EXHIBIT 10.2
THIRD AMENDMENT
TO FINANCING AGREEMENT
THIRD AMENDMENT, dated as of December 29, 2004 (this "Amendment"),
by and among Value City Department Stores LLC, an Ohio limited liability company
("VCDS LLC"), Shonac Corporation, an Ohio corporation ("Shonac"), DSW Shoe
Warehouse, Inc., a Missouri corporation ("DSW"), Gramex Retail Stores, Inc., a
Delaware corporation ("Gramex"), Filene's Basement, Inc., a Delaware corporation
("Filene's"), GB Retailers, Inc. a Delaware corporation ("GB"), Value City of
Michigan, Inc., a Michigan corporation ("VC Michigan", and together with Value
City, Shonac, DSW, Gramex, Filene's AND GB, each a "Borrower" and collectively,
the "Borrowers"), X.X. Xxxxxxxx Delivery, Inc. ("Overland"), Value City
Department Stores Services, Inc. ("Services"), Retail Ventures, Inc., an Ohio
corporation (the "Parent"), Retail Ventures Jewelry, Inc., an Ohio corporation
("RV Jewelry"), Retail Ventures Services, Inc., an Ohio corporation ("RV
Services"), and Retail Ventures Imports, Inc. (formerly known as VC Acquisition,
Inc.), an Ohio corporation ("Imports", and together with Overland, Services, the
Parent, RV Jewelry and RV Services, each a "Guarantor" and collectively, the
"Guarantors", and together with the Borrowers, each a "Loan Party", and
collectively, the "Loan Parties"), the lenders currently party to the Financing
Agreement (as defined below) (each a "Lender" and collectively, the "Lenders")
and Cerberus Partners, L.P., a limited partnership formed under the laws of the
State of Delaware ("CPLP"), as agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, the "Agent").
RECITALS
WHEREAS, Value City Department Stores, Inc., an Ohio corporation
(the "Existing Administrative Borrower"), the other Loan Parties and certain of
their affiliates, the Lenders and the Agent are parties to that certain
Financing Agreement dated as of June 11, 2002, as amended by the First Amendment
to Financing Agreement, dated as of October 7, 2003 and by the Second Amendment
to Financing Agreement, dated as of July 29, 2004 (as amended, supplemented,
restated or otherwise modified through the date hereof, the "Financing
Agreement");
WHEREAS, the Loan Parties have advised the Agent that the directors
of the Parent and the Existing Administrative Borrower have approved a corporate
reorganization (the "2004 Reorganization") of the Loan Parties pursuant to the
terms set forth on the Supplement to Schedule 1.01(b) hereto and has been
implemented subject to the consent of the Lenders;
WHEREAS, the following actions, among others, have been taken
pursuant to the 2004 Reorganization:
(i) Westerville Road GP, Inc., and Westerville Road LP, Inc.,
each a Delaware corporation, have merged into the Existing Administrative
Borrower, with the Existing Administrative Borrower being the surviving entity,
and therefore, Westerville Road GP, Inc. and Westerville Road LP, Inc. are no
longer Guarantors party to the Financing Agreement.
(ii) Value City Limited Partnership, an Ohio limited
partnership, has merged into the Existing Administrative Borrower, with the
Existing Administrative Borrower being the surviving entity. Therefore, Value
City Limited Partnership is no longer a Borrower party to the Financing
Agreement.
(iii) The Parent has formed a new wholly-owned subsidiary in
Ohio named "Value City Department Stores LLC". The Existing Administrative
Borrower has merged into Value City Department Stores LLC, with Value City
Department Stores LLC being the surviving entity.
(iv) Value City Department Stores LLC has transferred or will
transfer all of the issued and outstanding shares of each class of capital stock
of Shonac and Filene's to the Parent.
WHEREAS, the Loan Parties have requested that the Agent and the
Lenders (i) consent to the 2004 Reorganization, and (ii) make certain related
amendments to the Financing Agreement;
WHEREAS, the Lenders have agreed to consent to the 2004
Reorganization, and to modify and amend certain provisions of the Financing
Agreement as provided herein, provided that, among other things, the Loan
Parties execute and deliver this Third Amendment.
NOW THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Financing Agreement.
2. Joinder and Assumption of Liabilities by VCDS LLC. Effective as
of the date of this Third Amendment, VCDS LLC hereby acknowledges that it has
received and reviewed a copy of the Financing Agreement, and acknowledges and
agrees to:
(a) join in the execution of, and become a party to, the
Financing Agreement as a Borrower and as a Loan Party, as indicated with its
signature below;
(b) be bound by all representations, warranties, covenants,
agreements, liabilities and acknowledgments of the Administrative Borrower, the
Borrowers and the Loan Parties in the Financing Agreement, with the same force
and effect as if VCDS LLC was a signatory to the Financing Agreement and was
expressly named as the Administrative Borrower, as a Borrower and as a Loan
Party therein; and
(c) assume and perform all duties and Obligations of the Existing
Administrative Borrower, as a Borrower and as a Loan Party under the Financing
Agreement.
3. Amendments to Financing Agreement.
(a) General.
- 2 -
(i) VCDS LLC shall be a Borrower and a Loan Party under the
Financing Agreement and, in furtherance thereof, (i) all references in the
Financing Agreement to the "Administrative Borrower" shall hereafter be deemed
to refer to VCDS LLC, (ii) all references in the Financing Agreement to the
"Borrowers" or the "Loan Parties" shall hereafter be deemed to include VCDS LLC,
and (iii) all references in the Financing Agreement to "Value City" shall
hereafter be deemed to refer to VCDS LLC.
(ii) All references in the Financing Agreement to the
"Reorganization" shall hereafter be deemed to include the 2004 Reorganization,
and all references to the "Reorganization Effective Date" shall hereafter be
deemed to include the 2004 Reorganization Effective Date.
(b) New Definitions. (i) The following new definitions are
hereby added to Section 1.01 of the Financing Agreement (in appropriate
alphabetical order) to read in their entirety as follows:
"Third Amendment" means the Third Amendment to this Agreement, dated
as of December 29, 2004, made by the Borrower, the Guarantors, the
Lenders and the Agent.
"2004 Reorganization" means the corporate reorganization of the Loan
Parties, as described on the supplement to Schedule 1.01(b) hereto.
"2004 Reorganization Effective Date" means the date on which the
transactions contemplated by the 2004 Reorganization are
consummated.
(ii) The definition of "Convertible Loan Agreement" is hereby
deleted in its entirety and the following substituted in its stead:
"Convertible Loan Agreement" means the Senior Subordinated
Convertible Loan Agreement, dated as of March 15, 2000, as amended
from time to time and as amended and restated by the Senior
Convertible Loan Agreement dated as of June 11, 2002, among the Loan
Parties, the Convertible Loan Agent and the Convertible Loan
Lenders, as most recently amended on December 29, 2004.
(iii) The definition of "Revolving Credit Facility" is hereby
deleted in its entirety and the following substituted in its stead:
"Revolving Credit Facility" means the $350,000,000 working capital
facility, dated as of June 11, 2002, among the Loan Parties, the
Revolving Credit Facility Agent and the Revolving Credit Facility
Lenders, as most recently amended on December 29, 2004.
- 3 -
(iv) The definition of "Revolving Credit Facility Agent" is
hereby amended by deleting the reference to "National City Commercial Finance,
Inc." contained therein and substituting the words "National City Business
Credit, Inc." therefor.
(c) The sixth sentence in Section 5.01(q) is hereby amended by
the addition thereto of the phrase "except where such default or violation is
not reasonably likely to have a Material Adverse Effect" after the word
"Reorganization."
(d) Security Interests. Section 5.01(ff) of the Financing
Agreement is hereby amended by adding the words "and by Third Amendment" after
the words "and the UCC financing statements and financing statement amendments
contemplated by Second Amendment" contained in the second sentence thereof.
(e) Events of Default. Section 8.01 of the Financing Agreement is
hereby amended by adding a new clause (q) thereto to read in its entirety as
follows:
(q) the holder of the Promissory Note, dated January 1, 2005, made
by the Parent in favor of VCDS LLC fails to comply in any respect
with any subordination provision or any other intercreditor
provision contained therein or in any pledge agreement related
thereto;
4. Amendments to Schedules to Financing Agreement. A new supplement
to Schedule 1.01(b) (2004 Reorganization) is hereby added to Schedule 1.01(b) of
the Financing Agreement to read in its entirety in the form of Supplement to
Schedule 1.01(b) attached hereto and incorporated by reference herein.
5. Conditions to Effectiveness. This Amendment shall become
effective upon satisfaction in full of the following conditions precedent:
(a) Both before and immediately after giving effect to this
Amendment, (i) the representations and warranties contained in this Amendment
and Article V of the Financing Agreement (other than as described in Annex 1
hereto) shall be correct on and as of the date of this Amendment as though made
on and as of such date (except where such representations and warranties relate
to an earlier date in which case such representations and warranties shall be
true and correct as of such earlier date); and (ii) no Default or Event of
Default shall have occurred and be continuing on the date of this Amendment or
result from this Amendment becoming effective in accordance with its terms.
(b) The Agent shall have received, on or before the 2004
Reorganization Effective Date, each of the following documents, in form and
substance satisfactory to the Agent and dated the 2004 Reorganization Effective
Date (unless otherwise specified herein or in such document), and all conditions
precedent to the effectiveness of such documents (where applicable) shall have
been satisfied:
(i) this Amendment, duly executed by the Loan Parties, the
Lenders and the Agent;
- 4 -
(ii) Joinder, Confirmation and Amendment of Ancillary
Documents, duly executed by each of the Loan Parties and the Agent, together
with the original stock certificates or other certificated securities or
instruments representing all of the Capital Stock of such Loan Parties'
subsidiaries, and all intercompany notes accompanied by undated stock powers
executed in blank and other proper instruments of transfer, in each case, to the
extent not previously delivered to the Agent;
(iii) Assignment for Security (Copyrights) duly executed by
VCDS LLC;
(iv) Second Amendment to the Intercreditor Agreement, duly
executed by the Agent, the Revolving Credit Agent and the Term Loan Agent and
acknowledged by the Loan Parties;
(v) Endorsements to each Note, duly executed by the Borrower;
(vi) such Collection Account Agreements, Credit Card
Agreements and DDA Notifications as the Agent may reasonably require;
(vii) such UCC financing statements and UCC financing
statement amendments as the Agent may reasonably require;
(viii) an opinion of Vorys, Xxxxx, Xxxxxxx and Xxxxx, LLP,
counsel to the Loan Parties, with respect to the 2004 Reorganization, the Loan
Documents and the transactions contemplated hereby and thereby;
(ix) a certificate of the appropriate official(s) of the state
of organization of VCDS LLC and the Parent certifying as to the subsistence in
good standing of, and the payment of taxes by, such Person in such state;
(x) a true and complete copy of the charter, certificate of
formation or other publicly filed organizational document of VCDS LLC and the
Parent certified as of the 2004 Reorganization Effective Date (except as
otherwise agreed by the Agent) by an appropriate official of the state of
organization of such Person, which shall set forth the same complete name of
such Person as is set forth herein;
(xi) a copy of the by-laws, limited liability company
agreement, operating agreement, or other organizational document of VCDS LLC and
the Parent, together with all amendments thereto, certified as of the 2004
Reorganization Effective Date by an Authorized Officer of such Person;
(xii) a copy of the resolutions of VCDS LLC and the Parent,
certified as of the date hereof by an Authorized Officer thereof, authorizing
(A) the transactions contemplated hereby, and (B) the execution, delivery and
performance by such Person of each Loan Document to which such Person is or will
be a party, included as amended hereby or by the documents contemplated hereby,
and the execution and delivery of the other documents to be delivered by such
Person in connection herewith and therewith, and (C) the 2004 Reorganization,
and each of the documents contemplated thereby;
- 5 -
(xiii) a certificate of an Authorized Officer of VCDS LLC and
the Parent, certifying the names and true signatures of the representatives of
such Person authorized to sign each Loan Document to which such Person is or
will be a party and the other documents to be executed and delivered by such
Person in connection herewith and therewith, together with evidence of the
incumbency of such authorized officers; and
(xiv) copies of the Revolving Credit Facility Documents and
the Convertible Loan Documents, in each case, as amended as of December 29, 2004
and copies of each of the documents executed in connection with the 2004
Reorganization, in each case, duly executed by the parties thereto, which
documents shall be in form and substance satisfactory to the Agent;
(c) All consents, authorizations and approvals of, and filings
and registrations with, and all other actions in respect of, any Governmental
Authority or other Person required in connection with the 2004 Reorganization,
the amendment of the Loan Documents, or the conduct of the Loan Parties'
business shall have been obtained and shall be in full force and effect except
as to the extent that the failure to obtain the same would not have a Material
Adverse Effect.
(d) The Agent shall have completed its business and legal due
diligence with respect to the 2004 Reorganization and the results thereof shall
be acceptable to the Agent, in its sole and absolute discretion. The Agent's
execution hereof shall constitute satisfaction of this subsection 5(d).
(e) All conditions precedent to the 2004 Reorganization and the
amendment of the Revolving Credit Facility and the Convertible Loan Agreement
shall have been met to the satisfaction of the Agent.
(f) The Agent shall have received such other agreements,
instruments, opinions and other documents as the Agent may reasonably request in
respect of the transactions contemplated hereby.
(g) All proceedings in connection with the transactions
contemplated by this Amendment, and all documents incidental thereto, shall be
satisfactory to the Agent and its counsel, and the Agent and its counsel shall
have received all such information and such counterpart originals or certified
copies of documents as the Agent or its counsel may reasonably request.
(h) All fees, expenses and taxes accrued and unpaid or otherwise
due and payable by the Borrowers or a Loan Party pursuant to either the
Financing Agreement or this Amendment (including, without limitation, the fees
and other client charges of Xxxxxxx Xxxx & Xxxxx LLP in connection with this
Amendment and the related agreements, instruments and other documents) shall
have been paid in full.
6. Loan Parties' Representations and Warranties. Each Loan Party
(including VCDS LLC) represents and warrants to the Agent and the Lenders as
follows:
- 6 -
(a) Such Loan Party (i) is duly organized, validly existing and
in good standing under the laws of the state of its organization and (ii) has
all requisite power, authority and legal right to execute, deliver and perform
this Amendment and to perform the Financing Agreement, as amended hereby.
(b) The execution, delivery and performance by such Loan Party of
this Amendment and the performance by such Loan Party of the Financing
Agreement, as amended hereby and the consummation of the 2004 Reorganization (i)
have been duly authorized by all necessary action, (ii) do not and will not
violate or create a default under such Loan Party's organizational documents,
any applicable law or any contractual restriction binding on or otherwise
affecting such Loan Party or any of such Loan Party's properties (including,
without limitation, any Leases) except where such violation of default is not
reasonably likely to have a Material Adverse Effect, and (iii) except as
provided in the Loan Documents, do not and will not result in or require the
creation of any Lien, upon or with respect to such Loan Party's property.
(c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority is required in connection
with the due execution, delivery and performance by such Loan Party of this
Amendment or the performance by such Loan Party of the Financing Agreement, as
amended hereby, except to the extent that the failure to obtain the same would
not have a Material Adverse Effect.
(d) This Amendment and the Financing Agreement, as amended
hereby, constitute the legal, valid and binding obligations of such Loan Party,
as the case may be, enforceable against such Loan Party, in accordance with
their terms except to the extent the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, moratorium or similar laws from time to
time in effect affecting generally the enforcement of creditors' rights and
remedies and by general principles of equity.
(e) Both before and immediately after giving effect to this
Amendment, (i) the representations and warranties contained in Article V of the
Financing Agreement (other than as described on Annex 1 hereto) are correct on
and as of the date hereof as though made on and as of the date hereof (except to
the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date), and (ii) no Default or Event of Default has
occurred and is continuing on and as of the date hereof.
(f) Immediately prior to giving effect to this Amendment, VCDS
LLC had no assets and no liabilities.
(g) The 2004 Reorganization has been or will be consummated in
accordance with all requirements of applicable law.
7. Restatement of Representations, Warranties and Covenants in
Financing Agreement. The Loan Parties (including VCDS LLC) hereby restate all
representations, warranties, and covenants set forth in the Financing Agreement
as of the date hereof (other than as described on Annex 1 hereto). To the extent
that any changes in any representations, warranties, and covenants require any
amendments to the Schedules to the Financing Agreement,
- 7 -
such Schedules are amended and restated, as evidenced by Schedule 1.01(b) hereto
or any replacement Schedules annexed to this Third Amendment.
8. Continued Effectiveness of Financing Agreement. Each Loan Party
hereby (a) confirms and agrees that the Financing Agreement and each other Loan
Document to which it is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that on and
after December 29, 2004, all references in any such Loan Document to "the
Financing Agreement", the "Agreement", "hereto", "hereof", "hereunder",
"thereto", "thereof", "thereunder" or words of like import referring to the
Financing Agreement shall mean the Financing Agreement as amended by this
Amendment, (b) confirms and agrees that to the extent that any such Loan
Document purports to assign or pledge to the Agent, for the ratable benefit of
the Lenders, or to grant to the Agent, for the ratable benefit of the Lenders a
security interest in or Lien on, any Collateral as security for the Obligations
of the Loan Parties, or any of their respective Subsidiaries from time to time
existing in respect of the Financing Agreement and the Loan Documents, such
pledge, assignment and/or grant of the security interest or Lien is hereby
ratified and confirmed in all respects, and (c) confirms and agrees that no
amendment of any terms or provisions of the Financing Agreement or the
amendments granted hereunder shall relieve any Loan Party from complying with
such terms and provisions other than as expressly amended hereby or from
complying with any other term or provision thereof or herein.
9. Reaffirmation by Guarantors. Each Guarantor hereby (a) consents
to the transactions contemplated by the Amendment; (b) acknowledges and
reaffirms its obligations owing to the Agent and the Lenders under any Loan
Documents to which it is a party; and (c) agrees that each of the Loan Documents
to which it is a party is and shall remain in full force and effect. Although
each of the Guarantors has been informed of the matters set forth herein and has
acknowledged and agreed to same, it understands that neither the Agent nor any
Lender has any obligation to inform it of such matters in the future or to seek
its acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty.
10. Consent to 2004 Reorganization. Upon the determination of the
Agent that all conditions precedent to the effectiveness of this Third Amendment
have been satisfied, consent to the 2004 Reorganization shall be deemed to have
been given by the Lenders, provided however, that nothing contained herein shall
be deemed a consent to any transactions regarding the public issuance of stock
described in Paragraphs 11, 12, and 13 of the Supplement to Schedule 1.01(b) to
the extent that the consummation of any such transactions described therein
would constitute or result in the occurrence of an Event of Default.
11. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment.
- 8 -
(b) Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(c) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of the parties to this
Amendment hereby irrevocably waives all rights to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Amendment.
(d) This Amendment is a Loan Document executed pursuant to the
Financing Agreement and shall be construed, administered and interpreted in
accordance with the terms thereof.
12. JURY TRIAL WAIVER. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN
ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS
AMENDMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
- 9 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment,
to be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
BORROWERS: VALUE CITY DEPARTMENT STORES LLC,
an Ohio limited liability company
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Vice President
SHONAC CORPORATION,
an Ohio corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
DSW SHOE WAREHOUSE, INC.,
a Missouri corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
GRAMEX RETAIL STORES, INC.,
a Delaware corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
FILENE'S BASEMENT, INC.,
a Delaware corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
VALUE CITY OF MICHIGAN, INC.,
a Michigan corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
GB RETAILERS, INC.,
a Delaware corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
GUARANTORS: X.X. XXXXXXXX DELIVERY, INC.
a Delaware corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
VALUE CITY DEPARTMENT STORES
SERVICES, INC.
a Delaware corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
RETAIL VENTURES, INC.
an Ohio corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
RETAIL VENTURES JEWELRY, INC.
an Ohio corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
RETAIL VENTURES SERVICES, INC.
an Ohio corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
RETAIL VENTURES IMPORTS, INC.
(formerly known as VC Acquisition, Inc.),
an Ohio corporation
By: ______________________________
Name: Xxxxx X. XxXxxxx
Title: Chief Financial Officer
AGENT AND LENDER:
CERBERUS PARTNERS, L.P.,
a Delaware limited partnership
By: CERBERUS ASSOCIATES, L.L.C.
By: ______________________________
Name:
Title:
LENDER:
SCHOTTENSTEIN STORES CORPORATION
a Delaware limited partnership
By: ______________________________
Name:
Title:
