
3.14. Litigation.........................................................60
3.15. Perfection of Encumbrances.........................................60
3.16. All Fees and Expenses Paid.........................................60
3.17. Cash Management....................................................60
3.18. Insurance..........................................................60
3.19. Separation and Service Agreements..................................61
3.20. No Loan Party in Default...........................................61
3.21. No Adverse Change..................................................61
3.22. Certain Changes....................................................61
3.23. Benefit of Conditions Precedent....................................61
Article 4 - General Representations and Warranties..........................61
4.1. Due Organization. Authorization. No Conflicts......................62
4.2. Trade Names........................................................62
4.3. Intellectual Property..............................................63
4.4. Locations..........................................................63
4.5. Encumbrances.......................................................63
4.6. Indebtedness.......................................................64
4.7. Insurance..........................................................64
4.8. Licenses...........................................................64
4.9. Leases.............................................................64
4.10. Requirements of Law................................................64
4.11. Labor Relations....................................................64
4.12. Taxes..............................................................65
4.13. No Margin Stock....................................................67
4.14. Investment and Holding Company Status..............................67
4.15. ERISA..............................................................67
4.16. Hazardous Materials................................................67
4.17. Litigation.........................................................68
4.18. Adequacy of Disclosure.............................................68
4.19. Unrestricted Subsidiaries..........................................69
4.20. No Bankruptcy Filing...............................................69
Article 5 - GENERAL COVENANTS...............................................69
5.1. Payment and Performance of Liabilities.............................69
5.2. Maintenance of existence...........................................69
5.3. Trade Names........................................................70
5.4. Locations..........................................................70
5.5. Encumbrances.......................................................71
5.6. Indebtedness.......................................................71
5.7. Insurance..........................................................71
5.8. Licenses...........................................................72
5.9. Requirements of Law................................................72
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5.10. Labor Relations....................................................72
5.11. Maintain Properties................................................72
5.12. Taxes..............................................................73
5.13. No Margin Stock....................................................74
5.14. ERISA..............................................................74
5.15. Hazardous Materials................................................74
5.16. Dividends. Investments. Corporate Action...........................75
5.17. Loans..............................................................76
5.18. Protection of Assets...............................................77
5.19. Line of Business; Conduct of Business..............................77
5.20. Affiliate Transactions.............................................78
5.21. Additional Subsidiaries............................................78
5.22. Further Assurances.................................................79
5.23. Adequacy of Disclosure.............................................79
5.24. No Restrictions on Liabilities.....................................80
5.25. Unrestricted Subsidiaries..........................................80
5.26. Parent's Line of Business..........................................
Article 6 - Financial Reporting and Performance Covenants:..................80
6.1. Maintain Records...................................................80
6.2. Access to Records..................................................81
6.3. Prompt Notice to Administrative Agent..............................81
6.4. Weekly Reports.....................................................83
6.5. Monthly Reports....................................................83
6.6. Quarterly Reports..................................................83
6.7. Annual Reports.....................................................84
6.8. Officers' Certificates.............................................84
6.9. Inventories, Appraisals, and Audits................................85
6.10. Additional Financial Information...................................86
6.11. Information Delivered Pursuant to Article 6........................87
6.12. Financial Covenant.................................................87
Article 7 - USE OF COLLATERAL:..............................................87
7.1. Use of Inventory Collateral.......................................87
7.2. Inventory Quality..................................................88
7.3. Adjustments and Allowances.........................................88
7.4. Validity of Accounts...............................................88
7.5. Notification to Account Debtors....................................88
Article 8 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:........................89
8.1. Depository Accounts................................................89
8.2. Credit Card Receipts...............................................89
8.3. The Administrative agent's, Collection, and Operating Accounts ....90
8.4. Proceeds and Collections ..........................................90
8.5. Payment of Liabilities.............................................91
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8.6. The Operating Account..............................................92
Article 9 - GRANT OF SECURITY INTEREST:.....................................93
9.1. Grant of Security Interest.........................................93
9.2. Extent and Duration of Security Interest...........................94
Article 10 - COLLATERAL AGENT AS BORROWERS' ATTORNEY-IN-FACT:...............94
10.1. Appointment as Attorney-In-Fact....................................94
10.2. No Obligation to Act...............................................95
Article 11 - Events of Default:.............................................96
11.1. Failure to Pay the Revolving Credit................................96
11.2. Failure To Make Other Payments.....................................96
11.3. Failure to Perform Covenant or Liability (No Grace Period).........96
11.4. Financial Reporting Requirements...................................96
11.5. Failure to Perform Covenant or Liability (Grace Period)............97
11.6. Misrepresentation..................................................97
11.7. Acceleration of Other Debt. Breach of Lease........................97
11.8. Default Under Other Agreements.....................................97
11.9. Uninsured Casualty Loss............................................98
11.10. Attachment. Judgment. Restraint of Business........................98
11.11. Business Failure...................................................98
11.12. Bankruptcy.........................................................98
11.13. Termination of Guaranty............................................99
11.14. Challenge to Loan Documents........................................99
11.15. Change in Control..................................................99
Article 12 - RIGHTS AND REMEDIES UPON DEFAULT:..............................99
12.1. Acceleration.......................................................99
12.2. Rights of Enforcement..............................................99
12.3. Sale of Collateral................................................100
12.4. Occupation of Business Location...................................101
12.5. Grant of Nonexclusive License.....................................101
12.6. Assembly of Collateral............................................101
12.7. Rights and Remedies...............................................102
Article 13 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:..................102
13.1. Revolving Credit Funding Procedures...............................102
13.2. SwingLine Loans...................................................102
13.3. Administrative Agent's Covering of Fundings:......................103
13.4. Ordinary Course Distributions.....................................105
Article 14 - ACCELERATION AND LIQUIDATION:.................................106
14.1. Acceleration Notices..............................................106
14.2. Acceleration......................................................106
14.3. Initiation of Liquidation.........................................107
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14.4. Actions At and Following Initiation of Liquidation...............107
14.5. Collateral Agent' Conduct of Liquidation..........................107
14.6. Distribution of Liquidation Proceeds:.............................108
14.7. Relative Priorities To Proceeds of Liquidation....................108
Article 15 - THE AGENT:....................................................109
15.1. Appointment of The Agent..........................................109
15.2. Responsibilities of Agent.........................................109
15.3. Concerning Distributions By the Agent.............................110
15.4. Dispute Resolution................................................111
15.5. Distributions of Notices and of Documents.........................111
15.6. Confidential Information..........................................112
15.7. Reliance by Agent.................................................112
15.8. Non-Reliance on Agent and Other Revolving Credit Lenders..........112
15.9. Indemnification...................................................113
15.10. Resignation of Agent..............................................114
15.11. Lead Arranger.....................................................114
Article 16 - ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:............114
16.1. Administration of Credit Facilities...............................114
16.2. Actions Requiring or On Direction of Majority Lenders.............115
16.3. Actions Requiring or On Direction of SuperMajority Lenders........115
16.4. Action Requiring Certain Consent..................................116
16.5. Actions Requiring or Directed By Unanimous Consent................116
16.6. Actions Requiring SwingLine Lender Consent........................118
16.7. Actions Requiring Agent's Consent.................................118
16.8. Miscellaneous Actions.............................................118
16.9. Actions Requiring Lead Borrower's Consent.........................119
16.10. NonConsenting Revolving Credit Lender.............................120
Article 17 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:......................121
17.1. Assignments and Assumptions:......................................121
17.2. Assignment Procedures.............................................122
17.3. Effect of Assignment..............................................122
Article 18 - NOTICES:......................................................123
18.1. Notice Addresses..................................................123
18.2. Notice Given......................................................124
18.3. Wire Instructions. Notice Given...................................125
Article 19 - TERM:.........................................................125
19.1. Termination of Revolving Credit...................................125
19.2. Actions On Termination............................................125
Article 20 - GENERAL:......................................................126
20.1. Protection of Collateral..........................................126
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20.2. Publicity.........................................................126
20.3. Confidentiality...................................................126
20.4. Successors and Assigns............................................127
20.5. Severability......................................................127
20.6. Amendments. Course of Dealing....................................127
20.7. Power of Attorney.................................................128
20.8. Application of Proceeds...........................................128
20.9. Increased Costs...................................................129
20.10. Replacement of Revolving Credit Lender............................129
20.11. Costs and Expenses of the Agent and Issuer........................130
20.12. Copies and Facsimiles.............................................131
20.13. Ohio Law..........................................................131
20.14. Consent to Jurisdiction...........................................131
20.15. Indemnification...................................................132
20.16. Rules of Construction.............................................132
20.17. Agent's Consent...................................................134
20.18. Participations....................................................134
20.19. Right of Set-Off..................................................134
20.20. Pledges To Federal Reserve Banks..................................134
20.21. Maximum Interest Rate.............................................135
20.22. Waivers...........................................................135
20.23. Additional Waivers................................................136
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EXHIBITS
1.1 Existing L/Cs
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
4.12 : Taxes
4.16(a) : 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.
8.2 : Credit Card Arrangements
8.3 : Administrative Agent's Accounts; Collection
Account Banks; Operating Accounts
17.2 : Assignment / Assumption
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LOAN AND SECURITY AGREEMENT
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June __, 2005
THIS AGREEMENT is made between
National City Business Credit, Inc., an Ohio corporation with
offices at 0000 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, 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
DSW Inc. (in such capacity, the "LEAD BORROWER"), an Ohio
corporation with its principal executive offices at 0000 Xxxx Xxxxx
Xxxxxx, Xxxxxxxx, Xxxx 00000, as agent for the following (individually, a
"BORROWER" and collectively, the "BORROWERS"):
Said DSW Inc. ("DSW"); and
DSW Shoe Warehouse, Inc. ("DSW SHOE"), a Missouri corporation
with its principal executive offices at 0000 Xxxx Xxxxx
Xxxxxx, Xxxxxxxx, Xxxx 00000
in consideration of the mutual covenants contained herein and benefits to
be derived herefrom,
WITNESSETH:
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.
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"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, 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": 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
2
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.
"AGENTS' 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.
"APPLICABLE MARGIN": The following percentages for Base Margin
Loans and LIBOR Loans based upon the following criteria:
LEVEL EXCESS APPLICABLE APPLICABLE
AVAILABILITY MARGIN FOR MARGIN FOR
BASE LIBOR LOANS
MARGIN
LOANS
1 Greater than 0% 1.25%
$120,000,000
2 Greater than 0% 1.50%
$75,000,000, but
less than or
equal to
$120,000,000
3 Greater than 0% 1.75%
$35,000,000, but
less than or
equal to
$75,000,000
3
4 Less than or 0% 2.00%
equal to
$35,000,000
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 ____, 2005 [six
months], 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 Borrower'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 Borrower's Inventory in the event of an in-store
liquidation of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 87.5%.
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section 17.1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in Section 17.2.
"AUTHORIZED OFFICER": Is defined in Section 6.8.
"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.
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(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)).
(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 xxxx 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
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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": The Applicable Margin for Base Margin Loans.
"BORROWER" and "BORROWERS": Is defined in the Preamble.
"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 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 Thirty Million Dollars
($30,000,000). 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.
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"CCM": Cerberus Partners, L.P., a Delaware limited partnership
with its principal office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
"CCM TERM LOAN FACILITIES": The term loan facilities entered into
between, among others, 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.
(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,
55% of the capital stock of each of the other Loan Parties, except:
(i) in the event of an exercise of any warrants for Class A Common
Shares of DSW (but not for common stock of the Parent), the Parent
may sell, in exchange for cash, up to that number of Class A Common
Shares of DSW as shall provide net cash proceeds to the Parent equal
to the sum of (A) the tax liability, if any, actually incurred by
the Parent as a result of the exercise of such warrants, less (B)
the net cash proceeds (if any) received by the Parent upon such
exercise of such warrants, provided that (I) no Default or Event of
Default shall have occurred and be continuing at the time of such
sale, (II) the average closing sale price of the Class A Common
Shares on the New York Stock Exchange (or other exchange on which
such shares are listed) for the 30 days prior to such sale, times
the number of Class A Common Shares owned (or which could be
received by the Parent in exchange for its Class B Common Shares) by
the Parent after giving effect to such sale would be equal to at
least two times the outstanding principal amount of the Parent's
non-convertible loan under its Second Amended and Restated Senior
Loan
7
Agreement with Cerberus Partners, L.P., as agent thereunder
(including all paid-in-kind interest added thereto) at such time,
and (III) after giving effect to such sale, the Parent shall own a
number of Class A Common Shares (or Class B Common Shares
exchangeable into Class A Common Shares) sufficient to permit the
exercise in full, for Class A Common Shares, of all warrants issued
and outstanding at such time; and (ii) that the transfer of common
stock to the holders of any warrants upon the exercise thereof shall
be disregarded in calculating the Parent's ownership of the capital
stock of the Loan Parties. All references to "warrants" in this
clause (c) are limited to (Y) those warrants dated as of September
26, 2002, as amended and restated as of the Effective Date, issued
by the Parent, and (Z) those conversion warrants issued as of the
Effective Date to the lenders under the Amended and Restated Senior
Loan Agreement with Cerberus Partners, L.P., as agent thereunder.
(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.
"COLLATERAL": Is defined in Section 9.1.
"COLLATERAL AGENT": NCBC, 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'
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.
"COMMERCIAL TORT CLAIM": Has the meaning given that term in the UCC.
"COMPETITIVE BUSINESS": Any business or enterprise consisting of
any of the following:
8
(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 any
Agent of a proposed course of action to be followed by such Agent
without such Revolving Credit Lender's giving such 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 DSW 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 Agents' and Issuer's attorneys, and all reasonable out-of-pocket
costs incurred by the Agents 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 Agents and Issuer, where such costs and expenses are
related to or in respect of the Agents' and Issuer's: administration
and management of the
9
Liabilities; negotiation, documentation, and amendment of any Loan
Document; or efforts to preserve, protect, collect, or enforce the
Collateral, the Liabilities, and/or the Agents' Rights and Remedies
and/or any of the rights and remedies of the Agents 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": 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.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"DSW": Has the meaning given that term in the Preamble hereto.
"DSW SHOE" Has the meaning given that term in the Preamble hereto.
"DSW
"AVAILABILITY": The result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
10
(B) The DSW Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan Account
attributable to Revolving Credit Loans made to DSW
or DSW Shoe.
Minus
(iii) The aggregate undrawn Stated Amount of all then
outstanding L/Cs and Banker's Acceptances issued
for the account of DSW or DSW Shoe.
Minus
(iv) The aggregate of the Availability Reserves.
"DSW BORROWING BASE": The aggregate of the following:
(a) The face amount of Eligible Credit Card Receivables of DSW
and DSW Shoe multiplied by the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory (net of
Inventory Reserves) of DSW and DSW Shoe multiplied by the Inventory
Advance Rate or (b) the Appraised Inventory Percentage of the
Appraised Inventory Liquidation Value of the Inventory of DSW and
DSW Shoe.
"EBITDA": For the Borrowers, on a consolidated basis, in any period of
determination, the sum, without duplication, of the following: Net
Income determined in accordance with GAAP, plus, (a) Interest
Expense, (b) taxes on income, (c) depreciation expense, (d)
amortization expense, (e) all other non-cash and/or non-recurring
charges and expenses, and (f) loss from any sale of assets, other
than sales in the ordinary course of business, less (x) gain from
any sale of assets, other than sales in the ordinary course of
business and (y) all non-cash and/or non-recurring income, all of
the foregoing determined in accordance with GAAP.
"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 Affiliate of any Revolving
Credit Lender, or any Person to whom a Revolving Credit Lender
assigns its rights and obligations under this
11
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).
"EMPLOYEE BENEFIT PLAN": An employee benefit 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:
12
(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 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.
13
"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 the LIBOR Loans
shall be deemed to constitute Eurocurrency Liabilities subject
to reserve requirements without benefit of credits for
proration, exceptions or
14
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, DSW
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).
"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 arrangements (other than between the Loan Parties)
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; or
15
(e) any Exempt DDA.
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 xxxxx
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 L/CS": Those letters of credit described on EXHIBIT 1.1
hereto which have been issued by NCB under the Borrowers'
existing credit facility with, among others, NCB.
"FACILITY GUARANTEE": A guaranty executed by the Facility Guarantors
in favor of the Agent, the Issuer and the Revolving Credit
Lenders.
"FACILITY GUARANTORS": Each Borrower and all other Subsidiaries of
the Borrowers now existing or hereafter created, other than
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 Xxx X. Xxxxxxxxxxxxx, Xxxxx X. Xxxxxxx, Xxx X. Xxxxx,
Xxxx Xxxxxxxxxxxxx, Xxxxxxxxx Xxxxxxxxxxxxx, 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 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
16
Agent from three federal funds brokers of recognized standing
selected by the Administrative Agent.
"FEE LETTER": That letter dated on or about the Effective Date and
styled "Fee Letter" between the Lead Borrower and the
Administrative Agent, as such letter may from time to time be
amended.
"FISCAL": When followed by "month", "quarter" or "year", the
relevant fiscal period based on the Borrowers' fiscal year and
accounting conventions.
"FIXED CHARGES": The sum of the following for the Borrowers on a
consolidated basis: (a) Interest Expense, plus (b) scheduled
payments of principal on Indebtedness (including Capital
Leases).
"FIXED CHARGE COVERAGE RATIO": For the Borrowers on a consolidated
basis, at any date of determination, the ratio of (a) EBITDA,
minus Capital Expenditures, minus income taxes paid in cash,
minus dividends and other distributions on account of DSW's
capital stock, for the applicable period then ending taken as
one accounting period, to (b) Fixed Charges, for the
applicable period then ending taken as one accounting period.
"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.
"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
17
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 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.
"HAZARDOUS MATERIALS": (a) Any element, compound or chemical that is
defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or 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.
18
"HEDGE AGREEMENTS": 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 Borrowers 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.
(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
19
(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 amongst 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.
"INTEREST EXPENSE": Total interest expense generated during the
period in question (including attributable to conditional
sales contracts, Capital Leases and other title retention
agreements in accordance with GAAP) of the Borrowers on a
consolidated basis with respect to all outstanding
Indebtedness including accrued interest and interest paid in
kind and capitalized interest, fees, commissions, discounts
and other fees owed with respect to letters of credit and
bankers' acceptance financing, and net costs under Hedge
Agreements.
"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
(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:
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(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 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": The following percentages of the Cost of
Eligible Inventory of the Borrowers specified below for the
periods indicated:
21
Period Inventory Advance Rate
------ ----------------------
January 1 through March 79%
31 of each year
April 1 through October 83%
14 of each year
October 15 through 79%
December 31 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.
(c) Damaged Goods.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"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.
22
"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:
(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 any
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
each Agent or any Revolving Credit Lender
(including all future advances whether or not made
pursuant to a commitment by the Agent or any
23
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 any 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 any 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 any Agent or any Revolving
Credit Lender to any Borrower and/or which may be
due from any Borrower to any Agent or any
Revolving Credit Lender from time to time.
(v) All reasonable costs and expenses incurred or paid
by any Agent or any Revolving Credit Lender in
respect of any agreement between any Borrower and
any Agent or any Revolving Credit Lender or
instrument furnished by any Borrower to any 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
any 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 any Agent or
any Revolving Credit Lender or instrument
furnished by that Borrower to any Agent or any
Revolving Credit Lender.
(vii) Each of the foregoing as if each reference to the
"any Agent or any Revolving Credit Lender" were to
each Affiliate of each Agent.
(b) Any and all direct or indirect liabilities, debts,
and obligations of each Borrower to any Agent or any Affiliate
of any 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 Document, including cash management services, Hedge
Agreements, and the issuances of L/C's and Banker's
Acceptances.
24
"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 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.
"LOAN COMMITMENT": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment.
25
"LOAN DOCUMENTS": This Agreement, the Facility Guarantee, the
Facility Guarantors Collateral Documents, 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 any Agent or
any Affiliate of any 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 any Agent or any
Affiliate of any 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 Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Borrowers and their 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 the Loan Parties 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": June __, 2010.
"NCB": National City Bank, a national banking association.
"NCBC": National City Business Credit, Inc., an Ohio corporation.
"NET INCOME": The net income (or loss) of the Borrowers on a
consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP;
provided, that there shall be excluded (i) the income (or
loss) of any
26
Person in which any other Person (other than the Borrowers)
has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the
Borrowers by such Person during such period, (ii) the income
(or loss) of any Person accrued prior to the date it becomes a
Borrower or is merged into or consolidated with a Borrower or
that Person's assets are acquired by a Borrower, and (iii) the
income of any Subsidiary of the Borrowers to the extent that
the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the
time permitted by operation of the terms of the charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary.
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the Collateral Agent to own or manage
any Post Foreclosure Asset.
"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, DSW Availability 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 Borrowers and their 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 the Collateral
Agent with a current draft of the acquisition agreement and
other acquisition documents, a summary of any due diligence
undertaken by the
27
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, 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 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
$30,000,000.
(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 $40,000,000.
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 another 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 any
Loan Party; and
(f) (i) the sale of any property, land or building
(including any related receivables or other intangible assets)
to any Person which is not a Subsidiary of the Borrowers, or
(ii) 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;
29
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 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-
30
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;
(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
31
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 (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 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; and
(o) An Encumbrance granted by any Loan Party in
connection with the Senior Non-Convertible Facility.
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) Indebtedness on account of Equipment or improvements
to real property acquired in compliance with the requirements
of subparagraph (m) of the
32
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;
(c) (i) Indebtedness consisting of all obligations of a
Loan Party or any Subsidiary as lessee under Capital Leases,
and
(ii) Indebtedness consisting of all obligations of a
Loan Party or any Subsidiary 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.
(d) Indebtedness of the Loan Parties and any Subsidiary
under Hedge Agreements other than for speculative purposes
with any Revolving Credit Lender or an Affiliate of a
Revolving Credit Lender.
(e) The Indebtedness listed on EXHIBIT 4.6, annexed
hereto;
(f) Indebtedness to sellers in connection with Permitted
Acquisitions;
(g) 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;
(h) Indebtedness with respect to indemnities,
warranties, statutory obligations, and surety, appeal and
supersedeas bonds incurred in the ordinary course of business;
(i) Indebtedness in respect of overdraft protections and
otherwise in connection with deposit accounts;
33
(j) 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;
(k) 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
(l) 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 Xxxxx'x 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 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 Xxxxx'x
Investment Services, Inc.;
34
(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;
(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;
and
(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 a Borrower or owned or Controlled by any
director, officer or employee of 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;
35
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 $7,500,000; (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.
"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.
(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,
36
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
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.
(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": $150,000,000.00.
"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).
"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
37
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,
and 5.20 , and Article 8 only).
(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.
38
"SWINGLINE LOAN CEILING": $20,000,000.00 (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
11.12, 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 11.12,
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 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.
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 with reference to the DSW Borrowing Base and
shall be subject to DSW
39
Availability. The DSW Borrowing Base and DSW 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:
(i) Such determination shall take into account such Reserves as the
Collateral Agent may determine as being applicable thereto.
(ii) The Cost of Eligible Inventory will be determined in a manner
consistent with current tracking practices, based on the Borrowers' stock
ledgers inventory.
(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 16.3(a) (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 any
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
40
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.
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 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, (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.
41
(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.
(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.
(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 any 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.
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(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 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 Borrower. 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.
43
(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 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 at any one time be in excess of the lesser of (i) the
SwingLine Loan Ceiling, or (ii) DSW Availability. 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 DSW Availability 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.
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(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 Borrower.
(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 each Agent and each Revolving Credit Lender on account of the
Liabilities from each Borrower and of all credits against such amounts so owed.
(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 any 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 any 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 2.9(e) 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.
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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.
(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) 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
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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.
(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.
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(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 seven (7) 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 Borrower 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.
(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 any 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.
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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 any 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 any 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
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, 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 will endeavor to cause the issuance of 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 $50,000,000;
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(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/C's, 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/C's, ninety (90) days from
issuance.
(C) As to Banker's Acceptances, ninety (90) days from
issuance.
(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
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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 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:
(i) As to standby L/Cs, the Applicable Margin for LIBOR Loans.
(ii) As to documentary L/Cs, fifty percent (50%) of the
Applicable Margin for LIBOR Loans.
(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
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"Banker's Acceptance Fee") equal to fifty percent (50%) of the Applicable Margin
for LIBOR Loans of the average Stated Amount of the Banker's Acceptances
outstanding during the subject month. 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.
(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
(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.
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(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:
(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.
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(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.
(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.
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(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 Borrowers 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 each 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 it 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.
(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.
(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 Borrower. 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
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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 DSW Availability.
(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.
(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 amongst 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 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
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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 Agent at its offices at 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx
(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.
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(a) Certificates of corporate good standing 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
any Agent or its counsel may reasonably require or request including, without
limitation, the documents described on EXHIBIT 3.3 hereto.
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 TBD.
3.7. SENIOR NON-CONVERTIBLE FACILITY. The Loan Parties shall have been
released from all liabilities and obligations under the Senior Non-Convertible
Facility and all collateral security granted by the Loan Parties for the Senior
Non-Convertible Facility shall have been released, discharged and terminated to
the satisfaction of the Agent.
3.8. DSW INITIAL PUBLIC OFFERING.
The initial public offering of the capital stock of DSW shall have been
consummated and proceeds received, 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
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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, audited financial statements for each of fiscal years 2001, 2002,
2003 and 2004, monthly and annual financial projections of the Borrowers through
January, 2010. 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
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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. SEPARATION AND SERVICE AGREEMENTS.
The Agent shall have received an executed copy of, and shall be
reasonably satisfied with, the separation and service agreements between the
Loan Parties and the Parent and the Parent's other Subsidiaries.
3.20. NO LOAN PARTY IN DEFAULT. No Loan Party is in Default.
3.21. NO ADVERSE CHANGE. Each 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.
3.22. CERTAIN CHANGES.
(a) No material changes in governmental regulations or policies
affecting the Loan Parties, the Agents, 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 Effective 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.
3.23. 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
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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 Agents 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 Agents.
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 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.
(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 retain 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.
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(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, 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
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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 which 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.
(a) 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
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
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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:
(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.
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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 4.12:
(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 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
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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.
(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.
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(a) Except as set forth on EXHIBIT 4.16(A) 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
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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
Agents 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 Agents 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.
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. MAINTENANCE OF EXISTENCE
(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:
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(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.
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
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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.
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 Effective 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' interest therein, shall not be impaired or
invalidated, in whole or in part, by reason of any
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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 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.
(e) In the event of the failure by the Loan Parties to maintain
insurance as required herein, any Agent, at its option and the Loan Parties'
expense, may obtain such insurance at the expense of the Loan Parties, provided,
however, an 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
any 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. LAsBOR 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:
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(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.
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.
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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 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 xxxxx 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:
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(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 (k) 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
(ii) after giving effect to the making any such cash payment,
the aggregate amount so expended for such purposes subsequent to the
Effective 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) 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.
(iv) 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.
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(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.
(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.
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 amongst any Loan Parties within the same Borrower,
(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
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extent any of the same constitutes Permitted Indebtedness under clause (k) of
the definition of Permitted Indebtedness or to any Loan Party by the Parent,
provided that such intercompany loans shall be evidenced by such documentation
as the Collateral Agent may require.
(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 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
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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.
(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 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.
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(a) No Loan Party will hereafter acquire any asset or any interest
in property (other than real property, including Leasehold Interests therein)
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' 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 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' 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.
(a) No document, instrument, agreement, or paper hereafter given to
the Agents 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 Agents 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. UNRESTRICTED SUBSIDIARIES. No Unrestricted Subsidiary shall, at any
time, have assets in excess of $500,000 in the aggregate.
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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 Borrower, 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 each 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. Each Agent shall
have the right, and each Loan Party will permit each Agent from time to time as
such 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.
(b) Each Loan Party hereby authorizes each Agent to:
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(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 each 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) Any Agent from time to time may designate one or more
representatives to exercise such Agent's rights under this Section 6.2 as fully
as if such 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), and sales audit reports
and flash collateral reports (each in such form as may be specified from time to
time by the Collateral Agent). 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
the Loan Parties on a consolidated basis, 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 the Loan
Parties 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.
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(b) The Loan Parties, at their own expense, shall cause not less
than one (1) physical inventory of each of Borrower to be undertaken in each
twelve (12) month period during which this Agreement is in effect conducted by
such inventory takers as are reasonably 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 one (1) appraisal (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 one (1) 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 Borrower, 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 Borrower only shall be
inapplicable and the Agent may undertake as many appraisals and commercial
finance examinations of such Borrower 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 Borrowers).
(f) The Collateral Agent from time to time may undertake "mystery
shopping" (so-called) visits to all or any of the Loan Parties' business
premises.
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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 any 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 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.
All information required to be delivered pursuant to Article 6 may be
delivered by and in electronic format.
6.12. FINANCIAL COVENANT.
If the aggregate outsanding Revolving Credit Loans, together with
the Stated Amount of all outstanding L/Cs at any time exceeds ninety percent
(90%) of the lesser of the Revolving Credit Ceiling or the DSW Borrowing Base,
the Loan Parties shall not permit the
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fixed charge coverage ratio, tested monthly as of the last day of each month, on
a trailing twelve month basis, to be less than 1.1:1.0. Such covenant shall be
tested until [to be completed].
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.
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(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' 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:
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(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.
(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
Effective 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
Borrower 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 Borrower with NCB as more specifically described on
EXHIBIT 8.3 hereto.
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(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 .
(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 shall cause all
Receipts to be deposited or transferred to the Administrative Agent's Account.
(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.
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(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 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, Second, towards the unpaid balance of the Loan Account, 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 Borrower any surplus in the Administrative Agent's Account
remaining after the
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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
11.12 or acceleration following the occurrence of any other Event of Default.
8.6. THE OPERATING ACCOUNT.
(a) Funds in the Operating Account of each Borrower shall be
utilized to fund disbursements made by such Borrower, including, without
limitation, from any expense accounts maintained by such Borrower.
(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 $30,000,000, 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 Agents, 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.
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(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(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 in real
property).
(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(a) through 9.1(p)) or otherwise.
(q) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing (9.1(a) 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
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(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 Agents, and the
Affiliates of each of them, a perfected and first priority security interest
therein and in the Proceeds thereof.
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.
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(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 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
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4.18 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 6.5, subject, however,
to the following limited number of grace periods applicable to certain of those
requirements:
REPORT / STATEMENT REQUIRED GRACE PERIOD NUMBER OF GRACE
BY PERIODS
SECTION
Weekly Report 6.5 Two (2) Business Twice in any twelve
Days (12) consecutive
months
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 any
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 any
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
any Agent or any Revolving Credit Lender and any Loan Party or instrument given
by any Loan Party to any Agent or any Revolving Credit Lender relating to
Indebtedness of any Loan Party in excess of
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$1,000,000 in the aggregate and the expiration, without cure, of any applicable
grace period (notwithstanding that the subject 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.
For avoidance of doubt, the theft of credit card and other purchase information
announced by the Borrower on March 8, 2005 shall not constitute an uninsured
casualty loss or Event of Default.
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.
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
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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.
ARTICLE 12 - RIGHTS AND REMEDIES UPON DEFAULT:
12.1. ACCELERATION. Upon the occurrence of any Event of Default as
described in Section 11.12, 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 11.12, 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 Agents'
Rights and Remedies as the applicable Agent from time to time thereafter
determine as appropriate.
12.2. RIGHTS OF ENFORCEMENT. 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.
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(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 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'
rights and remedies upon default, may conduct one or more going out of business
sales, in the Collateral Agent' 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
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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'
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' exercise of the Collateral Agent' 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' 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' exercise of the Agent's Rights and
Remedies.
12.5. GRANT OF NONEXCLUSIVE LICENSE. In connection with the Collateral
Agent' exercise of the Collateral Agent' rights under this Article 12, each
Borrower hereby grants to 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' 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'
exercise of the Collateral Agent' 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 "AGENTS' 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 Agents' 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 Agents'
Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Agent
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and any Person, at any time, shall preclude the other or further exercise of the
Agents' Rights and Remedies. No waiver by any Agent of any of the Agents' 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 Agents' Rights and
Remedies may be exercised at such time or times and in such order of preference
as the Agent may determine. The Agents' 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 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.
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(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
13.1.
(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 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 13.1 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
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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 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
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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 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
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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).
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:
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(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' 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' 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.
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
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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.
(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 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 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
(vi) To any other Liabilities, including any obligations
due on account of Hedge Agreements.
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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 any 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 such
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) No Agent or any of their respective 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.
(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 applicable Agent) to perform its respective obligations under the
Loan Documents.
(c) Each 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
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attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(d) No Agent, or any of their respective 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) No Agent shall have any responsibility in any event for more
funds than such Agent actually receives and collects.
(f) Each 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
any 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 any Agent. If and to the extent that the Administrative
Agent does disburse funds and it later becomes apparent that an 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 any 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.
(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
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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 Agents 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 Agents 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 any 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, all of the following:
(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.
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(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 Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by such 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 each Agent that such Revolving Credit Lender:
(i) Independently and without reliance on any representation
or act by any 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 any 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) Each Agent, in the discharge of that Agent's duties hereunder,
shall not be required to make inquiry of, or to inspect the properties or books
of, any Person.
(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), no Agent shall
have any affirmative duty or
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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 any 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 any Agent, which documents relate to the Agent's performance of
their 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 each 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 such 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 an Agent as to which a final
judicial determination has been or is made (in a proceeding in which such Agent
has had an opportunity to be heard) that such Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.
15.10. RESIGNATION OF AGENT
(a) Any 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 such 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 $100,000,000. 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.
Notwithstanding the provisions of this Agreement or any of the other Loan
Documents, the Lead Arranger shall have no 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,
each Agent may take any action with respect to the credit facility contemplated
by the Loan Documents as the applicable Agent determines to be appropriate,
provided, however, no Agent is under any 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 an 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 Type of Consent Required
---------------------------- ------------------------------
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 any
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
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The Consent or direction of the SuperMajority Lenders is required as
follows:
(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 16.3(a),
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 16.3(a).
(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).
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(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.
(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.
(b) Any amendment of the Definitions of "DSW Borrowing Base", DSW
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 or the Inventory Advance Rate in the
Collateral Agent' 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 DSW 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).
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(ii) Section 17.1 (which relates to assignments and
assumptions).
(d) Any release of any Person obligated on account of the
Liabilities.
(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 the DSW 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 limiting 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
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(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects any Agent in
its capacity as Agent may be undertaken without the written consent of such
Agent.
(b) No action referenced herein which affects the rights, duties,
obligations, or liabilities of any Agent shall be effective without the written
consent of such 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.
(b) Each 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 such Agent shall first
(i) receive such clear, unambiguous, written instructions as
such Agent deem appropriate; and
(ii) be indemnified to such Agent's satisfaction by the
Revolving Credit Lenders against any and all liability and expense
which may be incurred by such 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
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certain circumstances may not be amended without the
Lead Borrower's consent).
16 Action By Agents - 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:
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 any of the Agents 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 an 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.
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(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 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.
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(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 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 17.12, 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.
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(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:
(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.
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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.
0000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention : Xxxxxx Xxxxxx
Fax : (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxx X. Xxxxxx, Esquire
Fax : (000) 000-0000
If to the Lead Borrower
And All Borrowers:
DSW Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention : Xxxxxxx Xxxxxx, Chief Financial Officer
Fax : (614) _______
With a copy to:
Schottenstein Stores Corporation
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attention : Xxxxx X. Xxxx, Esquire
Fax : (000) 000-0000
With a copy to:
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
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Attention : Xxxx X. Xxxxxx, Esquire
Fax : (000) 000-0000
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 : 000000000
Account Name : National City Business Credit, Inc.
Account Number : _________
Reference :DSW
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 ).
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(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 each 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.
ARTICLE 20 - GENERAL:
20.1. PROTECTION OF COLLATERAL. No Agent has any 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 such 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 Agents, 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
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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
Agents, 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 Agents, 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.
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 each 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 any 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.
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(a) This Agreement and the other Loan Documents incorporate all
discussions and negotiations between each Borrower and each 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 any 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 any 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 each Agent 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 each 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.
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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 any Agent or any
Revolving Credit Lender under this Agreement (except for taxes on any Agent or
any Revolving Credit Lender based on net income or capital imposed by the
jurisdiction in which the principal or lending offices of such 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 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
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(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 each 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.
(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.
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(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 any 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 any
Agent or any Revolving Credit Lender may be reproduced by that Revolving Credit
Lender or by any 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 any Agent to bring
legal actions or proceedings in any other competent jurisdiction.
(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
each Agent, the Issuer, and each Revolving Credit Lender and any Participant and
any of their
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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 any
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 with respect to LIBOR Loans and on a 365/366 day year and actual
days elapsed with respect to 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.
(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.
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(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".
(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,
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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,
any Agent's consent to any action of any Borrower which is prohibited unless
such consent is given may be given or refused by such Agent 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 any 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 any 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 any 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 such 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
any 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, such 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 Section4 of the Federal Reserve Act (12 U.S.C. Section341)
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 any 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 imposed by Applicable Law. Any payment
which is made which, if treated as interest on a
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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 each 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 any 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 ANY AGENT OR ANY REVOLVING CREDIT LENDER IS OR
BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST ANY AGENT OR ANY REVOLVING CREDIT LENDER OR IN WHICH ANY 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
AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON AND EACH 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 any 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 any
Agent or any Revolving Credit Lender to assert any claim
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or demand or to enforce or exercise any right or remedy against any other Loan
Party under the 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 any
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. Each 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 amongst the Loan Parties. In addition, any indebtedness of
any
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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, xxx for, or otherwise attempt to collect any such
indebtedness. If any amount shall erroneously be paid to 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.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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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.
DSW INC.
(" LEAD BORROWER")
By:
--------------------------------
Name: Xxxxx X. XxXxxxx
Title: Vice President
"OTHER BORROWERS":
DSW SHOE WAREHOUSE, INC.
By:
--------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
135
NATIONAL CITY BUSINESS CREDIT, INC.
(ADMINISTRATIVE AGENT, COLLATERAL AGENT
AND REVOLVING CREDIT LENDER)
By:
---------------------------------
Name:
Title: Director
136
NATIONAL CITY BANK
(ISSUER)
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
137
THE CIT GROUP/BUSINESS CREDIT, INC.
(CO-SYNDICATION AGENT AND REVOLVING
CREDIT LENDER)
By:
---------------------------------
Name:
Title: Vice President
000
XXXX XX XXXXXXX, N.A. (CO-SYNDICATION
AGENT AND REVOLVING CREDIT LENDER)
By:
---------------------------------
Name:
---------------------------------
Title:
-------------------------------
139
GENERAL ELECTRIC CAPITAL
CORPORATION (CO-DOCUMENTATION AGENT
AND REVOLVING CREDIT LENDER)
By:
---------------------------------
Name:
--------------------------------
Title:
------------------------------
140
XXXXX FARGO RETAIL FINANCE LLC (CO-
DOCUMENTATION AGENT AND REVOLVING CREDIT
LENDER)
By:
---------------------------------
Name:
--------------------------------
Title:
------------------------------
141
LASALLE BANK NATIONAL ASSOCIATION
By:
---------------------------------
Name:
--------------------------------
Title:
------------------------------
142
HSBC BUSINESS CREDIT (USA) INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
143
