1
Exhibit 10.1.2
VALUE CITY DEPARTMENT STORES, INC.,
AS THE BORROWER,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
AS LENDERS,
AND
NATIONAL CITY BANK
AS A LENDER, A LETTER OF CREDIT ISSUER, THE SWING LINE LENDER,
THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, AND
AS THE DOCUMENTATION AGENT
AMENDMENT NO. 2
AND WAIVER
DATED AS OF
DECEMBER 11, 2000
TO
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF
MARCH 15, 2000
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Exhibit 10.1.2
AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT, dated as of
December 11, 2000 ("THIS AMENDMENT"), is among VALUE CITY DEPARTMENT STORES,
INC., an Ohio corporation (herein, together with its successors and assigns, the
"BORROWER"), the financial institutions listed on the signature pages hereof
(collectively, the "LENDERS"), and NATIONAL CITY BANK, a national banking
association, as a Lender, the Swing Line Lender, a Letter of Credit Issuer, the
Collateral Agent, the Documentation Agent and as Administrative Agent (in such
latter capacity, the "ADMINISTRATIVE AGENT").
PRELIMINARY STATEMENTS:
1. The Borrower, the Lenders, and the Agents named above entered into
the Amended and Restated Credit Agreement, dated as of March 15, 2000, as
amended by Amendment No. 1 dated as of May 9, 2000 (the "CREDIT AGREEMENT").
Capitalized terms used in this Amendment and not otherwise defined have the
meanings assigned such terms in the Credit Agreement.
2. The Borrower has failed to comply with the covenants set forth in
Section 9.7 through 9.11 of the Credit Agreement and the provisions of Section
10.1(e) of the Credit Agreement as it pertains to existing defaults under the
terms of the Subordinated Bridge Debt, and Events of Default under the Credit
Agreement have occurred and are continuing as a result of these failures to
comply (such Events of Default hereinafter collectively called the "EXISTING
DEFAULTS").
3. An Affiliate of Borrower has agreed to purchase the Subordinated
Bridge Debt and restructure and modify the same in a manner satisfactory to the
Required Lenders and Borrower, and has agreed to further provide the Borrower
and its Subsidiaries with a secured credit facility subject to the terms of the
SSC Credit Agreement (as defined herein).
4. The Borrower has requested the Lenders to waive the Existing
Defaults and to amend the Credit Agreement in certain respects.
5. The Lenders have agreed to the Borrower's requested waiver and
amendments on the terms and subject to the conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Borrower, the Lender, and the Administrative
Agent hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT.
Subject to the satisfaction of each of the conditions to effectiveness
set forth in Section 5, the Credit Agreement is hereby amended as follows:
1.1. DEFINITIONS. Section 1.1 of the Credit Agreement is hereby amended
by amending and restating the following definitions in their entirety:
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Exhibit 10.1.2
"CONSOLIDATED TANGIBLE NET WORTH" shall mean at any time for
the determination thereof (i) all amounts that, in conformity with
GAAP, would be included under the caption "total stockholders' equity"
(or any like caption) on a consolidated balance sheet of the Borrower
as at such date, PLUS (ii) the outstanding principal balance of the
Subordinated Bridge Debt as at such date, REDUCED BY (iii) the sum
(without duplication), on a consolidated basis, of the following, to
the extent reflected as consolidated assets: (A) any write-up in the
book value of any assets subsequent to the date of the most recent
financial statements referred to in section 7.8(a), (B) goodwill, (C)
organizational expenses, research and development expenses, patents,
trademarks, copyrights licenses and other intangible assets, (D)
unamortized debt discount and expense, (E) securities which are not
readily marketable, (F) cash or Cash Equivalents held in a sinking or
other analogous fund established for the purpose of redemption,
retirement or prepayment of capital stock or Indebtedness, and (G) any
items not included in the foregoing clauses (A) through (F) that are
treated as intangibles in accordance with GAAP, PROVIDED that in no
event shall Consolidated Tangible Net Worth include any amounts in
respect of Redeemable Stock.
"SECURITY AGREEMENT" shall mean, collectively, the security
agreement referred to in section 6.1(c) and the Borrower Security
Agreement.
"SUBORDINATED BRIDGE DEBT" shall mean the Borrower's issuance
of Subordinated Indebtedness in the aggregate principal amount of
$75,000,000, pursuant to a Senior Subordinated Convertible loan
agreement dated as of March 15, 2000, between the Borrower and
Prudential Securities Credit Corp., LLC, as amended, modified,
supplemented, restated or assigned to SSC and as amended and modified
from time to time, including without limitation, any Subordinated
Indebtedness which is convertible to any other security of the Borrower
or any of its Subsidiaries or Affiliates and continuing subsequent to
any such conversion of any Indebtedness.
1.2. ADDITIONAL DEFINITIONS. Section 1.1 of the Credit Agreement is
amended to add the following defined terms in appropriate alphabetic order:
"BORROWER SECURITY AGREEMENT" shall mean the security
agreement by and among the Borrower, its Subsidiaries party thereto,
and the Collateral Agent dated as of December __, 2000.
"BORROWING BASE" shall mean as of any date an amount equal to
the sum of
(i) 80% of Eligible Receivables,
(ii) 65% of Eligible Inventory, and
(iii) VCM Inventory Factor
each as determined from time to time by the Collateral Agent on the
basis of the information shown in the most recent Borrowing Base
Certificate delivered to the
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Exhibit 10.1.2
Collateral Agent by the Borrower pursuant to section 8.1(d), PROVIDED
that, if in any calendar month the Borrower fails timely to deliver a
Borrowing Base Certificate to the Collateral Agent as required by
section 8.1(d) with respect to the preceding calendar month, the
Collateral Agent may in its reasonable discretion reduce any of the
above percentages until the Business Day following the date such
Borrowing Base Certificate is actually delivered to the Collateral
Agent.
"BORROWING BASE CERTIFICATE" shall have the meaning specified
in section 8.1(d).
"CONSOLIDATED WORKING CAPITAL" shall mean (i) total Current
Assets of the Borrower and its Subsidiaries on a consolidated basis and
in accordance with GAAP, less (ii) total Current Liabilities of the
Borrower and its Subsidiaries on a consolidated basis and in accordance
with GAAP.
"CURRENT ASSETS" shall mean, with respect to any person, at
any date, the aggregate amount of all assets of such person that would
be classified as current assets on a balance sheet of such person at
such date in accordance with GAAP.
"CURRENT LIABILITIES" shall mean, with respect to any person,
at any date, the aggregate amount of all liabilities of such person
that would be classified as current liabilities on a balance sheet of
such person at such date in accordance with GAAP (including tax and
other proper accruals and the current portion of any Indebtedness).
Notwithstanding the foregoing, in the case of the Borrower, the unpaid
principal amount of the Notes shall, if no Default or Event of Default
shall have occurred and be continuing, not be considered a Current
Liability.
"ELIGIBLE INVENTORY" shall mean merchandise inventories owned
by a Credit Party, stated at the lower of cost or market, using the
retail method (determined in accordance with GAAP) PROVIDED that no
inventory shall be considered Eligible Inventory, if it is:
(1) not subject to a first priority perfected
security interest in favor of the Collateral Agent created
pursuant to the Security Agreement;
(2) not in conformity in all material respects with
(A) all standards imposed by any governmental agency or
authority, and (B) all representations, warranties and
covenants with respect to inventory contained in this
Agreement or any of the other Credit Documents;
(3) not finished goods that are in good and saleable
condition (as determined in accordance with GAAP and any
applicable legal requirements);
(4) not located in the United States or in transit to
or from the United States;
(5) subject to any claim that a supplier or other
creditor of a Credit Party or any Affiliate of any Credit
Party, has asserted that might rank equally
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Exhibit 10.1.2
with or superior to the security interest of the Collateral
Agent granted pursuant to any of the Security Documents; and
(6) Limited Inventory.
Without limiting the foregoing, the Collateral Agent, in its reasonable
discretion in accordance with its customary business practices and in a
commercially reasonable manner and upon one day's notice to Borrower,
may exclude from Eligible Inventory inventory other than inventory
described in clauses (1) through (6) above.
"ELIGIBLE RECEIVABLES" shall mean the gross outstanding
balance of trade accounts receivable arising out of sales of goods or
performance of services in the ordinary course of business by a Credit
Party LESS all finance charges, late fees and other unearned fees, and
LESS reserves for doubtful accounts determined in accordance with GAAP,
PROVIDED that no account will be treated as an Eligible Receivable if:
(1) it is not subject to a first priority perfected
security interest in favor of the Collateral Agent created
pursuant to the Security Agreement;
(2) the account debtor has disputed liability on the
account, or asserted any claim against the Borrower or its
Subsidiaries, or any of their respective Affiliates;
(3) the accounts of such account debtor represent
more than 10% of the Eligible Receivables, but only such
excess shall not constitute Eligible Receivables (provided
however, for the purposes of clarification, that this clause
(3) shall not apply to credit card settlements);
(4) it has remained unpaid for a period exceeding 90
days after the date of the invoice therefor, or the date the
related goods are shipped or delivered, if earlier;
(5) in cases where 10% or more in dollar amount of
the accounts due from an account debtor are or have become
ineligible under clause (4) above, the Collateral Agent
believes, in its reasonable business judgment, that collection
of accounts from such account debtor is insecure;
(6) the account debtor is an Affiliate of the
Borrower or any of its Subsidiaries;
(7) the Borrower or any of its Subsidiaries, to be
entitled to collect the account, is required to perform any
additional substantial service for, or perform or incur any
additional obligation to, the account debtor;
(8) the account debtor has filed a petition for
relief under the Bankruptcy Code (or similar action under any
successor law), made a general assignment for the benefit of
creditors, had filed against it any petition or other
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Exhibit 10.1.2
application for relief under the Bankruptcy Code (or similar
action under any successor law), failed, suspended business
operations, become insolvent, has admitted in writing its
inability to pay its debts as they mature, called a meeting of
its creditors for the purpose of obtaining any financial
concession or accommodation, or had or suffered a receiver or
a trustee to be appointed for all or a significant portion of
its assets or affairs;
(9) the account is denominated in other than United
States Dollars, payable outside the United States, or payable
by an account debtor located outside the United States, UNLESS
such account is fully backed by an irrevocable letter of
credit on terms, and issued by a financial institution,
acceptable to the Collateral Agent, and such irrevocable
letter of credit has been assigned to and is in the possession
of the Collateral Agent; or
(10) the account is an account of the United States
Government or any political subdivision thereof, or any agency
or instrumentality of any of the foregoing, UNLESS the
Collateral Agent has perfected a first priority security
interest in such account, subject to compliance with the
Assignment of Claims Act of 1940, as amended, or other similar
applicable laws or regulations.
Without limiting the foregoing, the Collateral Agent, in its reasonable
discretion in accordance with its customary business practices and in a
commercially reasonable manner and upon one day's notice to Borrower,
may exclude from Eligible Receivables accounts other than the accounts
described in clauses (1) through (10) above.
"LIMITED" means The Limited, Inc. and its Affiliates.
"LIMITED AGREEMENT" shall mean that certain Agreement dated as
of December 2000 by and between the Borrower and Limited, as the same
may be amended, restated and supplemented from time to time in
accordance with the provisions of section 9.19.
"LIMITED DOCUMENTS" shall mean the Limited Agreement, the
Limited Security Agreement, and each and every other agreement,
document, and financing statement executed in connection therewith.
"LIMITED INVENTORY" shall mean the merchandise inventory of
the Borrower or its Subsidiaries (as initially identified on Exhibit C
to the Limited Agreement as "Excess Merchandise") subject to a lien in
favor of Limited pursuant to the Limited Documents from time to time.
"LIMITED SECURITY AGREEMENT" shall mean that certain Security
Agreement dated as of December 2000 by and between the Borrower and
Limited, as the same may be amended, restated and supplemented from
time to time in accordance with the provisions of section 9.19.
"SSC" shall mean Schottenstein Stores Corporation, a Delaware
corporation and the majority shareholder of the Borrower.
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Exhibit 10.1.2
"SSC CREDIT AGREEMENT" shall mean the Credit Agreement dated
as of December __, 2000 between the Borrower and SSC, as the same may
be amended, waived, or otherwise modified from time to time.
"SSC DEBT" shall mean the Indebtedness incurred pursuant to
the SSC Credit Agreement.
"SSC DOCUMENTS" shall mean the SSC Credit Agreement, the SSC
Security Agreement, and each other document executed and delivered in
connection with the SSC Credit Agreement.
"SSC SECURITY AGREEMENT" shall mean the Security Agreement
dated as of December __, 2000 by the Borrower in favor of SSC, as the
same may be amended, waived, or otherwise modified from time to time,
entered into in connection with the SSC Credit Agreement.
"SUBORDINATION AGREEMENT" shall mean the Subordination
Agreement dated as of December ___, 2000 between SSC and the
Administrative Agent substantially in the form of Exhibit G hereto, as
the same may be amended, waived, or otherwise modified from time to
time.
"VCM ELIGIBLE INVENTORY" shall mean one-half of the
merchandise inventories owned by VCM, Ltd., stated at the lower of cost
or market, using the retail method, less any applicable reserves for
shrinkage, obsolescence or slow-moving goods (determined in accordance
with GAAP) PROVIDED that no inventory shall be considered VCM Eligible
Inventory, if it is not:
(1) in conformity in all material respects with all
standards imposed by any governmental agency or authority;
(2) finished goods that are in good and saleable
condition (as determined in accordance with GAAP and any
applicable legal requirements);
(3) located in the United States or in transit to or
from the United States; and
(4) free of any claim that a supplier or other
creditor of VCM, Ltd. or any Affiliate of VCM, Ltd., has
asserted that might rank equally with or superior to the
security interest of National City Bank.
Without limiting the foregoing, the Collateral Agent, in its reasonable
discretion in accordance with its customary business practices and in a
commercially reasonable manner and upon one day's notice to Borrower,
may exclude from VCM Eligible Inventory inventory other than inventory
described in clauses (1) through (4) above.
"VCM INVENTORY FACTOR" shall mean the lesser of:
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Exhibit 10.1.2
(a) 65% of VCM Eligible Inventory; and
(b) the Reserved Amount.
1.3. NO BORROWINGS IN EXCESS OF BORROWING BASE. Section 2.1 of the
Credit Agreement is amended by adding the following at the end thereof:
Notwithstanding anything to the contrary contained in this
Agreement, the Borrower shall have no right to incur any new or
additional Loans or obtain any new or increased Letter of Credit, and
no Lender or Letter of Credit Issuer shall have any obligation to make
any new or additional Loans or issue or increase the Stated Amount of
any Letter of Credit, if immediately after giving effect thereto the
Borrowing Base then in effect is such that any Loans would be required
to be prepaid, or any Letter of Credit Outstandings would be required
to be cash collateralized, pursuant to section 5.2 hereof.
1.4. PRICING CHANGES. The Pricing Grid Table contained in section
2.8(g) of the Credit Agreement is amended and restated in its entirety as
follows:
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
--------------------------------------------- ---------------------- ------------------------ ----------------------
RATIO OF
CONSOLIDATED TOTAL DEBT APPLICABLE APPLICABLE APPLICABLE
TO EURODOLLAR MARGIN PRIME RATE MARGIN COMMITMENT FEE RATE
CONSOLIDATED EBITDA
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 3.50 to 1.00 275.00 125.00 50.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 3.25 to 1.00 but 250.00 100.00 50.00
less than 3.50 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 3.00 to 1.00 but 225.00 75.00 50.00
less than 3.25 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 2.50 to 1.00 but 200.00 50.00 37.50
less than 3.00 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 2.00 to 1.00 but 175.00 25.00 37.50
less than 2.50 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 1.50 to 1.00 but 150.00 -0- 30.00
less than 2.00 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Equal to or greater than 1.00 to 125.00 -0- 25.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
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Exhibit 10.1.2
--------------------------------------------- ---------------------- ------------------------ ----------------------
RATIO OF
CONSOLIDATED TOTAL DEBT APPLICABLE APPLICABLE APPLICABLE
TO EURODOLLAR MARGIN PRIME RATE MARGIN COMMITMENT FEE RATE
CONSOLIDATED EBITDA
--------------------------------------------- ---------------------- ------------------------ ----------------------
1.00 but less than 1.50 to 1.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
Less than 1.00 to 1.00 100.00 -0- 25.00
--------------------------------------------- ---------------------- ------------------------ ----------------------
1.5. LETTER OF CREDIT PROVISIONS. Section 3.1(b) of the Credit
Agreement is amended and restated in its entirety as follows:
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings at such time, would exceed either (x) the amount
that is 25% of the Total General Revolving Commitment then in effect,
or (y) when added to the sum of the Reserved Amount and the aggregate
principal amount of all Loans then outstanding, an amount equal to the
Total General Revolving Commitment at such time; (ii) no Letter of
Credit shall be issued or renewed, or amended to increase the Stated
Amount thereof, if immediately after giving effect thereto the
Borrowing Base then in effect is such that any Loans would be required
to be prepaid or any Letter of Credit Outstandings would be required to
be cash collateralized pursuant to section 5.2 hereof; (iii) no
individual Letter of Credit (other than any Existing Letter of Credit)
shall be issued that has an initial Stated Amount less than $25,000
unless such lesser Stated Amount is acceptable to the Letter of Credit
Issuer; and (iv) each Letter of Credit shall have an expiry date
(including any renewal periods) occurring not later than the earlier of
(A) one year from the date of issuance thereof, unless a longer period
is approved by the relevant Letter of Credit Issuer and Lenders (other
than any Defaulting Lender) holding a majority of the Total General
Revolving Commitment, and (B) 15 Business Days prior to the Maturity
Date, in each case on terms acceptable to the Administrative Agent and
the relevant Letter of Credit Issuer.
1.6. MANDATORY PREPAYMENT PROVISIONS. Sections 5.2(a) and 5.2(b) of the
Credit Agreement are amended and restated in their entirety as follows:
5.2. MANDATORY PREPAYMENTS. The Loans shall be subject to
mandatory prepayment in accordance with the following provisions:
(a) IF OUTSTANDING GENERAL REVOLVING LOANS, SWING
LINE REVOLVING LOANS, LETTER OF CREDIT OUTSTANDINGS AND
RESERVED AMOUNT EXCEED TOTAL GENERAL REVOLVING COMMITMENT OR
BORROWING BASE. If on any date (after giving effect to any
other payments on such date) the sum of (i) the aggregate
outstanding principal amount of General Revolving Loans and
Swing
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Exhibit 10.1.2
Line Revolving Loans, PLUS (ii) the aggregate amount of Letter
of Credit Outstandings, PLUS (iii) the Reserved Amount exceeds
the lesser of (x) the Total General Revolving Commitment as
then in effect and (y) the Borrowing Base as then in effect,
then the Borrower shall prepay on such date that principal
amount of General Revolving Loans and, after General Revolving
Loans have been paid in full, Swing Line Revolving Loans, and
after Swing Line Revolving Loans have been paid in full,
Unpaid Drawings, in an aggregate amount at least equal to such
excess and conforming in the case of partial prepayments of
any Loans to the applicable requirements as to the amounts of
partial prepayments that are contained in section 5.1. If,
after giving effect to the prepayment of General Revolving
Loans, Swing Line Revolving Loans and Unpaid Drawings, the
aggregate amount of Letter of Credit Outstandings exceeds the
lesser of (x) the Total General Revolving Commitment as then
in effect and (y) the Borrowing Base as then in effect, then
the Borrower shall pay to the Administrative Agent an amount
in cash and/or Cash Equivalents equal to such excess and the
Administrative Agent shall hold such payment as security for
the reimbursement obligations of the Borrower hereunder in
respect of Letters of Credit pursuant to a cash collateral
agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower
(which shall permit certain investments in Cash Equivalents
satisfactory to the Administrative Agent and the Borrower
until the proceeds are applied to the secured obligations).
(b) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED
UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT PLUS RESERVED
AMOUNT. If on any date (after giving effect to any other
payments on such date) the aggregate outstanding principal
amount of Swing Line Revolving Loans exceeds the sum of (x)
the Unutilized Total General Revolving Commitment as then in
effect that is available for a Borrowing made in compliance
with the Borrowing Base provisions of sections 2.1 and 5.2(a)
hereof, PLUS (y) the Reserved Amount, the Borrower shall
prepay on such date Swing Line Revolving Loans in an aggregate
amount at least equal to such excess and conforming in the
case of partial prepayments of Swing Line Revolving Loans to
the requirements as to the amounts of partial prepayments of
Swing Line Revolving Loans which are contained in section 5.1.
1.7. ANNUAL CLEANDOWN. Section 5.2(d) of the Credit Agreement is hereby
deleted in its entirety.
1.8. SENIOR DEBT. Section 7.23 of the Credit Agreement is hereby
amended by adding the following at the end thereof:
The Obligations constitute "Senior Indebtedness", as defined in the SSC
Credit Agreement; the SSC Credit Agreement is one of the SSC Documents;
and the Loans and other Obligations rank senior in right of payment to
the SSC Debt and the security interests securing the Loans and the
other Obligations are superior and prior to the security interests
securing the SSC Debt, each as provided in the subordination provisions
of the SSC Credit Agreement.
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Exhibit 10.1.2
1.9. BORROWING BASE CERTIFICATES. Section 8.1(d) of the Credit
Agreement is hereby amended and restated in its entirety as follows:
(d) BORROWING BASE CERTIFICATES; BUDGETS. As soon as
practicable and in any event within 20 days after the end of each
fiscal month, (i) a written report, reasonably satisfactory in form and
scope to the Collateral Agent, as to the inventory and accounts
receivable of the Borrower and its Subsidiaries, setting forth the
type, amount, value, location and aging of the Borrower's and its
Subsidiaries' inventory and accounts receivable as of the end of such
month, and (ii) a borrowing base certificate as to such inventory and
accounts receivable in a form reasonably satisfactory in scope and form
to the Collateral Agent (a "BORROWING BASE CERTIFICATE") relating to
the fiscal month just ended.
Not later than 45 days after the commencement of the first
fiscal quarter in any fiscal year of the Borrower and its Subsidiaries,
a consolidated budget in reasonable detail for such entire fiscal year,
and (if and to the extent prepared by management of the Borrower) for
any subsequent fiscal years, as customarily prepared by management for
its internal use, setting forth, with appropriate discussion, the
budgeted balance sheet, income statement, operating cash flows and
capital expenditures of the Borrower and its Subsidiaries for the
period covered thereby, and the principal assumptions upon which such
budget is based.
1.10. LANDLORD/MORTGAGEE WAIVERS; BAILEE LETTERS. Section 8.14 of the
Credit Agreement is hereby amended and restated in its entirety as follows:
8.14. LANDLORD/MORTGAGEE WAIVERS; BAILEE LETTERS. If requested
to do so by the Administrative Agent (which may give any such request
on its own initiative and shall give any such request when so
instructed by the Required Lenders), the Borrower will promptly (and in
any event within 60 days following any such request) use commercially
reasonable efforts to obtain, and thereafter the Borrower will use
commercially reasonable efforts to maintain in effect, (a) lien waivers
from landlords and mortgagees having any interest in any Real Property
on which any tangible items of Collateral, having a minimum value as
specified by the Administrative Agent in such request, are located,
substantially in the form provided by, or otherwise reasonably
acceptable to, the Administrative Agent (it being understood that no
lien waivers shall be required where the underlying lease or other
document itself contains a lien waiver covering inventory and equipment
which the Administrative Agent considers adequate, and further, it is
expressly understood that no lien waivers will be requested for
locations other than warehouse locations), and (b) bailee letters,
substantially in the form provided by, or otherwise reasonably
acceptable to, the Administrative Agent, from persons unrelated to any
of the Credit Parties who are parties to the Security Agreement to whom
any tangible items of Collateral having a minimum value as specified by
the Administrative Agent in such request, have been delivered for
storage, use, consignment or similar purposes.
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Exhibit 10.1.2
1.11. LIENS. Section 9.3 of the Credit Agreement is hereby amended by
inserting new clauses (d) and (e) as follows:
(d) SSC Debt: Liens that secure the indebtedness represented
by the SSC Debt permitted under Section 9.4(e).
(e) Limited Inventory: Liens of Limited on the Limited
Inventory pursuant to the Limited Documents.
1.12. INDEBTEDNESS. Section 9.4 of the Credit Agreement is hereby
amended by inserting a new clause (e) after clause (d) as follows and
relettering the existing clauses (e) and (f) accordingly:
(e) SSC Debt: the SSC Debt;
1.13. CERTAIN NEGATIVE COVENANTS. Sections 9.7 through 9.11 of the
Credit Agreement are amended and restated in their entirety as follows:
9.7. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower
will not permit its Consolidated Tangible Net Worth at any time to be
less than $202,610,000, EXCEPT that:
(a) effective as of the end of the Borrower's fiscal
quarter ended on or nearest to February 3, 2001, and as of the
end of each fiscal quarter thereafter, the foregoing amount
(as it may from time to time be increased as herein provided),
shall be increased by 50% of the Consolidated Net Income of
the Borrower for the fiscal quarter ended on such date, if any
(there being no reduction in the case of any such Consolidated
Net Income which reflects a deficit);
(b) the foregoing amount (as it may from time to time
be increased as herein provided), shall be increased by an
amount equal to 90% of the cash proceeds (net of underwriting
discounts and commissions and other customary fees and costs
associated therewith) from any sale or issuance of equity by
the Borrower after February 3, 2001 (other than the following:
(i) Redeemable Stock, (ii) any conversion to equity of the
Subordinated Bridge Debt, (iii) any sale or issuance to
management or employees or employee benefit plans pursuant to
employee benefit plans of general application, (iv) any
issuance of equity for the purposes of making a charitable
contribution of such equity that does not result in cash
proceeds (net of underwriting discounts and commissions and
other customary fees and costs associated therewith) and
provided that all such charitable contributions shall not
exceed $5,000,000 in the aggregate prior to the Maturity Date,
(v) any issuance in connection with the exchange of equity for
trade payables that does not result in cash proceeds (net of
underwriting discounts and commissions and other customary
fees and costs associated therewith), and (vi) any issuance in
connection with a capital contribution from SSC); PROVIDED
that if the Subordinated Bridge Debt is retired in full out of
the net proceeds of an offering or other issuance involving
the issuance by the Borrower of shares of its
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Exhibit 10.1.2
capital stock (other than Redeemable Stock), then effective
immediately after giving effect to such issuance and such
retirement, and the increase provided for in this clause (b)
as a result of such issuance, the foregoing percentage shall
change from 90% to 50%;
(c) the foregoing amount (as it may from time to time
be increased as herein provided), shall be increased by an
amount equal to 90% of (x) the principal amount of
Indebtedness (other than the Subordinated Bridge Debt) that is
converted or exchanged after February 3, 2001 into common
stock of the Borrower or any of its Subsidiaries or (y) the
higher of stated value or liquidation value of Redeemable
Stock, as the case may be, held by any person other than the
Borrower or any of its Subsidiaries, which is converted or
exchanged after February 3, 2001 into common stock of the
Borrower or any of its Subsidiaries; and
(d) the foregoing amount (as it may from time to time
be increased as herein provided), shall be increased by an
amount equal to 90% of the increase in Consolidated Tangible
Net Worth attributable to the issuance of common stock or
other equity interests (other than Redeemable Stock)
subsequent to February 3, 2001 as consideration in any
Acquisitions permitted under section 9.2.
9.8. MAXIMUM CAPITAL EXPENDITURES. The Borrower will not
permit Consolidated Capital Expenditures in any fiscal year to exceed
in the aggregate 75% of the sum of (i) Consolidated Depreciation
Expense plus (ii) Consolidated Amortization Expense for such fiscal
year.
9.9. MINIMUM WORKING CAPITAL. The Borrower will not permit
Consolidated Working Capital to be less than $200,000,000 at any time.
9.10. [RESERVED.]
9.11. [RESERVED.]
1.14. CROSS DEFAULT UNDER OTHER INSTRUMENTS. Section 10.1(e) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(e) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to
(w) any Indebtedness (other than the Obligations) owed to any Lender,
(x) any Indebtedness that constitutes Subordinated Bridge Debt or
Subordinated Bridge Debt Refinancing, (y) the SSC Credit Agreement, or
(z) any other Indebtedness having an aggregate unpaid principal amount
of $1,000,000 or greater, and in any such case such default shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, or (ii) default
in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods
applicable to such observance, performance or condition shall have
expired), or any other event shall occur
14
Exhibit 10.1.2
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or shall be
required to be prepaid (other than by a regularly scheduled required
prepayment or redemption, prior to the stated maturity thereof); or
1.15. MODIFICATIONS OF SSC DOCUMENTS. Section 9 of the Credit Agreement
is hereby amended by adding a new section 9.18 as follows:
9.18. MODIFICATIONS OF SSC DOCUMENTS. The Borrower will not
amend, modify or agree to any other change to any SSC Document as in
effect on December __, 2000, unless, prior to the effectiveness
thereof, any such amendment, modification or other change has been
approved in writing by the Administrative Agent, acting on instructions
from the Required Lenders.
1.16. MODIFICATIONS OF LIMITED DOCUMENTS. Section 9 of the Credit
Agreement is hereby amended by adding a new section 9.19 as follows:
9.19. MODIFICATIONS OF THE LIMITED DOCUMENTS. The Borrower
will not amend, modify or agree to any other change to the Limited
Documents from their forms attached hereto as Exhibits L-1 and L-2
which amendment, modification or change expands the scope of the liens
granted thereunder, the scope of the collateral covered thereby, or
otherwise conflicts with or is superior to the liens or security
interests of the Administrative Agent or the Lenders, unless, prior to
the effectiveness thereof, such amendment, modification or other change
has been approved in writing by the Administrative Agent, acting on
instructions from the Required Lenders.
1.17. REPAYMENT OF THE SSC DEBT. Section 9 of the Credit Agreement is
hereby amended by adding a new section 9.20 as follows:
9.20. REPAYMENT OF SSC DEBT. The Borrower will not permit the
aggregate outstanding principal balance of the SSC Debt at any time to
be less than $20,000,000 prior to the later of (i) receipt by the
Administrative Agent of audited financial statements for the fiscal
year ended February 2, 2002 that demonstrates Consolidated EBITDA for
such fiscal year of no less than $100,000,000, or (ii) April 30, 2002.
SECTION 2. WAIVER
Subject to the satisfaction of each of the conditions to effectiveness
set forth in Section 5, the Lenders hereby waive each of the Existing Defaults.
This waiver is limited strictly to the Existing Defaults, and shall not
constitute a waiver of any other Default or Event of Default, whether now
existing or hereafter arising, including without limitation any subsequent
failure of the Borrower to comply with the covenants set forth in Section 9.7
through 9.11 of the Credit Agreement.
15
Exhibit 10.1.2
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
3.1. AUTHORIZATION AND VALIDITY OF DOCUMENTS. This Amendment, each
Security Document, and each SSC Document has been duly authorized by all
necessary corporate action on the part of each Credit Party party thereto, has
been duly executed and delivered by a duly authorized officer of each such
Credit Party, and constitutes the valid and binding agreement of each such
Credit Party, enforceable against such Credit Party in accordance with its
terms.
3.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Credit Parties contained in the Credit Agreement and in the other Credit
Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties are hereby reaffirmed as
true and correct in all material respects as of the date when made.
3.3. NO EVENT OF DEFAULT. Except for the Existing Defaults, no
condition or event has occurred or exists that constitutes a Default or an Event
of Default.
3.4. COMPLIANCE. The Borrower is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and each
Credit Party is in full compliance with the other Credit Documents to which it
is a party.
SECTION 4. CONTINUING EFFECT OF CREDIT DOCUMENTS.
This Amendment shall not constitute an amendment or waiver of or
consent to any provision of the Credit Agreement or any other Credit Document
not expressly referred to herein and shall not be construed as an amendment,
waiver, or consent to any action on the part of the Borrower that would require
an amendment, waiver, or consent of the Administrative Agent or the Lenders
except as expressly stated herein. Except as expressly amended hereby, the
provisions of the Credit Agreement and each other Credit Document are and shall
remain in full force and effect in accordance with their respective terms.
SECTION 5. CONDITIONS TO EFFECTIVENESS.
This Amendment shall become effective on a date (the "AMENDMENT
EFFECTIVE DATE"), on or before December ___, 2000, if the following conditions
shall have been satisfied on and as of such date:
(a) counterparts of this Amendment shall have been executed by
the Borrower, the Required Lenders and the Administrative Agent, and
counterparts hereof as so executed shall have been delivered to the
Administrative Agent;
16
Exhibit 10.1.2
(b) the Acknowledgment and Consent appended hereto shall have
been executed by the Credit Parties named therein, and counterparts
thereof as so executed shall have been delivered to the Administrative
Agent;
(c) the Credit Parties named therein and the Collateral Agent
shall have executed and delivered the Security Documents substantially
in the respective forms attached hereto as Exhibits A and B, and the
applicable Security Documents shall be in full force and effect;
(d) the Borrower shall have delivered to the Collateral Agent
a Borrowing Base Certificate pursuant to section 8.1(d) of the Credit
Agreement as amended hereby, containing information as of [October 31,
2000], and such Borrowing Base Certificate shall be satisfactory in
form, detail and scope to the Collateral Agent;
(e) the Borrower shall have delivered to the Administrative
Agent, in sufficient quantity for the Lenders, a certificate signed on
behalf of the Borrower by its chief financial officer, (i) setting
forth calculations required to establish compliance as of [__________,
2000], with the financial covenants contained in sections 9.4(c),
9.5(p), and 9.6 through 9.11 of the Credit Agreement, as amended by
this Amendment, and (ii) stating that no Default or Event of Default
exists under the Credit Agreement as amended by this Amendment;
(f) the Borrower shall have delivered to the Administrative
Agent an opinion, addressed to the Administrative Agent and each of the
Lenders and dated the Effective Date, from Porter, Wright, Xxxxxx &
Xxxxxx, special counsel to the Borrower, substantially in the form of
Exhibit C hereto and covering such other matters incident to the
transactions contemplated hereby as the Administrative Agent may
reasonably request, such opinion to be in form and substance
satisfactory to the Administrative Agent; the Borrower shall further
cause to be delivered to the Administrative Agent an opinion, addressed
to the Administrative Agent and each of the Lenders and dated the
Effective Date, from Porter, Wright, Xxxxxx & Xxxxxx, covering the
perfection of security interests in each jurisdiction (other than Ohio)
for which UCC financing statements are prepared and executed within
five days of the Amendment Effective Date, it being expressly
understood and agreed that Borrower's failure to deliver such opinion
within five days of the Amendment Effective Date shall constitute an
Event of Default under the Credit Agreement;
(g) each of the SSC Documents shall be satisfactory in form
and substance to the Required Lenders, and the Administrative Agent
shall have received fully executed counterparts of each SSC Document,
and each of the SSC Documents shall be in full force and effect;
(h) the Borrower shall have obtained an initial advance of the
SSC Debt of not less than $20,000,000;
(i) the Administrative Agent shall have received from SSC (i)
evidence satisfactory to it of the consummation of the purchase by SSC
of all of the Borrower's
17
Exhibit 10.1.2
outstanding Subordinated Bridge Debt, and (ii) a letter in form and
substance satisfactory to the Required Lenders with respect to SSC's
commitment to restructure the Subordinated Bridge Debt;
(j) SSC and the Administrative Agent shall have agreed to
restructure the subordination provisions of the Subordinated Bridge
Debt in a manner satisfactory to the Required Lenders in their
reasonable discretion substantially in the form of Exhibit H hereto in
the event that the Subordinated Bridge Debt has not been converted to
equity of the Borrower or any of its Subsidiaries on or prior to March
15, 2001; it being expressly understood that, in the event that the
Subordinated Bridge Debt has not been converted to equity of the
Borrower or any of its Subsidiaries on or prior to March 15, 2001, the
failure to restructure such subordination provisions shall constitute
an Event of Default under the Credit Agreement;
(k) The Borrower shall have paid or caused to be paid all
reasonable fees and expenses of the Administrative Agent and of special
counsel to the Administrative Agent which have been invoiced on or
prior to such date in connection with the preparation, execution and
delivery of this Amendment and the other Credit Documents and the
consummation of the transactions contemplated hereby and thereby;
(l) The Administrative Agent shall have received, in
sufficient quantity for the Administrative Agent and the Lenders,
certified copies of the resolutions of the Board of Directors of the
Borrower and each other Credit Party, approving this Amendment and each
of the Credit Documents to which the Borrower or any such other Credit
Party, as the case may be, is or may become a party, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to the execution, delivery and
performance by the Borrower or any such other Credit Party of this
Amendment and each of the Credit Documents to which it is or may become
a party;
(m) The Administrative Agent shall have received, in
sufficient quantity for the Administrative Agent and the Lenders, a
certificate of the Secretary or an Assistant Secretary of the Borrower
and of each other Credit Party, certifying (i) the names and true
signatures of the officers of the Borrower or such other Credit Party,
as the case may be, authorized to sign this Amendment and the Credit
Documents to which the Borrower or such other Credit Party is a party
and any other documents to which the Borrower or any such other Credit
Party is a party which may be executed and delivered in connection
herewith (ii) the articles of incorporation (or other applicable
organizational documents) of such Credit Party, each as certified by
the secretary of state of the jurisdiction of its incorporation or
organization, (iii) the by-laws (or other applicable organizational
documents) of such Credit Party, and (iv) a certificate of good
standing of such Credit Party in the jurisdiction in which it is
incorporated or organized and in each other jurisdiction in which such
Credit Party is required to be qualified to do business;
(n) The Security Documents (or proper notices or financing
statements in respect thereof) shall have been duly recorded, published
and filed in such manner and in such places as is required by law to
establish, perfect, preserve, and protect the rights and security
interests of the parties thereto and their respective successors and
assigns, all
18
Exhibit 10.1.2
collateral items required to be physically delivered to the Collateral
Agent thereunder shall have been so delivered, accompanied by any
appropriate instruments of transfer, and all taxes, fees and other
charges then due and payable in connection with the execution,
delivery, recording, publishing and filing of such instruments shall
have been paid in full;
(o) The Collateral Agent shall have received certificates of
insurance and other evidence, satisfactory to it, of compliance with
the insurance requirements of the Credit Agreement and the Security
Documents;
(p) The Administrative Agent shall have received completed
requests for information on Form UCC-11, or search reports from one or
more commercial search firms acceptable to the Administrative Agent,
listing all of the effective financing statements filed against any
Credit Party which is a party to any Security Document in any
jurisdiction in which such Credit Party maintains an office or in which
any Collateral of such Credit Party is located, together with copies of
such financing statements;
(q) All corporate and other proceedings and all documents
incidental to the transactions contemplated hereby shall be
satisfactory in substance and form to the Administrative Agent and the
Required Lenders, and the Administrative Agent and its special counsel
and the Lenders shall have received all such counterpart originals or
certified or other copies of such documents as the Administrative Agent
or its special counsel or any Lender may reasonably request; and
(r) The Limited Documents shall be satisfactory in form and
substance to the Required Lenders and be substantially in the form of
Exhibits L-1 and L-2 attached hereto, and the Administrative Agent
shall have received fully executed counterparts of the Limited
Documents.
and thereafter this Amendment shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent, and each Lender and their respective
permitted successors and assigns. After this Amendment becomes effective, the
Administrative Agent will promptly furnish a copy of this Amendment to each
Lender and the Borrower.
SECTION 6. MISCELLANEOUS.
6.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by the Administrative Agent or any
Lender or any subsequent Loan or other Credit Event shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.
6.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference
19
Exhibit 10.1.2
therein to the Credit Agreement shall mean a reference to the Credit Agreement
as amended hereby.
6.3. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower shall pay on demand all
reasonable costs and expenses incurred by the Administrative Agent in connection
with the preparation, negotiation, and execution of this Amendment, including
without limitation the reasonable costs and fees of the Administrative Agent's
special legal counsel, regardless of whether this Amendment becomes effective in
accordance with the terms hereof, and all reasonable costs and expenses incurred
by the Administrative Agent or any Lender in connection with the enforcement or
preservation of any rights under the Credit Agreement, as amended hereby.
6.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
6.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
6.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
6.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.
6.8. JURY TRIAL WAIVER. The parties hereto hereby confirm that the jury
trial waiver provisions of section 12.8(c) of the Credit Agreement shall be
fully applicable to this Amendment and the transactions contemplated hereby.
6.9. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
[The balance of this page is intentionally blank.]
20
Exhibit 10.1.2
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
VALUE CITY DEPARTMENT STORES, INC. NATIONAL CITY BANK, INDIVIDUALLY AS A
LENDER, THE SWING LINE LENDER, A
LETTER OF CREDIT ISSUER AND IN ITS
CAPACITY AS THE COLLATERAL AGENT, THE
DOCUMENTATION AGENT AND THE
BY:_________________________________ ADMINISTRATIVE AGENT
Xxxxx X. XxXxxxx, Chief Financial
Officer and Treasurer
BY:___________________________________
Xxxxx X. Xxxxxxx,
Senior Vice-President
BANK ONE, N. A., AS A LENDER LASALLE BANK NATIONAL ASSOCIATION,
AS A LENDER
BY:_________________________________ BY:___________________________________
TITLE: TITLE:
FIRSTAR CORPORATION, AS A LENDER HSBC BANK USA, AS A LENDER
BY:_________________________________ BY:_________________________________
TITLE: TITLE:
THE HUNTINGTON NATIONAL BANK, FIFTH THIRD BANK, CENTRAL OHIO,
AS A LENDER AS A LENDER
BY:_________________________________ BY:___________________________________
TITLE: TITLE:
BANK LEUMI USA, CHICAGO BRANCH, ASSOCIATED BANK MILWAUKEE,
AS A LENDER AS A LENDER
BY:_________________________________ BY:___________________________________
TITLE: TITLE:
21
Exhibit 10.1.2
FIRST BANK, AS A LENDER XXXXX FARGO BANK N.A., AS A LENDER
BY:_________________________________ BY:_________________________________
TITLE: TITLE:
THE FUJI BANK, LIMITED, AS A LENDER
BY:_________________________________
TITLE:
