Exhibit 10.1
======================================
LOAN AND SECURITY AGREEMENT
======================================
VALUE CITY DEPARTMENT STORES, INC.
THE LEAD BORROWER
FOR:
VALUE CITY DEPARTMENT STORES, INC.
SHONAC CORPORATION
DSW SHOE WAREHOUSE, INC.
GRAMEX RETAIL STORES, INC.
FILENE'S BASEMENT, INC.
VALUE CITY LIMITED PARTNERSHIP
VALUE CITY OF MICHIGAN, INC.
GB RETAILERS, INC.
VCM, LTD.
THE BORROWERS
NATIONAL CITY COMMERCIAL FINANCE, INC.
ADMINISTRATIVE AGENT FOR
THE REVOLVING CREDIT LENDERS REFERENCED HEREIN
NATIONAL CITY COMMERCIAL FINANCE, INC.
FLEET RETAIL FINANCE INC.
AS COLLATERAL AGENTS
NATIONAL CITY BANK
AS LETTER OF CREDIT ISSUER
THE CIT GROUP/BUSINESS CREDIT, INC.
GENERAL ELECTRIC CAPITAL CORPORATION
AS CO-DOCUMENTATION AGENTS
FLEET RETAIL FINANCE INC.
XXXXX FARGO RETAIL FINANCE, LLC
AS CO-SYNDICATION AGENTS
NATIONAL CITY BANK
FLEET SECURITIES, INC.
XXXXX FARGO RETAIL FINANCE, LLC
THE CIT GROUP/BUSINESS CREDIT, INC.
AS CO-LEAD ARRANGERS
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS:
ARTICLE 2 - THE REVOLVING CREDIT:
2.1. Establishment of Revolving Credit.............................................................41
2.2. Advances in Excess of Borrowing Base (OverLoans)...............................................42
2.3. Risks of Value of Collateral...................................................................42
2.4. Commitment to Make Revolving Credit Loans and Support Letters of Credit........................43
2.5. Revolving Credit Loan Requests.................................................................43
2.6. Suspension of Revolving Credit.................................................................45
2.7 Making of Revolving Credit Loans...............................................................45
2.8. SwingLine Loans................................................................................46
2.9. The Loan Account...............................................................................47
2.10. The Revolving Credit Notes.....................................................................48
2.11. Payment of The Loan Account....................................................................48
2.12. Interest on Revolving Credit Loans. ...........................................................49
2.13. Underwriting Fee; Collateral Monitoring Fee....................................................50
2.14. Unused Line Fee................................................................................50
2.15. Early Termination Fee..........................................................................51
2.16. Concerning Fees................................................................................51
2.17. Agent's and Revolving Credit Lenders' Discretion...............................................51
2.18. Procedures For Issuance of L/Cs and Banker's Acceptances.......................................51
2.19. Fees For L/Cs and Banker's Acceptances.........................................................54
2.20. Concerning L/C's and Banker's Acceptances......................................................55
2.21. Changed Circumstances..........................................................................57
2.22. Designation of Lead Borrower as Borrowers' Agent...............................................57
2.23. Revolving Credit Lenders' Commitments..........................................................58
2.24 PAYMENTS.......................................................................................60
ARTICLE 3 - CONDITIONS PRECEDENT:
3.1. Corporate Due Diligence........................................................................60
3.2. Opinions.......................................................................................61
3.3. Additional Documents...........................................................................61
3.4. Officers' Certificates.........................................................................61
3.5. Representations and Warranties.................................................................61
3.6. Minimum Day One Availability...................................................................61
3.7. Term Loans; Intercreditor Agreement............................................................61
3.8 Repayment of Existing Indebtedness.............................................................61
3.9 CONSENTS.......................................................................................61
3.10 Appraisals and Commercial Finance Examinations.................................................61
3.11 Material Agreements............................................................................62
3.12 Litigation.....................................................................................62
3.13 Perfection of Encumbrances.....................................................................62
3.14. All Fees and Expenses Paid.....................................................................62
3.15 CASH MANAGEMENT................................................................................62
3.16 INSURANCE......................................................................................62
3.17. No Loan Party in Default.......................................................................63
3.18. No Adverse Change..............................................................................63
3.19 Certain Changes................................................................................63
3.20. Benefit of Conditions Precedent................................................................63
ARTICLE 4 - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
4.1. Payment and Performance of Liabilities.........................................................63
4.2. Due Organization. Authorization. No Conflicts..................................................63
4.3. Trade Names....................................................................................65
4.4. Intellectual property..........................................................................65
4.5. Locations......................................................................................65
4.6. Encumbrances...................................................................................66
4.7. Indebtedness...................................................................................67
4.8. Insurance......................................................................................67
4.9. Licenses.......................................................................................68
4.10. Leases.........................................................................................68
4.11. Requirements of Law............................................................................68
4.12. Labor Relations................................................................................68
4.13. Maintain Properties............................................................................69
4.14. Taxes..........................................................................................70
4.15. No Margin Stock................................................................................71
4.16. Investment and Holding Company Status..........................................................71
4.17. ERISA..........................................................................................71
4.18. Hazardous Materials............................................................................72
ii
4.19. Litigation.....................................................................................73
4.20. Dividends. Investments. Corporate Action.......................................................73
4.21. Loans..........................................................................................75
4.22. Protection of Assets...........................................................................76
4.23. Line of Business...............................................................................76
4.24. Affiliate Transactions.........................................................................76
4.25 Additional Subsidiaries......................................................................77
4.26. Further Assurances.............................................................................77
4.27. ADEQUACY OF DISCLOSURE.........................................................................78
4.28. No Restrictions on Liabilities.................................................................79
4.29. Restrictions on Payment of Term Loans..........................................................79
4.30 UNRESTRICTED SUBSIDIARIES......................................................................80
4.31 NO BANKRUPTCY FILING...........................................................................80
ARTICLE 5 FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5.1. Maintain Records...............................................................................81
5.2. Access to Records..............................................................................81
5.3. Prompt Notice to Administrative Agent..........................................................82
5.4. Weekly Reports.................................................................................84
5.5. Monthly Reports................................................................................84
5.6. Quarterly Reports..............................................................................84
5.7. Annual Reports.................................................................................85
5.8. Officers' Certificates.........................................................................85
5.9. Inventories, Appraisals, and Audits............................................................86
5.10. Additional Financial Information...............................................................87
5.11. Information Delivered Pursuant to Article 5....................................................88
ARTICLE 6 - USE OF COLLATERAL:
6.1. Use of Inventory Collateral...................................................................88
6.2. Inventory Quality..............................................................................89
6.3. Adjustments and Allowances.....................................................................89
6.4. Validity of Accounts...........................................................................89
6.5. Notification to Account Debtors................................................................89
ARTICLE 7 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7.1. Depository Accounts............................................................................90
7.2. Credit Card Receipts...........................................................................90
iii
7.3. The Administrative agent's, Collection, and Operating Accounts.................................91
7.4. Proceeds and Collections.......................................................................91
7.5. Payment of Liabilities.........................................................................92
7.6. The Operating Account..........................................................................94
ARTICLE 8 - GRANT OF SECURITY INTEREST:
8.1. Grant of Security Interest.....................................................................94
8.2. Extent and Duration of Security Interest.......................................................95
ARTICLE 9 - COLLATERAL AGENTS AS BORROWERS' ATTORNEY-IN-FACT:
9.1. Appointment as Attorney-In-Fact................................................................96
9.2. No Obligation to Act...........................................................................96
ARTICLE 10 - EVENTS OF DEFAULT:
10.1. Failure to Pay the Revolving Credit............................................................97
10.2. Failure To Make Other Payments.................................................................97
10.3. Failure to Perform Covenant or Liability (No Grace Period).....................................97
10.4. Financial Reporting Requirements...............................................................97
10.5. Failure to Perform Covenant or Liability (Grace Period)........................................98
10.6. Misrepresentation..............................................................................98
10.7. Acceleration of Other Debt. Breach of Lease....................................................98
10.8. Default Under Other Agreements.................................................................98
10.9. Uninsured Casualty Loss........................................................................98
10.10. Attachment. Judgment. Restraint of Business....................................................98
10.11. Business Failure...............................................................................99
10.12. Bankruptcy.....................................................................................99
10.13. Termination of Guaranty........................................................................99
10.14. Challenge to Loan Documents....................................................................99
10.15. Change in Control.............................................................................100
ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT:
11.1 Acceleration..................................................................................100
11.2. Rights of Enforcement.........................................................................100
11.3. Sale of Collateral............................................................................101
11.4. Occupation of Business Location...............................................................102
11.5. Grant of Nonexclusive License.................................................................102
iv
11.6. Assembly of Collateral........................................................................102
11.7. Rights and Remedies...........................................................................102
ARTICLE 12 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12.1. Revolving Credit Funding Procedures...........................................................103
12.2. SwingLine Loans...............................................................................103
12.3. Administrative Agent's Covering of Fundings:..................................................104
12.4. Ordinary Course Distributions.................................................................106
ARTICLE 13 - ACCELERATION AND LIQUIDATION:
13.1. Acceleration Notices..........................................................................107
13.2. Acceleration..................................................................................107
13.3. Initiation of Liquidation.....................................................................107
13.4. Actions At and Following Initiation of Liquidation...........................................108
13.5. Collateral Agents' Conduct of Liquidation.....................................................108
13.6. Distribution of Liquidation Proceeds:.........................................................108
13.7. Relative Priorities To Proceeds of Liquidation ...............................................109
ARTICLE 14 - THE AGENT:
14.1. Appointment of The Agent ...................................................................110
14.2. Responsibilities of Agent.....................................................................110
14.3. Concerning Distributions By the Agent ........................................................111
14.4. Dispute Resolution:...........................................................................112
14.5. Distributions of Notices and of Documents.....................................................112
14.6. Confidential Information......................................................................113
14.7. Reliance by Agent ............................................................................113
14.8. Non-Reliance on Agent and Other Revolving Credit Lenders......................................113
14.9. Indemnification...............................................................................114
14.10. Resignation of Agent..........................................................................114
14.11 Co-Lead Arrangers, Documentation Agent and Syndication Agent..................................115
ARTICLE 15 - ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:
15.1. Administration of Credit Facilities...........................................................115
15.2. Actions Requiring or On Direction of Majority Lenders.........................................116
15.3. Actions Requiring or On Direction of SuperMajority Lenders....................................116
v
15.4. Action Requiring Certain Consent .............................................................117
15.5. Actions Requiring or Directed By Unanimous Consent............................................117
15.6. Actions Requiring SwingLine Lender Consent....................................................119
15.7. Actions Requiring Agent's Consent.............................................................119
15.8. Miscellaneous Actions.........................................................................119
15.9. Actions Requiring Lead Borrower's Consent.....................................................120
15.10. NonConsenting Revolving Credit Lender.........................................................121
ARTICLE 16 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16.1. Assignments and Assumptions:..................................................................122
16.2. Assignment Procedures.........................................................................123
16.3. Effect of Assignment..........................................................................123
ARTICLE 17 - NOTICES:
17.1. Notice Addresses..............................................................................124
17.2. Notice Given..................................................................................125
17.3. Wire Instructions. Notice Given...............................................................126
ARTICLE 18 - TERM:
18.1. Termination of Revolving Credit...............................................................126
18.2. Actions On Termination........................................................................126
ARTICLE 19 - GENERAL:
19.1. Protection of Collateral......................................................................127
19.2. Publicity.....................................................................................127
19.3. Confidentiality...............................................................................127
19.4. Successors and Assigns........................................................................128
19.5. Severability..................................................................................128
19.6. Amendments. Course of Dealing................................................................128
19.7. Power of Attorney.............................................................................129
19.8. Application of Proceeds.......................................................................129
19.9. Increased Costs...............................................................................129
19.10. Replacement of Revolving Credit Lender........................................................130
19.11. Costs and Expenses of the Agent and Issuer....................................................131
19.12. Copies and Facsimiles.........................................................................131
vi
19.13. New York Law..................................................................................132
19.14. Consent to Jurisdiction.......................................................................132
19.15. Indemnification...............................................................................132
19.16. Rules of Construction.........................................................................133
19.17. Agent's Consent...............................................................................135
19.18. Participations:...............................................................................135
19.19. Right of Set-Off..............................................................................135
19.20. Pledges To Federal Reserve Banks: ............................................................135
19.21. Maximum Interest Rate.........................................................................135
19.22. Waivers. .....................................................................................136
19.23. Additional Waivers. ..........................................................................136
vii
EXHIBITS
1.1 : Existing L/Cs and Banker's Acceptances
1.2 : Facility Guarantors
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
2.23 : Revolving Credit Lenders' Commitments
3.3 : Additional Documents
4.2 : Corporate Information
4.3 : Trade Names
4.5 : Locations, Leases, and Landlords
4.6(a) : Encumbrances
4.6(b) : Consigned Property
4.7 : Indebtedness
4.8 : Insurance Policies
4.9 : Licenses
4.10 : Capital Leases
4.12 : Labor Contracts
4.14 : Taxes
4.18(a) : Hazardous Materials
4.19 : Litigation
4.21(e) : Existing Loans
4.21(f) : Intercompany Loans
5.4 : Borrowing Base Certificate
5.5 : Monthly Financial Reporting Requirements
7.1 : DDA's.
7.2 : Credit Card Arrangements
7.3 : Administrative Agent's Accounts; Collection
Account Banks; Operating Accounts
16.2 : Assignment / Assumption
viii
================================================================================
LOAN AND SECURITY AGREEMENT
================================================================================
June 11, 2002
THIS AGREEMENT is made between
National City Commercial Finance, 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 Commercial Finance, Inc., and Fleet Retail
Finance Inc., a Delaware corporation with offices at 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, as collateral agents (collectively, in
such capacity, herein the "COLLATERAL AGENTS"), for the ratable benefit
of the Revolving Credit Lenders,
and
The Revolving Credit Lenders;
and
Value City Department Stores, Inc. ( in such capacity, the
"LEAD BORROWER"), an Ohio corporation with its principal executive
offices at 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000, as agent
for the following (individually, a "BORROWER" and collectively, the
"BORROWERS"):
Said Value City Department Stores, Inc. ("Value City"); and
Shonac Corporation ("Shonac"), an Ohio corporation with its
principal executive offices at 0000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxx, Xxxx 00000;
DSW Shoe Warehouse, Inc. ("DSW"), a Missouri corporation with
its principal executive offices at 0000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxx, Xxxx 00000; and
Gramex Retail Stores, Inc. ("Gramex"), a Delaware corporation
with its principal
1
executive offices at 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000; and Filene's Basement, Inc. ("Filene's"), a Delaware
corporation with its principal executive offices at 0000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000; and
Value City Limited Partnership ("VCLP"), an Ohio limited
partnership with its principal executive offices at 0000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000; and
Value City of Michigan, Inc. ("VC Michigan"), a Michigan
corporation with its principal executive offices at 00000
Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000; and
GB Retailers, Inc. ("GBR"), a Delaware corporation with its
principal executive offices at 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000; and
VCM, Ltd. ("VCM"), an Ohio limited liability company with its
principal executive offices at 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000-0000
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.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Administrative Agent to the Revolving
Credit Lenders, as provided in Section 13.1(a).
(b) From the SuperMajority Lenders to the
Administrative Agent, as provided in Section 13.1(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,
2
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": NCCF, 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 7.3.
"ADMINISTRATIVE AGENT'S COVER": Defined in Section 12.3(c)(i).
"AFFILIATE": The following:
(a) With respect to any Person, any other Person that
directly or, alone or with a group of related Persons whose
interests taken as a whole, indirectly through one of more
intermediaries, Controls, is Controlled by, or is under common
Control with, such Person. Notwithstanding anything to the
contrary herein contained, in no event shall the Agent, the
Issuer, or any Revolving Credit Lender be considered an
"Affiliate" of a Loan Party.
(b) Any Person: which is a parent, brother-sister or
subsidiary, of a Borrower; whose enterprise's tax returns or
financial statements are consolidated with those of a
Borrower; which is a member of the same controlled group of
corporations (within the meaning of Section 1563(a)(1), (2)
and (3) of the Internal Revenue Code of 1986, as amended from
time to time) of which any Borrower is a member; or Controls
or is Controlled by any Borrower.
(c) With respect to the Loan Parties, without
limiting the provisions of clauses (a) and (b) hereof,
"Affiliate" includes Schottenstein Stores Corporation.
"AGENT": Collectively, the Administrative Agent and the Collateral
Agents.
3
"AGENTS' RIGHTS AND REMEDIES": Is defined in Section 11.7.
"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 Eurodollar Loans based upon the following criteria:
--------------------------------------------------------------------------------
LEVEL EXCESS AVAILABILITY APPLICABLE APPLICABLE MARGIN
MARGIN FOR FOR EURODOLLAR LOANS
BASE MARGIN
LOANS
--------------------------------------------------------------------------------
1 Greater than $150,000,000 0% 2.00%
--------------------------------------------------------------------------------
2 Greater than $100,000,000, 0% 2.25%
but less than or equal to
$150,000,000
--------------------------------------------------------------------------------
3 Greater than $75,000,000, 0.25% 2.50%
but less than or equal to
$100,000,000
--------------------------------------------------------------------------------
4 Less than or equal to 0.50% 2.75%
$75,000,000
--------------------------------------------------------------------------------
The Applicable Margin shall initially be established at Level
2. Thereafter, the Applicable Margin shall be adjusted
quarterly of the first day of each calendar quarter,
commencing October 1, 2002, 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 Closing
Date. Upon the occurrence and during the continuance
4
of a Specified Event of Default, the Applicable Margin may, at
the option of the Agent, be immediately increased to the
percentages set forth in Level 4 (even if the Excess
Availability requirements for another Level have been met) and
interest shall be determined in the manner set forth in
Section 2.12(g).
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of
Eligible Inventory (net of Inventory Reserves) multiplied by
(b) that percentage, determined from the then most recent
appraisal of each Division's Inventory undertaken initially at
the Lead Borrower's request, and subsequently at the request
of the Collateral Agents, to reflect the appraiser's estimate
of the net recovery on such Division's Inventory in the event
of an in-store liquidation of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 85%.
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section 16.1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in Section 16.2.
"AUTHORIZED OFFICER": Is defined in Section 5.8.
"AVAILABILITY": Gross Availability Minus the Excess Availability
Reserve.
"AVAILABILITY RESERVES": Without duplication, such reserves as the
Collateral Agents from time to time determine in the
Collateral Agents' reasonable, good faith discretion as being
appropriate to reflect the impediments to the Collateral
Agents' ability to realize upon the Collateral. The Collateral
Agents 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 Agents, has not
been received by the Collateral Agents).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges,
including, ad valorem, personal property,
and such other taxes which are reasonably
likely to have priority over the Collateral
Interests of the Collateral Agents in the
Collateral.
(iv) L/C Landing Costs.
(v) Hedge Agreements.
5
Without limiting the rights of the Collateral Agents to establish or
modify Availability Reserves, the initial Availability Reserves on the
Closing 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'SACCEPTANCE": 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 2.19.
"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"
or "base rate" in effect, such rate to be adjusted
automatically, without notice, as of the opening of business
on the effective date of any change in such rate (it being
agreed that (i) such rate is not necessarily the lowest rate
of interest then available from NCB on fluctuating rate loans,
and (ii) such rate may be established by NCB by public
announcement or otherwise), and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one
percent (0.50%) per annum.
"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing interest
at the Base Margin Rate.
6
"BASE MARGIN RATE": The Applicable Margin for Base Margin Loans.
"BORROWER" and "BORROWERS":Is defined in the Preamble.
"BORROWING BASE": The aggregate of the following with respect to all
Borrowers:
(a) The face amount of Eligible Credit Card
Receivables multiplied by the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory
(net of Inventory Reserves) multiplied by the Inventory
Advance Rate or (b) the Appraised Inventory Percentage of the
Appraised Inventory Liquidation Value.
"BORROWING BASE CERTIFICATE": Is defined in Section 5.4.
"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
Eurodollar 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
2002 through and including 2004 dated March 19, 2002, 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 Seventy
Million Dollars ($70,000,000.00). 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
7
amounts for ninety (90) consecutive Business Days) if a Cash
Control Event has occurred and been discontinued on one (1)
occasion during the preceding twelve month period.
"CCM": Cerberus Partners, L.P., a Delaware limited partnership with
its principal office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
"CCM TERM LOAN FACILITIES": The term loan facilities entered into
amongst 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.
"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, 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 Lead Borrower having the right, under
ordinary circumstances, to vote for the election of directors
of the Lead Borrower, excluding from the foregoing any
acquisition pursuant to warrants issued under the CCM Term
Loan Facilities or the exercise of conversion rights under the
Senior Convertible Facility.
(b) Other than as a result of the exercise by CCM of
board representation rights under the Senior Convertible
Facility, more than half of the Persons who were directors of
the Lead Borrower 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 the
month during which this Agreement was executed), cease, for
any reason other than death, disability, or replacement by
other Persons nominated by a nominating committee controlled
by Schottenstein Stores Corporation to be directors of the
Lead Borrower.
(c) The failure of the Lead Borrower to own, directly
or indirectly, 95% of the capital stock of each of the other
Loan Parties.
(d) The failure of Schottenstein Stores Corporation
to possess, directly or indirectly, the power to cause the
direction of the management and policies of the Borrowers.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"CLOSING 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.
8
"CO-LEAD ARRANGERS": Collectively, Fleet Securities Inc., Xxxxx Fargo
Retail Finance, LLC, The CIT Group/Business Credit, Inc., and
NCB.
"COLLATERAL": Is defined in Section 8.1.
"COLLATERAL AGENTS": Collectively, NCCF and FRF, in their capacity as
collateral agents 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
Closing date are set forth on EXHIBIT 7.3 hereto.
"COLLECTION ACCOUNT AGREEMENT": An Agreement, in form satisfactory to
the Collateral Agents, which Agreement recognizes the
Collateral Agents' 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:
(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
9
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 Borrowers and any
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 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%
"CUSTOMERCREDIT 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.
10
"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 12.3(c).
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC and also
includes all demand, time, savings, passbook, or similar
accounts maintained with a bank.
"DIVISION(S)": The various business segments of the Borrowers, such
being the DSW/Shonac Business, the Filene's Business, and the
Value City Business.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"DSW": Has the meaning given that term in the Preamble hereto.
"DSW/SHONAC
AVAILABILITY": The lesser of:
(a) the result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The DSW/Shonac Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account attributable to
Revolving Credit Loans made to DSW
or Shonac.
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/Cs and
Banker's Acceptances issued for the
account of DSW or Shonac.
Minus
(iv) The aggregate of the Availability Reserves
attributable to
11
DSW and Shonac.
or
(b) Availability.
"DSW/SHONAC BORROWING BASE": The aggregate of the following:
(a) The face amount of Eligible Credit Card
Receivables of DSW and Shonac 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 Shonac multiplied by
the Inventory Advance Rate or (b) the Appraised Inventory
Percentage of the Appraised Inventory Liquidation Value of the
Inventory of DSW and Shonac.
"DSW/SHONAC BUSINESS": Collectively, the businesses operated by
DSW Shoe Warehouse Inc. and Shonac Corporation.
"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 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 Agents
in their reasonable, good faith discretion from time to time
determine to be acceptable for borrowing, as to which
Inventory, the Collateral Agents have a perfected security
interest which is prior and superior to all security
interests, claims, and Encumbrances. Without limiting the
foregoing,
12
Inventory acquired in a Permitted Acquisition shall not be
deemed Eligible Inventory unless the Collateral Agents
otherwise agree.
"ELIGIBLEL/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 Agents in their
reasonable, good faith discretion from time to time
determine to be eligible for borrowing and it would
otherwise constitute Eligible Inventory; and
(b) The documentary L/C supporting such
purchase names the Collateral Agents as consignee of
the subject Inventory or the Collateral Agents have
control over the documents which evidence ownership
of the subject Inventory (such as by the providing to
the Collateral Agents of a Customs Brokers Agreement
in form reasonably satisfactory to the Collateral
Agents).
"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:
(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.
"END DATE": The date upon which all of the following conditions are
met: (a) all payment Liabilities described in Section 18.2(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 18.2(b), and (c)
all
13
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.
"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
14
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 Eurodollar 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
Eurodollar Loans is determined or any category or extension of
credit or other assets that include Eurodollar 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
Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities subject to reserve requirements without benefit of
credits for proration, exceptions or offsets which may be
available to any Revolving Credit Lender under Regulation D.
"EURODOLLAR BUSINESS DAY": Any day which is both a Business Day and a
day on which the principal market for Eurodollars in which NCB
participates is open for dealings in United States Dollar
deposits.
"EURODOLLAR LOAN": Any Revolving Credit Loan which bears interest at a
Eurodollar Rate.
"EURODOLLAR MARGIN": The Applicable Margin for Eurodollar Loans.
"EURODOLLAR OFFER RATE": For any Interest Period for Eurodollar Loans,
the quotient
15
(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
Eurodollar Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, appearing
on page 3770 of the Dow Xxxxx Market Services (or any
successor or substitute page of such Service, or any successor
to or substitute for such Service providing rate quotations
comparable to those currently provided on such page of such
Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates
applicable to deposits in U.S. Dollars in the applicable
Eurodollar interbank market) as the rate in the applicable
Eurodollar 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 Eurodollar Business Days prior to
the beginning of such Interest Period pertaining to such
Eurodollar 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 NCCF's Revolving Credit Commitment
Percentage of such Eurodollar Loan and with a maturity
comparable to such Interest Period are offered to the prime
banks by leading banks in the applicable Eurodollar interbank
market. The Eurodollar Offer Rate shall be adjusted
automatically on and as of the effective date of any change in
the Eurocurrency Reserve Percentage.
"EURODOLLAR RATE": That per annum rate which is the aggregate of the
Eurodollar Offer Rate plus the Eurodollar Margin.
"EVENTS OF DEFAULT": Is defined in Article 10. An "Event of Default"
shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the
Administrative Agent in writing or cured to the satisfaction
of the Administrative Agent.
"EXCESS AVAILABILITY": As of any date of determination, Gross
Availability less all then held checks, accounts payable which
are beyond customary payment terms consistent with past
practice (other than accounts payable which are being disputed
in good faith and for which the Borrowers have adequate
reserves), and overdrafts (other than daylight overdrafts, as
defined in the Federal Reserve Daylight Credit Policies in
effect from time to time).
"EXCESS AVAILABILITY RESERVE": $35,000,000.
16
"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.
(c) Inventory or other property held pursuant to
consignment arrangements in which a Borrower is the consignee
to the extent that the consignor has properly perfected its
interest therein;
(d) all motor vehicles owned by any Loan Party; or
(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 BANKER'S ACCEPTANCES": Those Banker's Acceptances described
on EXHIBIT
17
1.1 hereto which have been issued by NCB under the Borrowers'
existing credit facility with, among others, NCB.
"EXISTING L/CS": Those letters of credit described on EXHIBIT 1.1
hereto which have been issued by NCB under the Borrowers'
existing credit facility with, among others, NCB.
"FACILITY GUARANTEE": The Guaranty executed by the Facility Guarantors
in favor of the Agent, the Issuer and the Revolving Credit
Lenders.
"FACILITY GUARANTORS": Each Borrower, the Persons listed on EXHIBIT 1.2
hereto and all other Subsidiaries of each Borrower now
existing or hereafter created, other than 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.
"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 Agent from three
federal funds brokers of recognized standing selected by the
Administrative Agent.
"FEE LETTER": That letter dated on or about the Closing Date and
styled "Fee Letter" between the Lead Borrower and the
Administrative Agent, as such letter may from time to time be
amended.
"FILENE'S": Has the meaning given that term in the Preamble hereto.
"FILENE'S
AVAILABILITY": The lesser of:
18
(a) the result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The Filene's Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account attributable to
Revolving Credit Loans made to
Filene's.
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/Cs and
Banker's Acceptances issued for the
account of Filene's.
Minus
(iv) The aggregate of the Availability
Reserves attributable to Filene's.
or
(b) Availability.
"FILENE'S BORROWING BASE": The aggregate of the following:
(a) The face amount of Eligible Credit Card
Receivables of Filene's multiplied by
the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory
(net of Inventory Reserves) of Filene's multiplied by the
Inventory Advance Rate or (b) the Appraised Inventory
Percentage of the Appraised Inventory Liquidation Value of the
Inventory of Filene's.
"FILENE'S BUSINESS": The businesses operated by Filene's Basement, Inc.
"FISCAL": When followed by "month", "quarter" or "year", the relevant
fiscal period based on the Borrowers' fiscal year and
accounting conventions.
"FIXTURES": Has the meaning given that term in the UCC.
"FRF": Fleet Retail Finance Inc., a Delaware corporation.
"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
19
generally accepted accounting principles consistent with those
used in the preparation of the financial statements described
herein.
"GBR": Has the meaning given that term in the Preamble hereto.
"GENERAL INTANGIBLES": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
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.
20
"GOVERNMENTAL AUTHORITY": Any nation or government, any federal, state,
city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or
pertaining to government.
"GRAMEX": Has the meaning given that term in the Preamble hereto.
"GROSS AVAILABILITY": The result of the following in the aggregate with
respect to all Borrowers:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account.
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/Cs and
Banker's Acceptances.
Minus
(v) The aggregate of the Availability
Reserves.
"HAZARDOUS MATERIALS": (a) Any element, compound or chemical that is
defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or 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.
"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,
including,
21
without limitation, the Hedge Agreement between the Lead
Borrower and NCB dated March 28, 2000.
"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.
22
(y) Any guaranty, endorsement,
suretyship or other undertaking in respect
of Indebtedness pursuant to which that
Person may be liable on account of any
obligation of any third party; and
(z) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"INDEMNIFIED PERSON": Is defined in Section 19.15.
"INFORMATION": Is defined in Section 19.3.
"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 Closing
Date are set forth on EXHIBIT 1.3 hereto.
"INTERCREDITOR AGREEMENT": The Intercreditor and Lien Subordination
Agreement of even date entered into amongst the Agent, on
behalf of the Revolving Credit Lenders, CCM, as agent under
the CCM Term Loan Facilities, and CCM, as agent under the
Senior Convertible Facility.
"INTEREST PAYMENT DATE": With reference to:
Each Eurodollar 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 month;
the Termination Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With respect to each Eurodollar Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Eurodollar 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
23
conversion to such Base Margin Loan and ending on that date
(i) as of which the subject Base Margin Loan is converted to a
Eurodollar Loan, as the Lead Borrower may elect by notice
(pursuant to Section 2.5) to the Administrative Agent, or (ii)
on which the subject Base Margin Loan is paid by the
Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
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 Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Business Day of the month during
which that Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2.12(e) hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing.
"INVENTORY ADVANCE RATE": As to any Borrower, the following
percentages of the Cost of Eligible Inventory of such Borrower
specified below for the periods indicated:
24
--------------------------------------------------------------------------------------------------------------------
Borrower Period Inventory Advance Rate
--------------------------------------------------------------------------------------------------------------------
Filene's Basement, Inc. December 15 through 73%
August 31 of each year
September 1 through December 14 of
each year 80%
--------------------------------------------------------------------------------------------------------------------
DSW Shoe Warehouse Inc. October 15 through March 31 of each 74%
year
April 1 through October 14 of each
year 78%
--------------------------------------------------------------------------------------------------------------------
Shonac Corporation December 15 through October 31 of 77%
each year
November 1 through December 14 of
each year 83%
--------------------------------------------------------------------------------------------------------------------
All other Borrowers December 15 through October 31 of 67%
each year
November 1 through December 14 of
each year 79%
--------------------------------------------------------------------------------------------------------------------
Any Inventory Advance Rate may be increased by the Collateral Agents
from time to time in their 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 Agents shall not obligate the
Collateral Agents to maintain such increased Inventory Advance Rate for
any specific period of time and the Collateral Agents 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 Agents 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 Agents in
the Collateral Agents' 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 Agents 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
25
continuing, in which event no prior notice shall be required).
Without limiting the rights of the Collateral Agents to
establish or modify Inventory Reserves, the initial Inventory
Reserves on the Closing 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 Administrative
Agent may, in its reasonable, good faith discretion, select.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower. 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
2.19.
"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.
26
"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 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.
27
(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.
"LIQUIDATION": The exercise, by the Collateral Agents, of those rights
accorded to the Collateral Agents 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.
"LOAN DOCUMENTS": This Agreement, the Facility Guarantee, the
Facility Guarantors Collateral Documents, the Intercreditor
Agreement, and each other instrument or document from time to
time executed and/or delivered in connection with the
arrangements contemplated hereby or in connection with any
transaction with 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 more than 50% of the Revolving Credit
Commitment Percentages (calculated without regard to any
Revolving Credit Commitment Percentages of any Delinquent
Revolving Credit Lender).
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to
28
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, when compared with
such condition or results as if such change had not taken
place.
"MATERIAL ADVERSE EFFECT": A material adverse effect on (a) the
business, operations, property, assets, or financial condition
of (i) the Loan Parties taken as a whole, or (ii) the Value
City Business taken as a whole (including those portions of
Shonac that operate as part of the Value City Business), 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 11, 2005.
"NCB": National City Bank, a national banking association.
"NCCF": National City Commercial Finance, Inc., an Ohio corporation.
"NOMINEE": A business entity (such as a corporation or limited
partnership) formed by the Collateral Agents to own or manage
any Post Foreclosure Asset.
"OPERATING ACCOUNT": Is defined in Section 7.3.
"OVERLOAN": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability, DSW/Shonac Availability,
Filene's Availability or VC Availability, as applicable, is
less than zero.
"PARTICIPANT": Is defined in Section 19.18, 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 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
29
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
Agents with ten (10) days prior notice of such intended Acquisition and
shall have furnished the Collateral Agents with a current draft of the
acquisition agreement and other acquisition documents, a summary of any
due diligence undertaken by the Borrowers in connection with such
Acquisition, appropriate financial statements of the Person which is
the subject of such Acquisition, pro forma projected financial
statements for the twelve month period following such Acquisition after
giving effect to such Acquisition (including balance sheets, cash flows
and income statements by month for the acquired Person, individually,
and on a consolidated basis with all Loan Parties), and such other
information as the Collateral Agents may reasonably require, each of
which shall be reasonably satisfactory to the Collateral Agents.
(d) The structure of the Acquisition shall be acceptable to
the Collateral Agents in their 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 Agents 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 Agents may reasonably require,
all of the results of the foregoing to be reasonably satisfactory to
the Collateral Agents.
(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 4.23, below.
(g) If the Person which is the subject of such Acquisition
will be maintained as a Subsidiary of the 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 Agents, and the Collateral Agents 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.
30
(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 Closing Date, shall not exceed in the
aggregate the sum of $15,000,000.
(i) Excess Availability immediately prior to such Acquisition,
immediately after giving effect thereto, and projected Excess
Availability on a pro forma projected basis for the twelve months
immediately following such Acquisition, shall not be less than
$70,000,000.
"PERMITTED DISPOSITION": Shall mean any of the following:
(a) Licenses of intellectual property or licensed departments
of a Loan Party or any of its Subsidiaries in the ordinary course of
business;
(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 Agents 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 4.5(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
Agents; and
(e) (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 a Borrower, 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:
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
31
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 Agents as security for the Liabilities
pursuant to the terms of the Loan Documents;
B. the aggregate consideration for all such transactions
completed in any fiscal year does not exceed
$500,000,
C. the aggregate consideration for all such transactions
completed after the Closing 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'
32
compensation, unemployment insurance and other types of social
security;
(d) Deposits to secure the performance of tenders, bids,
sales, trade and government contracts, leases, statutory obligations,
surety, appeal, and supersedeas bonds, warranty, advance payment,
customs, performance and return-of-money bonds and other obligations of
a like nature in the ordinary course of business (exclusive of
obligations in respect of the payment of borrowed money) whether
pursuant to statutory requirements, common law or consensual
arrangements;
(e) Easements, rights of way, leases, zoning or deed
restrictions, licenses, covenants, building, restrictions, minor
defects or irregularities in title and other similar real estate
encumbrances incurred in the ordinary course of business that in the
aggregate do not materially interfere with the conduct of the business
of the Loan Parties; defects and irregularities in titles, survey
exceptions, encumbrances, easements or reservations of others for
rights-of-way, roads, pipelines, railroad crossings, services,
utilities or other similar purposes; outstanding mineral rights or
reservations (including rights with respect to the removal of material
resource) which do not materially diminish the value of the surface
estate, assuming usage of such surface estate similar to that being
carried on by any Loan Party as of the effective date;
(f) Any interest or title of a lessor under any lease entered
into by any Loan Party in the ordinary course of business not in
violation of the Loan Documents;
(g) Any interest or title of any lessee under any leases or
subleases of real property of a Loan Party not in violation of the
requirements of the Loan Documents, provided that all such Encumbrances
do not in the aggregate materially detract from the value of such Loan
Party's property or materially impair the use thereof in the operation
of such Loan Party's business;
(h) Encumbrances arising from financing statements regarding
property subject to Capital Leases not in violation of the requirements
of the Loan Documents, provided that such Encumbrances are only in
respect of the property subject to, and secure only, the respective
lease;
(i) Rights of consignors of goods to a Loan Party as
consignee;
(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 10.10(a);
(k) Encumbrances created by this Agreement or the other Loan
Documents;
33
(l) Encumbrances (i) listed on EXHIBIT 4.6(a), annexed hereto,
or (ii) arising out of the refinancing, extension, renewal or refunding
of any Indebtedness secured by any such Encumbrances, provided that the
principal amount of such Indebtedness is not increased and such
Indebtedness is not secured by any additional assets;
(m) Encumbrances which are placed upon Equipment or
improvements to real property (including the associated real property)
used in the ordinary course of business of a Loan Party or any
Subsidiary (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 Term Loans.
The inclusion of the foregoing as "Permitted Encumbrances" shall not
limit or impair the right of the Collateral Agents to impose Reserves
on account thereof in accordance with the provisions of this Agreement.
"PERMITTED INDEBTEDNESS": Any of the following:
(a) Indebtedness incurred under this Agreement and
the other Loan
34
Documents including any Indebtedness on account of the
Revolving Credit.
(b) Any Indebtedness incurred under the Term Loans
(including, without limitation, any indemnity required
thereunder in connection with the securitization of the Term
Loans).
(c) Indebtedness on account of Equipment or
improvements to real property acquired in compliance with the
requirements of subparagraph (m) of the definition of
Permitted Encumbrances, the incurrence of which would not
otherwise be prohibited by this Agreement; PROVIDED THAT such
Indebtedness shall not exceed $10,000,000 in the aggregate at
any time outstanding;
(d) (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.
(e) Indebtedness of the Loan Parties and any
Subsidiary under (i) the Hedge Agreement between the Lead
Borrower and NCB dated March 28, 2000, and (ii) Hedge
Agreements other than for speculative purposes with any
Revolving Credit Lender or an Affiliate of a Revolving Credit
Lender to which the agents under the Term Loans have consented
in accordance with agreements evidencing the Term Loans.
(f) The Indebtedness listed on EXHIBIT 4.7, annexed
hereto;
(h) Indebtedness to sellers in connection with
Permitted Acquisitions;
(i) Intercompany indebtedness between and among the
Lead Borrower and the other Loan Parties;
35
(j) Indebtedness to creditors of the former Filene's
incurred in connection with the acquisition of Filene's, such
Indebtedness not to exceed $6,000,000;
(k) Indebtedness with respect to indemnities,
warranties, statutory obligations, and surety, appeal and
supersedeas bonds incurred in the ordinary course of business;
(l) Indebtedness in respect of overdraft protections
and otherwise in connection with deposit accounts; and
(m) 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.
"PERMITTED INVESTMENTS": 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
36
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.;
(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 the
provisions of Section 4.25 hereof have been complied with
respect to such Subsidiary;
(i) to the extent not permitted by the foregoing
clauses, existing investments in any Subsidiaries (and any
increases thereof attributable to increases in retained
earnings);
(j) to the extent not permitted by the foregoing
clauses, the existing investments described on EXHIBIT 1.6
hereto;
(k) investments of a Loan Party and any Subsidiary in
Hedge Agreements other than for speculative purposes, to which
the agents under the Term Loans have consented in accordance
with agreements evidencing the Term Loans;
(l) investments of any Person which are outstanding
at the time such Person becomes a Subsidiary of a Loan Party
as a result of Permitted Acquisition, but not any increase in
the amount thereof; 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
37
otherwise permitted by the foregoing clauses, made after the
Closing 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 4.21(c) and (d)) does not
exceed $6,000,000.
"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 Agents 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 $17,500,000; (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 Agents) 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 and each type of property described in Section 8.1 hereof.
"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.
38
(b) Asset Valuation Services.
"RELEASE": Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, seeping,
migrating, dumping or disposing of any Hazardous Material
(including the abandonment or discarding of barrels,
containers and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment,
including, without limitation, the movement of Hazardous
Materials through or in the ambient air, soil, surface or
ground water, or property.
"REGISTER": Is defined in Section 16.2(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": $350,000,000.00.
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT 2.23,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"REVOLVING CREDIT EARLY TERMINATION FEE": Is defined in Section 2.15.
"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)).
39
"REVOLVING CREDIT NOTE": Is defined in Section 2.10.
"REVOLVING CREDIT COMMITMENT PERCENTAGE": As set forth on EXHIBIT 2.23,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"SENIOR 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 Closing
Date and as amended and restated June 11, 2002, in the present
principal amount of $75,000,000.00.
"SHONAC": Has the meaning given that term in the Preamble hereto.
"SPECIFIED EVENT OF DEFAULT": An Event of Default arising under any of
the following sections of this Agreement:
(a) Section 10.1.
(b) Section 10.2.
(c) Section 10.3 (with respect to Sections 4.20,
4.21, 4.24, and Article 7 only).
(d) Section 10.5 (with respect to a breach of
Sections 4.6 and 4.29 only).
(e) Section 10.6.
(f) Section 10.11.
(g) Section 10.12.
(h) Section 10.15.
"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
40
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": NCCF.
"SWINGLINE LOAN CEILING": $25,000,000.00 (subject to increase as
provided in Section 15.4(e)).
"SWINGLINE LOANS": Defined in Section 2.8.
"TERM LOANS": (i) The CCM Term Loan Facilities, and (ii) the Senior
Convertible Facility.
"TERM LOAN SENIOR COLLATERAL": All assets of the Borrowers other than
Accounts, Inventory, Chattel Paper, Instruments, and Documents
related to any Accounts or Inventory, Payment Intangibles,
marketable securities, licensed department agreements,
Intercompany Notes, Collection Accounts, DDAs, and credit card
proceeds, and books and records relating to the foregoing.
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10.12, below; or
(c) 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 10.12,
below; or (d) that 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
17.1), 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 New York.
"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).
41
"UNDERWRITING FEE": Is defined in Section 2.13.
"UNRESTRICTED SUBSIDIARY": Those Subsidiaries of the Lead Borrower
described on EXHIBIT 1.5 hereto.
"UNUSED LINE FEE": As defined in Section 2.14.
"VALUE CITY": Has the meaning given that term in the Preamble hereto.
"VALUE CITY BUSINESS": The Borrowers' business other than the
DSW/Shonac Business and the Filene's Business.
"VALUE CITY ENTITIES": Collectively, Value City, Gramex, VCLP, VC
Michigan, GBR, and VCM.
"VC AVAILABILITY": The lesser of:
(a) the result of the following:
(i) The lesser of
(A) The Revolving Credit Ceiling
or
(B) The VC Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account attributable to
Revolving Credit Loans made to the
Value City Entities.
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/Cs and
Banker's Acceptances issued for the
account of the Value City Entities.
Minus
(iv) The aggregate of the Availability
Reserves attributable to the Value
City Entities.
or
(b) Availability.
"VC BORROWING BASE": The aggregate of the following:
(a) The face amount of Eligible Credit Card Receivables
of the Value
42
City Entities multiplied by the Credit Card Advance Rate.
Plus
(b) The lesser of (a) the Cost of Eligible Inventory
(net of Inventory Reserves) of the Value City Entities
multiplied by the Inventory Advance Rate or (b) the Appraised
Inventory Percentage of the Appraised Inventory Liquidation
Value of the Inventory of the Value City Entities.
"VCLP": Has the meaning given that term in the Preamble hereto.
"VCM": Has the meaning given that term in the Preamble hereto.
"VC MICHIGAN": Has the meaning given that term in the Preamble hereto.
ARTICLE 2 - THE REVOLVING CREDIT:
2.1. ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a revolving
line of credit (the "REVOLVING CREDIT") in the Borrowers' favor pursuant to
which each Revolving Credit Lender, subject to, and in accordance with, this
Agreement, acting through the Administrative Agent, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made (i) with respect to DSW and Shonac, with
reference to the DSW/Shonac Borrowing Base and shall be subject to DSW/Shonac
Availability, (ii) with respect to Filene's, with reference to the Filene's
Borrowing Base and shall be subject to Filene's Availability, and (iii) with
respect to the Value City Entities, with reference to the VC Borrowing Base and
shall be subject to VC Availability, and (iv) with respect to all Borrowers,
with reference to Availability. The Borrowing Base, the DSW/Shonac Borrowing
Base, the Filene's Borrowing Base, the VC Borrowing Base, Availability,
DSW/Shonac Availability, Filene's Availability and VC Availability shall be
determined by the Administrative Agent by reference to Borrowing Base
Certificates furnished as provided in Section 5.4, below, and shall be subject
to the following:
(i) Such determination shall take into account such
Reserves as the Collateral Agents 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.
43
(c) The commitment of each Revolving Credit Lender to provide
such loans, advances, and financial accommodations is subject to Section 2.23.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely to repay the Borrowers' existing lines of credit due to
NCB, as agent, and to Schottenstein Stores Corporation, and 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) 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
12.3(a) (which relates to each Revolving Credit Lender's making amounts
available to the Administrative Agent) and 15.3(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 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,
44
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 (i.e.
DSW/Shonac, Filene's or the Value City Entities, as applicable), (ii) the amount
of the proposed borrowing and the date thereof (which shall be a Business Day)
and (iii) whether the borrowing then being requested is to be a borrowing of
Base Margin Loans or Eurodollar Loans and, if Eurodollar 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
Eurodollar 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
Eurodollar Loan, shall not be less than $250,000 and in increments of
$10,000 in excess of such minimum.
(ii) If such Revolving Credit Loan is to be, or is to
be continued as, or converted to, a Eurodollar Loan: By 2:00 p.m. three
(3) Eurodollar Business Days before the commencement of any new
Interest Period or the end of the then applicable Interest Period.
Eurodollar Loans and conversions to Eurodollar Loans shall each be not
less than
45
$3,000,000 and in increments of $1,000,000 in excess of such minimum.
(iii) Any Eurodollar 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
Eurodollar Loan.
(iv) Eurodollar Loans may not be converted or
continued as Eurodollar 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 Eurodollar 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
2.18.
(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.
(iii) Unless accompanied by a written Certificate of
the Lead Borrower's President or its Chief Financial Officer describing
(in reasonable detail) the
46
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 Eurodollar Loan or to convert any Base Margin Loan to a Eurodollar Loan.
2.7 MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the Operating Account
of the applicable Division. The proceeds of any Revolving Credit Loan shall be
made available before 3:00 p.m. on the date requested in accordance with Section
2.5 hereof.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the Administrative
Agent and the Revolving Credit Lenders for the amount thereof immediately) at
the following:
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance with the
Lead Borrower's instructions (if such loan or advance is of funds
requested by the Lead Borrower).
(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(c) Absent gross negligence, bad faith or willful misconduct,
there shall not be any recourse to or liability of the Administrative Agent or
any Revolving Credit Lender, on account of:
(i) Any delay in the making of any loan or advance
requested under the Revolving Credit.
47
(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)
as to all Borrowers, the SwingLine Loan Ceiling, or (ii) as to any Division,
DSW/Shonac Availability, Filene's Availability, or VC Availability, as
applicable. The SwingLine Lender shall not make a SwingLine Loan if the
SwingLine Lender has received notice from the Administrative Agent that the
Administrative Agent has suspended, or the Administrative Agent has received
written notice from the SuperMajority Lenders instructing the Administrative
Agent to suspend, the Revolving Credit in accordance with the terms hereof.
Absent such notification, the SwingLine Lender (x) shall not otherwise be
required to determine whether the conditions precedent to such SwingLine Loan
have been satisfied or whether the requested borrowing would cause Availability,
DSW/Shonac Availability, Filene's Availability or VC Availability, as
applicable, to be exceeded, and (y) shall be entitled in all cases to have each
Revolving Credit Lender make Revolving Credit Loans in settlement of such
SwingLine Loans in accordance with the provisions of Section 12.2 hereof.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin Loans 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".
48
(e) SwingLine Loans shall be subject to periodic settlement
with the Revolving Credit Lenders as provided in this Agreement.
2.9. THE LOAN ACCOUNT.
(a) An account ("LOAN ACCOUNT") shall be opened on the books
of the Administrative Agent in which a record shall be kept of all loans and
advances made under the Revolving Credit (including, without limitation,
Swingline Loans). The Loan Account shall also contain separate entries for loans
and advances made to each Division.
(b) The Administrative Agent shall also keep a record (either
in the Loan Account or elsewhere, as the Administrative Agent may from time to
time elect) of all interest, fees, service charges, costs, expenses, and other
debits owed to each Agent and each Revolving Credit Lender on account of the
Liabilities from each Borrower and from each Division and of all credits against
such amounts so owed.
(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
49
accepted by each Borrower and shall, absent manifest error, be conclusively
binding upon each Borrower unless the Lead Borrower provides the Administrative
Agent with written objection thereto within twenty (20) days from the receipt by
the Lead Borrower of such statement, which written objection shall indicate,
with particularity, the reason for such objection. The Loan Account and the
Administrative Agent's books and records concerning the loan arrangement
contemplated herein and the Liabilities shall be prima facie evidence and proof
of the items described therein.
2.10. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of
EXHIBIT 2.10, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. Upon
receipt of an affidavit of an officer of, and a customary indemnity from, a
Revolving Credit Lender as to the loss, theft, destruction or mutilation of the
Revolving Credit Note, the Borrowers will issue in lieu thereof a replacement
Revolving Credit Note in the same principal amount thereof and of like tenor.
2.11. PAYMENT OF THE LOAN ACCOUNT.
(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 7.4, during the continuance of a Cash
Control Event, the Borrowers shall repay the Revolving Credit:
(i) subject to the terms of the Intercreditor
Agreement, in an amount equal to the proceeds realized from
the sale, refinancing, or other disposition of, or realization
upon, any Collateral; and
(ii) in accordance with the provisions of Article 7
hereof.
All amounts prepaid under this Section 2.11(c) 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
50
payments (if any), pursuant to Sections 2.11(a) and 2.11(b) against Eurodollar
Loans then outstanding in such manner as results in the least cost to the
Borrowers, but shall not have any affirmative obligation to do so nor liability
on account of the Administrative Agent's failure to have done so. In no event
shall action or inaction taken by the Administrative Agent excuse any Borrower
from any indemnification obligation under Section 2.11(f).
(f) The Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the Administrative Agent and each
Revolving Credit Lender harmless from and against any loss, cost or expense
(including loss of anticipated profits and amounts payable by the Administrative
Agent or such Revolving Credit Lender on account of "breakage fees" (so-called))
which the Administrative Agent or such Revolving Credit Lender may sustain or
incur (including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(i) Failure by any Borrower to pay any of the
principal amount of or any interest on any Eurodollar 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 Eurodollar 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 Eurodollar 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 (i) all Early Termination Fees payable
on the amount of the Revolving Credit Dollar Commitments so terminated, and (ii)
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.
51
(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 Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar
Loan shall bear interest at the applicable Eurodollar 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
Eurodollar Rate as specified from time to time by the Lead Borrower by notice to
the Administrative Agent.
(d) For ease of reference and administration, each part of the
Loan Account which bears interest at the same rate of interest and for the same
Interest Period is referred to herein as if it were a separate "Revolving Credit
Loan".
(e) The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition to interest at
the Base Margin Rate, there are more than twelve (12) Interest Periods for
Eurodollar Loans in the aggregate for all Borrowers applicable to the Revolving
Credit Loans at any one time.
(f) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan to its Division in arrears as follows:
(i) On the applicable Interest Payment Date for that
Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(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 Eurodollar 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"
and the "COLLATERAL MONITORING FEE" at the times and in the amounts as set forth
the Fee Letter.
52
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 0.375% 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 for its
respective Division and the undrawn Stated Amount of L/Cs and Banker's
Acceptances outstanding during the relevant period for its respective Division.
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. EARLY TERMINATION FEE.
(a) In the event that the Termination Date occurs, for any
reason, prior to the second anniversary of the Closing Date, the Borrowers shall
pay to the Administrative Agent , for the benefit of the Revolving Credit
Lenders, the "REVOLVING CREDIT EARLY TERMINATION FEE" (so referred to herein) in
an amount equal to (i) one percent (1%) of the Revolving Credit Dollar
Commitments in effect on the date of this Agreement, if the Termination Date
occurs before the first anniversary of the Closing Date, or (ii) one half of one
percent (0.50%) of the Revolving Credit Dollar Commitments in effect on the date
of this Agreement, if the Termination Date occurs on or after the first
anniversary of the Closing Date and before the second anniversary of the Closing
Date. There shall be no Early Termination Fee payable if the Termination Date
occurs on or after the second anniversary of the Closing Date.
(b) All parties to this Agreement agree and acknowledge that
the Revolving Credit Lenders will have suffered damages on account of the early
termination of the Revolving Credit and that, in view of the difficulty in
ascertaining the amount of such damages, that the Early Termination Fee
constitutes reasonable compensation and liquidated damages to compensate
Revolving Credit Lenders on account thereof.
2.16. CONCERNING FEES. The Borrowers shall not be entitled to any
credit, rebate or repayment of any fee earned by the Administrative Agent or any
Revolving Credit Lender pursuant to this Agreement or any Loan Document
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Revolving Credit Lender's respective
obligation to make loans and advances hereunder.
2.17. 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.
53
(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'.
2.18. PROCEDURES FOR ISSUANCE OF L/CS AND BANKER'S ACCEPTANCES.
(a) The Lead Borrower may request, either directly or, as
provided in Section 2.22(a), through Value City Imports (a division of
Schottenstein Stores Corporation), that the Administrative Agent cause the
issuance by the Issuer 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). 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.
(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 Closing 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 One Hundred
Million Dollars ($100,000,000);
(ii) The expiry of the L/C or Banker's Acceptance is
not later than the earlier of thirty (30) days prior to the Maturity
Date or the following:
(A) Standby'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
54
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) Documentary's: Ninety (90) days from
issuance.
(C) 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 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
55
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.
2.19. FEES FOR L/CS AND BANKER'S ACCEPTANCES.
(a) The applicable Borrowers shall pay the Administrative
Agent, for the account of the Revolving Credit Lenders, on the first day of each
calendar month, in arrears, a fee (each, an "L/C Fee") equal to the following
per annum percentages of the average Stated Amount of the following categories
of L/Cs outstanding during the subject month for such Borrowers' Division:
(i) Standby Letters of Credit: The Applicable
Margin for Eurodollar Loans.
(ii) Documentary Letters of Credit: The Applicable
Margin for Eurodollar Loans minus 0.50%.
(iii) After the occurrence and during the
continuance of an Event of Default, at the option of the Administrative Agent
(or at the instruction of the SuperMajority Lenders), the L/C Fee shall be
increased for any L/Cs which from time to time are not cash collateralized in
the amounts required in accordance with the provisions of this Agreement by an
amount equal to two percent (2%) per annum.
(b) The applicable Borrowers shall pay the Administrative
Agent, for the account of the Revolving Credit Lenders, on the first day of each
month, in arrears, a fee (each, a "Banker's Acceptance Fee") equal to the
Applicable Margin for Eurodollar Loans minus 0.50%
56
of the average Stated Amount of the Banker's Acceptances outstanding during the
subject month for such Borrowers' Division. After the occurrence and during the
continuance of an Event of Default, at the option of the Administrative Agent
(or at the instruction of the SuperMajority Lenders), the Banker's Acceptance
Fee shall be increased for any Banker's Acceptances which from time to time are
not cash collateralized in the amounts required in accordance with the
provisions of this Agreement by an amount equal to two percent (2%) per annum.
(c) In addition to the fees to be paid as provided in
Subsections 2.19(a) and 2.19(b), above, the Borrowers shall pay to the
Administrative Agent (or to the Issuer, if so requested by Administrative
Agent), on demand, all issuance, processing, negotiation, amendment, and
administrative fees and other amounts charged by the Issuer on account of, or in
respect to, any L/C or Banker's Acceptance issued for its Division.
(d) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against letters of credit
heretofore or hereafter issued by any Issuer or with respect to which
any Revolving Credit Lender or any Issuer has an obligation to lend to
fund drawings under any L/C or any Banker's Acceptance; or
(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 2.19(d)(i) or 2.19(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 2.19(d)(i) or
2.19(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.
2.20. CONCERNING L/C'S AND BANKER'S ACCEPTANCES.
57
(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
58
statute or rule of law or contract.
(g) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Lead Borrower,
documentary L/Cs will be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce, Publication No. 500, and
standby L/Cs will be governed by International Standby Practices ISP98 (adopted
by the International Chamber of Commerce on April 6, 1998) and any respective
subsequent revisions thereof.
(h) The obligations of the Borrowers under this Agreement with
respect to L/Cs and Banker's Acceptances are absolute, unconditional, and
irrevocable and shall be performed strictly in accordance with the terms hereof
under all circumstances, whatsoever including, without limitation, the
following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this Agreement,
any L/C, any Banker's Acceptance, or any other agreement or instrument
relating thereto.
(ii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C or any Banker's
Acceptance.
(iii) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time against the
beneficiary of any L/C or Banker's Acceptance.
(iv) Any good faith honoring of a drawing under any
L/C or Banker's Acceptance, which drawing possibly could have been
dishonored based upon a strict construction of the terms of the L/C or
Banker's Acceptance.
2.21. 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 Eurodollar Loans.
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Eurodollar 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.
59
(iii) The indices on which the interest rates for
Eurodollar Loans are based shall no longer represent the effective cost
to the Administrative Agent or any Revolving Credit Lender for U.S.
dollar deposits in the interbank market for deposits in which it
regularly participates.
(b) In the event that the Administrative Agent advises the
Lead Borrower of an occurrence described in Section 2.21(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 Eurodollar Loan, the time for
action with respect to which has not occurred prior to the
Administrative Agent's having given notice pursuant to Section 2.21(a),
shall be deemed at the option of the Administrative Agent to not having
been given.
2.22. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints
the Lead Borrower as that Borrower's agent to obtain loans and advances under
the Revolving Credit, the proceeds of which shall be available to each Borrower
for those uses as those set forth in Section 2.1(d) and to request the issuance
of L/Cs and Banker's Acceptances for such Borrower. The Value City Entities and
Filene's further irrevocably designate and appoint Value City Imports (a
division of Schottenstein Stores Corporation) as their agent to request the
issuance of L/Cs and Banker's Acceptances for such Borrower. 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, its Division under the Revolving Credit
as if made directly by the Revolving Credit Lenders to that Borrower,
notwithstanding the manner by which such loans and advances are recorded on the
books and records of the Lead Borrower and of any Borrower.
(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
60
Credit which is requested by the Lead Borrower shall be deposited into
the Operating Account of the applicable Division. Neither the Administrative
Agent nor any Revolving Credit Lender shall have any obligation to see to the
application of such proceeds.
2.23. REVOLVING CREDIT LENDERS' COMMITMENTS
(a) Subject to Section 16.1 (which provides for assignments
and assumptions of commitments), each Revolving Credit Lender's "REVOLVING
CREDIT COMMITMENT PERCENTAGE", and "REVOLVING CREDIT DOLLAR COMMITMENT"
(respectively so referred to herein) is set forth on EXHIBIT 2.23, annexed
hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan under the Revolving Credit in excess of either of the following:
(i) That Revolving Credit Lender's Revolving
Credit Commitment Percentage of the subject loan or advance or of
Availability, DSW/Shonac Availability, Filene's Availability or VC
Availability, as applicable.
(ii) Any loan which, when aggregated with
all other loans made by that Revolving Credit Lender under the
Revolving Credit and then outstanding, exceed that Revolving Credit
Lender's Revolving Credit Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(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; or (iii) to any Eligible
Assignee (A) in connection with the initial syndication of the loan arrangement
and (B)
61
until a successful syndication as determined by the Syndication Agent
and the Co-Lead Arrangers has occurred.
(e) Upon written notice given the Lead Borrower from time to
time by the Administrative Agent, of any assignment or allocation referenced in
Section 2.23(d):
(i) Each Borrower shall execute one or more
replacement Revolving Credit Notes to reflect such changed Revolving
Credit Dollar Commitments, Revolving Credit Commitment Percentages, and
identities and shall deliver such replacement Revolving Credit Notes to
the Administrative Agent (which promptly thereafter shall deliver to
the Lead Borrower the Revolving Credit Notes so replaced) provided
however, in the event that a Revolving Credit Note is to be exchanged
following its acceleration or the entry of an order for relief under
the Bankruptcy Code with respect to any Borrower, the Administrative
Agent, in lieu of causing the Borrowers to execute one or more new
Revolving Credit Notes, may issue the Administrative Agent's
Certificate confirming the resulting Revolving Credit Dollar
Commitments and Revolving Credit Percentage Commitments.
(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.
2.24 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 Eurodollar 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.
62
(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
3.19, shall have been satisfied:
3.1. CORPORATE DUE DILIGENCE.
(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
63
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 One Hundred
Fifteen Million Dollars ($115,000,000.00).
3.7. TERM LOANS; INTERCREDITOR AGREEMENT. The Term Loans shall be fully
funded on the Closing Date. All documentation entered into with respect to the
Term Loans shall be satisfactory to the Co-Lead Arrangers, in their sole
reasonable, good faith discretion. The Agent shall have entered into the
Intercreditor Agreement on terms reasonably satisfactory to the Co-Lead
Arrangers.
3.8 REPAYMENT OF EXISTING INDEBTEDNESS. The Administrative Agent shall
have received a payoff letter from the Borrowers' existing lenders (including,
without limitation, NCB, as agent, and Schottenstein Stores Corporation, but
excluding the Senior Convertible Facility) as well as a tender of releases and
discharges of all collateral security for the Borrowers' existing credit
facilities, each in form and substance satisfactory to the Administrative Agent.
Such Indebtedness shall be repaid contemporaneously with the making of the first
Revolving Credit Loan hereunder.
3.9 CONSENTS. All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to the
Administrative Agent.
3.10 APPRAISALS AND COMMERCIAL FINANCE EXAMINATIONS. The Collateral
Agents shall have received (a) appraisals of the Borrowers' Inventory by a third
party appraiser acceptable to the Collateral Agents, and (b) a commercial
finance examination with respect to the Lead Borrower and its Subsidiaries, each
in form and substance satisfactory to the Collateral Agents.
3.11 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.
3.12 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.
3.13 PERFECTION OF ENCUMBRANCES.
64
(a) The Collateral Agents shall have received results of
searches or other evidence reasonably satisfactory to the Collateral Agents (in
each case dated as of a date reasonably satisfactory to the Collateral Agents)
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 Agents are being tendered
concurrently with such extension of credit.
(b) The Collateral Agents shall have received all documents
and instruments, including Uniform Commercial Code financing statements,
required by law or reasonably requested by the Collateral Agents to be filed,
registered or recorded to create or perfect the first priority Encumbrances
intended to be created under the Loan Documents (subject to Permitted
Encumbrances having priority over the Encumbrance of the Collateral Agents
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 Agents.
3.14. 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 Co-Lead Arrangers in connection with the establishment of
the credit facility contemplated hereby (including the fees and expenses of
counsel to the Agent and the Co-Lead Arrangers) shall have been paid in full.
3.15 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 7.1(b), 7.2(b), and
7.3(a).
3.16 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.
3.17. NO LOAN PARTY IN DEFAULT. No Loan Party is in Default.
3.18. 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 March, 2002 financial
information delivered to the Agent.
3.19 CERTAIN CHANGES.
(a) No material changes in governmental regulations or
policies affecting the Loan Parties, the Agents, the Co-Lead Arrangers or any
Revolving Credit Lender involved in this
65
transaction shall have occurred prior to the Closing Date.
(b) There shall not have occurred prior to the Closing 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.
3.20. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 3 are for the sole benefit of the Agent and each Revolving Credit Lender
and may be waived by the Administrative Agent in whole or in part without
prejudice to the Agent or any Revolving Credit Lender.
No document shall be deemed delivered to the 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, COVENANTS 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, warranties, and covenants made by any Loan Party in any other
Loan Document, make those representations, warranties, and covenants included in
this Agreement.
4.1. 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.
4.2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Loan Party presently is and hereafter shall remain in
good standing as a corporation or other entity under the laws of the State in
which it is organized, and is 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) 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 Closing Date, is listed on
EXHIBIT 4.2, annexed hereto.
(c) No Loan Party shall change its State of organization; any
organizational
66
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.
(d) 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 and will hereafter retain all requisite power to perform all Liabilities.
(e) 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, and will 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.
(f) Except where the failure to observe, maintain, or perform
the following is not reasonably likely to have a Material Adverse Effect:
(i) All customary formalities regarding the
corporate existence of each Loan Party will be observed.
(ii) In accordance with its present practices, each
Loan Party will accurately maintain its organizational documents separate from
those of any Affiliate of such Loan Party and any other Person.
(g) 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.
4.3. TRADE NAMES.
(a) EXHIBIT 4.3, annexed hereto, is a listing as of the
Closing Date, of:
67
(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.
(b) 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.
4.4. 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.
4.5. LOCATIONS.
(a) The Collateral, and the books, records, and papers of the
Loan Parties pertaining thereto, are kept and maintained and will be kept and
maintained hereafter solely (i) at those locations which are listed on EXHIBIT
4.5, 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 4.5(a) except for the following purposes:
68
(i) To accomplish sales of Inventory in the ordinary
course of business.
(ii) To move Inventory or other Collateral from
one such location to another such location.
(iii) To utilize such of the Collateral as is removed
from such locations in the ordinary course of business.
(c) No Loan Party will:
(i) Alter, modify, or amend any Lease in a manner
which is reasonably likely to have a Material Adverse Effect.
(ii) Other than leased departments and similar
arrangements with third parties, commit to open or close, or open or
close, any location at which any Loan Party maintains, offers for
sales, or stores any of the Collateral, in any fiscal year such that
the actual number of stores of all Borrowers in the aggregate (A)
exceeds by ten (10) the number of stores reflected on the Business Plan
for such fiscal year, or (B) is more than ten (10) fewer than the
number of stores reflected on the Business Plan for such fiscal year
(without giving effect to any new stores which the Business Plan
projected to be opened or closed, but which have not in fact been
opened or closed)
(d) No tangible personal property of any Loan Party is in the
care or custody of any third party or stored or entrusted with a bailee or other
third party and none shall hereafter be placed under such care, custody,
storage, or entrustment, except (i) as otherwise disclosed pursuant to, or
permitted by, this Section 4.5, 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.
4.6. ENCUMBRANCES.
(a) The Loan Parties are, and shall hereafter remain, the
owners of the Collateral free and clear of all Encumbrances other than any
Permitted Encumbrance.
(b) No Loan Party has, and none shall have, possession of any
property on consignment to that Loan Party except (i) as of the Closing Date,
those listed on EXHIBIT 4.6(b), annexed hereto and (ii) those as to which the
Loan Parties notify the Administrative Agent in accordance with the provisions
of Section 5.3 hereof.
4.7. INDEBTEDNESS. The Loan Parties do not and shall not hereafter
have any Indebtedness other than:
(a) Permitted Indebtedness; and
69
(b) A Loan Party's guaranty of Permitted Indebtedness of
another Loan Party.
4.8. INSURANCE.
(a) EXHIBIT 4.8, 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 Closing 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. The Lead Borrower shall provide the Administrative Agent with prompt
written notice of any change in the insurance policies owned by the Loan Parties
or under which any Loan Party is the named insured from those in effect as of
the Closing Date.
(b) The Loan Parties shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by the companies presently providing such
insurance, or such other companies as may be selected by the Lead Borrower and
are satisfactory to the Agent (whose consent shall not be unreasonably
withheld).
(c) All insurance carried by the Loan Parties shall provide
for a minimum of thirty (30) days' prior written notice of cancellation to the
Administrative Agent and all such insurance which covers the Collateral shall
(i) Include an endorsement in favor of the Collateral
Agents, which endorsement shall provide that the insurance, to the
extent of the Collateral Agents' interest therein, shall not be
impaired or invalidated, in whole or in part, by reason of any act or
neglect of any Loan Party or by the failure of any Loan Party to comply
with any warranty or condition of the policy.
(ii) Not include an endorsement in favor of any other
Person (other than the agents for the holders of the Term Loans, 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 Agents from
time to time, upon request of the Collateral Agents, with certificates or other
evidence satisfactory to the Collateral Agents 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.
70
4.9. 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 Closing Date is listed on EXHIBIT 4.9, 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. 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 Closing Date, shall, cause the
licensors and licensees to enter into such tri-party or estoppel agreements as
any Agent may reasonably request.
4.10. LEASES. EXHIBIT 4.10, annexed hereto, is a schedule of all
presently effective Capital Leases as of the Closing Date. (Exhibit 4.5 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.
4.11. REQUIREMENTS OF LAW. Each Loan Party is and will 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. 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.
4.12. LABOR RELATIONS.
(a) As of the Closing Date, no Loan Party is a party to any
collective bargaining or other labor contract except as listed on EXHIBIT 4.12,
annexed hereto. 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 Closing Date.
(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) Any proceeding against or affecting any Loan
Party relating to the alleged violation of any Applicable Law
pertaining to labor relations or before National
71
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 4.12(d)(i) which is reasonably likely to have a
Material Adverse Effect.
4.13. MAINTAIN PROPERTIES. The Loan Parties shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory in compliance with this
Agreement.
72
(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.
4.14. 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 4.14:
(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 and hereafter 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
73
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.
4.15. 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). 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.
4.16. 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.
4.17.ERISA.
(a) 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.
74
(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.
(b) Neither any Loan Party nor any ERISA Affiliate shall ever
engage in any action of the type described in Section 4.17(a), 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.
4.18. HAZARDOUS MATERIALS.
(a) Except as set forth on EXHIBIT 4.18(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
75
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.
(b) 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
Agents any documentation of such compliance which the Collateral Agents may
reasonably request; (iii) provide the Collateral Agents 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 Agents 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.
(c) 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
76
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.
4.19. LITIGATION. Except as described in EXHIBIT 4.19, 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 Closing Date, no
Loan Party is the holder of any Commercial Tort Claim other than as described on
EXHIBIT 4.19.
4.20. DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Loan Party
shall:
(a) Pay any cash dividend or make any other distribution in
respect of any class of that Loan Party's capital stock, (other than dividends
payable to another Loan Party or payable solely in the capital stock of such
paying Loan Party).
(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
Closing Date does not exceed $1,500,000; and
(iii) after giving effect to the making any such
cash payment, the aggregate amount so expended for such purposes in any fiscal
year of the Borrowers does not exceed $500,000.
(c) Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any Person other than a Permitted
Investment, or a Permitted Acquisition.
(d) Merge or consolidate or be merged or consolidated with or
into any other corporation or other entity, other than in connection with a
Permitted Acquisition (provided that a Loan Party is the surviving, continuing
or resulting corporation) or of one Loan Party into another Loan Party, or (ii)
consolidate any Loan Party's operations with those of any other Person other
than with another Loan Party; provided that, if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the following
shall be permitted:
(i) With the prior written consent of the agents
under the Term Loans, 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,
77
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 conditions contained in the definition
of the term Permitted Acquisition are satisfied;
(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.
4.21. 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
4.21(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 4.21(c) and investments
permitted under clause (m) of the definition of Permitted Investments) in the
aggregate outstanding to all employees at any one time;
78
(e) To the extent not permitted by the foregoing clauses, the
existing loans and advances, described on EXHIBIT 4.21(e) hereto;
(f) Intercompany loans (i) existing on the date hereof and
described on EXHIBIT 4.21(f) hereof, (ii) hereafter made amongst any Loan
Parties within the same Division, (iii) hereafter made by DSW, Shonac, or
Filene's to Value City, and (iv) hereafter made by Value City to any other Loan
Party, PROVIDED THAT (x) such intercompany loans shall be evidenced by such
documentation, as the Collateral Agents may require, and (y) after the
occurrence of a Cash Control Event, (A) no such intercompany loans may be made
under clause (iii) hereof unless there is no VC Availability immediately prior
to the making of such loan, and (B) no such intercompany loans may be made under
clause (iv) hereof to (1) Filene's unless there is no Filene's Availability
immediately prior to the making of such loan, or (2) DSW and/or Shonac unless
there is no DSW/Shonac Availability immediately prior to the making of such
loan.
(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 Closing Date, which loans
and advances have been approved in advance by the Administrative Agent.
4.22. 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 4.22.
4.23. 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
79
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 5.10, 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.
4.24. 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 4.21, above, no
Loan Party shall make any payment, nor give any value to any Affiliate except
for leases, goods and services with such Affiliate for a price and on terms
which shall be in the ordinary course of business at prices and on terms and
conditions no less favorable to that Loan Party than those which would have been
charged and imposed in an arms length transaction from unrelated third parties,
except (i) sales of goods to an Affiliate for use or distribution outside of the
United States of America which complies with the any applicable legal
requirements of the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended from time to time, PROVIDED THAT such sales shall not exceed
$500,000 in the aggregate in any fiscal year of the Borrowers, (ii) loans,
advances and other payments to officers and directors as part of their
compensation which are entered into in the ordinary course of business and which
are not otherwise prohibited under the Loan Documents, (iii) other dividends and
distributions to officers, directors and shareholders otherwise permitted under
this Agreement, or (iv) transactions between or among the Loan Parties not
prohibited hereunder and not involving any other Affiliate.
(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 Closing 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
80
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 4.24.
4.25 ADDITIONAL SUBSIDIARIES. If any additional Subsidiary is formed or
acquired after the Closing Date, the Lead Borrower will notify the Collateral
Agents thereof and (a) the Loan Parties will cause such Subsidiary to become a
Borrower or Facility Guarantor hereunder, as determined by the Collateral
Agents, 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 Agents 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.
4.26. FURTHER ASSURANCES.
(a) No Loan Party is the owner of, nor has it any interest in,
any property or asset which is not subject to a Collateral Interest in favor of
the Collateral Agents (subject only to Permitted Encumbrances) to secure the
Liabilities.
(b) No Loan Party will hereafter acquire any asset or any
interest in property which is not, immediately upon such acquisition, subject to
such a perfected Collateral Interest in favor of the Collateral Agents to secure
the Liabilities (subject only to Permitted Encumbrances).
(c) Each Loan Party shall execute and deliver to the
Collateral Agents such instruments, documents, and papers, and shall do all such
things from time to time hereafter as the Collateral Agents may reasonably
request to carry into effect the provisions and intent of this Agreement; to
protect and perfect the Collateral Agents' 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 Agents with
respect to the recordation and/or perfection of the Collateral Interests created
or contemplated herein.
(d) Each Loan Party hereby designates the Collateral Agents 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 Agents' Collateral Interests in the Collateral.
(e) This Agreement constitutes an authenticated record which
authorizes the Collateral Agents to file such financing statements as the
Collateral Agents determine as
81
appropriate to perfect or protect the Collateral Interests created by this
Agreement.
4.27. 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
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 now or
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. 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.
4.28. 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 Agents.
(b) Incurrence of Liabilities.
4.29. RESTRICTIONS ON PAYMENT OF TERM LOANS.
(a) The Term Loans may be paid only as follows:
(i)(A) Except as permitted pursuant to clause (i)(B)
hereof, interest and fees on the Term Loans may be paid in cash in the ordinary
course in accordance with the terms
82
of the documents evidencing the Term Loans as long as (A) no Specified Event of
Default has occurred and is continuing, and (B) Average Excess Availability for
the thirty (30) day period prior to the making of such payment is equal to or
greater than Thirty-Five Million Dollars ($35,000,000.00), plus the amount of
the proposed payment, and Excess Availability immediately after giving effect to
such payment is equal to or greater than Thirty-Five Million Dollars
($35,000,000.00). If such Excess Availability requirements are not satisfied, no
interest or fee payments may be made on the Term Loans in cash (i.e. partial
payments of interest or fees on the Term Loans in cash shall not be permitted).
(B) Notwithstanding the provisions of Section
4.29(a)(i)(A) hereof, the Borrowers may pay cash interest on the Term Loans
after the second anniversary of the Closing Date but only up to an amount equal
to fifty percent (50%) of the interest accruing from and after the second
anniversary of the Closing Date.
(ii) Subject to the terms of the Intercreditor
Agreement, principal on the Term Loans may be paid only as follows:
(A) In the case of the CCM Term Loan
Facilities only, from the net cash
proceeds of the Term Loan Senior
Collateral;
(B) Upon satisfaction of each of the
following conditions and only to the
extent that the following conditions
are not breached as a result of such
payment:
(I) The Administrative Agent's
receipt of the financial
statements required
pursuant to Section 5.7
hereto for the fiscal year
ending on or about January
31, 2003; and
(II) The Borrowers shall have
achieved at least 85% of
Consolidated EBITDA set
forth in the most receipt
forecasts furnished
pursuant to Section 5.10(b)
hereof for the twelve
months ending on the last
day of the month
immediately preceding such
payment; and
(III) After giving effect to such
payment, Excess
Availability shall be at
least $160,000,000, as
determined by the
Collateral Agents;
(IV) After giving effect to such
payment, pro forma
projected Excess
Availability for each of
the ninety (90) days
subsequent to the date of
such payment must be at
least $160,000,000, as
determined by the
Collateral Agents; and
(V) Prior to, at the time of,
and after giving effect to
83
such payment, no Specified
Event of Default then
exists; or
(C) On the scheduled maturity date of
the Term Loans (but not any
accelerated maturity date).
(iii) All payments on account of the Term Loans
shall first be applied to the CCM Term Loan Facilities prior to the application
to the Senior Convertible Facility.
(b) The Borrowers shall not hereafter effect or permit any
changes in or amendment to (i) the terms relating to the repayment of the Term
Loans, or (ii) except as provided in the Intercreditor Agreement, any of the
instruments, documents or agreements evidencing the Term Loans. If,
notwithstanding the foregoing, CCM, as agent under any Term Loan, hereafter
imposes any additional or more restrictive covenants (financial or otherwise) or
events of default with respect to the Term Loans (including by amendment or an
existing covenant or event of default, by waiver, consent or otherwise) than is
imposed on the Closing Date under this Agreement or any Loan Party grants to
CCM, as agent under any Term Loan, a new covenant or event of default that is
not contained in this Agreement as of the Closing Date, the Lead Borrower shall
promptly notify, and furnish a copy thereof to the Administrative Agent.
4.30 UNRESTRICTED SUBSIDIARIES. Each of the Unrestricted Subsidiaries
is inactive or in the process of being liquidated or dissolved. The Unrestricted
Subsidiaries shall not at any time have assets in excess of $500,000 in the
aggregate.
4.31 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 10.11 or 10.12 hereof. No Loan Party is contemplating the liquidation
of all or a major portion of such Loan Party's assets.
ARTICLE 5 FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
5.1. 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 5 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
84
Loan Parties at the close of, and the results of operations for, the period(s)
covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory for each Division, accurately and sufficiently
itemizing and describing the kinds, types, and quantities of Inventory and the
cost and selling prices thereof.
(d) At all times, retain (i) Deloitte and Touche, LLP, or such
other nationally recognized independent certified public accountants who are
reasonably satisfactory to Schottenstein Stores Corporation (as long as it
remains in Control of the Borrowers) or (ii) or such other independent certified
public accountants who are reasonably satisfactory to Schottenstein Stores
Corporation (as long as it remains in Control of the Borrowers) and the
Administrative Agent, and instruct such accountants, subject to the terms of
such accountants' internal policies, and subject to the confidentiality
provisions of this Agreement, to fully cooperate with, and be available to, the
Administrative Agent to discuss the Loan Parties' financial performance,
financial condition, operating results, controls, and such other matters, within
the scope of the retention of such accountants, as may be raised by the
Administrative Agent.
(e) Not change any Loan Party's fiscal year.
5.2. 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:
(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.
85
(c) Any Agent from time to time may designate one or more
representatives to exercise such Agent's rights under this Section 5.2 as fully
as if such Agent were doing so, PROVIDED THAT the Agent shall not designate a
Person which is in a Competitive Business.
5.3. 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 5.1(d)).
(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.
86
(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 Closing Date.
(xii) Any Loan Party's entering into a Capital Lease
after the Closing 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).
(iv) Provide the Administrative Agent, when received
by any Loan Party, with a copy of any management letter or similar
communications from any
87
independent accountant of any Loan Party.
5.4. 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 (in the form of EXHIBIT
5.4 annexed hereto, as such form may be revised from time to time by the
Administrative Agent) prepared separately for each Division and combined for all
Borrowers, and sales audit reports and flash collateral reports (each in such
form as may be specified from time to time by the Collateral Agents) prepared
separately for each Division and combined for all Borrowers. Such reports may be
sent to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission.
5.5. MONTHLY REPORTS. Monthly, the Lead Borrower shall provide the
Administrative Agent with those financial statements and reports described in
EXHIBIT 5.5, annexed hereto, at the times set forth in such exhibit.
5.6. 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 5.10(c) hereof) for
(i) the Loan Parties on a consolidated basis, (ii) the DSW/Shonac Business,
(iii) the Filene's Business, and (iv) the Value City Business, in each case for
the fiscal quarter most recently ended, and for the period from the beginning of
the Loan Parties' then current fiscal year through the end of the subject
quarter, with comparative information for the same period of the previous fiscal
year, which statement shall include a balance sheet, statement of operations,
and cash flows and comparisons for the corresponding quarter of the then
immediately previous year, as well as to the Loan Party's forecast.
(b) The officer's compliance certificate described in
Section 5.8.
5.7. 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
88
operations, statement of changes in shareholders' equity, and cash
flows.
(ii) A consolidating annual financial statement for
(i) the DSW/Shonac Business, (ii) the Filene's Business, and (iii) the
Value City Business which shall include (with comparative information
for the then prior fiscal year) a balance sheet and statement of
operations.
(iii) The officer's compliance certificate described
in Section 5.8.
(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.
5.8. 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.
89
5.9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Collateral Agents, at the reasonable expense of the
Loan Parties, may participate in and/or observe each scheduled physical count of
Inventory which is undertaken on behalf of any Loan Party.
(b) The Loan Parties, at their own expense, shall cause not
less than one (1) physical inventory of each of Division to be undertaken in
each twelve (12) month period during which this Agreement is in effect conducted
by such inventory takers as are reasonably satisfactory to the Collateral Agents
and following such methodology as may be reasonably satisfactory to the
Collateral Agents.
(i) The Lead Borrower, within forty-five (45) days
following the completion of such inventory, shall provide the
Collateral Agents 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 Agents, 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 Agents determine (each, at the expense of the Loan Parties).
(c) The Collateral Agents 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 Agents.
The Collateral Agents may conduct up to four (4) appraisals (in each event, at
the Loan Parties' expense) of the Collateral during any twelve (12) month period
during which this Agreement is in effect, but in their reasonable, good faith
discretion, during the occurrence and continuance of an Event of Default, may
undertake additional such appraisals (likewise at the Loan Party's expense)
during such period.
(d) The Collateral Agents may conduct up to four (4)
commercial finance field examinations (in each event, at the Loan Parties'
expense) of the Loan Parties' books and records during any twelve (12) month
period during which this Agreement is in effect, but in their reasonable, good
faith discretion during the occurrence and continuance of an Event of Default,
may undertake additional such audits (likewise at the Loan Party's expense)
during such period.
(e) Notwithstanding anything to the contrary herein contained,
upon the occurrence of any event or circumstance which is reasonably likely to
have a material adverse effect on the business, operations, property, assets, or
financial condition of any Division, the
90
limitations set forth in clauses (c) and (d) on the number of appraisals and
commercial finance examinations which the Agent may cause to be undertaken for
such Division only shall be inapplicable and the Agent may undertake as many
appraisals and commercial finance examinations of such Division with such
frequency as the Agent may deem reasonably appropriate and necessary (none of
which shall be included in determining the number of appraisals and commercial
finance examinations the Agent may undertake with respect to other Divisions).
(f) Pursuant to the terms of the Intercreditor Agreement, CCM,
as agent under the Term Loans, may require the Collateral Agents to undertake
appraisals of the Collateral by appraisers selected in accordance with the
provisions of Section 5.9(c) hereof. Any such appraisals undertaken by the
Collateral Agents at the requirement of any Term Lender shall not reduce the
number of appraisals permitted to be undertaken by the Collateral Agents under
Section 5.9(c) hereof. To the extent that the results of any such appraisal
reflect a reduction in the Appraised Inventory Liquidation Value, the Collateral
Agents may in their reasonable, good faith discretion reduce the Inventory
Advance Rates in a manner consistent with the reduced Appraised Inventory
Liquidation Value. In no event shall such Inventory Advance Rates be subject to
increase as a result of such appraisals, provided that nothing contained herein
shall impair the right of the Collateral Agents to increase the Inventory
Advance Rate as set forth in the definition of such term.
(g) The Collateral Agents from time to time may undertake
"mystery shopping" (so-called) visits to all or any of the Loan Parties'
business premises.
5.10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 5, 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
91
statement of cash flow, by month, each Consolidated (with consolidating
schedules by Division) and each prepared in conformity with GAAP and consistent
with the Loan Parties' then current accounting practices.
(d) When available the "Annual Budget", as approved by the
Lead Borrowers' Board of Directors, shall be provided to the Administrative
Agent. The Annual Budget shall be subject to the approval of the Administrative
Agent (whose approval shall not be unreasonably withheld) only if the Annual
Budget varies in a material way from the Business Plan for such fiscal year.
(e) Each Loan Party recognizes that all commercial finance
examinations, inventories, analysis, financial information, and other materials
which the Agent may obtain, develop, or receive with respect to the Loan Parties
(other than appraisals and inventories received from third parties) are
confidential to the Agent and that, except as otherwise provided herein, no Loan
Party is entitled to receipt of any of such commercial finance examinations,
inventories, analysis, financial information, and other materials, nor copies or
extracts thereof or therefrom.
5.11. INFORMATION DELIVERED PURSUANT TO ARTICLE 5.
All information required to be delivered pursuant to Article 5
may be delivered by and in electronic format.
ARTICLE 6 - USE OF COLLATERAL:
6.1. 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 in connection with Permitted Dispositions.
92
(b) 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 Agents.
6.2. 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.
6.3. 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 6.3 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.
6.4. 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.
(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 Agents)
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 Agents.
6.5. NOTIFICATION TO ACCOUNT DEBTORS. The Collateral Agents 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.
93
ARTICLE 7 - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
7.1. DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 7.1 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 Agents'
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 7.1.
(c) No Borrower will establish any DDA hereafter (other than
an Exempt DDA) unless, contemporaneous with such establishment, the Lead
Borrower delivers the following to the Administrative Agent:
(i) A notification for the depository at which such
DDA is established if the same would have been required pursuant to
Section 7.1(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 7.1(b)(ii) if the subject
DDA were open at the execution of this Agreement.
7.2. CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 7.2, 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
94
Borrower with each of each Borrower's credit card clearinghouses and processors
(in form satisfactory to the Administrative Agent), which agreement provides
that, during the existence of a Cash Control Event, payment of all credit card
charges submitted by that Borrower to that clearinghouse or other processor and
any other amount payable to that Borrower by such clearinghouse or other
processor shall be directed to the Administrative Agent's Account or as
otherwise designated from time to time by the Administrative Agent. No Borrower
shall change such direction or designation except upon and with the prior
written consent of the Administrative Agent and no Borrower will enter into any
agreements with a new credit card clearinghouse or processor hereafter unless,
contemporaneous with such establishment, the Lead Borrower delivers to the
Administrative Agent an agreement with such credit card clearinghouse or
processor of like terms to those required hereunder on the Closing Date.
7.3. THE ADMINISTRATIVE AGENT'S, COLLECTION, AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "ADMINISTRATIVE AGENT'S ACCOUNT(S)" (so
referred to herein): Established by the Administrative Agent
with NCB for each Division as more specifically described on
EXHIBIT 7.3 hereto.
(ii) The "COLLECTION ACCOUNTS" (so referred to
herein): Established by the Lead Borrower with those financial
institutions described on EXHIBIT 7.3 hereof.
(iii) The "OPERATING ACCOUNTs" (so referred to
herein): Established by each Division with NCB as more
specifically described on EXHIBIT 7.3 hereto.
(b) The contents of each DDA and of each Collection Account
constitutes Collateral and Proceeds of Collateral. The contents of each
Administrative Agent's Account constitutes the Administrative Agent's property.
(c) The Borrowers shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by
and/or is the property of the Agent).
7.4. 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 for each
Division shall cause
95
all Receipts to be deposited or transferred to the Administrative Agent's
Account for such Division.
(d) Subject to this Section 7.4, 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 Agents.
(B) Shall not be commingled with any of any
Borrower's other funds.
(C) Shall be deposited and/or transferred
only to a Collection Account or the applicable Administrative
Agent's Accounts, and the Borrowers shall not have any
authority to withdraw any amounts from such accounts and the
Administrative Agent shall have no obligation to deposit such
Receipts in the applicable Operating Account.
(ii) The Lead Borrower shall cause the ACH transfer
or wire transfer to the Collection Account or the applicable
Administrative Agent's Account (except in those instances in which such
transfer is not within the control of the Lead Borrower or any other
Borrower), no less frequently than daily (and whether or not there is
then an outstanding balance in the Loan Account) of the following:
(A) The then contents of each DDA (other than
any Exempt DDA), each such transfer to be net of any minimum
balance, not to exceed $2,000.00, as may be required to be
maintained in the subject DDA by the bank at which such DDA is
maintained.
(B) The proceeds of all credit card charges
not otherwise provided for pursuant hereto.
(iii) In the event that, notwithstanding the
provisions of this Section 7.4(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,
96
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 7.4.
7.5. PAYMENT OF LIABILITIES.
(a) On each Business Day after the occurrence and during the
continuance of a Cash Control Event, the Administrative Agent shall apply the
then collected balance of each Administrative Agent's Account (net of fees
charged, and of such impressed balances as may be required by the bank at which
such Administrative Agent's Account is maintained) First, towards the SwingLine
Loans of the applicable Division, Second, towards the unpaid balance of the Loan
Account for such Division, and Third, to all other Liabilities in such order as
the Administrative Agent may determine.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Section 7.5:
(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 7.5(b)(i)) or payment (Section
7.5(b)(ii)) is not available to the Administrative Agent until
after 1:00PM on a Business Day, such deposit or payment shall
be deemed to have been made at 9:00AM on the then next
Business Day.
(iv) All deposits to an Administrative Agent's
Account and other payments to the Administrative Agent are
subject to clearance and collection.
(c) The Administrative Agent shall transfer to the Operating
Account of the applicable Division any surplus in the Administrative Agent's
Account for such Division remaining after the application towards the
Liabilities referred to in Section 7.5(a), above (less those amounts which are
to be netted out, as provided therein) provided, however, in the event that
97
(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
10.12 or acceleration following the occurrence of any other Event of Default.
7.6. THE OPERATING ACCOUNT.
(a) Except as otherwise specifically provided in, or permitted
by, this Agreement, funds in the Operating Account of each Division shall be
utilized to fund disbursements made by such Division, including, without
limitation, from any expense accounts maintained by such Division, PROVIDED THAT
funds in the Operating Account for the Filene's Business may be distributed to
the Lead Borrower in the ordinary course to the extent necessary in order that
the Lead Borrower may pay the expenses of the Filene's Business consistent with
the parties' prior practices.
(b) After the occurrence and during the continuance of any
Event of Default or at any time that Average Excess Availability for any five
(5) consecutive Business Days is less than $60,000,000, 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 8 - GRANT OF SECURITY INTEREST:
8.1. 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 Agents, 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
Agents, 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
Agents may in the future be granted a security interest, is referred to herein
as the "COLLATERAL"):
(a) All Accounts.
(b) All Inventory.
98
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) The Commercial Tort Claim described on EXHIBIT 4.19
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.
(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. (8.1(a) through 8.1(o)) or otherwise.
(q) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing (8.1(a)
through 8.1(p)), including the right of stoppage in
transit.
8.2. 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 Agents (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 18.2
hereof have been made; and
(iii) the security interest created herein is
specifically terminated in writing by duly authorized officers
of the Collateral Agents as provided in Section 18.2(d)
hereof.
99
(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 Agents shall request in order to grant to the Collateral Agents, 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 9 - COLLATERAL AGENTS AS BORROWERS' ATTORNEY-IN-FACT:
9.1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Collateral Agents (acting through any officer of
the Collateral Agents) 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 Agents 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
Agents 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 Agents 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 Agents 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.
100
(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.
9.2. NO OBLIGATION TO ACT. The Collateral Agents shall not be
obligated to do any of the acts or to exercise any of the powers authorized by
Section 9.1 herein, but if the Collateral Agents 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 Agents 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 10 - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 10 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.
10.1. 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.
10.2. 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.
10.3. 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 :
------------------------------------------
4.7 Indebtedness
101
4.14 Pay taxes
4.20 Dividends. Investments. Other
Corporate Actions
4.21 Loans and Advances
4.24 Affiliate Transactions
Article 5 Reporting Requirements (except
as set forth in Section 10.4,
below)
Article 7 Cash Management
10.4. 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 5.4, subject,
however, to the following limited number of grace periods applicable to certain
of those requirements:
-------------------------- ------------------ -------------------------- ----------------------------
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE
SECTION PERIODS
-------------------------- ------------------ -------------------------- ----------------------------
Weekly Report 5.4 Two (2) Business Days Twice in any twelve (12)
Days consecutive months
-------------------------- ------------------ -------------------------- ----------------------------
10.5. 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 10.1, 10.2, 10.3, or 10.4 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 Agents, is reasonably likely to have a Material Adverse
Effect.
10.6. 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
102
Revolving Credit Lender was not true or complete in all material respects when
given.
10.7. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence and
continuance of any event of default or other event, which with the giving of
notice, the passage of time or both, would be an event of default under (i) the
CCM Term Loan Facilities, (ii) the Senior Convertible Facility, or (iii) any
other Indebtedness of any Loan Party equal to or in excess of One Million
Dollars ($1,000,000.00) to any creditor other than the Agent or any Revolving
Credit Lender, (whether or not such Indebtedness has been accelerated), or,
Leases aggregating more than five percent (5%) of all Leases of the Loan
Parties existing from time to time could be terminated due to a default by a
Loan Party thereunder (whether or not the subject creditor or lessor takes any
action on account of such occurrence).
10.8. 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 $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).
10.9. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Collateral.
10.10. 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.
10.11. 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
103
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.
10.12. BANKRUPTCY. The failure by any Loan Party to generally pay the
debts of that Loan Party as they mature; adjudication of bankruptcy or
insolvency relative to any Loan Party; the entry of an order for relief or
similar order with respect to any Loan Party in any proceeding pursuant to the
Bankruptcy Code or any other federal bankruptcy law; the filing of any
complaint, application, or petition by any Loan Party initiating any matter in
which any Loan Party is or may be granted any relief from the debts of that Loan
Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Loan Party initiating any matter in which that Loan Party is or may be granted
any relief from the debts of that Loan Party pursuant to the Bankruptcy Code or
any other insolvency statute or procedure, which complaint, application, or
petition is not timely contested in good faith by that Loan Party by appropriate
proceedings or, if so contested, is not dismissed within sixty (60) days of when
filed.
10.13. TERMINATION OF GUARANTY. The termination or attempted
termination of any Facility Guarantee by any Facility Guarantor.
10.14. 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.
10.15. CHANGE IN CONTROL. Any Change in Control.
104
ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT:
11.1 ACCELERATION. Upon the occurrence of any Event of Default as
described in Section 10.12, 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 10.12, 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.
11.2. RIGHTS OF ENFORCEMENT. Subject to the terms of the Intercreditor
Agreement, the Collateral Agents shall have all of the rights and remedies of a
secured party upon default under the UCC, in addition to which the Collateral
Agents 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 Agents as provided in any
written agreement or undertaking of such broker in favor of the Collateral
Agents.
(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 Agents 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.
11.3. SALE OF COLLATERAL.
105
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
Agents deem advisable, having due regard to compliance with any statute or
regulation which might affect, limit, or apply to the Collateral Agents'
disposition of the Collateral.
(b) The Collateral Agents, in the exercise of the Collateral
Agents' rights and remedies upon default, may conduct one or more going out of
business sales, in the Collateral Agents' 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 Agents 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 Agents 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 Agents 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 Agents 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 Agents shall provide the Lead Borrower
such notice as may be practicable under the circumstances), the Collateral
Agents shall give the Lead Borrower at least ten (10) days prior notice, by
authenticated record, of the date, time, and place of any proposed public sale,
and of the date after which any private sale or other disposition of the
Collateral may be made. Each Borrower agrees that such written notice shall
satisfy all requirements for notice to that Borrower which are imposed under the
UCC or other applicable law with respect to the exercise of the Collateral
Agents' 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 Agents shall deliver the proceeds of the
Collateral Agents' exercise of its rights and remedies upon default to the
Administrative Agent for application pursuant to Section 13.6 hereof.
11.4. OCCUPATION OF BUSINESS LOCATION. In connection with the
Collateral Agents' exercise of the Collateral Agents' rights under this Article
11, the Collateral Agents 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,
106
occupied, or used by the Collateral Agents. The Collateral Agents shall not be
required to remove any of the Collateral from any such premises upon the
Collateral Agents' taking possession thereof, and may render any Collateral
unusable to the Borrowers. In no event shall the Collateral Agents be liable to
any Borrower for use or occupancy by the Collateral Agents of any premises
pursuant to this Article 11, nor for any charge (such as wages for any
Borrowers' employees and utilities) incurred in connection with the Collateral
Agents' exercise of the Agent's Rights and Remedies.
11.5. GRANT OF NONEXCLUSIVE LICENSE. In connection with the Collateral
Agents' exercise of the Collateral Agents' rights under this Article 11, each
Borrower hereby grants to the Collateral Agents 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 Agents' 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.
11.6. ASSEMBLY OF COLLATERAL. In connection with the Collateral Agents'
exercise of the Collateral Agents' rights under this Article 11, the Collateral
Agents may require any Borrower to assemble the Collateral and make it available
to the Collateral Agents at the Borrowers' sole risk and expense at a place or
places which are reasonably convenient to both the Collateral Agents and the
Lead Borrower.
11.7. 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 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 12 - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
12.1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 12.2:
107
(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.
12.2. 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 12.4, the then
entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
(iii) At the initiation of a Liquidation, the then
entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if such
conversion were the making of a Revolving Credit Loan as provided in Section
12.1.
(c) The SwingLine Lender, in separate capacities, may also be
the Administrative Agent and a Revolving Credit Lender.
108
(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 13.6.
(ii) Determination of whether the requisite Loan
Commitments have Consented to action requiring such Consent.
12.3. 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 12.3(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 12.1 and shall make available, to the extent not
"covered" by a Revolving Credit Loan, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of any honoring of an L/C or a
Banker's Acceptance.
(ii) In reliance upon such assumption, make available
the corresponding amount to the Borrowers (but the Administrative Agent
shall not be obligated to make such amount available to the Borrowers
until actual receipt thereof from the Revolving Credit Lenders).
(iii) Assume that each Revolving Credit Lender timely
shall pay, and shall make available, to the Administrative Agent all
other amounts which that Revolving Credit Lender is obligated to so pay
and/or make available hereunder or under any of the Loan Documents.
109
(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 12.4(a) (which relates to ordinary course distributions) or
Section 13.6 (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 12.3(c)(iv), the Delinquent
Revolving Credit Lender shall be entitled to receive any payments from
the Borrowers to which the Delinquent Revolving Credit Lender is then
entitled, provided however there shall be deducted from such amount and
retained by the Administrative Agent any interest to which the
Administrative Agent is then entitled on account of Section
12.3(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
110
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 12.3(c)(iv),
above) with respect to that Delinquent
Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 12.3(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.
12.4. ORDINARY COURSE DISTRIBUTIONS. (This Section 12.4 applies unless
the provisions of Section 13.6 (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 Revolving Credit Lender,
until the Administrative Agent has distributed to that Revolving Credit Lender
its pro-
111
rata share thereof.
(c) No Revolving Credit Lender shall have any interest in, or
right to receive any part of, the Underwriting 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 12.4 is subject
to Section 12.3(c), above.
ARTICLE 13 - ACCELERATION AND LIQUIDATION:
13.1. 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.
13.2. 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 13.1(a).
(b) The Administrative Agent's receipt of an Acceleration
Notice from the SuperMajority Lenders, in compliance with Section 13.1(b) .
13.3. INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Administrative Agent within a
commercially reasonable time
112
following Acceleration of Liabilities on account of the Revolving Credit.
13.4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section 12.2(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.
13.5. COLLATERAL AGENTS' CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Collateral
Agents, subject to the direction of the SuperMajority Lenders.
(b) The Collateral Agents may establish one or more Nominees
to "bid in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agents 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 Agents and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Collateral Agents determine as appropriate under the
circumstances.
(d) The Collateral Agents may decline to undertake or to
continue taking a course of action or to execute an action plan (whether
proposed by the Collateral Agents or any Revolving Credit Lender) unless
indemnified to the Collateral Agents' satisfaction by the Revolving Credit
Lenders against any and all liability and expense which may be incurred by the
Collateral Agents 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 Agents and/or the Nominee reasonably may request with respect
to the creation and governance of any
113
Nominee, the conduct of the Liquidation, and the management and disposition of
any Post Foreclosure Asset.
13.6. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Collateral Agents 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 Agents in the exercise of rights as a secured creditor of the
Borrowers and prior claims which the Collateral Agents anticipate may need to be
paid.
(b) The Collateral Agents shall distribute the net proceeds of
Liquidation to the Administrative Agent for application in accordance with the
relative priorities set forth in Section 13.7, but subject to the terms of the
Intercreditor Agreement.
(c) Each Revolving Credit Lender, on the written request of
the Collateral Agents and/or any Nominee, not more frequently than once each
month, shall reimburse the Collateral Agents and/or any Nominee, pro-rata, for
any cost or expense reasonably incurred by the Collateral Agents 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 Agents.
13.7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION
(a) All distributions of proceeds of a Liquidation shall be
net of payment over to the Collateral Agents as reimbursement for all reasonable
third party costs and expenses incurred by the Collateral Agents and to Lenders'
Special Counsel and to any funded reserve established pursuant to Section
13.6(a).
(b) Subject to the terms of the Intercreditor Agreement and
the provisions of Section 13.7(c) below, the proceeds of a Liquidation, net of
those amounts described in Section 12.3(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 13.4(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
114
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
13.7(b)(ii), 13.7(b)(iii), 13.7(b)(iv); and
then
(vi) To the Revolving Credit Lenders, pro-rata,
to the extent of the Revolving
Credit Early Termination Fee; and then
(vii) To any other Liabilities, including any
obligations due on account of Hedge
Agreements.
(c) Notwithstanding anything to the contrary herein contained,
all proceeds received from the Collateral of a Division shall first be applied
to the Revolving Credit Loans, L/Cs, Banker's Acceptances, interest, fees and
other Liabilities of such Division before application to any other Liabilities.
ARTICLE 14 - THE AGENT:
14.1. APPOINTMENT OF THE AGENT
(a) Each Lender appoints and designates NCCF as the
"Administrative Agent" hereunder and under the Loan Documents.
(b) Each Lender appoints and designates NCCF and FRF as the
"Collateral Agents" 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.
14.2. RESPONSIBILITIES OF AGENT
115
(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
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.
14.3. CONCERNING DISTRIBUTIONS BY THE AGENT
116
(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 13.7.
(e) Each Revolving Credit Lender recognizes that the crediting
of the Borrowers with the "proceeds" of any transaction in which a Post
Foreclosure Asset is acquired is a non-cash transaction and that, in
consequence, no distribution of such "proceeds" will be made by the
Administrative Agent to any Revolving Credit Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the 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.
14.4. 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
117
Credit Lender hereto hereby submits.
14.5. 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 5 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.
14.6. 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.
(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.
14.7. 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
118
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.
14.8. 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 14.5), no Agent
shall have any affirmative duty or responsibility to provide any Lender with any
credit or other information concerning any Person, which information may come
into the possession of the Agent or any Affiliate of 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.
14.9. 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
119
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.
14.10. 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 14.10(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.
(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.
14.11 CO-LEAD ARRANGERS, DOCUMENTATION AGENT AND SYNDICATION AGENT
Notwithstanding the provisions of this Agreement or any of the other
Loan Documents, the Co-Lead Arrangers, the Documentation Agent, and the
Syndication Agent shall have no
120
powers, rights, duties, responsibilities or liabilities with respect to this
Agreement and the other Loan Documents other than confidentiality provisions
contained herein.
ARTICLE 15 - ACTION BY AGENT - CONSENTS - AMENDMENTS - WAIVERS:
15.1. 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
-------------------------------------------------------------
15.2 Majority Lenders
15.3 SuperMajority Lenders
15.4 Certain Consent
15.5 Unanimous Consent
15.6 Consent of SwingLine Lender
15.7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders in
those sections referenced in Section 15.1(b) shall not otherwise limit or impair
any Agent's exercise of its reasonable, good faith discretion under the Loan
Documents.
15.2. 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.
15.3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS
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
121
described in this Section 15.3(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 15.3(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 13.1(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.
15.4. ACTION REQUIRING CERTAIN CONSENT The Consent or direction of
the following is required for the following actions:
(a) Any forgiveness of all or any portion of any payment
Liability: All Revolving Credit Lenders whose payment Liability is being so
forgiven: (other than any Delinquent Revolving Credit Lender).
(b) Any decrease in any interest rate or fee payable under any
of the Loan Documents (other than any fee payable to the Administrative Agent
(for which the consent of the Administrative Agent shall be required): All
Revolving Credit Lenders adversely affected thereby (other than any Delinquent
Revolving Credit Lender).
(c) Any postponement of the scheduled time for payment of any
amount payable under any of the Loan Documents: All Revolving Credit Lenders
adversely affected thereby (other than any Delinquent Revolving Credit Lender).
122
(d) Volitional Disgorgement as described in 14.3(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.
15.5. 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 "Borrowing Base",
"DSW/Shonac Borrowing Base", "Filene's Borrowing Base", "VC Borrowing Base",
"Excess Availability Reserve", "Availability", "DSW/Shonac Availability",
"Filene's Availability" or "VC Availability" or of any Definition of any
component thereof, such that more credit would be available to a Borrower, based
on the same assets, as would have been available to such Borrower immediately
prior to such amendment, it being understood, however, that:
(i) The foregoing shall not limit the adjustment by
the Collateral Agents of any Reserve or the Inventory Advance Rate in
the Collateral Agents' administration of the Revolving Credit as
otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the
Administrative Agent, in its administration of the Revolving Credit,
from restoring any component of the Borrowing Base, DSW/Shonac
Borrowing Base, Filene's Borrowing Base, or VC Borrowing Base which had
been lowered by the Administrative Agent back to the value of such
component, as stated in this Agreement or to an intermediate value.
(c) Any waiver, amendment, or modification which has the
effect of increasing any Revolving Credit Dollar Commitment, Revolving Credit
Commitment Percentage, or the Revolving Credit Ceiling, except that no Consent
shall be required for
123
any such increase which is the result of the application of the following
Sections of this Agreement:
(i) Section 15.10 (which relates to NonConsenting
Revolving Credit Lenders).
(ii) Section 16.1 (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 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 15.
(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"
124
15.6. 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.
15.7. ACTIONS REQUIRING AGENT'S CONSENT
(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.
15.8. 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.
15.9. 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
125
without the consent of the Lead Borrower:
ARTICLE TITLE OF ARTICLE
-------------------------------
12 Revolving Credit Fundings and Distributions
13 Acceleration and Liquidation (other than any
modifications to the requisite percentage of
Revolving Credit Lenders which may furnish an
Acceleration Notice under Section 13.1(b))
14 The Agent (PROVIDED THAT the provisions of
Section 14.10(a) relating to the Lead Borrower's
consent to a successor Agent in certain circumstances
may not be amended without the Lead Borrower's consent).
15 Action By Agents - Consents - Amendments - Waivers
(other than as provided in Section 15.9(b))
16 Assignments and Participations (PROVIDED THAT the
provisions of Section 16.1(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 15.9(c), the following Sections of
Article 15 may not be amended without the consent of the Lead Borrower:
ACTIONS DESCRIBED IN SECTION TYPE OF CONSENT REQUIRED
---------------------------------------------------------
15.3 SuperMajority Lenders
15.5 Unanimous Consent
15.9 Actions Requiring Lead Borrower's Consent
and further provided that no provision of any Article listed in Section 15.9(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 15.9(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.
15.10. NONCONSENTING REVOLVING CREDIT LENDER
126
(a) In the event that a Revolving Credit Lender (in this
Section 15.10, 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 15, 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 16.1, below, of the NonConsenting
Revolving Credit Lender's Loan Commitment hereunder on fifteen (15) days written
notice to the Administrative Agent and to the NonConsenting Revolving Credit
Lender.
(b) At the end of such fifteen (15) days, and provided that
the NonConsenting Revolving Credit Lender delivers the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender to the Administrative Agent
(or a lost note affidavit and indemnity reasonably acceptable to the
Administrative Agent), the Revolving Credit Lenders who have given such written
notice shall Transfer the following to the NonConsenting Revolving Credit
Lender:
(i) Such NonConsenting Revolving Credit Lender's
pro-rata share of the principal and interest of the Revolving Credit
Loans to the date of such assignment.
(ii) All fees distributable hereunder to the
NonConsenting Revolving Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which
the NonConsenting Revolving Credit Lender is entitled to reimbursement
from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Administrative Agent the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender (or a lost note affidavit and
indemnity) as provided in Section 15.10(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
127
become subject to all of the obligations of the NonConsenting Revolving
Credit Lender as "Revolving Credit Lender".
(d) In the event that more than one (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting Revolving Credit
Lender's Loan Commitment hereunder shall be divided among such Revolving Credit
Lenders, pro-rata based upon their respective Revolving Credit Commitment
Percentages, with the Administrative Agent coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement
of the Revolving Credit Note held by the NonConsenting Revolving Credit Lender
and the issuance of Revolving Credit Notes to those Revolving Credit Lenders
which "take-out" such NonConsenting Revolving Credit Lender, provided, however,
no processing fee otherwise to be paid as provided in Section 16.2(b) shall be
due under such circumstances.
ARTICLE 16 - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
16.1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 16.1(a), an "ASSIGNING REVOLVING CREDIT LENDER") may assign to
one or more Eligible Assignees (in this Section 16.1(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 2.23(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 16.1(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.
16.2. ASSIGNMENT PROCEDURES. (This Section 16.2 describes the
procedures to be
128
followed in connection with an assignment effected pursuant to this Article 16
and permitted by Section 16.1).
(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 16.1, annexed
hereto.
(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, provided, however, no such
processing fee shall be due where the Assigning Revolving Credit Lender is one
of the Revolving Credit Lenders at the initial execution of this Agreement.
(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.
16.3. 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
129
hereunder to the extent of the Revolving Credit Dollar
Commitment and Revolving Credit Commitment Percentage
assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lender's obligations
under this Agreement and the Loan Documents to the extent of the Loan
Commitment assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to
obtain and distribute replacement Revolving Credit Notes to the subject
Assigning Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance,
the parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 17 - NOTICES:
17.1. 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 Commercial Finance, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx 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:
Value City Department Stores, Inc.
0000 Xxxxxxxxxxx Xxxx
000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx. X. XxXxxxx
Fax: (000) 000-0000
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:
Porter, Wright, Xxxxxx & Xxxxxx LLP
00 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esquire
and Xxxxxxx X. Xxxxx, Esquire
Fax: (000) 000-0000
17.2. 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.
131
17.3. WIRE INSTRUCTIONS. NOTICE GIVEN. Subject to change in the
same manner that a notice address may be changed (as to which, see Section
17.1), 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 Commercial Finance, Inc.
Account Number : 0000000
Reference : Value City
ARTICLE 18 - TERM:
18.1. 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.
18.2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the
Administrative Agent (whether or not then due), in immediately available funds,
all Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including
the unpaid principal balance of the Revolving Credit Loans, and the
SwingLine Loan ).
(ii) Any then remaining installments of the
Collateral Monitoring Fee.
(iii) Any payments due on account of the
indemnification obligations included in Section 2.11(f).
(iv) Any accrued and unpaid Unused Line Fee.
(v) Any applicable Revolving Credit Early Termination
Fee.
(vi) All unreimbursed costs and expenses of each
Agent and of Lenders' Special Counsel for which each Borrower is
responsible.
(vii) 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 18.2(a)) and arrangements
concerning L/Cs
132
and Banker's Acceptances (Section 18.2(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 18.2(a) and (b), above, the Collateral Agents
shall release the Collateral Interests granted the Collateral Agents by the
Borrowers hereunder, which may be upon such conditions and indemnifications as
the Collateral Agents may reasonably require.
ARTICLE 19 - GENERAL:
19.1. 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.
19.2. 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.
19.3. CONFIDENTIALITY. Each of the Agents, the Issuer, the Co-Lead
Arrangers, the Syndication Agent, the Revolving Credit Lenders, the SwingLine
Lender, and any Person subject to this Section 19.3 by the terms of this
Agreement (or behalf of itself, and each of its directors, officers, and
employees) agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement and any actual or
prospective counterparty or advisors to any swap or derivative transactions
relating to the Loan Parties and the Liabilities (subject to an agreement
executed for the benefit of the Lead Borrower which contains provisions
substantially the same as those of this Section 19.3, (g) with the consent of
the Loan Parties or (h) to the extent such Information (i) becomes publicly
available other than as
133
a result of a breach of this Section or (ii) becomes legally available to the
Agents, the Issuer, the Co-Lead Arrangers 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 Co-Lead Arrangers
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.
19.4. 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.
19.5. 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.
19.6. AMENDMENTS. COURSE OF DEALING.
(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.
134
(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 15, 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.
19.7. 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.
19.8. 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 13.6 and 13.7 and any other applicable
provisions of this Agreement. The Borrowers shall remain liable for any
deficiency remaining following such application.
19.9. 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
135
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.
19.10. REPLACEMENT OF REVOLVING CREDIT LENDER. If (a) any Revolving
Credit Lender incurs increased costs and requests compensation under Section
2.19(d) or Section 19.9, (b) any Revolving Credit Lender is a Delinquent
Revolving Credit Lender, then the Lead Borrower may
(a) request such Revolving Credit Lender or Issuer to use
reasonable efforts to designate a different lending office for funding or
booking its loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches, or Affiliates, if in the judgment of such
Revolving Credit Lender or Issuer, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.19(d) or Section 19.9
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
136
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 16), 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.
19.11. 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.
(d) The undertaking on the part of each Borrower in this
Section 19.11 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
137
specific reference to this Section 19.11.
19.12. 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.
19.13. NEW YORK 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 New York.
19.14. 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.
19.15. INDEMNIFICATION. Each Borrower shall indemnify, defend, and
hold each
138
Agent, the Issuer, and each Revolving Credit Lender and any Participant and any
of their respective employees, officers, agents, Subsidiaries, and Affiliates
(each, an "INDEMNIFIED PERSON") harmless of and from any claim brought or
threatened against any Indemnified Person by any Borrower, any guarantor or
endorser of the Liabilities, or any other Person (as well as from reasonable
attorneys' fees, expenses, and disbursements in connection therewith) on account
of the relationship of the Borrowers or of any guarantor or endorser of the
Liabilities, including all costs, expenses, liabilities, and damages as may be
suffered by any Indemnified Person in connection with (x) the Collateral; (y)
the occurrence of any Event of Default; or (z) the exercise of any rights or
remedies under any of the Loan Documents (each of claims which may be defended,
compromised, settled, or pursued by the Indemnified Person with counsel of the
Lender's selection, but at the expense of the Borrowers) other than any claim as
to which a final determination is made in a judicial proceeding (in which the
Agent and any other Indemnified Person has had an opportunity to be heard),
which determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual bad
faith or in willful misconduct. This indemnification shall survive payment of
the Liabilities and/or any termination, release, or discharge executed by 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 19.15.
19.16. 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.
(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,
139
construction, or effect.
(e) The words "includes" and "including" are not limiting.
(f) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(g) Text which is shown in italics (except for parenthesized
italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(h) The words "may not" are prohibitive and not permissive.
(i) Any reference to a Person's "knowledge" (or words of
similar import) are to such Person's knowledge assuming that such Person has
undertaken reasonable and diligent investigation with respect to the subject of
such "knowledge" (whether or not such investigation has actually been
undertaken).
(j) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
(k) The term "Dollars" and the symbol "$" each refers to
United States Dollars.
(l) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(m) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on which
application of such reference is being made.
(n) Except as otherwise specifically provided, all references
to time are to Cleveland, Ohio time.
(o) In the determination of any notice, grace, or other period
of time prescribed or allowed hereunder:
(i) Unless otherwise provided (A) the day of the act,
event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed
shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next
Business Day and (B) the period so computed shall end at 5:00 PM on the
relevant Business Day.
140
(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 19.17
hereof, provided, however, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.
19.17. 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 2.17 hereof.
19.18. 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.
19.19. 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.
19.20. 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
141
Lender is subject to any of the twelve Federal Reserve Banks organized under
ss.4 of the Federal Reserve Act (12 U.S.C. ss.341) from pledging all or any
portion of that Lender's interest and rights under this Agreement, provided,
however, neither such pledge nor the enforcement thereof shall release the
pledging Revolving Credit Lender from any of its obligations hereunder or under
any of the Loan Documents.
19.21. 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 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."
19.22. WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and sureties
of the Liabilities) make each of the waivers included in Section 19.22(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).
142
(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.
19.23. 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 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
Agents 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
143
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 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]
144
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
VALUE CITY DEPARTMENT STORES, INC.
("LEAD BORROWER")
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
"OTHER BORROWERS":
SHONAC CORPORATION
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
DSW SHOE WAREHOUSE, INC.
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
GRAMEX RETAIL STORES, INC.
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
FILENE'S BASEMENT, INC.
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
145
Title: Chief Financial Officer
VALUE CITY LIMITED PARTNERSHIP
By: Westerville Road GP, Inc., its General
Partner
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
VALUE CITY OF MICHIGAN, INC.
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
GB RETAILERS, INC.
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
VCM, LTD.
By: GB Retailers, Inc., its Sole Member
By: /s/ Xxxxx X. XxXxxxx
----------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
146
NATIONAL CITY COMMERCIAL FINANCE, INC.
(ADMINISTRATIVE AGENT, COLLATERAL AGENT AND
REVOLVING CREDIT LENDER)
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
147
NATIONAL CITY BANK
(ISSUER)
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
148
FLEET RETAIL FINANCE INC.
(COLLATERAL AGENT AND REVOLVING CREDIT LENDER)
By:
-------------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
149
XXXXX FARGO RETAIL FINANCE LLC
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
150
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
151
AMSOUTH BANK
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
152
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
153
HSBC BUSINESS CREDIT (USA), INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
154
IBJ WHITEHALL RETAIL FINANCE,
A Division of IBJ Whitehall Business Credit Corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
155
LASALLE BANK NATIONAL ASSOCIATION
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
156
PNC BANK, National Association
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
157
THE PROVIDENT BANK
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
158
SIEMENS FINANCIAL SERVICES, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
159
