Exhibit 10.3.1
AMENDMENT NO. 1 TO
AMENDED AND RESTATED SENIOR CONVERTIBLE LOAN AGREEMENT
Amendment No. 1, dated as of June 11, 2002, to the Amended and Restated
Senior Convertible Loan Agreement (the "LOAN AGREEMENT") dated as of June 11,
2002, by and among Value City Department Stores, Inc., an Ohio corporation (the
"BORROWER"), Shonac Corporation, an Ohio corporation ("SHONAC"), DSW Shoe
Warehouse, Inc., a Missouri corporation ("DSW"), Gramex Retail Stores, Inc., a
Delaware corporation ("GRAMEX"), VCM, Ltd., an Ohio limited liability company
("VCM"), Filene's Basement, Inc., a Delaware corporation ("FILENE'S"), GB
Retailers, Inc., a Delaware corporation ("GB"), X.X. Xxxxxxxx Delivery, Inc., a
Delaware corporation ("JS"), Value City Department Stores Services, Inc. a
Delaware corporation ("VC SERVICES"), Value City Limited Partnership, an Ohio
limited partnership ("VCLP"), Value City of Michigan, Inc., a Michigan
corporation ("VC MICHIGAN"), Westerville Road GP, Inc., a Delaware corporation
("WESTERVILLE GP"), Westerville Road LP, Inc. a Delaware corporation
("WESTERVILLE LP", and together with Shonac, DSW, Gramex, VCM, Filene's, GB, JS,
VC Services, VCLP, VC Michigan and Westerville GP, each a "GUARANTOR", and
collectively, the "GUARANTORS"), the lenders from time to time party hereto
(each a "LENDER" and collectively, the "LENDERS"), and Schottenstein Stores
Corporation, a Delaware corporation ("SSC"), as Agent (in such capacity,
together with its successors, if any, the "AGENT") and as a Lender.
RECITALS
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent are
parties to the Loan Agreement;
WHEREAS, SSC, the sole Lender under the Loan Agreement, will,
concurrently with the effectiveness of this Amendment, sell and assign to
Cerberus Partners, L.P. ("CPLP"), 50% of its right, title and interest as Lender
under the Loan Agreement pursuant to the terms of the Assignment and Acceptance,
dated the date hereof, between SSC and CPLP (the "SSC ASSIGNMENT");
WHEREAS, it is a condition precedent to the effectiveness of the SSC
Assignment that the Loan Agreement be amended to reflect the transactions
contemplated by the SSC Assignment;
WHEREAS, in connection with such amendment the Borrower has requested
and the Lenders have agreed to amend certain terms and conditions of the Loan
Agreement; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
1. DEFINITIONS. All terms used herein which are defined in the Loan
Agreement and not otherwise defined herein are used herein as defined therein.
2. DEFINITIONS IN LOAN AGREEMENT.
(a) Section 1.01 of the Loan Agreement is hereby amended by
adding the following defined terms in the appropriate alphabetical order
therein:
"ACCOUNT DEBTOR" means each debtor, customer or obligor in any way
obligated on or in connection with any Accounts Receivable.
"ACCOUNTS RECEIVABLE" means, with respect to any Person, any and all
rights of such Person to payment for goods sold and/or services rendered,
including accounts, general intangibles and any and all such rights evidenced by
chattel paper, instruments or documents, whether due or to become due and
whether or not earned by performance, and whether now or hereafter acquired or
arising in the future, and any proceeds arising therefrom or relating thereto.
"AGENT ADVANCES" has the meaning specified therefor in section
10.08(a).
"ALLOCATED WARRANTS" has the meaning specified therefor in Section
14.02(c).
"APPROVED EXISTING TRANSACTION" has the meaning specified therefor
in Section 14.01.
"BORROWING BASE CERTIFICATE" has the meaning set forth in the
Revolving Credit Facility as in effect from time to time.
"BUYOUT EXERCISE NOTICE" has the meaning specified therefor in
Section 14.02(a).
"BUYOUT OPTION" has the meaning specified therefor in Section
14.02(a).
"BUYOUT SECURITIES" has the meaning specified therefor in Section
14.02(c).
"COLLATERAL" means all of the property and assets and all interests
therein and proceeds thereof now owned or hereafter acquired by any Person upon
which a Lien is granted or purported to be granted by such Person as security
for all or any part of the Obligations.
"CONTROL AGREEMENT" means the Collection Account Agreements (as
defined in the Revolving Credit Facility) made by a Loan Party and the financial
institutions maintaining Collection Accounts (as defined in the Revolving Credit
Facility) in favor of the Revolving Credit Facility Agent for the benefit of the
Lenders (among others) securing the Obligations (and the obligations owing to
certain other lenders).
"CPLP" has the meaning specified therefore in the preamble hereto.
"CPLP NON-CONVERSION NOTICE" has the meaning specified in Section
14.02.
"DRAG ALONG CONVERSION NOTICE" has the meaning specified therefor in
Section 13.01(c).
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"DRAG ALONG CONVERSION RIGHT" has the meaning specified therefor in
Section 13.01(c).
"EXCESS AVAILABILITY" has the meaning specified in the Revolving
Credit Facility.
"EXCESS AVAILABILITY RESERVE" has the meaning specified in the
Revolving Credit Facility.
"FAIRNESS COMMITTEE" has the meaning specified therefor in Section
14.02(b).
"INTERCREDITOR AGREEMENT" means the Intercreditor and Lien
Subordination Agreement, by and among the Agent, on behalf of itself and the
Lenders, the Revolving Credit Facility Agent, on behalf of itself and the
Revolving Facility Lenders, the Term Loan Agent, on behalf of itself and the
Term Loan Lenders and acknowledged and agreed by the Borrower and the
Guarantors.
"KEY LOAN PARTIES" means, collectively, the Borrower, Shonac, DSW,
Gramex, VCM, Filene's, GB, VCLP and VC Michigan.
"LANDLORD'S AGREEMENT" means a landlord's agreement consenting to
the recording of the Mortgages, in form and substance satisfactory to the Agent,
made by the fee owner (or ground or prime lessee with the consent of the fee
owner) of the real property secured by a Mortgage in favor of the Agent for the
benefit of the Lenders (among others) and delivered to the Agent pursuant to
Sections 4.01(d) and 6.01(a) and (i).
"LEASEHOLD MORTGAGE STATUS REPORT" means a monthly report that
reflects the Loan Parties' efforts to obtain leasehold Mortgages on
substantially all Leases of the Loan Parties, such report to contain sufficient
detail to enable the Agent to evaluate the status of the Loan Parties' efforts
on a property-by-property basis.
"MORTGAGE" means a mortgage (including, without limitation, a
leasehold mortgage, deed of trust or deed to secure debt), in form and substance
satisfactory to the Agent, made by a Loan Party in favor of the Agent for the
benefit of the Lenders (among others), securing the Obligations and the
obligations owing to certain other lenders, and delivered to the Agent pursuant
to Section 4.01(d), Section 6.01(a), Section 6.01(i) or otherwise.
"NON-CONVERSION NOTICE" has the meaning specified therefore in
Section 13.02(c).
"NOTIFICATION DATE" has the meaning specified therefor in Section
14.01.
"OBJECTION DATE" has the meaning specified therefor in Section
14.01.
"OBJECTION NOTICE" has the meaning specified therefor in Section
14.01.
"PLEDGE AGREEMENT" means a Pledge and Security Agreement made by a
Loan Party in favor of the Agent for the benefit of the Lenders, substantially
in the form of Exhibit F, securing the Obligations and delivered to the Agent.
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"REFERRAL NOTICE" has the meaning specified therefor in Section
14.02(b).
"REFERRED SSC TRANSACTION" has the meaning specified therefor in
Section 14.02(b).
"REVOLVING CREDIT FACILITY" means the $350,000,000 working capital
facility, of even date herewith, among the Borrower and certain of its
Subsidiaries, as borrowers and as guarantors, the Revolving Credit Facility
Agent and the Revolving Credit Facility Lenders.
"REVOLVING CREDIT FACILITY AGENT" means National City Commercial
Finance, Inc. ("NCCF"), as Administrative Agent and/or NCCF and Fleet Retail
Finance, Inc., as Collateral Agents for the Revolving Credit Facility Lenders,
and each of their respective successors and assigns.
"REVOLVING CREDIT FACILITY DOCUMENTS" means any agreement,
instrument or other document executed and delivered pursuant to the Revolving
Credit Facility or otherwise securing or evidencing any loan or obligation
thereunder.
"REVOLVING CREDIT FACILITY LENDERS" means the financial institutions
party to the Revolving Credit Facility.
"SECURITY AGREEMENT" means a Security Agreement made by a Loan Party
in favor of the Agent for the benefit of the Lenders, substantially in the form
of Exhibit E, securing the Obligations and delivered to the Agent.
"SSC" means Schottenstein Stores Corporation.
"SSC ASSIGNMENT" means the sale and assignment by SSC to CPLP of a
50% interest in the Borrower's Obligations under this Agreement, pursuant to the
terms of the SSC Assignment Agreement.
"SSC ASSIGNMENT AGREEMENT" means the Assignment and Acceptance
Agreement, dated June 11, 2002 by and between SSC and CPLP.
"SSC ASSIGNMENT DOCUMENTS" means the SSC Assignment Agreement and
each of the other documents delivered in connection with the SSC Agreement.
"SSC TRANSACTION" has the meaning specified therefor in Section
14.01.
"TERM LOAN AGENT" means CPLP, in its capacity as agent to the Term
Loan Lenders, or any successor thereto.
"TERM LOAN AGREEMENT" means the Financing Agreement dated as of June
11, 2002, among the Borrower and certain of its Subsidiaries, as borrowers and
as guarantors, the Term Loan Agent and the Term Loan Lenders.
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"TERM LOAN DOCUMENTS" means the Term Loan Agreement and any
agreement, instrument or other document executed and delivered pursuant to the
Term Loan Agreement or otherwise securing evidencing any loan or obligation
thereunder.
"TERM LOAN LENDERS" means the financial institutions party to the
Term Loan Agreement.
"UCC FILING AUTHORIZATION LETTER" means a letter duly executed by
each Loan Party authorizing the Agent to file appropriate financing statements
on Form UCC-1 without the signature of such Loan Party in such office or offices
as may be necessary or, in the opinion of the Agent, desirable to perfect the
security interests purported to be created by each Security Agreement, each
Pledge Agreement and each Mortgage.
"UNIFORM COMMERCIAL CODE" has the meaning specified therefor in
Section 1.03.
"WARRANTS" means any of the warrants issued pursuant to the terms of
the Term Loan Agreement.
"WARRANT STOCK" means the shares of Common Stock issuable on the
exercise of the Warrants.
(b) Section 1.01 of the Loan Agreement is hereby amended by
deleting the definitions of the terms "Change in Control", "Equipment", "Fair
Market Value", "Loan Documents", "Market Price", "Payment Office", "Registration
Rights Agreement" and "Required Lenders" and substituting the following
therefor:
"CHANGE IN CONTROL" means the occurrence of any of the following:
(i) the acquisition, by any person or group (within the meaning of Section
13(d)(3) of the Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 of the Exchange Act) of 25% or more of the issued and outstanding
capital stock of the Borrower having the right, under ordinary circumstances, to
vote for the election of directors of the Borrower, excluding from the foregoing
any acquisition pursuant to the issuance of the Warrants or the exercise of
conversion rights under this Agreement; (ii) other than as a result of the
exercise by CPLP of Board representation rights under this Agreement, more than
half of the Persons who were directors of the 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 SSC to be directors of the Borrower; (iii) the failure of the
Borrower to own, directly or indirectly, 95% of the capital stock of each of the
other Loan Parties; or (iv) the failure of SSC to possess, directly or
indirectly, the power to cause the direction of the management and policies of
the Key Loan Parties.
"EQUIPMENT" means, , without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor vehicles, rolling stock,
machinery, office equipment, plant equipment, tools, dies, molds, and other
goods, property, and assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and all accessions or
additions thereto, and substitutions therefor.
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"FAIR MARKET VALUE" means, on any date specified herein (i) in the
case of cash, the dollar amount thereof, (ii) in the case of a security, the
Current Market Price, and (iii) in all other cases, the fair value thereof (as
of a date which is within 20 days of the date as of which the determination is
to be made) determined in good faith by a committee of Borrower's Board of
Directors consisting of directors who are not Affiliates of Borrower, SSC or
CPLP; PROVIDED, however, that at the request of CPLP, the Fair Market Value
shall be determined in good faith by an independent investment banking firm
selected by Borrower, SSC and CPLP or, if that selection cannot be made within
ten days, by an independent investment banking firm selected by the American
Arbitration Association in accordance with its rules, and PROVIDED, further,
that Borrower shall pay all of the reasonable fees and expenses of any third
parties incurred in connection with determining the Fair Market Value.
"LOAN DOCUMENT" means this Agreement, any Guaranty, any Security
Agreement, any Pledge Agreement, any Mortgage, any Landlord's Agreement, any
Control Agreement, any UCC Filing Authorization Letter, the Intercreditor
Agreement, the Warrants, the Registration Rights Agreement and any other
agreement, instrument or other document executed and delivered pursuant hereto
or thereto or otherwise evidencing or securing any Loan or any other Obligation.
"MARKET PRICE" means, on any date specified herein, the amount per
share of the Common Stock, equal to (i) the last reported sale price of such
Common Stock, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices thereof regular way
on such date, in either case as officially reported on the principal national
securities exchange on which such Common Stock is then listed or admitted for
trading, (ii) if such Common Stock is not then listed or admitted for trading on
any national securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common Stock on
such date, (iii) if there shall have been no trading on such date or if the
Common Stock is not so designated, the average of the closing bid and asked
prices of the Common Stock on such date as shown by the NASD automated quotation
system, (iv) if trading in such Common Stock is quoted in the over-the-counter
market, the average of the closing bid and asked prices of the Common Stock on
such date as shown on the OTC Bulletin Board, or (v) if such Common Stock is not
then listed or admitted for trading on any national exchange or quoted in the
over-the-counter market, the fair value thereof (as of a date which is within 20
days of the date as of which the determination is to be made) determined in good
faith by a committee of Borrower's Board of Directors consisting of directors
who are not Affiliates of Borrower or SSC; PROVIDED, however, that at the
request of CPLP, the Market Price shall be determined in good faith by an
independent investment banking firm selected by Borrower, SSC and CPLP or, if
that selection cannot be made within 10 days, by an independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules, and PROVIDED, further, that Borrower shall pay all of the reasonable
fees and expenses of any third parties incurred in connection with determining
the Market Price.
"PAYMENT OFFICE" means the Agent's office located at 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or at such other office or
offices of the Agent as may be designated in writing from time to time by the
Agent to the Borrower.
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"REGISTRATION RIGHTS AGREEMENT" means the Amended and Restated
Registration Rights Agreement, in form and substance satisfactory to the Agent,
by and between the Borrower, the Lenders and the Term Loan C Lenders (as defined
in the Term Loan Agreement) with respect to the matters covered thereby.
"REQUIRED LENDERS" means CPLP and any of its affiliates to whom it
assigns all or any portion of its rights and obligations under this Agreement or
any of the Loan Documents.
(c) The definition of "EBITDA" in Section 1.01 of the Loan
Agreement is hereby amended by deleting the existing clause (E) and substituting
the following therefor:
(E) expenses incurred in connection with the Term Loan Agreement,
this Agreement, the Revolving Credit Facility, the refinancing of
the Borrower's existing credit facilities and any subsequent
refinancing of the Borrower.
(d) The definition of "Permitted Acquisition" in Section
1.01 of the Loan Agreement is hereby amended by restating clauses (g) and (h)
thereof in their entirety, and by adding a new section (i) thereto, in each
case, to read as follows:
(g) if the Person which is the subject of such Acquisition will
be maintained as a Subsidiary of a key Loan Party, such
Subsidiary shall have executed such documents as may be necessary
to be joined as a "Guarantor" hereunder, and the Agent shall have
received subject to the terms of the Intercreditor Agreement a
first priority security and mortgage interest (subject to
Permitted Liens) 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 Obligations; (h) the total consideration
paid for all Acquisitions (whether in cash, tangible property,
notes or other property (other than capital stock of the
Borrower)) after the Effective Date, shall not exceed in the
aggregate the sum of $15,000,000; and (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 (12) months immediately following
such Acquisition, shall not be less than $70,000,000.
(e) The definition of "Permitted Indebtedness" in Section
1.01 of the Loan Agreement is hereby amended by restating clauses (ii) and (v)
thereof to read in their entirety as follows:
(ii) any Indebtedness incurred under the Revolving Credit
Facility and the Term Loan Agreement;
(v) Indebtedness of the Loan Parties and any Subsidiary under (a)
the NCB Hedging Agreement, and (b) Hedging Agreements
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with any Revolving Credit Lender or an Affiliate of a Revolving
Credit Lender; PROVIDED that (1) such agreement is
non-speculative in nature, and (2) the Loan Parties have received
the written consent of the Agent (which consent shall not be
unreasonably withheld) prior to entering into such agreement;
(f) The definition of "Permitted Liens" in Section 1.01 of
the Loan Agreement is hereby amended by deleting the words "property or assets
of such Loan Party" in clause (ii)(y) thereof, and substituting the word
"Collateral" therefor, and (ii) by adding a new clause (xiv) and (xv) at the end
thereof to read in their entirety as follows:
(xiv) Liens securing Indebtedness assumed in connection with, or
continuing to exist after, but not incurred in connection with,
or contemplation of, a Permitted Acquisition, which Liens were in
effect prior to the consummation of the Permitted Acquisition;
PROVIDED, that such Liens may not extend to any Collateral of the
Loan Parties, or the Inventory, Accounts Receivable or General
Intangibles of the Person so acquired; and (xv) a Lien granted by
any Loan Party in connection with the Revolving Credit Facility
or the Term Loan Documents.
3. PREPAYMENTS. Section 2.04 of the Loan Agreement is hereby amended by
inserting the following after the words "After March 31, 2007" in the second
sentence thereof:
, and subject in all respects to the limitations contained in the
Revolving Credit Facility, the Term Loan Agreement and the
Intercreditor Agreement as in effect on the Effective Date,
4. FEES. (a) Section 3.01 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
Section 3.01 AUDIT AND COLLATERAL MONITORING FEES. The Key Loan
Parties acknowledge that representatives of the Agent may visit
any or all of the Loan Parties and/or conduct audits, inspections
and valuations of any or all of the Loan Parties in accordance
with the terms and conditions set forth in Sections 7.02 and
7.09. The Borrower agrees to pay the costs and expenses of such
visits, audits, inspections and valuations, whether conducted by
the Agent itself or by third-party representatives of the Agent.
(b) Section 3.04(b) of the Loan Agreement is hereby amended by
adding the words "and all proceeds of the Collateral," immediately prior to the
words "subject to the provisions of this Agreement".
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5. REPRESENTATIONS AND WARRANTIES. (a) Section 5.01(e)(ii) of the
Loan Agreement is hereby amended by deleting the last sentence thereof and
substituting the following therefore:
Except as indicated on such Schedule and the Liens created
pursuant to the Term Loan Documents, the Revolving Credit
Facility Documents and the Loan Documents, all such Capital Stock
is owned by the Borrower or one or more of its wholly-owned
Subsidiaries, free and clear of all Liens.
(b) Section 5.01(ee) of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
(ee) LOCATION OF COLLATERAL. Except as permitted by Section
6.02(r), there is no location at which any Loan Party has any
Collateral or the books, records and papers of the Loan Parties
pertaining thereto other than (i) those locations listed on
Schedule 5.01(ee) and (ii) at such other locations as to which
the Borrower has provided ten (10) days prior written notice to
the Agent of the intended location of the Collateral, books,
records and papers thereat. Schedule 5.01(ee) hereto contains a
true, correct and complete list, as of the Effective Date, of the
legal names and addresses of each warehouse at which Collateral
of each Loan Party is stored and/or the name and address of the
landlord on the Lease which covers such location and of all
service bureaus with which such records are maintained. None of
the receipts received by any Loan Party from any warehouse states
that the goods covered thereby are to be delivered to bearer or
to the order of a named Person or to a named Person and such
named Person's assigns. No tangible personal property of any Loan
Party is in the care or custody of any third party or stored or
entrusted with a bailee or other third party, except (x) as
otherwise disclosed pursuant to, or permitted by this Section, or
(y) for Inventory in an amount not to exceed $1,000,000 at Cost
(as defined in the Revolving Credit Facility) in the aggregate at
any time in the ordinary course of business.
(c) Section 5.01(ff) of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
(ff) SECURITY INTERESTS. Each Security Agreement creates in favor
of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral secured thereby.
Upon the filing of the UCC-1 financing statements described in
Section 4.01(d) and the recording of the Collateral Assignments
for Security referred to in each Security Agreement in the United
States Patent and Trademark Office and the United States
Copyright Office, as applicable, such security interests in and
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Liens on the Collateral granted thereby shall be perfected
security interests to the extent such security interests may be
perfected by such filings, and no further recordings or filings
are or will be required in connection with the creation,
perfection or enforcement of such security interests and Liens,
other than (i) the filing of continuation statements in
accordance with Applicable Law, (ii) the recording of the
Collateral Assignments for Security pursuant to each Security
Agreement in the United States Patent and Trademark Office and
the United States Copyright Office, as applicable, with respect
to after-acquired U.S. patent and trademark applications and
registrations and U.S. copyrights, (iii) the recordation of
appropriate evidence of the security interest in the appropriate
foreign registry with respect to all foreign intellectual
property, and (iv) control agreements for deposit accounts, liens
on titles and similar items. Subject to Permitted Liens, such
security interests in, and Liens on the Collateral shall be
first-priority security interests; provided, however, that any
security interest in and Lien on Collateral that is Revolving
Lender Primary Collateral (as defined in the Intercreditor
Agreement) shall be a perfected, second-priority Lien on and
security interest (subject only to Permitted Liens and the prior
Lien on and security interest in favor of the Revolving Credit
Facility Agent for the benefit of the Revolving Credit Facility
Lenders).
(d) Section 5.01(gg) of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
(gg) LIENS IN FAVOR OF AGENT. Other than the Excluded Property
(as defined in the Security Agreement), no Loan Party is the
owner of, nor has any interest in, any property or asset which is
not subject to a Lien in favor of the Agent (subject only to
Permitted Liens) to secure the Obligations.
6. COVENANTS.
(a) Section 6.01(a) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
(a) ADDITIONAL GUARANTIES AND COLLATERAL SECURITY. Cause (i) each
Subsidiary of any Loan Party not in existence on the Effective
Date, or any Unrestricted Subsidiary that at any time fails to
meet the requirements for an Unrestricted Subsidiary, to execute
and deliver to the Agent promptly and in any event within three
(3) Business Days after the formation, acquisition or change in
status thereof (A) a Guaranty guaranteeing the Obligations, (B) a
Security Agreement, (C) if such Subsidiary has any Subsidiaries,
a Pledge Agreement together with (x) certificates evidencing all
of the
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Capital Stock of any Person owned by such Subsidiary, (y) undated
stock powers executed in blank with signature guaranteed, and (z)
such opinion of counsel and such approving certificate of such
Subsidiary as the Agent may reasonably request in respect of
complying with any legend on any such certificate or any other
matter relating to such shares, (D) one or more Mortgages
creating on any real property having a book value in excess of
$1,000,000, or leased property having an annual minimum fixed
rent in excess of $750,000 (if the lease term (including
extensions) is less than five years) or $250,000 (if the lease
term (including extensions) is equal to or greater than five
years) of such Subsidiary a perfected, Lien on such real property
subject only to Permitted Liens, a Title Insurance Policy
covering such owned real property, a current ALTA survey thereof
and a surveyor's certificate, each in form and substance
satisfactory to the Agent, together with such other agreements,
instruments and documents as the Agent may reasonably require
whether comparable to the documents required under Section
6.01(i) or otherwise (it being understood that the Loan Parties
shall use their reasonable best efforts (which shall not include
the payment of additional sums (other than incidental expenses))
to obtain such Mortgage and other documents) , and (E) such other
agreements, instruments, approvals, legal opinions or other
documents reasonably requested by the Agent in order to create,
perfect, establish the first priority of or otherwise protect any
Lien purported to be covered by any such Security Agreement,
Pledge Agreement or Mortgage or otherwise to effect the intent
that such Subsidiary shall become bound by all of the terms,
covenants and agreements contained in the Loan Documents and that
all property and assets of such Subsidiary shall become
Collateral for the Obligations; and (ii) each owner of the
Capital Stock of any such Subsidiary to execute and deliver
promptly and in any event within three (3) Business Days after
the formation or acquisition of such Subsidiary a Pledge
Agreement, together with (A) certificates evidencing all of the
Capital Stock of such Subsidiary, (B) undated stock powers or
other appropriate instruments of assignment executed in blank
with signature guaranteed, (C) such opinion of counsel and such
approving certificate of such Subsidiary as the Agent may
reasonably request in respect of complying with any legend on any
such certificate or any other matter relating to such shares and
(D) such other agreements, instruments, approvals, legal opinions
or other documents requested by the Agent; PROVIDED, HOWEVER,
that 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, or the
requirements applicable to Unrestricted Subsidiaries.
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(b) Section 6.01(d) of the Loan Agreement is hereby
amended by deleting the words "its properties and assets" in clause (i) thereof,
and substituting the words "the Collateral" therefor.
(c) Section 6.01(e) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
(e) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Subsidiaries to maintain, insurance (including, without
limitation, comprehensive general liability, hazard, rent and
business interruption insurance) with responsible and reputable
insurance companies or associations (which shall include the
companies presently providing such insurance, or such other
companies as may be selected by the Borrower with the consent of
the Agent, whose consent shall not be unreasonably withheld) with
respect to its properties (including all real properties leased
or owned by it) and business, in such amounts, in such form, for
such periods and covering such risks as is required by any
Governmental Authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated
and in any event in amount, adequacy and scope reasonably
satisfactory to the Agent. All policies covering the Collateral
are to be made payable to the Agent for the benefit of the
Lenders, as its interests may appear, in case of loss, under a
standard non-contributory "lender" or "secured party" clause and
shall provide that the insurance, to the extent of the Agent's
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 and are to contain such other provisions
as the Agent may reasonably require to fully protect the Lenders'
interest in the Collateral and to obtain any payments to be made
under such policies. Such policy shall not include an endorsement
in favor of any other Person (other than the Revolving Credit
Agent, the Term Loan Agent, the holder of any Permitted Liens and
those Persons intended as beneficiaries of any builder's risk
insurance). All certificates of insurance are to be delivered to
the Agent and the policies are to be premium prepaid or with
customary payment terms (which shall be complied with in a timely
fashion by such Loan Parties), with the loss payable and
additional insured endorsement in favor of the Agent and such
other Persons as the Agent may designate from time to time, and
shall provide for not less than thirty (30) days' prior written
notice to the Agent of the exercise of any right of cancellation.
The Key Loan Parties shall furnish the Agent with certificates or
other evidence satisfactory to the Agent regarding compliance by
the Loan Parties with the foregoing requirements. If any Loan
Party or
12
any of its Subsidiaries fails to maintain such insurance, the
Agent may arrange for such insurance, but at the Key Loan
Parties' expense and without any responsibility on the Agent's
part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of
claims; PROVIDED, HOWEVER, that the Agent's obtaining such
insurance shall not constitute a waiver of any Event of Default
occasioned by the Loan Parties' failure to have maintained such
insurance. Upon the occurrence and during the continuance of an
Event of Default and subject to the terms of the Intercreditor
Agreement, the Agent shall have the sole right, in the name of
the Lenders, any Loan Party and its Subsidiaries, to file claims
under any insurance policies, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and
to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of
any claims under any such insurance policies. The Borrower shall
provide the Agent with prompt written notice of any change in the
insurance policies owned by the Loan Parties, or under which any
Loan Party is the named insured, from those in effect as of the
Effective Date.
(d) Section 6.01(h) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
(h) FURTHER ASSURANCES. Take such action and execute, acknowledge
and deliver, and cause each of its Subsidiaries to take such
action and execute, acknowledge and deliver, at its sole cost and
expense, such agreements, instruments or other documents as the
Agent may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement and the
other Loan Documents, (ii) to subject to valid and perfected
first priority Liens (subject to Permitted Liens) any of the
Collateral of any Loan Party and its Subsidiaries, (iii) to
establish and maintain the validity and effectiveness of any of
the Loan Documents and the validity, perfection and priority of
the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer and confirm unto the
Agent and each Lender the rights now or hereafter intended to be
granted to it under this Agreement or any other Loan Document. In
furtherance of the foregoing, to the maximum extent permitted by
Applicable Law, each Loan Party (x) authorizes the Agent to
execute any such agreements, instruments or other documents
deemed reasonably necessary by the Agent in connection with this
Agreement in such Loan Party's name and to file such agreements,
instruments or other documents in any appropriate filing office,
(y) authorizes the Agent to file any financing statement required
hereunder or under any other Loan
13
Document, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the
signature of such Loan Party, and (z) ratifies the filing of any
financing statement, and any continuation statement or amendment
with respect thereto, filed without the signature of such Loan
Party prior to the date hereof.
(e) Section 6.01(i) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
(i) AFTER ACQUIRED REAL PROPERTY. Upon the acquisition by it or
any of its Subsidiaries after the date hereof of any interest
(whether fee or leasehold) in any real property (wherever
located) (each such interest being an "AFTER ACQUIRED PROPERTY")
(x) with a Current Value (as defined below) in excess of
$1,000,000 in the case of a fee interest, or (y) requiring, in
the case of a leasehold interest, the payment of annual minimum
fixed rent exceeding in the aggregate $750,000 (if the Lease term
(including extensions) is less than five years) or $250,000 (if
the Lease term (including extensions) is equal to or greater than
five years), immediately so notify the Agent, setting forth with
specificity a description of the interest acquired, the location
of the real property, any structures or improvements thereon and
either an appraisal or such Loan Party's good-faith estimate of
the current value of such real property (for purposes of this
Section, THE "CURRENT VALUE"). The Agent shall notify such Loan
Party whether it intends to require a Mortgage and the other
documents referred to below or in the case of leasehold, a
leasehold Mortgage or Landlord's Agreement (pursuant to Section
6.01(i) hereof). Upon receipt of such notice requesting a
Mortgage, the Person which has acquired such After Acquired
Property shall promptly furnish to the Agent the following, each
in form and substance satisfactory to the Agent: (i) a Mortgage
with respect to such real property and related assets located at
the After Acquired Property, each duly executed by such Person
and in recordable form; (ii) evidence of the recording of the
Mortgage referred to in clause (i) above in such office or
offices as may be necessary or, in the reasonable good faith
opinion of the Agent, desirable to create and perfect a valid and
enforceable first priority lien on the property purported to be
covered thereby or to otherwise protect the rights of the Agent
and the Lenders thereunder; (iii) in the case of a fee interest,
a title insurance policy, a survey of such real property,
certified to the Agent and to the issuer of the Title Insurance
Policy by a licensed professional surveyor reasonably
satisfactory to the Agent and a Phase I Environmental Site
Assessment with respect to such real property, certified to the
Agent by a company reasonably satisfactory to the Agent; (iv) in
the case of a leasehold interest, a certified copy of
14
the lease between the landlord and such Person with respect to
such real property in which such Person has a leasehold interest,
and the certificate of occupancy with respect thereto; (v) in the
case of a leasehold interest, an attornment and nondisturbance
agreement between the landlord (and any fee mortgagee) with
respect to such real property and the Agent; and (vi) such other
documents or instruments (including, without limitation,
guarantees and opinions of counsel) as the Agent may reasonably
require, PROVIDED, HOWEVER, that nothing contained herein shall
be deemed a modification of any other provisions of this
Agreement restricting Acquisitions or investments by the Loan
Parties. The Key Loan Parties shall pay all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, and
all title insurance charges and premiums, in connection with each
Loan Party's obligations under this Section 6.01(i).
(f) Section 6.01 of the Loan Agreement is hereby amended
by inserting the following provisions at the end thereof to read in their
entirety as follows:
(q) LEASEHOLD MORTGAGES. Each of the Loan Parties shall use their
reasonable best efforts to obtain leasehold Mortgages on
substantially all Leases of the Loan Parties it being understood
that reasonable best efforts shall require a bona fide request be
made in writing to the appropriate parties with a copy to the
Agent (or in lieu thereof, a short memorandum describing a
telephone request made in respect thereof, which memorandum shall
include the date of the conversation and the name of the person
with whom the Loan Party spoke) with appropriate follow-up as
reasonably required by the Agent, which in each case shall be
included in the Leasehold Mortgage Status Report; PROVIDED, that
no Loan Parties shall be required to pay any money (other than
incidental expenses), agree to amended Lease terms (unless such
amendments are immaterial in the reasonable judgment of the Key
Loan Parties), or commence any legal action.
(r) BOARD OF DIRECTORS RIGHTS.
(i) BOARD OBSERVERS. From the Effective Date until the date
that the provisions of Section 6.01(r)(ii) below are
applicable, the Borrower shall allow two representatives
designated by CPLP to attend all meetings, including
telephonic meetings, of the Borrower's Board of Directors
in a non-voting capacity. The Borrower will give such
representatives written notice of each meeting of its Board
of Directors in advance and at the same time and in the
same manner as notice is given to the directors. Such
representatives shall also be provided with all written
15
materials and other information (including minutes of
meetings) given to directors in connection with such
meetings at the same time such materials and information are
given to the directors. If the Borrower proposes to take any
action by written consent in lieu of a meeting of its Board
of Directors, the Borrower shall give written notice thereof
to such representatives promptly following the effective
date of such consent describing in reasonable detail the
nature and substance of such action. In the event the
Borrower establishes separate committees of the Board of
Directors, the right to representatives granted hereunder
shall extend to meetings of such committees.
(ii) BOARD REPRESENTATIVES. From and after the date on which
CPLP holds 50% of the Conversion Shares issuable upon the
conversion of its Pro Rata share of the Loan as of the
Effective Date, CPLP shall be entitled to designate two
directors to serve on the Board of Directors of the
Borrower. The Borrower shall promptly take all action
necessary to cause such individuals to be appointed to the
Board, including either increasing the size of the Board or
securing the resignations of incumbent directors or both.
At each annual or other meeting of shareholders at which
the election of directors is considered, if CPLP is
entitled to designate directors under this Section
6.01(r)(ii), the Board of Directors of the Borrower shall
continue to nominate at least two designees of CPLP for
election to the Board. At any such shareholder meeting, if
CPLP is entitled to designate directors under this Section
6.01(r)(ii), SSC hereby agrees that it shall vote all
shares of Common Stock and other voting securities of the
Borrower over which such SSC has voting control, and shall
take all other reasonably necessary actions within its
control (whether in its capacity as a shareholder,
director, member of a Board committee or officer of the
Borrower or otherwise, and including attendance at meetings
in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and
the Borrower shall take all reasonably necessary actions
within its control (including calling special board and
shareholder meetings), so that persons designated by CPLP
will be elected to the Borrower's Board of Directors. Any
vacancy on the Board of Directors created by reason of the
death, removal or resignation of a director who is a
designee of CPLP shall be filled by an individual
designated by the CPLP.
16
(iii) TERMINATION. The rights of CPLP pursuant to Section
6.01(r)(i) shall terminate and be of no further force and
effect from and after the date that CPLP converts at least
50% of its Pro Rata Share of the Loan as of the Effective
Date. The rights of CPLP pursuant to Section 6.01(r)(ii)
shall terminate and be of no further force and effect from
and after the date that CPLP holds, or is entitled to hold
upon conversion of its Pro Rata Share of the Loan, in the
aggregate shares of Common Stock representing less than 50%
of the Conversion Shares issued or issuable upon Conversion
of its Pro Rata Share of the Loan as of the Effective Date.
(g) Section 6.02(c) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(c) FUNDAMENTAL CHANGES; DISPOSITIONS. (i) Wind-up, liquidate or
dissolve, or permit any of its Subsidiaries to wind-up, liquidate
or dissolve; (ii) merge, consolidate or amalgamate with any
Person, or permit any of its Subsidiaries to merge, consolidate
or amalgamate with any Person; (iii) purchase or otherwise
acquire, whether in one transaction or a series of related
transactions, all or substantially all of the assets of any
Person (or any division thereof), or permit any of its
Subsidiaries to do any of the foregoing; (iv) suffer or cause, or
permit any of its Subsidiaries to suffer or cause the waste or
destruction of any material part of the Collateral; (v) use or
permit any of its Subsidiaries to use, any of the Collateral in
violation of any policy of insurance thereon; (vi) sell, lease,
sublease, convey, transfer or otherwise dispose of, or permit any
of its Subsidiaries to sell, lease, sublease, convey, transfer or
otherwise dispose of any of the Collateral; and (vii) other than
leased departments and similar arrangements with third parties,
commit to open or close any location at which any Loan Party
maintains, offers for sale, or stores any of the Collateral, in
any fiscal year such that the actual number of stores of all Key
Loan Parties in the aggregate (x) exceeds by ten (10) the number
of stores reflected on the Business Plan for such fiscal year, or
(y) 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); PROVIDED, HOWEVER, that each of the following shall be
permitted:
(A) if no Default or Event of Default shall have
occurred and be continuing or would result
therefrom, with the prior written consent of the
Agent (which consent shall not be unreasonably
17
withheld) any wholly-owned Subsidiary may merge,
consolidate or amalgamate with or into a Borrower
or with or into another wholly-owned Subsidiary of
a Borrower, so long as in any merger,
consolidation or amalgamation involving a
Borrower, the Borrower is the surviving,
continuing or resulting corporation;
(B) if no Default or Event of Default shall have
occurred and be continuing or would result
therefrom, any Loan Party may liquidate or
dissolve any Unrestricted Subsidiary;
(C) if no Default or Event of Default shall have
occurred and be continuing or would result
therefrom, any Loan Party may engage in any
Acquisition which is a Permitted Acquisition,
provided that all of the conditions contained in
the definition of the term Permitted Acquisition
are satisfied; and
(D) any Loan Party may engage in (1) the sale of
Inventory in compliance with this Agreement; (2)
the disposal of Equipment which is obsolete, worn
out, or damaged beyond repair, or no longer useful
in the Loan Parties' businesses; (3) Permitted
Dispositions; (4) the turning over to the Agent of
certain Collateral as provided herein, or to the
Revolving Credit Agent of all Receipts (as defined
in the Revolving Credit Facility) as provided in
the Revolving Credit Facility; and (5) the use of
the Collateral to pay obligations arising in the
ordinary course.
(h) Section 6.02(e) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(e) LOANS; ADVANCES; INVESTMENTS, ETC. (i) Make or commit or
agree to make any loan, advance guarantee of obligations, other
extension of credit or capital contributions to, or hold or
invest in or commit or agree to hold or invest in, or purchase or
otherwise acquire any shares of the Capital Stock, bonds, notes,
debentures or other securities of, or make or commit or agree to
make any other investment in, any other Person; (ii) purchase or
own any futures contract or otherwise become liable for the
purchase or sale of currency or other commodities at a future
date in the nature of a futures contract; (iii) subordinate any
debts or obligations owed to
18
that Loan Party by any third party (but not by another Loan
Party) to any other debts owed by such third party to any other
Person; (iv) enter into leases of property or assets not
constituting Permitted Acquisitions, unless such leases are not
otherwise in violation of this Agreement; (v) organize or create
any Affiliate other than in connection with a Permitted
Acquisition; or (vi) 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, or permit any of its Subsidiaries to do any of
the foregoing, except for:
(A) Permitted Investments and investments directly
related to Permitted Acquisitions;
(B) advance payments made to that Loan Party's
suppliers in the ordinary course;
(C) 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;
(D) 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 6.02(e)(E) and investments permitted
under clause (xiii) of the definition of Permitted
Investment) $6,000,000 in the aggregate
outstanding to all employees at any one time;
(E) 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 6.02(e)(D) and investments permitted under
clause (xiii) of the definition of Permitted
Investments) in the aggregate outstanding to all
employees at any one time;
19
(F) intercompany loans (1) existing on the date hereof
and described on Schedule 6.02(e)(vi)(F) hereof,
and (2) hereafter made amongst any Loan Parties
pursuant to the terms of the Revolving Credit
Facility;
(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) to the extent not permitted by the foregoing
clauses, the existing loans and advances described
on Schedule 6.02(e)(vi)(H) hereto;
(I) any other loans and advances to or for the benefit
of any Person which (1) is not itself a Loan
Party, (2) are not otherwise permitted by the
foregoing clauses, and (3) are made after the
Effective Date, which loans and advances have been
approved in advance by the Agent.
(i) Section 6.02(i) of the Loan Agreement is hereby
amended by adding the following proviso at the end thereof:
PROVIDED, HOWEVER, that notwithstanding anything to the contrary
contained in this Section 6.02(i), no Loan Party may engage in
any SSC Transaction or CPLP Transaction except in accordance with
the terms of Article XIV.
(j) Section 6.02(j) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(j) LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES AND RESTRICTIONS ON OBLIGATIONS. Create or
otherwise cause, incur, assume, suffer or permit to exist or
become effective any consensual encumbrance or restriction of any
kind on the ability of (i) any Loan Party to create or grant
liens in favor of the Agent or to incur Obligations or (ii) any
Subsidiary of any Loan Party (A) to pay dividends or to make any
other distribution on any shares of Capital Stock of such
Subsidiary owned by any Loan Party or any of its Subsidiaries,
(B) to pay or prepay or to subordinate any Indebtedness owed to
any Loan Party or any of its Subsidiaries, (C) to make loans or
advances to any Loan Party or any of its Subsidiaries or (D) to
transfer any of its property or
20
assets to any Loan Party or any of its Subsidiaries, or permit
any of its Subsidiaries to do any of the foregoing; PROVIDED,
HOWEVER, that nothing in any of clauses (A) through (D) of this
Section 6.02(j) shall prohibit or restrict compliance with:
(1) this Agreement and the other Loan Documents, the
Revolving Credit Facility Documents or the Term Loan
Documents;
(2) any agreements in effect on the date of this
Agreement and described on Schedule 6.02(j);
(3) any Applicable Law, rule or regulation (including,
without limitation, applicable currency control laws and
applicable state corporate statutes restricting the payment
of dividends in certain circumstances);
(4) in the case of clause (D) any agreement setting
forth customary restrictions on the subletting, assignment
or transfer of any property or asset that is a lease,
license, conveyance or contract of similar property or
assets; or
(5) in the case of clause (D), any agreement,
instrument or other document evidencing a Permitted Lien
from restricting on customary terms the transfer of any
property or assets subject thereto.
(k) Section 6.02(k) of the Loan Agreement is hereby amended
and restated in its entirety as follows:
(k) LIMITATION ON ISSUANCE OF CAPITAL STOCK. Issue or sell or
enter into any agreement or arrangement for the issuance and sale
of, or permit any of its Subsidiaries to issue or sell or enter
into any agreement or arrangement for the issuance and sale of,
any shares of its Capital Stock, any securities convertible into
or exchangeable for its Capital Stock or any warrants, PROVIDED,
that Borrower may issue (i) the Warrant Stock, (ii) the shares
issuable upon conversion of the Loan pursuant to the terms of
this Agreement, (iii) up to 5,000,000 shares of Common Stock (and
following the fifth anniversary of the Effective Date, up to an
additional 5,000,000 shares of Common Stock) that are issued to
Persons other than Affiliates of the Borrower, including (A)
shares of Common Stock or options exercisable therefor, issued or
to be issued under the Borrower's 2000 Stock Option Plan as in
effect on the Effective Date or under any other employee stock
option or purchase plan or plans, or pursuant to compensatory or
incentive agreements, for officers, employees or consultants of
the Borrower or any of its Subsidiaries, in each case adopted or
assumed after
21
such date by the Borrower's Board of Directors; provided in each
case that the exercise or purchase price for any such share shall
not be less than 95% of the fair market value (determined in good
faith by the Borrower's Board of Directors) of the Common Stock
on the date of the grant, and such additional number of shares as
may become issuable pursuant to the terms of any such plans by
reason of adjustments required pursuant to antidilution
provisions applicable to such securities in order to reflect any
subdivision or combination of Common Stock, by reclassification
or otherwise, or any dividend on Common Stock payable in Common
Stock, (B) shares of restricted stock issued by the Borrower to
executive officers of the Borrower, and (C) shares of Common
Stock issued by the Borrower as charitable gifts.
(l) Section 6.02(l) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(l) MODIFICATIONS OF INDEBTEDNESS, ORGANIZATIONAL DOCUMENTS AND
CERTAIN OTHER AGREEMENTS, ETC. (i) Amend, modify or otherwise
change (or permit the amendment, modification or other change) in
any manner of any of the provisions of any of its or its
Subsidiaries' Indebtedness or of any instrument or agreement
(including, without limitation, any purchase agreement,
indenture, loan agreement or security agreement) relating to any
such Indebtedness if such amendment, modification or change (A)
would shorten the final maturity or average life to maturity of,
or require any payment to be made earlier than the date
originally scheduled on, such Indebtedness, or would increase the
interest rate applicable to such Indebtedness unless (x) Excess
Availability, both immediately prior to, immediately after giving
effect to and on a pro forma projected basis for the 12 months
immediately following such amendment, modification or change, is
at least $100 million, or (y) the total amount of such
Indebtedness so amended, modified or changed since the Effective
Date (together with the amounts permitted under clause (ii)
hereof), does not exceed $500,000 in any Fiscal Year of the
Borrower; (B) would change the subordination provision, if any,
of such Indebtedness, or (C) would otherwise be adverse to the
Lenders in any respect; (ii) except for the Obligations and
except as otherwise explicitly permitted herein, make any
voluntary or optional payment, prepayment, redemption,
defeasance, sinking fund payment or other acquisition for value
of any of its or its Subsidiaries' Indebtedness (including,
without limitation, by way of depositing money or securities with
the trustee therefor before the date required for the purpose of
paying any portion of such Indebtedness when due), or refund,
refinance, replace or exchange any other Indebtedness for any
such Indebtedness (except to the
22
extent such Indebtedness is otherwise expressly permitted by the
definition of "Permitted Indebtedness"), or make any payment,
prepayment, redemption, defeasance, sinking fund payment or
repurchase of any outstanding Indebtedness as a result of any
asset sale, change of control, issuance and sale of debt or
equity securities or similar event, or give any notice with
respect to any of the foregoing unless (x) Excess Availability,
both immediately prior to, immediately after giving effect to and
on a pro forma projected basis for the 12 months immediately
following such event is at least $100 million, or (y) the total
amount of such Indebtedness so paid since the Effective Date
(together with the amounts permitted under clause (i)(A) hereof),
does not exceed $500,000 in any Fiscal Year of the Borrower;
(iii) except as permitted by Section 6.02(c), amend, modify or
otherwise change its name, jurisdiction of organization,
organizational identification number or FEIN; (iv) amend, modify
or otherwise change its certificate of incorporation or bylaws
(or other similar organizational documents), including, without
limitation, by the filing or modification of any certificate of
designation, or any agreement or arrangement entered into by it,
with respect to any of its Capital Stock (including any
shareholders' agreement), or enter into any new agreement with
respect to any of its Capital Stock, except any such amendments,
modifications or changes or any such new agreements or
arrangements pursuant to this clause (iv) that either
individually or in the aggregate, could not have a Material
Adverse Effect; (v) amend, modify, waive or otherwise change (or
permit the amendment, modification, waiver or other change in any
manner) of any provisions in the Revolving Credit Facility
Documents relating to (A) Availability, Excess Availability,
Excess Availability Reserve, Gross Availability or the Borrowing
Base (as each is defined in the Revolving Credit Facility) which
amendment has or could have the effect of increasing
Availability, Excess Availability, Gross Availability or the
Borrowing Base or decreasing the Availability Reserve, (B) the
Credit Card Advance Rate, the Inventory Advance Rate, the
Appraised Inventory Percentage or the Appraised Inventory
Liquidation Value (as each is defined in the Revolving Credit
Facility), in each case, to an amount in excess of the rates set
forth in the Revolving Credit Facility as in effect on the date
hereof, (C) the definition of Cash Control Event and the related
provisions contained in Article VII of the Revolving Credit
Agreement, (D) the provisions of the Revolving Credit Agreement
relating to the Term Loan Debt, and (E) any covenants or Events
of Default contained in the Revolving Credit Agreement, if such
amendments imposes any additional or more restrictive
representations, covenants (financial or otherwise) or events of
default than is
23
contained in the Revolving Credit Agreements in effect on the
date hereof, and, if, notwithstanding the foregoing, such
amendment is made, the Borrower shall promptly notify, and
furnish a copy thereof to the Agent; (vi) agree to any material
amendment or other material change to or waiver of any of its
rights under any Material Contract without the consent of the
Agent (which consent shall not be unreasonably withheld); or
(vii) alter, modify or amend any Lease in a manner which is
reasonably likely to have a Material Adverse Effect.
(m) Section 6.02(n) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(n) PROPERTIES. Other than in the ordinary course of business,
permit any property to become a fixture with respect to real
property or to become an accession with respect to other personal
property with respect to which real or personal property the
Agent does not have a valid and perfected first priority Lien.
(n) Section 6.02(q) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(q) EXCESS AVAILABILITY RESERVE. Permit the Excess Availability
Reserve at any time to be less than the sum of $35,000,000.
(o) Section 6.02(r) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(r) LOCATION OF COLLATERAL. (i) Remove any Collateral from
locations described in Schedule 5.01(ee) except for the following
purposes:
(A) to accomplish sales of Inventory in the ordinary
course of business;
(B) to move Inventory or other Collateral from one
such location to another such location; or
(C) to utilize such of the Collateral as is removed
from such locations in the ordinary course of
business.
(ii) place any tangible personal property of any Loan Party in
the care or custody of any third party, or store or entrust
any such personal property with a bailee or other third
party, except (A) as otherwise disclosed to the Agent
pursuant to Section 5.01(ee), or permitted by this Section
6.02(r), or (B) for Inventory in an amount not to exceed
$1,000,000 at Cost (as defined in the Revolving Credit
24
Facility) in the aggregate at any time in the ordinary
course of business;
7. REPORTING REQUIREMENTS. (a) Section 7.01(c) of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:
(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.
(b) Section 7.02(b) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(b) Each Loan Party hereby authorizes the 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
the Agent from any service bureau, contractor, accountant, or
other Person; and (ii) verify at any time the Collateral or any
portion thereof, including verification with Account Debtors,
and/or with each Loan Party's computer billing companies,
collection agencies, and accountants.
(c) Section 7.03(a)(xi) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
(xi) any material adverse change relating to the type, quantity
or quality of the Collateral or the Lien granted thereon;
(d) Sections 7.04, 7.05 and 7.09 of the Loan Agreement are hereby
amended and restated to read in their entirety as follows:
Section 7.04 WEEKLY REPORTS. Weekly, on Friday of each week (as
of the then immediately preceding Saturday) the Borrower shall
provide the Agent with Borrowing Base Certificates (in the form
of Exhibit G annexed hereto, as such form may be revised from
time to time by the Revolving Credit Agent) prepared separately
for each Division and combined for all Key Loan Parties, 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 Key Loan Parties. Such reports may be sent to the Agent by
facsimile transmission, provided that the original thereof is
forwarded to the Agent on the date of such transmission.
25
Section 7.05 MONTHLY REPORTS. Monthly, the Borrower shall provide
the Agent with those financial statements and reports described
on Schedule 7.05, annexed hereto, at the times set forth in such
Schedule and a Leasehold Mortgage Status Report.
Section 7.09 INVENTORY, APPRAISALS AND AUDITS.
(a) The Agent, at the reasonable expense of the Loan Parties, may
participate in and/or observe each scheduled physical count of
Inventory which is undertaken on behalf of any Loan Party.
(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; (i) the Borrower, within forty-five (45)
days following the completion of such inventory, shall provide
the Agent with a reconciliation of the results of each such
inventory (as well as of any other physical inventory undertaken
by any Loan Party) and shall post such results to the Loan
Parties' stock ledger and, as applicable to the Loan Parties'
other financial books and records; and (ii) the Agent, in its
reasonable, good faith discretion, if any Event of Default has
occurred and is continuing, may cause such additional inventories
to be taken as the Agent determines (each, at the expense of the
Loan Parties).
(c) The Agent may require the Collateral Agents (as defined in
the Revolving Credit Facility) to obtain appraisals of the
Collateral (copies of which, subject to the approval of the
appraiser, shall be provided to the Borrower promptly upon
receipt thereof), at any time (i) after the occurrence and during
the continuance of an Event of Default, (ii) that Excess
Availability (as defined in the Revolving Credit Facility) is
equal to or less than $60,000,000, or (iii) after an Inadvertent
Overadvance (as defined in the Intercreditor Agreement) has
occurred (in all events, at the Loan Parties' expenses) conducted
by Hilco Appraisal Services, LLC or such appraisers as are
satisfactory to the Agent and the Revolving Credit Agent, in
addition to those appraisals permitted to be obtained by the
Collateral Agents (as defined in the Revolving Credit Facility)
pursuant to Section 5.9 of the Revolving Credit Facility.
Following the termination of the Revolving Credit Facility, the
Agent shall be entitled to conduct appraisals independently on
the same terms granted to the Collateral Agents under the terms
of the Revolving Credit Facility in effect on the Effective Date.
(d) If made available to any Loan Party, the Agent shall receive
copies of the results of any commercial finance field
26
examination of the Loan Parties' books and records conducted
during any period in which this Agreement is in effect.
(e) The Agent from time to time may undertake "mystery shopping"
(so-called) visits to all or any of the Loan Parties' business
premises.
8. USE OF COLLATERAL. Article VIII is hereby amended and restated to
read in its entirety as follows:
ARTICLE VIII
USE OF COLLATERAL
Section 8.01 USE OF INVENTORY CONTROL.
(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; and (v) sales in connection with Permitted
Dispositions.
(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 Agent.
Section 8.02 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.
Section 8.03 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 8.03 may be limited or terminated by the Agent at any time in the
Agent's reasonable, good faith discretion after the occurrence and during the
continuance of an Event of Default.
Section 8.04 VALIDITY OF ACCOUNTS.
(a) Except for adjustments and disputes in the ordinary course
of business, the amount of each of the Accounts Receivable 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.
27
(b) No Loan Party has any knowledge of any impairment of the
validity or collectibility of any of the Accounts Receivable, other than
returns, reserves, unauthorized use of credit cards, bad checks, adjustments and
disputes which occur in the ordinary course of business. The Borrower shall
notify the 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 Agent) in the event
of any Loan Party's failure so to perform, if, as a result of the surety,
guarantor or third party obligee's performance, such Person would obtain a Lien
on any Collateral having priority to the Lien of the Agent.
Section 8.05 NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the
right (after the occurrence of a Cash Control Event (as defined in the Revolving
Credit Facility)) to notify any of the Loan Parties' Account Debtors to make
payment directly to the Agent and to collect all amounts due on account of the
Collateral, in each case, subject to the terms of the Intercreditor Agreement.
Section 8.06 APPOINTMENT AS ATTORNEY-IN-FACT. Each Key Loan Party
hereby irrevocably constitutes and appoints the Agent (acting through any
officer of the Agent) as that Key Loan Party's true and lawful attorney, with
full power of substitution, following the occurrence and during the continuance
of an Event of Default and subject to the terms of the Intercreditor Agreement,
to convert the Collateral into cash at the sole risk, cost, and expense of that
Key Loan Party, but for the sole benefit of the Agent and the Lenders. The
rights and powers granted the Agent by this appointment include but are not
limited to the right and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral;
(b) Sign change of address forms to change the address to
which each Key Loan Parties' mail is to be sent to such address as the Agent
shall designate (after which copies of all such mail shall be promptly furnished
to the Borrower); receive and open each Key Loan Parties' mail; remove any
Collateral and proceeds of Collateral therefrom and turn over the balance of
such mail either to the Key Loan Party or to any trustee in bankruptcy or
receiver of the Borrower, or other legal representative of a Borrower whom the
Agent determines to be the appropriate Person to whom to so turn over such mail;
(c) Endorse the name of the relevant Key Loan Party in favor of
the Agent upon any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of the relevant Key Loan Party 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;
28
(d) Sign the name of the relevant Key Loan Party on any notice
to that Key Loan Parties' Account Debtors or verification of the Collateral;
sign the relevant Key Loan Parties' 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 Receivable;
(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 Key Loan
Party 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 Key Loan Party; and
(g) Use, license or transfer any or all General Intangibles of
each Key Loan Party.
Section 8.07 NO OBLIGATION TO ACT. The Agent shall not be obligated to
do any of the acts or to exercise any of the powers authorized by Section 8.06
herein, but if the Agent elects to do any such act or to exercise any of such
powers, it shall not be accountable for more than it actually receives 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 Agent has 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.
9. EVENTS OF DEFAULT.
(a) Section 9.01(c) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(c) the failure by any Loan Party to promptly, punctually,
faithfully and timely perform, discharge, or comply with any
covenant or Obligation included in any of the following provisions
hereof:
29
SECTION RELATES TO
------- ----------
6.02(b) Indebtedness
6.01(b) Pay Taxes
6.02(g) Dividends. Investments. Other
Corporate Actions
6.02(e) Loans and Advances
6.02(i) Affiliate Transactions
6.02(q) Excess Availability Reserve
Article VII Reporting Requirements (except as
set forth in Section 9.01(d))
5(k) of the Security Cash Management
Agreement
(b) Section 9.01(d) of the Loan Agreement is hereby amended and
restated in is entirety as follows:
(d) the failure by the Key Loan Parties to promptly, punctually,
faithfully and timely perform, discharge, or comply with the
financial reporting requirements included in Section 7.04, subject,
however, to the following limited number of grace periods applicable
to certain of those requirements:
NUMBER OF
REPORT/STATEMENT REQUIRED BY SECTION GRACE PERIOD GRACE PERIODS
---------------- ------------------- ------------ -------------
Weekly Report 7.04 2 Business Days Twice any 12 consecutive
months
(c) Section 9.01(g) of the Loan Agreement is hereby amended and
restated in is entirety as follows:
(g) 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 Revolving Credit
Facility, (ii) the Term Loan Documents, 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
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);
30
(d) Section 9.01(i) of the Loan Agreement is hereby amended by
deleting the words "property or assets of the Loan Parties" and substituting the
word "Collateral" therefor.
(e) Section 9.01(n) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(n) (i) 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;
(ii) 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; or
(f) Section 9.01(q) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(q) the Loan Parties refinance the Loan (as defined in the Term Loan
Agreement) and 80% or more of the proceeds of such refinancing is
derived from the incurrence of Indebtedness.
10. AGENT.
(a) Section 10.01 of the Loan Agreement is hereby amended by
deleting the words "properties and assets of the Loan Parties" in clause (iii)
thereof and substituting the word "Collateral" therefor, deleting the words "and
take any enforcement action in clause (C) thereof, and substituting the words
"take action to realize upon the Collateral" therefor and amending and restating
clause (v) thereof to read in its entirety as follows:
(v) to make Agent Advances, for the Agent or on behalf of the
applicable Lenders as provided in this Agreement or any other Loan
Document;
(b) Section 10.02 of the Loan Agreement is hereby amended by
deleting the words "properties and asset of the Loan Parties" in the final
sentence thereof and substituting the word "Collateral" therefor.
(c) Section 10.03 of the Loan Agreement is hereby amended by
deleting the word "and" immediately prior to clause (v) thereof and inserting
the following at the end thereof:
31
; and (vi) shall not be deemed to have made any representation or
warranty regarding the existence, value or collectibility of the
Collateral, the existence, priority or perfection of the Agent's
Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall the Agent or the Required Lenders be
responsible or liable to the Lenders for any failure to monitor or
maintain any portion of the Collateral.
(d) Section 10.08 and 10.09 of the Loan Agreement is hereby amended
and restated in their entirety to read as follows:
Section 10.08 COLLATERAL MATTERS.
(a) The Agent may from time to time make such disbursements and
advances ("AGENT ADVANCES") which the Agent, in its sole discretion, deems
reasonably necessary or desirable to preserve, protect, prepare for sale or
lease or dispose of the Collateral or any portion thereof, to enhance the
likelihood or maximize the amount of repayment by the Borrower of the Loan and
other Obligations or to pay any other amount chargeable to the Key Loan Parties
pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 12.04. The Agent Advances shall be
repayable on demand and be secured by the Collateral. The Agent Advances shall
constitute Obligations hereunder. The Agent shall notify each Lender and the
Borrower in writing of each such Agent Advance, which notice shall include a
description of the purpose of such Agent Advance. Without limitation to its
obligations pursuant to Section 10.05, each Lender agrees that it shall make
available to the Agent, upon the Agent's demand, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each such
Agent Advance. If such funds are not made available to the Agent by such Lender,
the Agent shall be entitled to recover such funds on demand from such Lender,
together with interest thereon for each day from the date such payment was due
until the date such amount is paid to the Agent, at the Federal Funds Rate for
three Business Days and thereafter at the Reference Rate.
(b) The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral upon payment and satisfaction of the Loan and all
other Obligations which have matured and which the Agent has been notified in
writing are then due and payable; or constituting property being sold or
disposed of in the ordinary course of any Loan Party's business and in
compliance with the terms of this Agreement and the other Loan Documents; or
constituting property in which the Loan Parties owned no interest at the time
the Lien was granted or at any time thereafter; or if approved, authorized or
ratified in writing by the Lenders. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this Section 10.08(b).
(c) Without in any manner limiting the Agent's authority to act
without any specific or further authorization or consent by the Lenders (as set
forth in Section 10.08(b)), each Lender agrees to confirm in writing, upon
request by the Agent, the authority to release Collateral conferred upon the
Agent under Section 10.08(b). Upon receipt by the Agent of confirmation from the
Lenders of its authority to release any particular item or types of
32
Collateral, and upon prior written request by any Loan Party, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens granted to the Agent
for the benefit of the Lenders upon such Collateral; PROVIDED, HOWEVER, that (i)
the Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligations or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Lien upon (or obligations of
any Loan Party in respect of) all interests in the Collateral retained by any
Loan Party.
(d) The Agent shall have no obligation whatsoever to any Lender
to assure that the Collateral exists or is owned by the Loan Parties or is cared
for, protected or insured or has been encumbered or that the Lien granted to the
Agent pursuant to this Agreement or any other Loan Document has been properly or
sufficiently or lawfully created, perfected, protected or enforced or is
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 10.08 or in any other Loan Document, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
any other Lender, except as otherwise provided herein.
Section 10.09 AGENCY FOR PERFECTION. Each Lender hereby appoints the
Agent and each other Lender as agent and bailee for the purpose of perfecting
the security interests in and liens upon the Collateral in assets which, in
accordance with Article 9 of the Uniform Commercial Code, can be perfected only
by possession or control (or where the security interest of a secured party with
possession or control has priority over the security interest of another secured
party) and each Agent and each Lender hereby acknowledges that it holds
possession of or otherwise controls any such Collateral for the benefit of the
Agent and the Lenders as secured party. Should any Lender obtain possession or
control of any such Collateral, such Lender shall notify the Agent thereof, and,
promptly upon the Agent's request therefor shall deliver such Collateral to the
Agent or in accordance with the Agent's instructions. Each Loan Party by its
execution and delivery of this Agreement hereby consents to the foregoing.
11. GUARANTY.
(a) Section 11.02(c) of the Loan Agreement is hereby amended
and restated in its entirety as follows:
(c) Any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other Guaranty, for all or any of
the Guaranteed Obligations;
(b) Section 11.03 of the Loan Agreement is hereby amended by
adding the words "or any Collateral" at the end of the first sentence thereof.
33
(c) Section 11.05 of the Loan Agreement is hereby amended (i) by
adding the words "or any Collateral" immediately prior to the word "whether" in
the first sentence thereof, and (ii) by adding the words "or to be held as
Collateral for any Guaranteed Obligations or other amounts payable under this
Article XI thereafter arising" at the end of the penultimate sentence thereof.
12. MISCELLANEOUS.
(a) Section 12.01 of the Loan Agreement shall be amended and
restated to read in its entirety as follows:
Section 12.01 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage, prepaid and return receipt requested), telecopied or delivered,
if to any Loan Party, at the following address:
Value City Department Stores, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Schottenstein Stores Corporation
0000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
and
Xxxxxx Xxxxxx Xxxxxx & Xxxxxx LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq. and Xxxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
if to the Agent, to it at the following address:
Cerberus Partners, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
34
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties complying as
to delivery with the terms of this Section 12.01. All such notices and other
communications shall be effective, (i) if sent by certified mail, return receipt
requested, the date when actually received, (ii) if sent by recognized overnight
express delivery, the Business Day following the day when sent, (iii) if
delivered by hand 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), and (iv) by
telecopier and 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).
(b) Section 12.02 of the Loan Agreement is hereby amended and
restating in its entirety to read as follows:
AMENDMENTS, ETC. Subject to Section 6.02(l), no amendment or
waiver of any provision of this Agreement, and no consent to any
departure by any Loan Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent, the Borrower and the Guarantors, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given, PROVIDED, HOWEVER, that no
amendment, waiver or consent shall (i) reduce the principal of,
or interest on, the Loan, reduce the amount of any fee payable
for the account of any Lender, or postpone or extend any date
fixed for any payment of principal of, or interest or fees on
the Loan payable to any Lender, in each case without the written
consent of any Lender affected thereby, (ii) amend the
definition of "Pro Rata Share", (iii) release all or a
substantial portion of the Collateral (except as otherwise
provided in this Agreement and the other Loan Documents),
subordinate any Lien granted in favor of the Agent for the
benefit of the Lenders, or release the Borrower or any Guarantor
or (iv) amend, modify or waive Section 3.04, Article XII or this
Section 12.02 of this Agreement in each case, without the
written consent of each Lender. Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and
signed by the Agent, affect the rights or duties of the Agent
(but not in its capacity as a Lender) under this Agreement or
the other Loan Documents.
35
(c) Section 12.04 of the Loan Agreement is hereby amended by
adding the words "appraisals of Collateral," after the words "monitoring of
assets" in the first sentence thereof, and by amending and restating clauses
(f), (g), and (h) in their entirety and substituting the following therefor:
(f) the filing of any petition, complaint, answer, motion or
other pleading by the Agent or any Lender, or the taking of any
action in respect of the Collateral or other security, in
connection with this Agreement or any other Loan Document; (g)
the protection, collection, lease, sale, taking possession of or
liquidation of, any Collateral or other security in connection
with this Agreement or any other Loan Document; (h) any attempt
to enforce any Lien or security interest in any Collateral or
other security in connection with this Agreement or any other
Loan Document;
13. CONVERSION PROVISIONS. (a) Section 13.01 of the Loan Agreement is
hereby amended by adding the following subsection (c) at the end thereof:
(c) Except as provided in Section 14.03, at any time that CPLP
converts all or any portion of its Pro Rata Share of the Loan
into Conversion Shares, CPLP may require that simultaneous with
such Conversion, SSC convert up to an equivalent amount of the
Loan owed to it into Conversion Shares (the "DRAG ALONG
CONVERSION RIGHT"). In order to exercise its Drag Along
Conversion Right, CPLP must provide SSC with five (5) Business
Days prior written notice of its conversion (the "DRAG ALONG
CONVERSION NOTICE") which shall set forth (i) the amount of the
Loan that it intends to convert, (ii) the Conversion Date for
such conversion and (iii) the amount of the Loan that SSC must
convert. Within two (2) Business Days of receipt of a Drag Along
Conversion Notice, SSC shall provide the Borrower with a
Conversion Notice (as defined below) that it will convert at
least the same amount of the Loan as is set forth in such Drag
Along Conversion Notice on the Conversion Date set forth in such
Drag Along Conversion Notice; PROVIDED, HOWEVER, that if SSC has
already converted a portion of the Loan initially held by it
other than in response to a Drag Along Conversion Notice, it
shall only be required to convert that portion of its Loan up to
the amount set forth in the Drag Along Conversion Notice as is
necessary so that following the conversion set forth in the
Conversion Notice delivered in response to such Drag Along
Conversion Notice, it shall have converted the same amount of
its initial Loan as is set forth in the Drag Along Conversion
Notice. In the event that CPLP converts all or any portion of
the Loan after it receives a Buyout Exercise Notice (as defined
below) relating to an SSC Transaction (defined below) which is
not a
36
Referred SSC Transaction (as defined below) and before
thirty-one (31) days following the receipt of such Buyout
Exercise Notice, CPLP shall not be entitled to exercise its Drag
Along Conversion Right with respect to such conversion.
(b) Section 13.03(a)(iv) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
(iv) (A) shares of Common Stock issued upon exercise of the
Warrants and (B) such additional number of shares as may become
issuable upon the exercise of any such securities by reason of
adjustments required pursuant to anti-dilution provisions
applicable to such securities as in effect on the date hereof.
(c) Sections 13.03(e)(i)(B) and (C) of the Loan Agreement are hereby
amended and restated in their entirety as follows:
(B) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as
determined in good faith by a committee of the Borrower's Board
of Directors consisting of directors who are not Affiliates of
the Borrower, SSC or CPLP; PROVIDED, HOWEVER, that at the
request of any Lender, the fair value shall be determined in
good faith by an independent investment banking firm selected by
the Borrower, SSC and CPLP or, if that selection cannot be made
within ten days, by an independent investment banking firm
selected by the American Arbitration Association in accordance
with its rules, and PROVIDED, FURTHER, that the Borrower shall
pay all of the reasonable fees and expenses of any third parties
incurred in connection with determining the fair value; and
(C) in the event Additional Shares of Common Stock are issued
together with other shares of securities or other assets of the
Borrower for a single undivided consideration, be the proportion
of such consideration so received allocable to such Additional
Shares of Common Stock, computed as provided in clauses (A) and
(B) above, as determined in good faith by the a committee of the
Borrower's Board of Directors consisting of directors who are
not Affiliates of the Borrower, SSC or CPLP, or at the request
of any Lender, of the proportion of such consideration so
received allocable to such Additional Shares of Common Stock
value shall be determined in good faith by an independent
investment banking firm selected by the Borrower, SSC and CPLP
or, if that selection cannot be made within ten days, by an
independent investment banking firm selected by the American
Arbitration Association in
37
accordance with its rules, and PROVIDED, FURTHER, that the
Borrower shall pay all of the reasonable fees and expenses of
any third parties incurred in connection with determining the
proportion of such consideration so received allocable to such
Additional Shares of Common Stock.
(d) The Loan Agreement is hereby amended by adding a new Section
13.13 to read in its entirety as follows:
Section 13.13. TERMINATION. All provisions of the Loan Agreement
except Section 6.01(r) shall terminate upon the conversion of the entirety of
the Loan into Conversion Shares. Section 6.01(r) shall terminate in accordance
with the terms set forth in Section 6.01(r)(iii).
14. The Loan Agreement is hereby amended to add a new Article XIV to
read in its entirety as follows:
ARTICLE XIV
TRANSACTIONS WITH AFFILIATES
Section 14.01 TRANSACTION APPROVAL. Unless the Buyout Option (as
defined below) has been exercised, neither Borrower nor any of their respective
Subsidiaries shall enter into an SSC Transaction (as defined below) without the
prior written consent of CPLP. In the event that the Borrower, SSC or any of its
Subsidiaries propose to enter into an SSC Transaction, Borrower shall promptly
notify CPLP in writing of the proposed SSC Transaction (the "NOTIFICATION DATE")
which notice shall (i) describe the proposed SSC Transaction in reasonable
detail and (ii) be accompanied by such information as Borrower reasonably
believes that a third party investor would reasonably require in order to
determine the fairness of the proposed SSC Transaction. The Borrower shall
promptly provide such additional information (and make personnel available to
discuss the same) as CPLP may reasonably request regarding the SSC Transaction
during the three (3) Business Days following the Notification Date. Within five
(5) Business Days of the Notification Date, CPLP shall deliver to the Borrower
and SSC a written notice (an "OBJECTION NOTICE") stating that it objects to such
SSC Transaction (the "OBJECTION DATE"). If CPLP does not deliver an Objection
Notice with respect to an SSC Transaction on or prior to the Objection Date, it
shall be deemed (subject to the provisions of Section 14.02(b)) to have
consented to such SSC Transaction.
An "SSC TRANSACTION" means any transaction, agreement, arrangement,
lease, guaranty, loan or advance of money (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) or a series of related transactions or the material amendment or
modification of any existing or previously approved transaction, between (i) the
Borrower or any of its Subsidiaries and (ii) SSC or any Affiliate of SSC (other
than Borrower and its Subsidiaries) unless: (x) the transaction, or series of
related transactions, has a value of at less than $500,000, (y) such
transactions and other prior transactions of the Borrower and its Subsidiaries
in any fiscal year of the Borrower have a value of less than $5,000,000 in the
aggregate, or (iii) the transaction is an Approved Existing Transaction.
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An "APPROVED EXISTING TRANSACTION" means a transaction, agreement,
arrangement, lease, guaranty, loan or advance of money (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) described in the confidential side letter between the
Borrower and the Agent of even date herewith on the terms in effect as of the
date hereof and excluding any material modification or amendment thereto.
Section 14.02 BUYOUT OPTION. (a) In the event that CPLP delivers an
Objection Notice, SSC shall have the right exercisable by delivering a written
notice, not more that five (5) Business Days after the Objection Date, to CPLP
stating that it elects to exercise its Buyout Option (a "BUYOUT EXERCISE
NOTICE") to purchase all but not less than all of the Buyout Securities (as
defined below) for a cash purchase price equal to all principal and interest due
to CPLP pursuant to the Term Loan Agreement, all principal and interest due to
CPLP with respect to the Loan and CPLP's pro rata portion of any fees payable to
it under the Term Loan Agreement or this Agreement (the "BUYOUT OPTION");
PROVIDED, HOWEVER, that if CPLP has exercised a portion of the Warrants that
would otherwise be deemed Allocated Warrants (the shares of Common Stock issued
upon exercise of the Allocated Warrants shall be referred to as the "ALLOCATED
SHARES"), then the purchase price paid by SSC for the Buyout Option shall be
reduced (by an amount not less than zero) (i) if CPLP then owns all or a portion
of the Allocated Shares, by the product of (a) the number of Allocated Shares
then owned and (b) the difference between the Current Market Price on the date
of the Buyout Exercise Notice and the exercise price paid by CPLP for such
Allocated Shares or (ii) if CPLP has sold all or a portion of the Allocated
Shares, by the product of (x) the number of Allocated Shares so sold and (y) the
difference between the consideration received by CPLP upon the sale of the
Allocated Shares so sold and the exercise price paid by CPLP for such Allocated
Shares; PROVIDED, FURTHER, that if CPLP has acquired the Allocated Shares via
cashless exercise, the foregoing computation shall be made as if such exercise
had been a cash exercise. If SSC does not deliver a Buyout Exercise Notice in
accordance with the terms of this Section 14.02, then SSC shall be deemed to
have waived its Buyout Option as to the transactions stated in the Buyout
Exercise Notice, and the parties may not proceed with the SSC Transaction that
is the subject of such Objection Notice.
(b) If a Buyout Exercise Notice is delivered, CPLP, within
five (5) Business Days of delivery of such Buyout Exercise Notice, may request
by written notice to Borrower and SSC (a "REFERRAL NOTICE") that a committee
comprised of all of the independent directors of the Borrower not affiliated
with SSC, CPLP or the Borrower's management (the "FAIRNESS COMMITTEE") review
and approve the SSC Transaction that is the subject of the Buyout Exercise
Notice (a "REFERRED SSC TRANSACTION") as to its fairness to the Borrower and its
unaffiliated shareholders. The Borrower shall cause a Fairness Committee to be
appointed within five (5) Business Days of its receipt of a Referral Notice. In
the event that the Fairness Committee reviews and approves as fair to Borrower
and its unaffiliated shareholders the Referred SSC Transaction as proposed by
SSC or if the Fairness Committee modifies the Referred SSC Transaction, and as
modified approves the Referred SSC Transaction as fair to Borrower and its
unaffiliated shareholders, CPLP shall be deemed to have consented to the SSC
Transaction as so approved. In the event that CPLP requests that an SSC
Transaction be reviewed by a Fairness Committee, such request shall be
irrevocable, SSC shall not have any rights to exercise a Buyout Option in
connection with such Referred SSC Transaction, and Section 14.03 shall not apply
to such Referred SSC Transaction.
39
(c) If SSC elects to exercise the Buyout Option and CPLP does
not timely deliver a Referral Notice pursuant to Section 14.02(b), then the
closing of the Buyout Option regarding the amounts payable under the Term Loan
Agreement shall occur on the 30th day following the delivery of the Buyout
Exercise Notice. CPLP shall have the right to convert or elect not to convert
any portion of the Loan payable to CPLP for a period of up to 30 days following
the delivery of the Buyout Exercise Notice. The closing of the Buyout Option
regarding the portion of the Loan payable to CPLP shall occur on the earlier to
occur of (i) the 30th day following the delivery by CPLP to the Borrower and SSC
of a notice that it does not elect to convert the outstanding portion of the
Loan payable to it or specifying which portion of the Loan it does elect to
convert (the "CPLP NON-CONVERSION NOTICE") and (ii) the 60th day following the
delivery of a Buyout Exercise Notice.
"BUYOUT SECURITIES" means (i) amounts payable to CPLP under the Term
Loan Agreement, (ii) the portion of the Loan payable to CPLP and (iii) the
Allocated Warrants (as defined below) but shall in no event include (a)
Conversion Shares, (b) shares issued upon exercise of the Warrant previously
issued to CPLP (subject to the provisions of Section 14.02(a)) and (c) the
portion of the Warrant not constituting the Allocated Warrants. To the extent
that CPLP has partially exercised the Warrant prior to the delivery of a Buyout
Exercise Notice, the Warrant shall be deemed first exercised as to the portion
of the Warrant that is not deemed Allocated Warrants. The "ALLOCATED WARRANTS"
shall be (x) 75% of the Warrant until the first anniversary of the Effective
Date, (y) 50% of the Warrant from the first anniversary of the Effective Date
until the second anniversary of the Effective Date, (z) 25% of the Warrant from
the second anniversary of the Effective Date until the third anniversary of the
Effective Date, and (iv) zero from and after the third anniversary of the
Effective Date.
Section 14.03 EXERCISABILITY. The Allocated Warrants shall not be
exercisable by CPLP from the date on which CPLP receives the Buyout Exercise
Notice until the date which is thirty-one (31) days after the receipt by CPLP of
the Buyout Exercise Notice. The Loan shall not be convertible by CPLP from the
date of delivery of the Non-Conversion Notice until the date which is thirty-one
(31) days following the date of delivery of the Non-Conversion Notice.
Section 14.04 CPLP TRANSACTION. Neither the Borrower nor its
Subsidiaries will enter into any transaction with CPLP or its Affiliates, other
than the transactions contemplated by the Term Loan Agreement and this
Agreement, without the prior written consent of the Borrower's Board of
Directors and SSC unless the transaction, or series of related transactions, is
valued at less than $500,000.
40
15. RESIGNATION/APPOINTMENT OF AGENT. On the effectiveness of this
Amendment on the First Amendment Effective Date (as defined below), SSC shall
resign all of its functions and duties as agent, and CPLP will thereupon become
the successor Agent and shall succeed to and become vested with all the rights,
powers and privileges of the Agent. Each of the parties hereto hereby agrees to
such resignation and such appointment and waives the notice requirements of
Section 10.07 of the Loan Agreement.
16. CONDITIONS. This Amendment shall become effective on the date (the
"First Amendment Effective Date") as of which each of the following conditions
precedent shall have been satisfied in a manner satisfactory to each Lender:
(a) FEES AND EXPENSES.
(i) All fees, expenses and taxes accrued and unpaid or
otherwise due and payable by the Borrower or a Loan Party pursuant to either the
Loan Agreement or this Amendment shall have been paid in full.
(ii) The Lenders shall have received either (A) evidence that
any and all placement fees associated with the SSC Assignment have been paid in
full, or (B) a certificate from an Authorized Officer of the Borrower that no
such fees are applicable.
(b) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. Both
before and after giving effect to the transactions contemplated by this
Amendment, the representations and warranties contained in the Loan Agreement,
as amended, are true and correct in all respects, and no Default or Event of
Default has occurred and is continuing.
(c) LEGALITY. This Amendment and the transactions contemplated
thereby shall not contravene any law, rule or regulation applicable top the
Agent or any Lender. The Agent shall have received on or before the First
Amendment Effective Date, each of the following in form and substance
satisfactory to the Agent:
(i) this Amendment, duly executed by each of the Loan Parties;
(ii) the Notes, payable to the order of each Lender and duly
executed by the Borrower;
(iii) a Security Agreement, duly executed by each Loan Party;
(iv) an Assignment for Security (as defined in the Security
Agreement) with respect to trademarks and trademark licenses, duly executed by
each Loan Party;
(v) an Assignment for Security (as defined in the Security
Agreement) with respect to copyrights and copyright licenses, duly executed by
each Loan Party;
(vi) a Pledge Agreement, duly executed by each Loan Party (as
applicable) together with the original stock certificates or other certificated
securities or instruments representing all of the Capital Stock of such Loan
Party's subsidiaries accompanied by undated stock powers executed in blank and
other proper instruments of transfer;
41
(vii) Mortgages and Landlord's Agreements with respect to all
Leases set forth on Schedule 4.01(d) hereto;
(viii) the Control Agreements and such other depository account,
notices and other similar documents entered into in connection with the
Revolving Credit Facility Documents with respect to the accounts controlled
under such agreements subject to the priority set forth in the Intercreditor
Agreement, each in form and substance satisfactory to the Agent, with respect to
the Key Loan Parties' cash management system;
(ix) payoff letters and termination and release agreements and all
related documents, and UCC-3 termination statements for all UCC-1 financing
statements covering any portion of the Collateral; a UCC Filing Authorization
Letter, duly executed by each Loan Party, together with appropriate financing
statements on Form UCC-1, duly executed by each Loan Party and duly filed in
such office or offices as may be necessary or, in the opinion of the Agent,
desirable to perfect the security interests purported to be created by each
Security Agreement, each Pledge Agreement and each Mortgage;
(x) evidence of the recording of the leasehold Mortgages in such
office or offices as may be necessary or, in the opinion of the Agent, desirable
to perfect the Lien purported to be created thereby or to otherwise protect the
rights of the Agent and the Lenders thereunder;
(xi) the Intercreditor Agreement, in form and substance
satisfactory to the Agent, duly executed by each of the parties thereto;
(xii) the Registration Rights Agreement, duly executed by each of
the parties thereto;
(xiii) an opinion of Porter, Wright, Xxxxxx & Xxxxxx LLP, counsel
to the Loan Parties, substantially in the form of Exhibit H and as to such other
matters as the Agent may reasonably request as well as opinions of local counsel
with respect to Key Loan Parties or Guarantors formed in Michigan and Missouri;
(xiv) a copy of the resolutions of each Loan Party, certified as of
the Effective Date by an Authorized Officer thereof, authorizing (A) the
transactions contemplated by the Loan Documents to which such Loan Party is or
will be a party, and (B) the execution, delivery and performance by such Loan
Party of each Loan Document to which such Loan Party is or will be a party and
the execution and delivery of the other documents to be delivered by such Person
in connection herewith and therewith;
(xv) evidence of the insurance coverage required by Section 6.01
and the terms of each Security Agreement and each Mortgage and such other
insurance coverage with respect to the business and operations of the Loan
Parties as the Agent may reasonably request, in each case, where requested by
the Agent, with such endorsements as to the named insureds or loss payees
thereunder as the Agent may request and providing that such policy may be
terminated or canceled (by the insurer or the insured thereunder) only upon
thirty (30) days' prior written notice to the Agent and each such named insured
or loss payee, together with evidence of the payment of all premiums due in
respect thereof for such period as the Agent may request;
42
(xvi) copies of the Revolving Credit Facility Documents, the Term
Loan Documents and the SSC Assignment Documents, in each case, duly executed by
the parties thereto and certified as true and correct copies thereof by an
Authorized Officer of the Borrower, each of which shall be in form and substance
satisfactory to the Agent; and
(xvii) evidence of completion of certain documentation as
requested by the Agent in connection with Collateral consisting of intellectual
property.
(e) MATERIAL ADVERSE EFFECT. The Agent shall have determined, in
its sole judgment, that no event or development shall have occurred since
February 2, 2002 which could have a Material Adverse Effect.
(f) APPROVALS. 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 making of
the Loans or the conduct of the Loan Parties' business shall have been obtained
and shall be in full force and effect.
(g) PROCEEDINGS; RECEIPT OF DOCUMENTS. All proceedings in
connection with the making of the Loans and the other transactions contemplated
by this Agreement and the other Loan Documents, and all documents incidental
hereto and thereto, shall be satisfactory to the Agent and its counsel, and the
Agent and such counsel shall have received all such information and such
counterpart originals or certified copies or other copies of such documents as
the Agent or such counsel may reasonably request, including, without limitation,
interim financial statements and monthly availability projections.
(h) CASH MANAGEMENT. The Lenders shall be satisfied with the cash
management systems and procedures of each of the Loan Parties.
(i) EXCESS AVAILABILITY. After giving effect to all the
transactions contemplated hereby (including transaction costs), the Key Loan
Parties shall have Excess Availability (calculated without regard to the Excess
Availability Reserve) of not less than $115,000,000.
(j) TRANSACTION COSTS. The Lenders shall be satisfied with the
costs in connection with the transactions contemplated hereby.
(k) REVOLVING CREDIT FACILITY AND TERM LOAN AGREEMENT. All
conditions precedent to the Revolving Credit Facility shall have been met to the
satisfaction of the Lenders and Agents thereto.
17. MISCELLANEOUS.
(a) CONTINUED EFFECTIVENESS OF THE LOAN AGREEMENT. Except as
otherwise expressly provided herein, each Loan Agreement and the other Loan
Documents are, and shall continue to be, in full force and effect and are hereby
ratified and confirmed in all respects.
43
(b) COUNTERPARTS. 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.
(c) HEADINGS. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(d) GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law of the State of New York.
(e) COSTS AND EXPENSES. The Borrower and other Loan Parties
jointly and severally agree to pay on demand all reasonable fees, costs and
expenses of the Lenders in connection with the preparation, execution and
delivery of this Amendment and the other related agreements, instruments and
documents.
(f) AMENDMENT AS LOAN DOCUMENT. The Borrower and other Loan
Parties hereby acknowledge and agree that this Amendment constitutes a "Loan
Document" under the Loan Agreement. Accordingly, it shall be an Event of Default
under the Loan Agreement if (i) any representation or warranty made by the
Borrower or any other Loan Party under or in connection with this Amendment
shall have been untrue, false or misleading in any material respect when made,
or (ii) the Borrower or any other Loan Party shall fail to perform or observe in
any material respect any term, covenant or agreement contained in this Amendment
(g) WAIVER OF JURY TRIAL. THE BORROWER, EACH OTHER LOAN PARTY
AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE ACTIONS OF EITHER
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
VALUE CITY DEPARTMENT STORES, INC.,
an Ohio corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
SUBSIDIARY GUARANTORS:
SHONAC CORPORATION,
an Ohio corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
DSW SHOE WAREHOUSE, INC.,
a Missouri Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
GRAMEX RETAIL STORES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
45
FILENE'S BASEMENT, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
GB RETAILERS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
X.X. XXXXXXXX DELIVERY, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
VALUE CITY DEPARTMENT STORES SERVICES, INC.
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
VALUE CITY LIMITED PARTNERSHIP,
an Ohio limited partnership
By: Westerville Road GP, Inc., its
General Partner
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
46
VALUE CITY OF MICHIGAN, INC.,
a Michigan corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
VCM, LTD.,
an Ohio limited liability company
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
WESTERVILLE ROAD GP, INC.
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
WESTERVILLE ROAD LP, INC.
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
47
RESIGNING AGENT AND LENDER:
SCHOTTENSTEIN STORES CORPORATION
By:
----------------------------------------
Name:
Title:
SUCCESSOR AGENT AND LENDER:
CERBERUS PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
