<PAGE>
EXHIBIT 10.9
$50,000,000
SECOND AMENDED AND RESTATED
SENIOR LOAN AGREEMENT
DATED AS OF JUNE __, 2005
BY AND AMONG
VALUE CITY DEPARTMENT STORES LLC
AS BORROWER,
RETAIL VENTURES, INC.
GRAMEX RETAIL STORES, INC.,
FILENE'S BASEMENT, INC.,
GB RETAILERS, INC.,
VALUE CITY OF MICHIGAN, INC.,
J.S. OVERLAND DELIVERY, INC.
VALUE CITY DEPARTMENT STORES SERVICES, INC.
RETAIL VENTURES JEWELRY, INC.,
RETAIL VENTURES SERVICES, INC., AND
RETAIL VENTURES IMPORTS, INC.
AS GUARANTORS,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
AS LENDERS,
AND
CERBERUS PARTNERS, L.P.
AS AGENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S>
<C>
ARTICLE I DEFINITIONS; CERTAIN
TERMS...........................................................................
1
SECTION 1.01
DEFINITIONS.....................................................................
2
SECTION 1.02
TERMS
GENERALLY.................................................................
25
SECTION 1.03
ACCOUNTING AND OTHER
TERMS......................................................
25
SECTION 1.04
TIME
REFERENCES.................................................................
25
ARTICLE II THE
LOAN............................................................................................
26
SECTION 2.01
THE
LOAN........................................................................
26
SECTION 2.02
NOTES; REPAYMENT OF
LOAN........................................................
26
SECTION 2.03
INTEREST........................................................................
27
SECTION 2.04
PREPAYMENT OF
LOAN..............................................................
27
SECTION 2.05
TAXES...........................................................................
28
ARTICLE III FEES, PAYMENTS AND OTHER
COMPENSATION..............................................................
30
SECTION 3.01
AUDIT AND COLLATERAL MONITORING
FEES............................................ 30
SECTION
3.02
PAYMENTS; COMPUTATIONS AND
STATEMENTS........................................... 30
SECTION 3.03
SHARING OF PAYMENTS,
ETC........................................................
31
SECTION 3.04
APPORTIONMENT OF
PAYMENTS.......................................................
31
SECTION 3.05
INCREASED COSTS AND REDUCED
RETURN.............................................. 32
ARTICLE IV CONDITIONS TO EFFECTIVENESS;
consent to
ipo.........................................................
34
SECTION 4.01
CONDITIONS PRECEDENT TO
EFFECTIVENESS...........................................
34
SECTION 4.02
CONSENT TO
IPO..................................................................
37
SECTION 4.03
RELEASE OF DSW AND
DSWSW........................................................
38
ARTICLE V REPRESENTATIONS AND
WARRANTIES.......................................................................
38
SECTION 5.01
REPRESENTATIONS AND
WARRANTIES..................................................
38
ARTICLE VI COVENANTS OF THE LOAN
PARTIES.......................................................................
49
SECTION 6.01
AFFIRMATIVE
COVENANTS...........................................................
49
SECTION 6.02
NEGATIVE
COVENANTS..............................................................
54
ARTICLE VII REPORTING
REQUIREMENTS.............................................................................
64
SECTION 7.01
MAINTAIN
RECORDS................................................................
64
SECTION 7.02
ACCESS TO
RECORDS...............................................................
65
SECTION 7.03
PROMPT NOTICE TO ADMINISTRATIVE
AGENT........................................... 65
SECTION
7.04
WEEKLY
REPORTS..................................................................
66
</TABLE>
<PAGE>
<TABLE>
<S>
<C>
SECTION 7.05
MONTHLY
REPORTS.................................................................
66
SECTION 7.06
QUARTERLY
REPORTS...............................................................
66
SECTION 7.07
ANNUAL
REPORTS..................................................................
67
SECTION 7.08
OFFICER'S
CERTIFICATES..........................................................
67
SECTION 7.09
INVENTORY,
APPRAISALS AND
AUDITS................................................ 68
SECTION 7.10
ADDITIONAL FINANCIAL
INFORMATION................................................
68
SECTION 7.11
FORMAT OF
INFORMATION...........................................................
69
ARTICLE VIII USE OF
COLLATERAL.................................................................................
69
SECTION 8.01
USE OF INVENTORY
CONTROL........................................................
69
SECTION 8.02
INVENTORY
QUALITY...............................................................
70
SECTION 8.03
ADJUSTMENTS AND
ALLOWANCES......................................................
70
SECTION 8.04
VALIDITY OF
ACCOUNTS............................................................
70
SECTION 8.05
NOTIFICATION TO ACCOUNT
DEBTORS.................................................
70
SECTION 8.06
APPOINTMENT AS
ATTORNEY-IN-FACT.................................................
70
SECTION 8.07
NO OBLIGATION TO
ACT............................................................
71
ARTICLE IX EVENTS OF
DEFAULT...................................................................................
72
SECTION 9.01
EVENTS OF
DEFAULT...............................................................
72
ARTICLE X
AGENT................................................................................................
76
SECTION 10.01
APPOINTMENT.....................................................................
76
SECTION 10.02
NATURE OF
DUTIES................................................................
77
SECTION 10.03
RIGHTS; EXCULPATION,
ETC........................................................
77
SECTION 10.04
RELIANCE........................................................................
78
SECTION 10.05
INDEMNIFICATION.................................................................
78
SECTION 10.06
AGENT
INDIVIDUALLY..............................................................
78
SECTION 10.07
SUCCESSOR
AGENT.................................................................
79
SECTION 10.08
COLLATERAL
MATTERS..............................................................
79
SECTION 10.09
AGENCY FOR
PERFECTION...........................................................
80
ARTICLE XI
GUARANTY............................................................................................
81
SECTION 11.01
GUARANTY........................................................................
81
SECTION 11.02
GUARANTY
ABSOLUTE...............................................................
81
SECTION 11.03
WAIVER..........................................................................
82
SECTION 11.04
CONTINUING GUARANTY;
ASSIGNMENTS................................................
82
SECTION 11.05
SUBROGATION.....................................................................
82
ARTICLE XII
MISCELLANEOUS......................................................................................
83
SECTION 12.01
NOTICES,
ETC....................................................................
83
SECTION 12.02
AMENDMENTS,
ETC.................................................................
84
SECTION 12.03
NO WAIVER; REMEDIES,
ETC........................................................
84
SECTION 12.04
EXPENSES; TAXES; ATTORNEYS'
FEES................................................ 85
</TABLE>
-ii-
<PAGE>
<TABLE>
<S>
<C>
SECTION 12.05
RIGHT OF
SET-OFF................................................................
86
SECTION 12.06
SEVERABILITY....................................................................
86
SECTION 12.07
ASSIGNMENTS AND
PARTICIPATIONS..................................................
86
SECTION 12.08
COUNTERPARTS....................................................................
89
SECTION 12.09
GOVERNING
LAW...................................................................
89
SECTION 12.10
CONSENT TO JURISDICTION; SERVICE OF PROCESS AND
VENUE........................... 89
SECTION 12.11
WAIVER OF JURY TRIAL,
ETC.......................................................
90
SECTION 12.12
CONSENT BY THE
AGENT AND LENDERS................................................
90
SECTION 12.13
NO PARTY DEEMED
DRAFTER.........................................................
90
SECTION 12.14
REINSTATEMENT; CERTAIN
PAYMENTS.................................................
90
SECTION 12.15
INDEMNIFICATION.................................................................
91
SECTION 12.16
[INTENTIONALLY
OMITTED.]........................................................
92
SECTION 12.17
RECORDS.........................................................................
92
SECTION 12.18
BINDING
EFFECT..................................................................
92
SECTION 12.19
MAXIMUM
INTEREST................................................................
92
SECTION 12.20
CONFIDENTIALITY.................................................................
93
SECTION 12.21
INTEGRATION.....................................................................
94
ARTICLE XIII ISSUANCE OF EQUITY INTERESTS
TO
LENDERS...........................................................
94
SECTION 13.01
AUTHORIZATION AND ISSUANCE OF
WARRANTS.......................................... 94
SECTION 13.02
SECURITIES ACT
MATTERS..........................................................
94
SECTION 13.03
CERTAIN
TAXES...................................................................
96
SECTION 13.04
CANCELLATION AND
ISSUANCE.......................................................
96
ARTICLE XIV TRANSACTIONS WITH
AFFILIATES.......................................................................
96
SECTION 14.01
TRANSACTION
APPROVAL............................................................
96
SECTION 14.02
BUYOUT
OPTION...................................................................
97
SECTION 14.03
CPLP
TRANSACTION................................................................
98
ARTICLE XV REAFFIRMATION AND
CONSENT...........................................................................
98
SECTION 15.01
REAFFIRMATION AND
CONFIRMATION..................................................
98
</TABLE>
-iii-
<PAGE>
SECOND AMENDED AND RESTATED SENIOR
LOAN AGREEMENT
Second Amended and Restated Senior Loan Agreement, dated as of
June
__, 2005 (the "Agreement"), among Value
City Department Stores LLC, an Ohio
limited liability company (the "Borrower"),
Retail Ventures, Inc., an Ohio
corporation (the "Parent"), Gramex Retail
Stores, Inc., a Delaware corporation
("Gramex"), Filene's Basement, Inc., a
Delaware corporation ("Filene's"), GB
Retailers, Inc., a Delaware corporation
("GB"), Value City of Michigan, Inc., a
Michigan corporation ("VC Michigan"), J.S.
Overland Delivery, Inc., a Delaware
corporation ("Overland"), Value City
Department Stores Services, Inc.
("Services"), Retail Ventures Jewelry,
Inc., an Ohio corporation ("RV Jewelry"),
Retail Ventures Services, Inc., a Delaware
corporation ("RV Services"), Retail
Ventures Imports, Inc. (formerly known as
VC Acquisition, Inc.), an Ohio
corporation ("Imports", and together with
Parent, Gramex, Filene's, GB, VC
Michigan, Overland, Services, RV Jewelry
and RV Services, each a "Guarantor",
and collectively, the "Guarantors"), the
lenders from time to time party hereto
(each a "Lender" and collectively, the
"Lenders"), and Cerberus Partners, L.P.,
a Delaware limited partnership ("CPLP"), as
agent for itself and the other
Lenders (in such capacity, together with
its successors, if any, the "Agent").
RECITALS
WHEREAS, the Borrower, the Guarantors and certain of their
affiliates, the Lenders and the Agent are
parties to the Amended and Restated
Senior Convertible Loan Agreement, dated as
of June 11, 2002 (as amended by (a)
Amendment No. 1 to Amended and Restated
Senior Convertible Loan Agreement, dated
June 11, 2002, (b) Amendment No. 2 to
Amended and Restated Senior Convertible
Loan Agreement, dated October 7, 2003, and
(c) Amendment No. 3 to the Amended
and Restated Senior Convertible Loan
Agreement, dated December 29, 2004, the
"Original Agreement");
WHEREAS, the Borrower, the Guarantors and certain of their
affiliates have undergone certain
corporation reorganizations;
WHEREAS, the parties hereto have agreed to remove the
conversion
feature contained under the Original
Agreement and issue to the Lenders
warrants, the exercise price of which may
be paid with the Loan (as hereinafter
defined) on all the same terms as if the
Loan (as defined in the Original
Agreement) were converted;
WHEREAS, the Borrower, the Guarantors, the Lenders and the
Agent
desire to amend and restate the Original
Agreement, effective upon the Effective
Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the
covenants
and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
<PAGE>
Section 1.01 Definitions. As used in this Agreement, the
following
terms shall have the respective meanings
indicated below, such meanings to be
applicable equally to both the singular and
plural forms of such terms:
"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.
"Action" has the meaning specified therefor in Section 12.12.
"Acquisition" means the purchase or acquisition of all or
substantially all of the assets of any
Person, the purchase of a controlling
equity interest in any Person, or the
merger or consolidation of any Person with
any other Person, in any transaction or
group of transactions which are part of
a common plan.
"Affiliate" means (i) with respect to any Person, any other
Person
that directly or, alone or with a group of
related Persons whose interests taken
as a whole, indirectly through one or more
intermediaries, Controls, is
Controlled by, or is under common Control
with, such Person; (ii) any Person
which is a parent, brother-sister or
Subsidiary of a Key Loan Party, whose
enterprise's tax returns or financial
statements are consolidated with those of
a Key Loan Party, which is a member of the
same controlled group of corporations
(within the meaning of Section 1563(a)(1),
(2) and (3) of the Internal Revenue
Code or 1986, as amended from time to time)
of which any Key Loan Party is a
member, or Controls or is Controlled by any
Key Loan Party; and (iii) with
respect to the Loan Parties, without
limiting the provisions of clauses (i) and
(ii) hereof, "Affiliate" includes SSC, DSW
and DSWSW. Notwithstanding anything
to the contrary contained herein, in no
event shall the Agent or any Lender be
considered an "Affiliate" of a Loan Party
as a result of being party to this
Agreement or the transactions contemplated
hereby
"Agent" has the meaning specified therefor in the preamble
hereto.
"Agent Advances" has the meaning specified therefor in section
10.08(a).
"Agent's Account" means an account at a bank designated by the
Agent
from time to time as the account into which
the Loan Parties shall make certain
payments to the Agent for the benefit of
the Agent and the Lenders under this
Agreement and the other Loan Documents.
"Agreement" means this Second Amended and Restated Senior Loan
Agreement, including all amendments,
modifications and supplements and any
exhibits or schedules to any of the
foregoing, and shall refer to the Agreement
as the same may be in effect at the time
such reference becomes operative.
"Applicable Law" means, as to any Person, (i) all statutes,
rules,
regulations, orders or other requirements
having the force of law, and (ii) all
court orders and injunctions,
arbitrator's
-2-
<PAGE>
decisions and/or similar rulings, in each
instance ((i) and (ii)) of or by any
Federal, state, municipal or other
governmental authority, or court, tribunal,
panel or other body which has or claims
jurisdiction over such Person, or any
property of such Person, or of any other
Person for whose conduct such Person
would be responsible.
"Approved Existing Transaction" has the meaning specified
therefor
in Section 14.01.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an assigning Lender and an
assignee, and accepted by the Agent,
in accordance with Section 12.07 hereof and
substantially in the form of Exhibit
I to the Original Agreement or such other
form acceptable to the Agent.
"Authorized Officer" means, with respect to any Person, the
chief
executive officer, chief financial officer,
president, executive vice president,
controller or treasurer of such Person.
"Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C.
Section 101, et seq.), as amended from time
to time, and any successor statute.
"Board" means the Board of Governors of the Federal Reserve
System
of the United States.
"Board of Directors" means the board of directors of the
Parent.
"Borrower" has the meaning specified therefor in the preamble
hereto.
"Borrowing Base Certificate" has the meaning set forth in the
Revolving Credit Facility as in effect from
time to time.
"Business Day" means any day other than (i) a Saturday or
Sunday,
(ii) any day on which banks in New York
City generally are not open to the
general public for the purpose of
conducting commercial banking business, or
(iii) a day on which the principal office
of the Agent is not open to the
general public to conduct business.
"Business Plan" means the business plan for the Loan Parties for
the
fiscal years 2005 through and including
2006, in form and substance reasonably
satisfactory to the Agent and the Lenders
and delivered to the Agent prior to
the Effective Date.
"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).
"Capital Guideline" means any law, rule, regulation, policy,
guideline or directive (whether or not
having the force of law and whether or
not the failure to comply therewith would
be unlawful) of any central bank or
Governmental Authority (i) regarding
capital adequacy, capital ratios, capital
requirements, the calculation of a bank's
capital or similar matters, or (ii)
-3-
<PAGE>
affecting the amount of capital required to
be obtained or maintained by any
Lender, any Person controlling any Lender
or the manner in which any Lender, any
Person controlling any Lender, allocates
capital to any of its contingent
liabilities (including letters of credit),
advances, acceptances, commitments,
assets or liabilities.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests,
participations or other equivalents
(however designated and whether or not
voting) of corporate stock; and (ii) with
respect to any Person that is not a
corporation, any and all partnership,
membership or other equity interests of
such Person.
"Capitalized Lease" means, with respect to any Person, any lease
of
real or personal property by such Person as
lessee which is (i) required under
GAAP to be capitalized on the balance sheet
of such Person; or (ii) a
transaction of a type commonly known as a
"synthetic lease" (i.e. a lease
transaction that is treated as an operating
lease for accounting purposes but
with respect to which payments of rent are
intended to be treated as payments of
principal and interest on a loan for
Federal income tax purposes).
"Capitalized Lease Obligations" means, with respect to any
Person,
obligations of such Person and its
Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such
obligation shall be the capitalized
amount thereof determined in accordance
with GAAP.
"Change in Control" means the occurrence of any of the
following:
(i) the acquisition, by any person or group
(other than (A) a Person controlled
by SSC or (B) one or more Family Trusts)
(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 Parent having the right, under
ordinary circumstances, to vote for the
election of directors of the Parent,
excluding from the foregoing any
acquisition pursuant to the issuance of the
Warrants or the Conversion Warrants
or the exercise of such Warrants or
Conversion Warrants by the holder thereof to
acquire Warrant Stock; (ii) more than
thirty percent (30%) of the Persons who
were directors of the Parent on the first
day of any period consisting of twelve
(12) consecutive calendar months (the first
of which twelve (12) month periods
commencing with the first day of August
2003), cease to be directors of the
Parent, for any reason other than death,
disability, or replacement (in the
ordinary course of business and not as a
result of any change in the equity
ownership of the Parent) by other Persons
nominated by a nominating committee of
the Board of Directors of the Parent; (iii)
the failure of the Parent 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 or one or more Family Trusts to
possess, directly or indirectly, the power
to cause the direction of the
management and policies of the Parent.
"Class A Common Shares" has the meaning set forth for such term
in
the Articles of Organization of DSW as in
effect on the Effective Date.
"Class B Common Shares" has the meaning set forth for such term
in
the Articles of Organization of DSW as in
effect on the Effective Date.
"Collateral" means all of the property and assets and all
interests
therein and proceeds thereof now owned or
hereafter acquired by any Loan Party
upon which a Lien is
-4-
<PAGE>
granted or purported to be granted by such
Loan Party as security for all or any
part of the Obligations.
"Common Stock" means the common stock, no par value, of the
Parent.
"Competitive Business" means any business or enterprise
consisting
of (i) operation of off-price discount
department stores; (ii) operation of
retail furniture stores and related
accessories; (iii) operation of designer and
name-brand shoe stores; (iv) operation of
licensed shoe departments; (v)
furniture manufacturing; or (vi) bedding
manufacturing.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or
intended to guarantee any Indebtedness
("primary obligations") of any other Person
(the "primary obligor") in any
manner, whether directly or indirectly,
including, without limitation, (i) the
direct or indirect guaranty, endorsement
(other than for collection or deposit
in the ordinary course of business),
co-making, discounting with recourse or
sale with recourse by such Person of the
obligation of a primary obligor; (ii)
the obligation to make take-or-pay or
similar payments, if required, regardless
of nonperformance by any other party or
parties to an agreement (other than such
agreements to purchase goods in the
ordinary course of business); (iii) any
obligation of such Person, whether or not
contingent, (A) to purchase any such
primary obligation or any property
constituting direct or indirect security
therefor, (B) (other than such agreements
to purchase goods in the ordinary
course of business) to advance or supply
funds (1) for the purchase or payment
of any such primary obligation or (2) to
maintain working capital or equity
capital of the primary obligor or otherwise
to maintain the net worth or
solvency of the primary obligor, (C) to
purchase property, assets, securities or
services primarily for the purpose of
assuring the owner of any such primary
obligation of the ability of the primary
obligor to make payment of such primary
obligation or (D) otherwise to assure or
hold harmless the holder of such
primary obligation against loss in respect
thereof (other than such agreements
to purchase goods in the ordinary course of
business); provided, however, that
the term "Contingent Obligation" shall not
include (1) any product warranties or
(2) obligations, warranties and indemnities
not relating to Indebtedness which
have been made or undertaken, in each case,
extended in the ordinary course of
business.
"Control", "Controls", "Controlled by", or "under common
Control
with" means the possession, direct or
indirect of the power to cause the
direction of the management and policies of
a Person whether through the
ownership of voting securities, by contract
or otherwise. A Person shall be
deemed to have control of another Person if
it is a "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule
13-d-5 under the Exchange Act) or a
member of a "group" that is the beneficial
owner, directly or indirectly, of 20%
or more of the voting stock of or equity
interest in such Person.
"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).
-5-
<PAGE>
"Conversion Warrantholders" means the Lenders party hereto on
the
Effective Date, and any subsequent holders
of the Conversion Warrants.
"Conversion Warrants" means any of the warrants issued to the
Conversion Warrantholders on the Effective
Date pursuant to the terms hereof,
substantially in the form of Exhibit A-1
hereto.
"CPLP" has the meaning specified therefore in the preamble
hereto.
"Current Market Price" means, on any date specified herein, the
average of the daily Market Price during
the ten consecutive trading days before
such date, except that, if on any such date
the shares of Common Stock or Class
A Common Shares, as applicable, are not
listed or admitted for trading on any
national securities exchange or quoted in
the over-the-counter market, the
Current Market Price shall be the Market
Price on such date.
"Default" means an event which, with the giving of notice or
the
lapse of time or both, would constitute an
Event of Default.
"Disposition" means any transaction, or series of related
transactions, pursuant to which any Person
or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of
any property or assets (whether now
owned or hereafter acquired) to any other
Person, in each case, whether or not
the consideration therefor consists of
cash, securities or other assets owned by
the acquiring Person, excluding any sales
of Inventory in the ordinary course of
business on ordinary business terms.
"Division(s)" means the various business segments of the Key
Loan
Parties, being the Filene's Business and
the Value City Business.
"Dollar," "Dollars" and the symbol "$" each means lawful money
of
the United States of America.
"DSW" means DSW Inc. (formerly known as Shonac Corporation), an
Ohio
corporation.
"DSW Common Stock" means the Capital Stock of DSW consisting of
Class A Common Shares and Class B Common
Shares.
"DSW Note" means (a) the promissory note dated March 10, 2005,
made
by DSW to the order of the Parent, in the
original principal amount of
$165,000,000 and (b) the promissory note
dated May 27, 2005, made by DSW to the
order of the Parent in the original
principal amount of $25,000,000.
"DSW Registration Rights Agreement" means the registration
rights
agreement, substantially in the form of
Exhibit E-2 hereto, by and among DSW,
the Warrantholders and the Conversion
Warrantholders with respect to the matters
covered thereby.
"DSWSW" means DSW Shoe Warehouse, Inc. (formerly known as DSW,
Inc.), an Ohio corporation.
-6-
<PAGE>
"DSWSW Guarantee" means the guarantee, dated as of March 10,
2005,
made by DSWSW in favor of the Parent,
guaranteeing the obligations of DSW under
the DSW Note.
"Effective Date" means the date, on or before December 31, 2005,
on
which all of the conditions precedent set
forth in Section 4.01 are satisfied or
waived.
"Eligible Assignee" means any Federal, state or foreign banking
institution, or any private entity or
commercial institution primarily engaged
in the business of making commercial loans,
and shall in no event include a
Person that is engaged in a Competitive
Business with any Loan Party, and as
long as SSC remains in Control of the Key
Loan Parties, an "Eligible Assignee"
shall in no event include a Person which is
engaged in a Competitive Business or
a Related Business with SSC.
"Employee Benefit Plan" means an employee benefit pension
benefit
plan that is covered by Title IV of ERISA
or is subject to the minimum funding
standards under Section 412 of the Internal
Revenue Code of 1986, as amended
from time to time, and as to which a Key
Loan Party or any ERISA Affiliate may
have any liability.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim,
litigation, investigation, judicial or
administrative proceeding, judgment,
letter, or other communication from any
Person or Governmental Authority involving
violations of Environmental Laws or
Releases of Hazardous Materials (i) from
any assets, properties or businesses
owned or operated by any Loan Party or any
of its Subsidiaries or any
predecessor in interest; or (ii) onto any
facilities which received Hazardous
Materials generated by any Loan Party or
any of its Subsidiaries or any
predecessor in interest.
"Environmental Laws" means the Comprehensive Environmental
Response,
Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C.
Section 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.
Section 6901, et seq.), the Federal
Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601
et seq.) and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et
seq.), as such laws may be amended or
otherwise modified from time to time, and
any other present or future Federal, state,
local or foreign statute, ordinance,
rule, regulation, order, judgment, decree,
permit, license or other binding
determination of any Governmental Authority
imposing liability or establishing
standards of conduct for protection of the
environment or other government
restrictions relating to the protection of
the environment or the Release,
deposit, or migration of any Hazardous
Materials into the environment.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions,
losses, damages, punitive damages,
consequential damages, treble damages,
reasonable costs, and expenses (including
all reasonable fees, disbursements and
expenses of counsel, experts, and
consultants and costs of investigations and
feasibility studies), fines,
penalties, sanctions and interest incurred
as a result of any claim or demand by
any Governmental Authority or any third
party, and which relate to any
environmental condition or a Release of
Hazardous Materials from or onto (i) any
property presently or formerly owned by
-7-
<PAGE>
any Loan Party or any of its Subsidiaries;
or (ii) any facility which received
Hazardous Materials generated by any Loan
Party or any of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any
Governmental
Authority for Environmental Liabilities and
Costs.
"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 Loan Party's
business, and any and all accessions
or additions thereto, and substitutions
therefor.
"ERISA" means the Employee Retirement Income Security Act of
1974,
as amended from time to time.
"ERISA Affiliate" means any Person which is under common
control
with a Key Loan Party within the meaning of
Section 4001 of ERISA or is part of
a group which includes any Key Loan Party
and which would be treated as a single
employer under Section 414 of the Internal
Revenue Code of 1986, as amended from
time to time.
"Event of Default" means any of the events set forth in Section
9.01. An "Event of Default" shall be deemed
to have occurred and to be
continuing unless and until that Event of
Default has been duly waived by the
Agent or cured to the satisfaction of the
Agent.
"Excess Availability" has the meaning specified in the
Revolving
Credit Facility.
"Excess Availability Reserve" has the meaning specified in the
Revolving Credit Facility.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations
promulgated thereunder, as amended,
modified, succeeded or replaced from time
to time.
"Fairness Committee" has the meaning specified therefor in
Section
14.02(b).
"Family Trust" means one or more trusts established for the
benefit
of any of Jay L. Schottenstein, Susan S.
Diamond, Ann S. Deshe, Lori
Schottenstein, Geraldine Schottenstein, any
of their respective spouses,
children or lineal descendants, or any
Person controlled by any such trust or
trusts.
"Federal Funds Rate" means, for any period, a fluctuating
interest
rate per annum equal to, for each day
during such period, the weighted average
of the rates on overnight Federal funds
transactions with members of the Federal
Reserve System arranged by Federal funds
brokers, as published on the next
succeeding Business Day by the Federal
Reserve Bank of New York, or, if such
rate is not so published for any day which
is a Business Day, the average of the
quotations for such day on such
transactions received by the Agent from three
Federal funds brokers of recognized
standing selected by it.
-8-
<PAGE>
"Filene's Business" means the businesses operated by Filene's.
"Final Maturity Date" means June 10, 2009, or such earlier date
on
which the Loan shall become due and payable
in accordance with the terms of this
Agreement and the other Loan Documents.
"Financial Statements" means (i) the audited consolidated
balance
sheet of the Parent and its Subsidiaries
for the Fiscal Year ended January 29,
2005, and the related consolidated
statement of operations, shareholders' equity
and cash flows for the Fiscal Year then
ended; and (ii) the unaudited
consolidated balance sheet of the Parent
and its Subsidiaries for the three
months ended April 30, 2005, and the
related consolidated statement of
operations, shareholder's equity and cash
flows for the three months then ended.
"Fiscal Year" means the fiscal year of the Parent and its
Subsidiaries ending on the Saturday nearest
January 31st of each year.
"GAAP" means generally accepted accounting principles in effect
from
time to time in the United States, applied
on a consistent basis; provided, that
for the purpose of Article VII hereof and
the definitions used therein, "GAAP"
shall mean generally accepted accounting
principles in effect on the date hereof
and consistent with those used in the
preparation of the Financial Statements;
provided, further, that if there occurs
after the date of this Agreement any
change in GAAP that affects in any respect
the calculation of any covenant
contained in Article VII hereof, the Agent
and the Borrower shall negotiate in
good faith amendments to the provisions of
this Agreement that relate to the
calculation of such covenant with the
intent of having the respective positions
of the Lenders and the Borrower after such
change in GAAP conform as nearly as
possible to their respective positions as
of the date of this Agreement.
"Governmental Authority" means any nation or government, any
Federal, state, city, town, municipality,
county, local or other political
subdivision thereof or thereto and any
department, commission, board, bureau,
instrumentality, agency or other entity
exercising executive, legislative,
judicial, taxing, regulatory or
administrative powers or functions of or
pertaining to government.
"Guaranteed Obligations" has the meaning specified therefor in
Section 11.01.
"Guarantor" means the Parent and each Subsidiary of the Parent,
now
existing or hereafter created or acquired
(other than the Borrower and the
Unrestricted Subsidiaries). For the
avoidance of doubt, it is hereby agreed that
none of DSW, DSWSW or any of their
respective Subsidiaries shall be a
"Guarantor" hereunder.
"Guaranty" means (i) the Guaranty of each Guarantor party
hereto
contained in Article XI hereof; and (ii)
each Guaranty, made by any other
Guarantor in favor of the Agent for the
benefit of the Lenders, pursuant to
Section 6.01(a) or otherwise, which
Guaranty shall be reasonably satisfactory,
in form and substance to the Agent and the
Lenders.
"Hazardous Material" means (i) any element, compound or
chemical
that is defined, listed or otherwise
classified as a contaminant, pollutant,
toxic pollutant, toxic or hazardous
substance, extremely hazardous substance or
chemical, hazardous waste, special
-9-
<PAGE>
waste, or solid waste under Environmental
Laws or that is reasonably likely to
cause immediately, or at some reasonably
foreseeable future time, harm to or
have an adverse effect on, the environment
or risk to human health or safety,
including, without limitation, any
pollutant, contaminant, waste, hazardous
waste, toxic substance or dangerous good
which is defined or identified in any
Environmental Law and which is present in
the environment in such quantity or
state that it contravenes any Environmental
Law; (ii) petroleum and its refined
products; (iii) polychlorinated biphenyls;
(iv) any substance exhibiting a
hazardous waste characteristic, including,
without limitation, corrosivity,
ignitability, toxicity or reactivity as
well as any radioactive or explosive
materials; and (v) any raw materials,
building components (including, without
limitation, asbestos-containing materials)
and manufactured products containing
hazardous substances listed or classified
as such under Environmental Laws.
"Hedging Agreement" means any interest rate, foreign currency,
commodity or equity swap, collar, cap,
floor or forward rate agreement, or other
agreement or arrangement designed to
protect against fluctuations in interest
rates or currency, commodity or equity
values (including, without limitation,
any option with respect to any of the
foregoing and any combination of the
foregoing agreements or arrangements), and
any confirmation executed in
connection with any such agreement or
arrangement.
"Highest Lawful Rate" means, with respect to the Agent or any
Lender, the maximum non-usurious interest
rate, if any, that at any time or from
time to time may be contracted for, taken,
reserved, charged or received on the
Obligations under laws applicable to the
Agent or such Lender which are
currently in effect or, to the extent
allowed by law, under such Applicable Laws
which may hereafter be in effect and which
allow a higher maximum non-usurious
interest rate than Applicable Laws now
allow.
"Indebtedness" means, without duplication, all obligations,
including Contingent Obligations, that in
accordance with GAAP should be
classified upon the balance sheet of any
Key Loan Party and/or the consolidated
balance sheet of the Parent as liabilities,
other than trade payables, deferred
rent, or accrued expenses incurred in the
ordinary course of business or to
which reference should be made by footnotes
thereto, including, in any event and
whether or not so classified, (i) all
obligations in respect of money borrowed
(including any indebtedness which is
non-recourse to the credit of such Person
but which is secured by a Lien on any asset
of such Person) whether or not
evidenced by a promissory note, bond,
debenture or other written obligation to
pay money; (ii) all obligations evidenced
by bonds, notes, debentures or other
similar instruments; (iii) all obligations
in connection with Hedging
Agreements; (iv) all obligations in
connection with any letter of credit or
acceptance transaction (including, without
limitation, the face amount of all
letters of credit and acceptances issued
for the account of such Person or
reimbursement on account of which such
Person would be obligated); (v) all
obligations in connection with the sale or
discount of accounts receivable or
chattel paper of such Person; (vi) all
obligations on account of deposits or
advances other than deferred rent incurred
in the ordinary course of business;
(vii) all obligations as lessee under
Capitalized Leases; and (viii) all
obligations in connection with any sale and
leaseback transaction.
"Indebtedness" also includes: (x)
Indebtedness of others secured by a Lien on
any asset of such Person, whether or not
such Indebtedness is assumed by such
Person; (y) any guaranty, endorsement,
suretyship or other undertaking pursuant
to which that Person may be liable in
respect of Indebtedness of any
-10-
<PAGE>
third party; and (z) the Indebtedness of a
partnership or joint venture for
which such Person is liable as a general
partner or joint venturer.
"Indemnified Matters" has the meaning specified therefor in
Section
12.15.
"Indemnitees" has the meaning specified therefor in Section
12.15.
"Initial DSW Stock Exercise Amount" means that number of Class
A
Common Shares obtained by dividing the
outstanding principal amount of the Loan
by the IPO Price.
"Insolvency Proceeding" means any proceeding commenced by or
against
any Person under any provision of the
Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments
for the benefit of creditors, formal
or informal moratoria, compositions, or
extensions generally with creditors, or
proceedings seeking reorganization,
arrangement, or other similar relief.
"Intercreditor Agreement" means the Amended and Restated
Intercreditor and Lien Subordination
Agreement, substantially in the form of
Exhibit B, as amended or otherwise modified
from time to time in accordance with
its terms, by and between the Agent, on
behalf of itself and the Lenders and the
Revolving Credit Facility Agent, on behalf
of itself and the Revolving Facility
Lenders and acknowledged and agreed by the
Borrower and the Guarantors.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as
amended from time to time, (or any
successor statute thereto) and the
regulations thereunder.
"Inventory" means, with respect to any Person, all goods and
merchandise of such Person, including,
without limitation, all raw materials,
work-in-process, packaging, supplies,
materials and finished goods of every
nature used or usable in connection with
the shipping, storing, advertising or
sale of such goods and merchandise, whether
now owned or hereafter acquired, and
all such other property the sale or other
disposition of which would give rise
to Accounts Receivable or cash.
"IPO" means the proposed initial public offering of Class A
Common
Shares of DSW under the Securities Act,
completed substantially as described in
DSW's Form S-1 Registration Statement, as
filed with the SEC on June 15, 2005,
as amended from time to time, which
offering shall be completed as a primary
offering by DSW.
"IPO Effective Date" means the date on which the IPO is
consummated
in accordance with the terms set forth in
(i) Section 4.02 hereof, and (ii) the
Form S-1 Registration Statement as filed
with the SEC on June 15, 2005 as
amended from time to time.
"IPO Price" means the price at which each Class A Common Share
is
offered to the public in a Qualifying IPO
as set forth on the cover page to the
prospectus in such IPO.
"Key Loan Parties" means, collectively, the Borrower, the
Parent,
Gramex, Filene's, GB, VC Michigan and RV
Jewelry.
-11-
<PAGE>
"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 (or the
Agent's representative) 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) or
pursuant to the Original Agreement.
"Lease" means any lease of real property to which any Loan Party
or
any of its Subsidiaries is a party as
lessor or lessee.
"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.
"Lenders" means the financial institutions listed on the
signature
pages hereof, and each assignee that shall
become a party hereto pursuant to
Section 12.07.
"Lender's Account" means, with respect to each Lender, an account
at
a bank designated by each Lender from time
to time into which the Loan Parties
shall make certain payments to such Lender
under this Agreement.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory
or
otherwise), security interest, charge or
other encumbrance or security or
preferential arrangement of any nature,
including, without limitation, any
conditional sale or title retention
arrangement, any Capitalized Lease and any
assignment, deposit arrangement or
financing lease intended as, or having the
effect of, security.
"Loan" means the loan made by Lenders to the Borrower pursuant
to
Article II hereof.
"Loan Document" means this Agreement, any Guaranty, any
Security
Agreement, any Pledge Agreement, any
Mortgage, any Landlord's Agreement, any
Control Agreement, the Intercreditor
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 and at any
time a Lender is a holder of (i) the
Warrants, the Warrants, the Registration
Rights Agreement, and the DSW Registration
Rights Agreement, and/or (ii), the
Convertible Warrants, the Convertible
Warrants, the Registration Rights
Agreement and the DSW Registration Rights
Agreement.
"Loan Party" means the Borrower or any Guarantor.
"Market Price" means, on any date specified herein, the amount
per
share of the Common Stock or Class A Common
Shares, as applicable, equal to (i)
the last reported sale price of such Common
Stock or Class A Common Shares, as
applicable, 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 or Class A Common Shares, as
applicable, is
-12-
<PAGE>
then listed or admitted for trading, (ii)
if such Common Stock or Class A Common
Shares, as applicable, 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 or
Class A Common Shares, as applicable, on
such date, (iii) if there shall have
been no trading on such date or if the
Common Stock or Class A Common Shares, as
applicable, is not so designated, the
average of the closing bid and asked
prices of the Common Stock or Class A
Common Shares, as applicable, on such date
as shown by the NASD automated quotation
system, (iv) if trading in such Common
Stock or Class A Common Shares, as
applicable, is quoted in the over-the-counter
market, the average of the closing bid and
asked prices of the Common Stock or
Class A Common Shares, as applicable, on
such date as shown on the OTC Bulletin
Board, or (v) if such Common Stock or Class
A Common Shares, as applicable, 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
the Parent's Board of Directors
consisting of directors who are not
Affiliates of the Parent 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 the Parent, 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 the Borrower shall pay
all of the reasonable fees and expenses of
any third parties incurred in
connection with determining the Market
Price.
"Material Accounting Change" means any change in GAAP applicable
to
accounting periods subsequent to the
Parent's fiscal year most recently
completed prior to the execution of this
Agreement, which change has a material
effect on the Parent's Consolidated
financial condition or operating results, as
reflected on financial statements and
reports prepared by or for the Parent and
its Subsidiaries, when compared with such
condition or results as if such change
had not taken place.
"Material Adverse Effect" means a material adverse effect on (i)
the
business, operations, property, assets or
financial condition of (x) the Loan
Parties taken as a whole or (y) the Value
City Business taken as a whole or (ii)
the validity or enforceability of this
Agreement or any of the other Loan
Documents or any of the material rights or
remedies of the Agent or the Lenders
hereunder or thereunder.
"Material Contract" means, with respect to any Person, (i) each
contract or agreement (other than Leases,
intercompany agreements benefit and
pension plans, stock option plans and labor
and employment contracts) to which
such Person or any of its Subsidiaries is a
party involving aggregate
consideration payable to or by such Person
or such Subsidiary of $1,000,000 or
more annually (other than purchase orders
in the ordinary course of the business
of such Person or such Subsidiary and other
than contracts that by their terms
may be terminated by such Person or
Subsidiary in the ordinary course of its
business upon less than 60 days' notice
without penalty or premium) and (ii) all
other contracts or agreements material to
the business, operations, condition
(financial or otherwise), performance,
prospects or properties of such Person or
such Subsidiary.
"Moody's" means Moody's Investors Service, Inc. and any
successor
thereto.
-13-
<PAGE>
"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, including
under the Original Agreement.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any
Loan Party or any of its ERISA
Affiliates has contributed to, or has been
obligated to contribute, at any time
during the preceding six (6) years.
"Note" means a promissory note of the Borrower, substantially in
the
form of Exhibit A to the Original
Agreement, made payable to the order of each
Lender requesting a Note, and evidencing
the Indebtedness resulting from the
making by such Lender of its Pro Rata Share
of the Loan.
"Notice of Election" has the meaning specified therefore in
Section
2.03(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.
"Obligations" means all present and future indebtedness,
obligations, and liabilities of each Loan
Party to the Agent and the Lenders
under the Loan Documents, whether or not
the right of payment in respect of such
claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent,
matured, disputed, undisputed, legal,
equitable, secured, unsecured, and whether
or not such claim is discharged, stayed or
otherwise affected by any proceeding
referred to in Section 9.01. Without
limiting the generality of the foregoing,
the Obligations of each Loan Party under
the Loan Documents include (i) the
obligation to pay principal, interest,
including any PIK Interest, charges,
expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts
payable by such Person under the Loan
Documents; and (ii) the obligation of such
Person to reimburse any amount in respect
of any of the foregoing that the Agent
may elect in accordance with the terms
thereof to pay or advance on behalf of
such Person.
"Old Notes" has the meaning specified in Section 2.01.
"Original Agreement" has the meaning specified therefore in the
preamble.
"Other Taxes" has the meaning specified therefor in Section
2.05.
"Parent" has the meaning specified therefor in the preamble.
"Participant Register" has the meaning specified therefor in
Section
12.07(b)(v).
-14-
<PAGE>
"Payment Office" means the Agent's office located at 299 Park
Avenue, New York, New York, 10171, 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.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Acquisition" means (i) any Acquisition the cash
consideration for which is less than
$3,000,000 in the aggregate in any fiscal
year of the Parent and its Subsidiaries and
which satisfies the conditions set
forth in clauses (f), (g), (h) and (i)
below; (ii) an Acquisition in which each
of the following conditions are satisfied:
(a) no Default or Event of Default
then exists or would arise from the
consummation of such Acquisition; (b) such
Acquisition shall have been approved by the
Board of Directors of the Person (or
similar governing body if such Person is
not a corporation) which is the subject
of such Acquisition and such Person shall
not have announced that it will oppose
such Acquisition or shall not have
commenced any action which alleges that such
Acquisition will violate Applicable Law;
(c) the Borrower shall have furnished
the Agent with ten (10) days' prior notice
of such intended Acquisition and
shall have furnished the Agent with a
current draft of the Acquisition agreement
and other Acquisition documents, a summary
of any due diligence undertaken by
the Parent and/or the Key Loan Parties in
connection with such Acquisition,
appropriate financial statements of the
Person which is the subject of such
Acquisition, pro forma projected financial
statements for the twelve (12) month
period following such Acquisition after
giving effect to such Acquisition
(including balance sheets, cash flows and
income statements by month for the
acquired Person, individually, and on a
consolidated basis with all Loan
Parties), and such other information as the
Agent may reasonably require, each
of which shall be reasonably satisfactory
to the Agent; (d) the structure of the
Acquisition shall be acceptable to the
Agent in its reasonable judgment; if an
Acquisition of capital stock or other
equity interests, after consummation of
such Acquisition, a Key Loan Party shall
own directly or indirectly a majority
of the equity interests in the Person being
acquired and shall Control a
majority of any voting interests, and/or
shall otherwise Control the governance
of the Person being acquired; (e) the Agent
shall have received (i) the results
of appraisals of the assets (or the assets
of the Person) to be acquired in such
Acquisition and of a commercial finance
examination of the Person that is (or
whose assets are) being acquired, and (ii)
such other due diligence as the Agent
may reasonably require, all of the results
of the foregoing to be reasonably
satisfactory to the Agent; (f) any assets
acquired shall be utilized only in,
and if the Acquisition involves a merger,
consolidation or stock acquisition,
the Person which is the subject of such
Acquisition shall be engaged only in, a
Permitted Business; (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 Parent))
after June 11, 2002, shall not exceed in
the aggregate the sum of $20,000,000;
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
-15-
<PAGE>
the twelve (12) months immediately
following such Acquisition, shall not be less
than $70,000,000.
"Permitted Business" means the business of owning and operating
a
chain of retail department stores selling
clothing apparel, housewares, home
furnishings, toys, sporting goods, jewelry,
shoes, health and beauty care items
or any of the foregoing, and engaging in
certain related licensing and other
retail and wholesale businesses reasonably
related thereto, including, but not
limited to, any retail lease department
operation.
"Permitted Disposition" means any of the following: (i) licenses
of
intellectual property or licensed or leased
departments of a Loan Party or any
of its Subsidiaries in the ordinary course
of business or to any other Loan
Party (other than the Parent); (ii) Leases
or subleases of Leases, to the extent
at any point in time such Leases or
subleases have, in the aggregate,
anticipated minimum fixed annual rental
payments of not more than $3,000,000;
(iii) sales, assignments, transfers,
conveyances or other dispositions of any or
all of the Property specified in Schedule
6.02(c) hereof; provided that in
connection with a sale or similar
disposition of any such Property, if a Loan
Party receives a note or similar obligation
as all or part of the consideration
therefor, such Loan Party shall secure such
note or obligation with a Mortgage
or similar Lien on such Property and pledge
such note or other obligation to the
Agent as security for the Obligations
pursuant to the terms of the Loan
Documents; (iv) sales of Inventory and
Equipment in connection with store
closures permitted in accordance with the
provisions of Section 6.02(c)(vii)
hereof, provided that all sales of
Inventory in connection with store closings
(x) after the occurrence and during the
continuance of an Event of Default or
(y) consisting of more than fifteen (15)
retail stores at the same time, shall
be in accordance with liquidation
agreements and with liquidators reasonably
acceptable to the Agent; and (v) (x) the
sale of any property, land or building
(including any related receivables or other
intangible assets) to any Person
which is not a Subsidiary of the Parent,
DSW or DSWSW, or (y) the sale of the
entire Capital Stock (or other equity
interests) and Indebtedness of any
Subsidiary owned by a Loan Party to any
Person which is not a Subsidiary of the
Parent, DSW or DSWSW, or (z) the
consummation of any other asset sale with a
Person who is not a Subsidiary of the
Parent, provided that: (A) the
consideration for such transaction
represents fair value, and at least 90% of
such consideration consists of cash,
provided that in connection with a sale or
similar disposition of any such Property,
if a Loan Party receives a note or
similar obligations as all or part of the
consideration therefor, such Loan
Party shall secure such note or obligation
with a Mortgage or similar Lien on
such property and pledge such note or other
obligation to the Agent as security
for the Obligations pursuant to the terms
of the Loan Documents; (B) the
aggregate consideration for all such
transactions completed in any fiscal year
does not exceed $500,000; (C) the aggregate
consideration for all such
transactions completed after June 11, 2002
does not exceed $1,500,000; and (D)
other than in connection with a
transaction, the aggregate consideration for
which is equal to an amount less than
$500,000, at least five (5) Business Days
prior to the date of completion of such
transaction such Loan Party shall have
delivered to the Agent an officer's
certificate executed on behalf of such Loan
Party by an Authorized Officer of such Loan
Party, which certificate shall
contain a description of the proposed
transaction, the date such transaction is
scheduled to be consummated, the estimated
purchase price or other consideration
for such transaction, financial information
pertaining to compliance with the
preceding clause (A), and which shall (if
requested by the Agent) include a
certified copy of the draft or definitive
documentation pertaining thereto.
-16-
<PAGE>
"Permitted DSW Stock Sale" means a sale by the Parent of
Capital
Stock of DSW generating Net Cash Proceeds
at the time of such sale in an amount
sufficient to pay all Obligations hereunder
in full.
"Permitted Indebtedness" means any of the following: (i)
Indebtedness incurred under this Agreement
and the other Loan Documents; (ii)
any Indebtedness incurred under the
Revolving Credit Facility; (iii)
Indebtedness on account of Equipment or
improvements to real property acquired
in compliance with the requirements of
subparagraph (xiii) of the definition of
Permitted Liens, the incurrence of which
would not otherwise be prohibited by
this Agreement; provided, that such
Indebtedness shall not exceed $10,000,000 in
the aggregate principal amount at any time
outstanding for all Loan Parties and,
with respect to the Parent only, shall not
exceed $5,000,000 in the aggregate
principal amount outstanding at any time;
(iv) (a) Indebtedness consisting of
all obligations of a Loan Party or any
Subsidiary as lessee under Capitalized
Leases, and (b) Indebtedness consisting of
all obligations of a Loan Party or
any Subsidiary under any lease (x) that is
accounted for by the lessee as an
operating lease and (y) under which the
lessee is intended to be the "owner" of
the leased property for Federal income tax
purposes; provided, that (A) at the
time of any incurrence thereof after the
date hereof, and after giving effect
thereto, no Event of Default shall have
occurred and be continuing or would
result therefrom, and (B) the aggregate
outstanding principal amount (using the
obligations in lieu of principal amount, in
the case of any Capitalized Lease,
or present value, based on the implicit
interest rate, in lieu of principal
amount, in the case of any lease described
above in part (b)) of Indebtedness
permitted by this clause (iv) shall not
exceed $10,000,000 in the aggregate at
any time outstanding for all Loan Parties
and, with respect to the Parent only,
shall not exceed $5,000,000 in the
aggregate outstanding at any time; (v)
Indebtedness of the Loan Parties and any
Subsidiary under the Hedging Agreements
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; (vi) the
Indebtedness listed on Schedule 6.02(b),
annexed hereto; (vii) Indebtedness to
sellers in connection with Permitted
Acquisitions; (viii) intercompany
Indebtedness between and among the Loan
Parties (other than the Parent) pursuant
to loans and advances permitted in
accordance with Subsection 6.02(e)(F), below,
and intercompany Indebtedness due to the
Parent by any other Loan Party to the
extent permitted hereunder; (ix)
Indebtedness to creditors of the former
Filene's incurred in connection with the
acquisition of Filene's, such
Indebtedness not to exceed $6,000,000; (x)
Indebtedness with respect to
indemnities, warranties, statutory
obligations, and surety, appeal and
supersedeas bonds incurred in the ordinary
course of business; (xi) Indebtedness
in respect of overdraft protections and
otherwise in connection with deposit
accounts; (xii) Indebtedness arising out of
the refinancing, extension, renewal
or refunding of any Indebtedness permitted
under this Agreement, provided that
the principal amount of such Indebtedness
is not increased from the amount
outstanding at the time of such
refinancing; (xiii) Indebtedness owed by the
Parent to any of the other Loan Parties in
an amount not to exceed $5,000,000
(less amounts paid under Section 6.02(g)
hereof) in the aggregate at any time
outstanding; and (xiv) Indebtedness owing
by the Parent to the Borrower pursuant
to the RVI Note, provided that such
Indebtedness is subject to the subordination
provisions contained therein as in effect
on the Effective Date.
"Permitted Investments" means each of the following: (i) direct
obligations of, or obligations the
principal of and interest on which are
unconditionally guaranteed by, the
United
-17-
<PAGE>
States of America (or by any agency thereof
to the extent such obligations are
backed by the full faith and credit of the
United States of America), in each
case maturing not more than one year from
the date of acquisition thereof; (ii)
investments in commercial paper maturing
not more than one year from the date of
acquisition thereof and having, at such
date of acquisition, the highest credit
rating obtainable from Standard &
Poor's or from Moody's; (iii) investments in
certificates of deposit, banker's
acceptances and time deposits maturing not
more than one year from the date of
acquisition thereof issued or guaranteed by
or placed with, and money market deposit
accounts issued or offered by, any
domestic office of any financial
institution organized under the laws of the
United States of America or any State
thereof that has a combined capital and
surplus and undivided profits of not less
than $500,000,000; (iv) fully
collateralized repurchase agreements with a
term of not more than 30 days for
securities described in clause (i) above
(without regard to the limitation on
maturity contained in such clause) and
entered into with a financial institution
satisfying the criteria described in clause
(iii) above; (v) marketable direct
obligations issued by any state of the
United States of America or any political
subdivision of any such state or any public
instrumentality thereof maturing
within one year from the date of
acquisition thereof and, at the time of
acquisition, having one of the two highest
ratings obtainable from either
Standard & Poor's or from Moody's; (vi)
investments in money market funds,
substantially all the assets of which are
comprised of securities of the types
described in clauses (i) through (vi)
above; (vii) investments acquired by a
Loan Party or any of its Subsidiaries (x)
in exchange for any other investment
held by such Loan Party or any such
Subsidiary in connection with or as a result
of a bankruptcy, workout, reorganization or
recapitalization of the issuer of
such other investment, or (y) as a result
of a foreclosure by such Loan Party or
any of its Subsidiaries with respect to any
secured investment or other transfer
of title with respect to any secured
investment in default; (viii) investments
by a Loan Party in the capital of any
wholly-owned Subsidiary of such Loan
Party, including without limitation, any
Permitted Acquisitions, provided that
the provisions of Section 6.01(a) hereof
have been complied with respect to such
Subsidiary; (ix) investments by the Parent
in the Capital Stock of DSW; (x) to
the extent not permitted by the foregoing
clauses, existing investments in any
Subsidiaries (and any increases thereof
attributable to increases in retained
earnings); (xi) to the extent not permitted
by the foregoing clauses, the
existing investments described on Schedule
6.02(e) hereto; (xii) investments of
a Loan Party and any Subsidiary in Hedging
Agreements permitted by clause (v) of
the definition of Permitted Indebtedness;
(xiii) investments of any Person which
are outstanding at the time such Person
becomes a Subsidiary of a Loan Party as
a result of a Permitted Acquisition, but
not any increase in the amount thereof
unless otherwise permitted by this
Agreement; (xiv) investments by Value City in
the Parent pursuant to the RVI Note, and
investments by the Borrower pursuant to
the DSW Note and the DSWSW Guarantee,
provided, that in each case, such
investment is subject to the subordination
terms contained therein as in effect
on the Effective Date; and (xv) any other
investments (whether in the form of
cash or contribution of property, and if in
the form of a contribution of
property, such property shall be valued for
purposes of this clause at the fair
value thereof) in any corporation,
partnership, limited liability company, joint
venture or other business entity, which is
not itself a Subsidiary of a Key Loan
Party or owned or Controlled by any
director, officer or employee of a Key Loan
Party or any of its Subsidiaries, not
otherwise permitted by the foregoing
clauses, made after June 11, 2002, shall be
permitted to be incurred if (a) no
Event of Default shall have occurred and be
continuing, or would result
therefrom, and (b) the aggregate cumulative
amount of such investments (together
with any loans and advances permitted under
Sections
-18-
<PAGE>
6.02(e)(vi)(D) and (E)) does not exceed
$6,000,000, provided, that except for
loans to officers and directors, all such
Permitted Investments are subject to a
perfected first priority Lien in favor of
the Agent (subject to the terms of the
Intercreditor Agreement).
"Permitted Liens" means any of the following: (i) Liens for
taxes
not yet delinquent or which are being
contested in good faith by appropriate
proceedings, provided that adequate
reserves with respect thereto are maintained
on the books of a Loan Party in accordance
with GAAP, and provided further that,
no notice of tax lien has been filed with
respect thereto; (ii) Liens in respect
of property or assets imposed by law in the
ordinary course of business, such as
carrier's, warehousemen's, mechanics',
materialmen's, repairmen's, landlord's or
similar Liens arising in the ordinary
course of business which (x) are not
overdue in accordance with customary
business practices and consistent with the
applicable Loan Party's prior practices,
and do not in the aggregate materially
detract from the value of such property or
assets or materially impair the use
thereof in the operation of the business of
the Loan Parties, or (y) are being
contested in good faith by a Loan Party, by
appropriate proceedings diligently
instituted and conducted and without danger
of any material risk to the
Collateral and adequate reserves or other
appropriate provision, if any, as
shall be required in conformity with GAAP
shall have been made therefor; (iii)
Liens, pledges or deposits in connection
with workers' compensation,
unemployment insurance and other types of
social security; (iv) deposits to
secure the performance of tenders, bids,
sales, trade and government contracts,
leases, statutory obligations, surety,
appeal, and supersedeas bonds, warranty,
advance payment, customs, performance and
return-of-money bonds and other
obligations of a like nature in the
ordinary course of business (exclusive of
obligations in respect of the payment of
borrowed money) whether pursuant to
statutory requirements, common law or
consensual arrangements; (v) easements,
rights of way, leases, zoning or deed
restrictions, licenses, covenants,
building restrictions, minor defects or
irregularities in title and other
similar real estate encumbrances incurred
in the ordinary course of business
that in the aggregate do not materially
interfere with the conduct of the
business of the Loan Parties; defects and
irregularities in titles, survey
exceptions, encumbrances, easements or
reservations of others for rights-of-way,
roads, pipelines, railroad crossings,
services, utilities or other similar
purposes; outstanding mineral rights or
reservations (including rights with
respect to the removal of material
resource) which do not materially diminish
the value of the surface estate, assuming
usage of such surface estate similar
to that being carried on by any Loan Party
as of the Effective Date; (vi) any
interest or title of a lessor under any
lease entered into by any Loan Party in
the ordinary course of business not in
violation of the Loan Documents; (vii)
any interest or title of any lessee under
any leases or subleases of real
property of a Loan Party not in violation
of the requirements of the Loan
Documents, provided that all such Liens do
not in the aggregate materially
detract from the value of such Loan Party's
property or materially impair the
use thereof in the operation of such Loan
Party's business; (viii) Liens arising
from financing statements regarding
property subject to Capitalized Leases not
in violation of the requirements of the
Loan Documents, provided that such Liens
are only in respect of the property subject
to, and secure only, the respective
lease; (ix) rights of consignors of goods
to a Loan Party as consignee; (x)
Liens arising from judgments, decrees or
attachments in existence less than 30
days after the entry thereof, with respect
to which execution has been stayed
and with respect to which payment in full
above any applicable deductible is
covered by insurance or a bond, or in
circumstances not constituting an Event of
Default under Section 9.01(j)(i); (xi)
Liens created by this Agreement or the
other Loan Documents; (xii) Liens (x)
listed on Schedule 6.02(a), annexed
hereto, or (y) arising out of the
refinancing, extension, renewal or refunding
of any Indebtedness
-19-
<PAGE>
secured by any such Lien, provided that the
principal amount of such
Indebtedness is not increased and such
Indebtedness is not secured by any
additional assets; (xiii) Liens which are
placed upon Equipment or improvements
to real property (including the associated
real property) used in the ordinary
course of business of a Loan Party or any
Subsidiary (x) at the time of (or
within 90 days after) the acquisition of
such Equipment or the completion of
such improvements by such Loan Party or any
such Subsidiary to secure
Indebtedness incurred to pay or finance all
or a portion of the purchase price
or other cost thereof, provided that the
Lien on the Equipment so acquired or
the real property so improved does not
encumber any other asset of such Loan
Party or any such Subsidiary; or (y) are
existing on Equipment or real property
at the time acquired by a Loan Party or any
Subsidiary or on assets of a Person
at the time such Person first becomes a
Subsidiary of a Loan Party; provided,
that (A) any such Lien was not created at
the time of or in contemplation of the
acquisition of such assets or Person by a
Loan Party or any Subsidiaries, (B) in
the case of any such acquisition of a
Person, any such Lien attaches only to the
Equipment or real estate, as applicable, of
such Person, and (C) in the case of
any such acquisition of Equipment or real
estate by a Loan Party or any
Subsidiary, any such Lien attaches only to
the property and assets so acquired
and not to any other property or assets of
such Loan Party or any such
Subsidiary; provided, that the Liens
outstanding from time to time under this
clause (xiii) shall not secure any
Indebtedness other than Permitted
Indebtedness described in clause (iii) of
such definition; (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; (xv) a Lien granted by any Loan
Party in connection with the Revolving
Credit Facility; (xvi) Liens granted by the
Parent in favor of the Borrower
solely with respect to the DSW Common Stock
owned by the Parent to secure the
Parent's obligations to the Borrower under
the RVI Note, subject to the terms of
the RVI Note and the RVI Pledge as in
effect on the Effective Date.
Notwithstanding anything to the contrary
contained herein, no Lien shall be
permitted to exist on the DSW Common Stock
held by the Parent, other than Liens
in favor of the Agent and Liens in favor of
the Borrower to the extent permitted
by clause (xvi) of the definition of
Permitted Liens.
"Person" shall have the meaning given to such term as defined
in
Section 13(d)(3) of the Securities Exchange
Act.
"PIK Interest" means, as at any date of determination, the amount
of
all interest accrued with respect to the
Loan that has been paid-in-kind by
being added to the outstanding principal
balance thereof on a monthly basis in
accordance with Section 2.03.
"Pledge Agreement" means a Pledge and Security Agreement
(including
any amendments or joinders thereto) made by
a Loan Party in favor of the Agent
for the benefit of the Lenders, whether
delivered pursuant to the Original
Agreement and reaffirmed pursuant to
Section 15.01(b) of this Agreement or
delivered pursuant to Section 6.01(a) of
this Agreement, and, in each case,
securing the Obligations and delivered to
the Agent.
"Post-Default Rate" means a rate of interest per annum equal to
the
rate of interest otherwise in effect from
time to time pursuant to the terms of
this Agreement plus 3%.
-20-
<PAGE>
"Pro Rata Share" means the percentage obtained by dividing (i)
the
aggregate unpaid principal amount of such
Lender's portion of the Loan, by (ii)
the aggregate unpaid principal amount of
the Loan.
"Property" means any right or interest in or to property of any
kind
whatsoever, whether real, personal or mixed
and whether tangible or intangible.
"Qualifying IPO" means an IPO that satisfies each of the
following
conditions:
(a) Not more than 45% of the value (as of the IPO Effective
Date calculated by reference to the IPO
Price) of all issued and outstanding DSW
Common Stock shall be sold in connection
with the IPO;
(b) Immediately following the IPO and the application of the
Net Cash Proceeds thereof, DSW Common Stock
having not less than 55% of the
value (as of the IPO Effective Date
calculated by reference to the IPO Price) of
all issued and outstanding DSW Common Stock
shall be held (directly or
indirectly) by Parent, free and clear of
all Liens, other than (i) Liens in
favor of the Agent, and (ii) Liens
permitted by clause (xvi) of the definition
of Permitted Liens;
(c) The sale price of the Class A Common Shares sold in the
IPO shall reflect the fair market value of
such Class A Common Shares on the IPO
Effective Date;
(d) The Net Cash Proceeds from the IPO shall be sufficient to
repay (i) in full in cash all obligations
outstanding under the Term Loan
Agreement and (ii) in cash, $25,000,000 of
the principal amount of the Old Notes
under the Original Agreement; and
(e) The IPO Effective Date shall be on or prior to December
31, 2005.
"Reference
Bank" means JPMorgan Chase Bank, its successors or any
other commercial bank designated by the
Agent to the Borrower from time to time.
"Reference Rate" means the rate of interest publicly announced
by
the Reference Bank in New York, New York
from time to time as its reference
rate, base rate or prime rate. The
reference rate, base rate or prime rate is
determined from time to time by the
Reference Bank as a means of pricing some
loans to its borrowers and neither is tied
to any external rate of interest or
index nor necessarily reflects the lowest
rate of interest actually charged by
the Reference Bank to any particular class
or category of customers. Each change
in the Reference Rate shall be effective
from and including the date such change
is publicly announced as being
effective.
"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).
"Register" has the meaning specified therefor in Section
12.07(b)(ii).
-21-
<PAGE>
"Registered Loan" has the meaning specified therefor in Section
12.07(b)(ii).
"Registered Note" has the meaning specified therefor in Section
2.02(c).
"Registration Rights Agreement" means the Second Amended and
Restated Registration Rights Agreement,
substantially in the form of Exhibit E-1
hereto, by and between the Parent, the
Conversion Warrantholders and the
Warrantholders with respect to the matters
covered thereby.
"Regulation T", "Regulation U" and "Regulation X" mean,
respectively, Regulations T, U and X of the
Board or any successor, as the same
may be amended or supplemented from time to
time.
"Related Business" means any business or enterprise consisting
of
asset maximization services or asset
valuation services.
"Release" means any spilling, leaking, pumping, pouring,
emitting,
emptying, discharging, injecting, escaping,
leaching, seeping, migrating,
dumping or disposing of any Hazardous
Material (including the abandonment or
discarding of barrels, containers and other
closed receptacles containing any
Hazardous Material) into the indoor or
outdoor environment, including, without
limitation, the movement of Hazardous
Materials through or in the ambient air,
soil, surface or ground water, or property
which is in violation of any
Environmental Laws.
"Remedial Action" means all actions taken to (i) clean up,
remove,
remediate, contain, treat, monitor, assess,
evaluate or in any other way address
Hazardous Materials in the indoor or
outdoor environment; (ii) prevent or
minimize a Release or threatened Release of
Hazardous Materials so they do not
migrate or endanger or threaten to endanger
public health or welfare or the
indoor or outdoor environment; (iii)
perform pre-remedial studies and
investigations and post-remedial operation
and maintenance activities; or (iv)
perform any other actions authorized by 42
U.S.C. Section 9601.
"Reportable Event" means an event described in Section 4043 of
ERISA
(other than an event not subject to the
provision for 30-day notice to the PBGC
under the regulations promulgated under
such Section).
"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.
"Revolving Credit Facility" means the $275,000,000 working
capital
facility, dated as of June __, 2005, as
amended, restated, supplemented or
otherwise modified from time to time, among
the Loan Parties, the Revolving
Credit Facility Agent and the Revolving
Credit Facility Lenders.
"Revolving Credit Facility Agent" means National City Business
Credit, Inc. ("NCBC"), as Administrative
Agent and as Collateral Agent for the
Revolving Credit Facility Lenders, and each
of its respective successors and
assigns.
-22-
<PAGE>
"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.
"RVI Note" means the promissory note, dated January 1, 2005, as
amended by the First Amendment to
Promissory Note and First Amendment to Stock
Pledge Agreement dated as of the Effective
Date, substantially in the form of
Exhibit C-1 hereto, made by the Parent to
the order of the Borrower, in the
original principal amount of
$240,000,000.
"RVI Pledge" means the pledge agreement, dated as of January 1,
2005, as amended by the First Amendment to
Promissory Note and First Amendment
to Stock Pledge Agreement dated as of the
Effective Date, substantially in the
form of Exhibit C-2 hereto, securing the
obligations under the RVI Note.
"SEC" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal
government administering the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or
any similar Federal statute, and the rules
and regulations of the SEC
thereunder, all as the same shall be in
effect from time to time.
"Security Agreement" means a Security Agreement (including any
amendments or joinders thereto) made by a
Loan Party in favor of the Agent for
the benefit of the Lenders, whether
delivered pursuant to the Original Agreement
and reaffirmed pursuant to Section 15.01(b)
of this Agreement, or delivered
pursuant to Section 6.01(a) of this
Agreement, in each case, securing the
Obligations and delivered to the Agent.
"Solvent" means, with respect to any Person on a particular
date,
that on such date (i) the fair value of the
property of such Person is not less
than the total amount of the liabilities of
such Person; (ii) the present fair
saleable value of the assets of such Person
is not less than the amount that
will be required to pay the probable
liability of such Person on its existing
debts as they become absolute and matured;
(iii) such Person is able to realize
upon its assets and pay its debts and other
liabilities, Contingent Obligations
and other commitments as they mature in the
normal course of business; (iv) such
Person does not intend to, and does not
believe that it will, incur debts or
liabilities beyond such Person's ability to
pay as such debts and liabilities
mature; and (v) such Person is not engaged
in business or a transaction, and is
not about to engage in business or a
transaction, for which such Person's
property would constitute unreasonably
small capital. The determination of
whether a Person is Solvent shall take into
account all such Person's properties
and liabilities regardless of whether, or
the amount at which, any such property
or liability is included on a balance sheet
of such Person prepared in
accordance with GAAP, including properties
such as contingent contribution or
subrogation rights, business prospects,
distribution channels and goodwill. The
determination of the sum of a Person's
properties at a fair valuation or the
present fair saleable value of a Person's
properties shall be made on a going
concern basis unless, at the time of such
determination, the liquidation of the
-23-
<PAGE>
business in which such properties are used
or useful is in process or is
demonstrably imminent. In computing the
amount of contingent or unrealized
properties or contingent or unliquidated
liabilities at any time, such
properties and liabilities will be computed
at the amounts which, in light of
all the facts and circumstances existing at
such time, represent the amount that
reasonably can be expected to become
realized properties or matured liabilities,
as the case may be. In computing the amount
that would be required to pay a
person's probable liability on its existing
debts as they become absolute and
matured, reasonable valuation techniques,
including a present value analysis,
shall be applied using such rates over such
periods as are appropriate under the
circumstances, and it is understood that,
in appropriate circumstances, the
present value of Contingent Liabilities may
be zero.
"Standard & Poor's" means Standard & Poor's Ratings
Services, a
division of The McGraw-Hill Companies, Inc.
and any successor thereto.
"SSC" means Schottenstein Stores Corporation.
"SSC Transaction" has the meaning specified therefor in Section
14.01.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited or general
partnership, limited liability company, trust,
estate, association, joint venture or other
business entity (i) the accounts of
which would be consolidated with those of
such Person in such Person's
consolidated financial statements if such
financial statements were prepared in
accordance with GAAP or (ii) of which more
than 50% of (A) the outstanding
Capital Stock having (in the absence of
contingencies) ordinary voting power to
elect a majority of the board of directors
or other managing body of such
Person, (B) in the case of a partnership or
limited liability company, the
interest in the capital or profits of such
partnership or limited liability
company or (C) in the case of a trust,
estate, association, joint venture or
other entity, the beneficial interest in
such trust, estate, association or
other entity business is, at the time of
determination, owned or controlled
directly or indirectly through one or more
intermediaries, by such Person;
provided, however, that notwithstanding
anything to the contrary contained
herein, following the Effective Date, none
of DSW, DSWSW or any of their
respective Subsidiaries shall be, or be
deemed to be "Subsidiaries" of any Loan
Party for purposes of this Agreement or any
other Loan Document.
"Taxes" has the meaning set forth in Section 2.05.
"Term Loan Agreement" means the Financing Agreement dated as of
June
11, 2002, as amended, restated,
supplemented or otherwise modified from time to
time, among the Loan Parties, the lenders
party thereto and CPLP as agent for
the lenders, which Financing Agreement
shall be paid in full and terminated on
the Effective Date.
"Uniform Commercial Code" has the meaning specified therefor in
Section 1.03.
"Unrestricted Subsidiary" has the meaning specified therefor in
Section 5.01(kk).
"Value City Business" means the Key Loan Parties' business
other
than the Filene's Business.
-24-
<PAGE>
"Warrantholders" means the holders of the Warrants.
"Warrants" means the warrants dated as of September 26, 2002,
and
amended and restated as of the Effective
Date, substantially in the form of
Exhibit A-1 hereto, issued by the Parent in
favor of the Warrantholders.
"Warrant Stock" means the shares of Common Stock of the Parent
and/or the Class A Common Shares of DSW
issuable upon the exercise of the
Warrants and/or the Conversion
Warrants.
Section 1.02 Terms Generally. The definitions of terms herein
shall
apply equally to the singular and plural
forms of the terms defined. Whenever
the context may require, any pronoun shall
include the corresponding masculine,
feminine and neuter forms. The words
"include", "includes" and "including" shall
be deemed to be followed by the phrase
"without limitation". The word "will"
shall be construed to have the same meaning
and effect as the word "shall".
Unless the context requires otherwise, (a)
any definition of or reference to any
agreement, instrument or other document
herein shall be construed as referring
to such agreement, instrument or other
document as from time to time amended,
supplemented or otherwise modified (subject
to any restrictions on such
amendments, supplements or modifications
set forth herein), (b) any reference
herein to any Person shall be construed to
include such Person's successors and
assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar
import, shall be construed to refer to this
Agreement in its entirety and not to
any particular provision hereof, (d) all
references herein to Articles,
Sections, Exhibits and Schedules shall be
construed to refer to Articles and
Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words
"asset" and "property" shall be construed
to have the same meaning and effect
and to refer to any and all tangible and
intangible assets and properties,
including cash, securities, accounts and
contract rights. References in this
Agreement to "determination" by the Agent
include good faith estimates by the
Agent (in the case of quantitative
determinations) and good faith beliefs by the
Agent (in the case of qualitative
determinations).
Section 1.03 Accounting and Other Terms. Unless otherwise
expressly
provided herein, each accounting term used
herein shall have the meaning given
it under GAAP applied on a basis consistent
with those used in preparing the
Financial Statements.
Section 1.04 Time References. Unless otherwise indicated herein,
all
references to time of day refer to Eastern
Standard Time or Eastern daylight
saving time, as in effect in New York City
on such day. For purposes of the
computation of a period of time from a
specified date to a later specified date,
the word "from" means "from and including"
and the words "to" and "until" each
means "to but excluding"; provided,
however, that with respect to a computation
of fees or interest payable to the Agent or
any Lender, such period shall in any
event consist of at least one full day.
-25-
<PAGE>
ARTICLE II
THE LOAN
Section 2.01 The Loan. (a) The Lenders have made a Loan (as
defined
in the Original Agreement) to the Borrower
under the Original Agreement, of
which $50,000,000 of the original principal
amount remains outstanding on the
Effective Date (immediately prior to the
effectiveness of this Agreement but
after giving effect to the payment
described in clause (d)(ii) of the definition
of the term "Qualifying IPO"). The Borrower
acknowledges and agrees that upon
the effectiveness of this Agreement, the
aggregate principal amount of such Loan
shall automatically and immediately be
deemed to constitute the "Loan" to the
Borrower by the Lenders under this
Agreement. It is the intention of the parties
hereto that this Agreement and the
consolidation and substitution of the Notes
for the existing "Notes" referred to in the
Original Agreement (the "Old Notes")
shall not in any way constitute (i) a
forgiveness of the indebtedness of the
Borrower under the Old Note, (ii) a release
of the Borrower from such
obligations, or (iii) a novation of the Old
Notes.
(b) Any principal amount of the Loan which is prepaid or
repaid may not be reborrowed.
Section 2.02 Notes;
Repayment of Loan.
(a) The obligations of the Borrower to repay the Loan and
interest thereon shall, upon the request of
any Lender, be evidenced by Notes,
duly executed on behalf of the Borrower,
and delivered to and made payable to
the order of each such Lender requesting a
Note in a principal amount equal to
such Lender's Pro Rata Share of the Loan as
set forth on Schedule 1.01A.
(b) The Borrower shall repay the principal amount of the Loan
(including all PIK Interest added thereto)
on the Final Maturity Date together
with all such other amounts as may be
necessary to pay in full, in cash, all
Obligations to the Lenders.
(c) The Loan may not be evidenced by promissory notes other
than a Note which is a Registered Note.
Upon the registration of the Loan, any
promissory note (other than a Registered
Note) evidencing the same shall be null
and void and shall be returned to the
Borrower. The Borrower agrees, at the
request of the Agent, to execute and
deliver to each Lender, a promissory note
in registered form (a "Registered Note") to
evidence such Registered Loan and
registered as provided in Section 12.07.
Once recorded in the Register, the Loan
evidenced by such Note may not be removed
from the Register so long as it
remains outstanding and a Registered Note
may not be exchanged for a promissory
note that is not a Registered Note.
(d) Upon the delivery by a Conversion Warrantholder to the
Borrower of a Note or a portion of a Note
as payment of the Purchase Price (as
such term is defined in the Conversion
Warrant) under the Conversion Warrant, in
addition to satisfying each of its
obligations under the Conversion Warrant with
respect to the exercise thereof, the
Borrower shall pay to such Conversion
Warrantholder all accrued and unpaid
interest (including all accrued and unpaid
PIK interest thereon) and fees (if any) on
the principal amount of the Note so
delivered as
-26-
<PAGE>
payment of such Purchase Price.
Section 2.03 Interest. (a) Rate. Pursuant to the Original
Agreement,
the Loan has borne interest on the
principal amount thereof from time to time
outstanding, from July 11, 2002, and,
pursuant to this Agreement, shall continue
to bear interest on the principal amount
thereof from time to time outstanding,
until such principal amount becomes due, at
an interest rate per annum equal to
10%.
(b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an
Event of Default, the principal of,
and all accrued and unpaid interest on, the
Loan and all fees, indemnities or
any other Obligations of the Loan Parties
under this Agreement and the other
Loan Documents, shall bear interest, from
the date such Event of Default
occurred until the date such Event of
Default is cured or waived in writing in
accordance herewith, at a rate per annum
equal at all times to the Post-Default
Rate.
(c) Interest Payment. Interest on the Loan shall be payable
quarterly in arrears, on the last day of
January, April, July and October in
each year (commencing, as to this
Agreement, on July 31, 2005, which payment
shall include unpaid interest accrued under
the Original Agreement through the
Effective Date) and on the Final Maturity
Date (whether upon demand, by
acceleration or otherwise), at the option
of the Borrower, either (i) entirely
in cash, or (ii) in a combination of cash
and PIK Interest (the amount of any
such PIK Interest shall be accrued and
added to the outstanding principal amount
of the Loan quarterly in arrears and shall
be payable at Final Maturity),
provided, however, that at least 50% of the
interest payable at any time shall
be paid in cash. The Borrower shall give
the Agent and each of the Lenders prior
telephonic notice (immediately confirmed in
writing in substantially the form of
Exhibit C to the Original Agreement (a
"Notice of Election")) not later than two
(2) Business Days prior to any date on
which a payment of interest is required
pursuant to this Section 2.03(c),
specifying the amount of interest to be paid
in cash and the amount to be paid in PIK
Interest. Such Notice of Election shall
be irrevocable. Notwithstanding anything to
the contrary contained herein,
interest at the Post-Default Rate shall be
payable in cash on demand.
(d) General. All interest shall be computed on the basis of a
year of 360 days for the actual number of
days, including the first day but
excluding the last day, elapsed.
Section 2.04 Prepayment of Loan.
(a) (i) Optional Prepayment. Prior to June 10, 2007, the
Borrower shall not have any right to prepay
the Loan. After June 10, 2007, and
subject in all respects to the limitations
contained in the Revolving Credit
Facility and the Intercreditor Agreement as
in effect on the Effective Date, the
Borrower may, upon at least 30, but not
more than 60 Business Days' written
notice to the Agent (such notice being
irrevocable), stating the proposed date
and aggregate principal amount of the
prepayment, and if such notice is given,
the Borrower shall, prepay the Loan, in
whole or in part, together with accrued
interest to the date of such prepayment on
the principal amount prepaid and any
amounts owing in connection therewith;
provided, however, that each partial
prepayment shall be in an aggregate
principal amount not less than $5,000,000 or
an integral multiple of $1,000,000 in
excess thereof. Any portion of the
-27-
<PAGE>
Loan that is prepaid may not be reborrowed,
in whole or in part.
(ii) Mandatory Prepayment. Immediately upon the
occurrence of a Permitted DSW Stock Sale
pursuant to Section 6.02(c), the
Borrower shall prepay the outstanding
principal amount of the Loan and all other
Obligations then outstanding hereunder in
full in cash. Nothing contained in
this subsection (ii) shall permit the
Parent to dispose of any DSW Common Stock
or shall permit any Loan Party or any of
its Subsidiaries to make a Disposition
of any property other than in accordance
with Section 6.02(c).
(b) Interest and Fees. Any prepayment made pursuant to this
Section 2.04 shall be accompanied by
accrued interest on the principal amount
being prepaid to the date of prepayment,
and if such prepayment would reduce the
amount of the outstanding Loan to zero,
such prepayment shall be accompanied by
the payment of all fees accrued to such
date pursuant to the terms of this
Agreement.
(c) Cumulative Prepayments. Except as otherwise expressly
provided in this Section 2.04, payments
with respect to any subsection of this
Section 2.04 are in addition to payments
made or required to be made under any
other provision of this Agreement.
Section 2.05 Taxes. (a) All payments made by any Loan Party
hereunder or under any other Loan Document
shall be made without set-off,
counterclaim, deduction or other defense.
All such payments shall be made free
and clear of and without deduction for any
present or future income, franchise,
sales, use, excise, stamp or other taxes,
levies, imposts, deductions, charges,
fees, withholdings, restrictions or
conditions of any nature now or hereafter
imposed, levied, collected, withheld or
assessed by any jurisdiction (whether
pursuant to Federal, state, local or
foreign law) or by any political
subdivision or taxing authority thereof or
therein, and all interest, penalties
or additional amounts, excluding taxes on
the net income of any Lender or the
Agent imposed by the jurisdiction in which
such Lender or such Agent is
organized or any political subdivision
thereof or taxing authority thereof or
any jurisdiction in which such Person's
principal office is located or any
political subdivision thereof or taxing
authority thereof (such nonexcluded
taxes, levies, imposts, deductions,
charges, fees, withholdings, restrictions,
conditions, interest, penalties and
additional amounts being hereinafter
collectively referred to as "Taxes"). If
any Loan Party shall be required to
deduct or to withhold any Taxes from or in
respect of any amount payable
hereunder or under any other Loan
Document:
(i) the amount so payable shall be increased so that
after making all required deductions and
withholdings (including Taxes on
amounts payable pursuant to this sentence)
the Lenders or the Agent, as the case
may be, receive an amount equal to the sum
they would have received had no such
deduction or withholding been made;
(ii) such Loan Party shall make such deduction or
withholding;
(iii) such Loan Party shall pay the full amount deducted
or withheld to the relevant taxation
authority in accordance with Applicable
Law; and
(iv) whenever any Taxes are payable by any Loan Party,
as promptly as possible thereafter, such
Loan Party shall send the Lenders and
the Agent an official receipt (or, if an
official receipt is not available, such
other documentation as shall be
satisfactory
-28-
<PAGE>
to the Lenders or the Agent, as the case
may be) evidencing payment of the
amount or amounts so deducted or withheld.
In addition, each Loan Party agrees
to pay any present or future taxes, charges
or similar levies which arise from
any payment made hereunder or from the
execution, delivery, performance,
recordation or filing of, or otherwise with
respect to, this Agreement or any
other Loan Document other than the
foregoing excluded taxes (hereinafter
referred to as "Other Taxes").
(b) The Loan Parties hereby jointly and severally agree to
indemnify and hold the Lenders and the
Agent harmless from and against Taxes or
Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under
this Section 2.05) paid by any Lender
or the Agent and any liability (including
penalties, interest and expenses for
nonpayment, late payment or otherwise)
arising therefrom or with respect
thereto, whether or not such Taxes or Other
Taxes were correctly or legally
asserted. Such indemnification shall be
paid within 10 days from the date on
which any the Agent, on behalf of the
Lenders, makes written demand therefor,
which demand shall identify in reasonable
detail the nature and amount of such
Taxes or Other Taxes.
(c) Each Lender that is organized in a jurisdiction outside
the United States hereby agrees that it
shall, no later than the Effective Date
or, in the case of a Lender which becomes a
party hereto pursuant to Section
12.07 hereof after the Effective Date, the
date upon which such Lender becomes a
party hereto (and from time to time
thereafter upon the reasonable request of
the Borrower or the Agent, but only if such
Lender is legally able to do so),
deliver to the Borrower and the Agent
either (i) two accurate, complete and
signed copies of either (x) U.S. Internal
Revenue Service Form W-8ECI or
successor form, or (y) U.S. Internal
Revenue Service Form W-8BEN or successor
form, in each case, indicating that such
Lender is on the date of delivery
thereof entitled to receive payments of
interest hereunder free from, or subject
to a reduced rate of, withholding of United
States Federal income tax or (ii) in
the case of such a Lender that is entitled
to claim exemption from withholding
of United States Federal income tax under
Section 871(h) or Section 881(c) of
the Internal Revenue Code, (x) a
certificate to the effect that such Lender is
(A) not a "bank" within the meaning of
Section 881(c)(3)(A) of the Internal
Revenue Code, (B) not a "10 percent
shareholder" of the Borrower within the
meaning of Section 881(c)(3)(B) of the
Internal Revenue Code and (C) not a
controller foreign corporation receiving
interest from a related person within
the meaning of Section 881(c)(3)(C) of the
Internal Revenue Code and (y) two
accurate, complete and signed copies of
U.S. Internal Revenue Service Form
W-8BEN or successor form.
(d) If any Loan Party fails to perform any of its obligations
under this Section 2.05, the Loan Parties
shall indemnify the Lenders and the
Agent for any taxes, interest or penalties
that may become payable as a result
of any such failure. The obligations of the
Loan Parties under this Section 2.05
shall survive the termination of this
Agreement and the payment of the Loan and
all other amounts payable hereunder.
-29-
<PAGE>
ARTICLE III
FEES, PAYMENTS
AND OTHER COMPENSATION
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.
Section 3.02 Payments; Computations and Statements. (a) The
Borrower
will make each payment under this Agreement
not later than 12:00 noon (New York
City time) on the day when due, in lawful
money of the United States of America
and in immediately available funds, in the
manner set forth in clause (b) below.
All payments received after 12:00 noon (New
York City time) on any Business Day
will be credited on the next succeeding
Business Day. All payments shall be made
by the Borrower without set-off,
counterclaim, deduction or other defense to the
Agent and the Lenders. Whenever any payment
to be made under any such Loan
Document shall be stated to be due on a day
other than a Business Day, such
payment shall be made on the next
succeeding Business Day and such extension of
time shall in such case be included in the
computation of interest or fees, as
the case may be. All computations of fees
shall be made by the Agent on the
basis of a year of 360 days for the actual
number of days (including the first
day but excluding the last day) occurring
in the period for which such fees are
payable. Each determination by the Agent of
an interest payment amount or fees
hereunder shall be rebuttably presumed to
be accurate, in the absence of
manifest error.
(b) (i) Other than during the continuance of an Event of
Default, the Borrower shall make each
payment relating to the payment of
principal and interest in respect of the
Loan directly to the Lender's Account
of each Lender to whom payment is required
to be made, in like funds and in
accordance with each Lender's Pro Rata
Share of such payment. The Borrower shall
make all other payments under this
Agreement to the Agent's Account for
distribution to the Lenders in accordance
with clause (iii) below.
(ii) Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall
make all payments under this Agreement
to the Agent's Account for distribution to
the Lenders in accordance with clause
(iii) below.
(iii) Upon the receipt of any payment under this
Agreement, the Agent will promptly (and in
any case, not later than five (5)
Business Days) thereafter, cause to be
distributed to the Lenders to whom
payment is required to be made, (A) in the
case of payments relating to
principal and interest, in like funds in
accordance with their Pro Rata Shares,
and (B) in the case of the payment of any
other amount payable to any Lender, in
like funds; provided, however, that this
clause shall not apply to any payment
made under this Agreement that is solely
for the account of the Agent.
(c) The Agent shall provide the Borrower, promptly after the
end of each calendar month, a summary
statement (in the form from time to time
used by the Agent) of
-30-
<PAGE>
the amounts and dates of all payments on
account of the Loan to the Borrower
during such month, the amount of interest
accrued on the Loan to the Borrower
during such month, the amount of PIK
Interest added to the principal of the Loan
during such month, and the amount and
nature of any other fees, commissions,
expenses and other Obligations incurred
during such month. All entries on any
such statement shall be presumed to be
correct and, thirty (30) days after the
same is sent, shall be rebuttably presumed
to be accurate, absent manifest
error. For purposes of such statement, the
Agent shall have the right to
conclude, absent evidence to the contrary
(i) that no payments have been made by
the Borrower and no requests for payments
have been made to the Borrower by any
Lender other than in accordance with this
Agreement, and (ii) all payments of
principal and interest required to be made
directly to any Lender's Account have
been made pursuant to the terms of this
Agreement.
Section 3.03 Sharing of Payments, Etc. Except as provided in
Sections 2.02 and 3.02(b) hereof, if any
Lender shall obtain any payment
(whether voluntary, involuntary, through
the exercise of any right of set-off,
or otherwise) on account of any Obligation
in excess of its ratable share of
payments on account of similar obligations
obtained by all the Lenders, such
Lender shall forthwith purchase from the
other Lenders such participations in
such similar obligations held by them as
shall be necessary to cause such
purchasing Lender to share the excess
payment ratably with each of them;
provided, however, that if all or any
portion of such excess payment is
thereafter recovered from such purchasing
Lender, such purchase from each Lender
shall be rescinded and such Lender shall
repay to the purchasing Lender the
purchase price to the extent of such
recovery together with an amount equal to
such Lender's ratable share (according to
the proportion of (i) the amount of
such Lender's required repayment to (ii)
the total amount so recovered from the
purchasing Lender of any interest or other
amount paid by the purchasing Lender
in respect of the total amount so
recovered). The Borrower agrees that any
Lender so purchasing a participation from
another Lender pursuant to this
Section 3.03 may, to the fullest extent
permitted by law, exercise all of its
rights (including the Lender's right of
set-off) with respect to such
participation as fully as if such Lender
were the direct creditor of the
Borrower in the amount of such
participation.
Section 3.04 Apportionment of Payments. Subject to Section 2.02
hereof and to any written agreement among
the Agent and/or the Lenders:
(a) All payments of principal, interest and PIK Interest in
respect of the outstanding portion of the
Loan, all payments of fees and all
other payments in respect of any other
Obligations, shall be allocated by the
Agent among such of the Lenders as are
entitled thereto, in proportion to their
respective Pro Rata Shares or otherwise as
provided herein or, in respect of
payments not made on account of the Loan,
as designated by the Person making
payment when the payment is made.
(b) After the occurrence and during the continuance of an
Event of Default, the Agent may apply all
payments in respect of any Obligations
and all proceeds of the Collateral, subject
to the provisions of this Agreement,
(i) first, ratably to pay the Obligations
in respect of any fees, expense
reimbursements, indemnities and other
amounts then due to the Agent until paid
in full; (ii) second, ratably to pay the
Obligations in respect of any fees and
indemnities then due to the Lenders until
paid in full; (iii) third, ratably to
pay interest due in respect of the Loan
until paid in full; (iv) fourth, ratably
to pay PIK Interest due in respect of
the
-31-
<PAGE>
Loan until paid in full; (v) fifth, ratably
to pay the principal of the Loan
until paid in full; and (viii) sixth, to
the ratable payment of all other
Obligations then due and payable.
(c) In each instance, so long as no Event of Default has
occurred and is continuing, Section 3.04(b)
shall not be deemed to apply to any
payment by the Borrower specified by the
Borrower to the Agent to be for the
prepayment of all or part of the principal
of the Loan in accordance with the
terms and conditions of Section 2.04.
(d) For purposes of Section 3.04(b), "paid in full" with
respect to interest shall include interest
accrued after the commencement of any
Insolvency Proceeding irrespective of
whether a claim for such interest is
allowable in such Insolvency
Proceeding.
(e) In the event of a direct conflict between the priority
provisions of this Section 3.04 and other
provisions contained in any other Loan
Document, it is the intention of the
parties hereto that both such priority
provisions in such documents shall be read
together and construed, to the
fullest extent possible, to be in concert
with each other. In the event of any
actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms
and provisions of this Section 3.04 shall
control and govern.
Section 3.05 Increased Costs and Reduced Return. (a) If any
Lender
or the Agent shall have determined that the
adoption or implementation of, or
any change in, any law, rule, treaty or
regulation, or any policy, guideline or
directive of, or any change in, the
interpretation or administration thereof by,
any court, central bank or other
administrative or Governmental Authority, or
compliance by any Lender or the Agent or
any Person controlling any such Lender
or the Agent with any directive of, or
guideline from, any central bank or other
Governmental Authority or the introduction
of, or change in, any accounting
principles applicable to any Lender or the
Agent or any Person controlling any
such Lender or the Agent (in each case,
whether or not having the force of law),
shall (i) subject any Lender or the Agent,
or any Person controlling any such
Lender or the Agent to any tax, duty or
other charge with respect to this
Agreement or any Loan made by such Lender
or the Agent, or change the basis of
taxation of payments to any Lender or the
Agent or any Person controlling any
such Lender or the Agent of any amounts
payable hereunder (except for taxes on
the overall net income of any Lender or the
Agent or any Person controlling any
such Lender or the Agent), (ii) impose,
modify or deem applicable any reserve,
special deposit or similar requirement
against any Loan, or against assets of or
held by, or deposits with or for the
account of, or credit extended by, any
Lender or the Agent or any Person
controlling any such Lender or the Agent or
(iii) impose on any Lender or the Agent or
any Person controlling any such
Lender or the Agent or any other condition
regarding this Agreement or any Loan,
and the result of any event referred to in
clauses (i), (ii) or (iii) above
shall be to increase the cost to any Lender
or the Agent of making any Loan, or
agreeing to make any Loan, or to reduce any
amount received or receivable by any
Lender or the Agent hereunder, then, within
ten (10) days after demand and
receipt of a detailed calculation and
statement of cause by the Agent, on behalf
of the affected Lenders, the Borrower shall
pay to the Agent, for the benefit of
the affected Lenders, such additional
amounts as will compensate such Lenders
for such increased costs or reductions in
amount.
(b) If any Lender or the Agent shall have determined that any
Capital Guideline or the adoption or
implementation of, or any change in, any
Capital Guideline by the
-32-
<PAGE>
Governmental Authority charged with the
interpretation or administration
thereof, or compliance by any Lender or the
Agent or any Person controlling such
Lender or the Agent with any Capital
Guideline or with any request or directive
of any such Governmental Authority with
respect to any Capital Guideline, or the
implementation of, or any change in, any
applicable accounting principles (in
each case, whether or not having the force
of law), either (i) affects or would
affect the amount of capital required or
expected to be maintained by any Lender
or the Agent or any Person controlling such
Lender or the Agent, and any Lender
or the Agent determines that the amount of
such capital is increased as a direct
or indirect consequence of any Loan made or
maintained, or any guaranty or
participation with respect thereto, any
Lender's or the Agent's or any such
other controlling Person's other
obligations hereunder; or (ii) has or would
have the effect of reducing the rate of
return on any Lender's or the Agent's
any such other controlling Person's capital
to a level below that which such
Lender or the Agent or such controlling
Person could have achieved but for such
circumstances as a consequence of any Loan
made or maintained, or any guaranty
or participation with respect thereto or
any agreement to make Loan, or such
Lender's or the Agent's or such other
controlling Person's other obligations
hereunder (in each case, taking into
consideration, such Lender's, Agent's or
other controlling Person's policies with
respect to capital adequacy), then,
within ten (10) days after demand and
receipt of a detailed calculation and
statement of cause by the Agent, on behalf
of the affected Lenders, the Borrower
shall pay to the Agent, for the benefit of
such affected Lenders, from time to
time such additional amounts as will
compensate such Lenders for such cost of
maintaining such increased capital or such
reduction in the rate of return on
such Lender's or the Agent's or such other
controlling Person's capital.
(c) All amounts payable under this Section 3.05 shall bear
interest from the date that is ten (10)
days after the date of demand by any
Lender or the Agent until payment in full
to such Lender or the Agent at the
Reference Rate. A certificate of the Agent,
on behalf of the affected Lenders,
claiming compensation under this Section
3.05, specifying the event herein above
described and the nature of such event
shall be submitted by the Agent, on
behalf of the affected Lenders, to the
Borrower, setting forth the additional
amount due and an explanation of the
calculation thereof, and the Agent's
reasons for invoking the provisions of this
Section 3.05, and shall be
rebuttably presumed to be correct, absent
manifest error.
(d) If any Lender incurs increased costs and requests
compensation under this Section 3.05, then
the Borrower may (i) request such
Lender use reasonable efforts to designate
a different lending office for
booking its loans hereunder or to assign
its rights and obligations hereunder to
another of its offices, branches, or
Affiliates, if in the judgment of such
Lender, such designation or assignment (A)
would eliminate or reduce amounts
payable pursuant to Section 3.05 hereof,
and (B) would not subject such Lender
to any unreimbursed cost or expense, and
would not otherwise be disadvantageous
to such Lender. The Borrower shall pay all
reasonable costs and expenses
incurred by such Lender in connection with
any such designation of assignment;
and (ii) at its sole expense and effort,
upon notice to such Lender and the
Agent, require such Lender to assign and
delegate, without recourse (in
accordance with and subject to the
restrictions contained in Section 12.07), all
its interests, rights and obligations under
this Agreement to an assignee that
shall assume such obligations (which
assignee may be another Lender, if a Lender
accepts such assignment), provided that (A)
if such assignee is not an existing
Lender, the Borrower shall have received
the prior written consent of the Agent,
which consent shall not unreasonably be
withheld, (B) such Lender shall have
received payment of an
-33-
<PAGE>
amount equal to the outstanding principal
of its Pro Rata Share of the Loan,
accrued interest thereon, accrued fees and
all other amounts payable to it
hereunder, from the assignee (to the extent
of such outstanding principal and
accrued interest and fees) or the Borrower
(in the case of all other amounts,
which shall be paid to the Agent for
distribution to such Lender) and (C) such
assignment will result in a reduction in
such compensation, payments or costs. A
Lender shall not be required to make any
such assignment and delegation if,
prior thereto, as a result of a waiver by
such Lender or otherwise, the
circumstances entitling the Borrower to
require such assignment and delegation
cease to apply.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS; CONSENT TO IPO
Section
4.01 Conditions Precedent to Effectiveness. This Agreement
shall become effective as of the Business
Day (the "Effective Date") when each
of the following conditions precedent shall
have been satisfied (or waived) in a
manner satisfactory to the Agent:
(a) Payment of Fees, Etc. The Borrower shall have paid to the
Agent and the Lenders on or before the date
of this Agreement, in immediately
available funds, all fees, costs, expenses
and taxes (including, without
limitation, fees, costs, expenses and taxes
incurred in connection with the IPO)
then payable pursuant to the Original
Agreement and pursuant to this Agreement.
(b) Representations and Warranties; No Event of Default. The
following statements shall be true and
correct: (i) the representations and
warranties contained in Article V and in
each other Loan Document, certificate
or other writing delivered to the Agent or
any Lender pursuant hereto or thereto
on or prior to the Effective Date are true
and correct on and as of the
Effective Date as though made on and as of
such date; and (ii) no Default or
Event of Default shall have occurred and be
continuing on the Effective Date or
would result from this Agreement or the
other Loan Documents becoming effective
in accordance with its or their respective
terms.
(c) Legality. Amending and restating this Agreement and
maintaining of the Loan shall not
contravene any law, rule or regulation
applicable to the Agent or any Lender.
(d) Delivery of
Documents. The Agent shall have received on or
before the Effective Date, the following,
each in form and substance reasonably
satisfactory to the Agent and the Lenders,
and, unless indicated otherwise,
dated the Effective Date, and all
conditions precedent to the effectiveness of
such documents (where applicable) shall
have been satisfied or waived:
(i) the Warrants, issued in favor of each Warrantholder
and duly executed by the Parent (which
shall be exchanged for the existing
Warrants held by each such
Warrantholder);
(ii) the Conversion Warrants, issued in favor of each
Conversion Warrantholder and duly executed
by the Parent;
-34-
<PAGE>
(iii) the Registration Rights Agreement, duly executed
by the Parent, the Warrantholders and the
Conversion Warrantholders;
(iv) the DSW Registration Rights Agreement, duly
executed by DSW, the Warrantholders and the
Conversion Warrantholders;
(v) to the extent not already held by the Agent, the
original stock certificates or other
certificated securities or instruments
representing all of the Capital Stock of
such Loan Parties' Subsidiaries, the
Capital Stock of DSW held by the Parent
following the IPO and all intercompany
promissory notes of such Loan Parties
(including the RVI Note and the DSW Note),
accompanied by undated stock powers
executed in blank and other proper
instruments of transfer;
(vi) to the extent required, amendments to Control
Agreements, duly executed by each of the
parties thereto;
(vii) Intercreditor Agreement, duly executed by the
Agent and the Revolving Credit Agent, and
acknowledged by the Loan Parties;
(viii) opinions of Simpson Thacher & Bartlett LLP and
the General Counsel of the Loan Parties and
DSW, dated as of the Effective Date,
substantially in the form of Exhibit E-1
and Exhibit E-2 respectively;
(ix) copies of the Revolving Credit Facility Documents,
the RVI Note and the RVI Pledge, in each
case, duly executed by each of the
parties thereto, reasonably satisfactory in
form and substance to the Agent, and
certified as true and correct copies
thereof by an Authorized Officer of the
Parent;
(x) a copy of the resolutions of each Loan Party and
DSW, certified by an Authorized Officer
thereof, authorizing (A) the
transactions contemplated by the Loan
Documents to which such Person is or will
be a party, (B) the execution, delivery and
performance by such Person of each
Loan Document to which such Person 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, and (C) the IPO and
the transactions contemplated
thereby;
(xi) a certificate of the appropriate official(s) of the
state of organization and each state of
foreign qualification of each Loan
Party, DSW and DSWSW, certifying as to the
subsistence in good standing of, and
the payment of taxes by, such Person in
such states;
(xii) a true and complete copy of the charter,
certificate of formation, certificate of
limited partnership or other publicly
filed organizational document of each Loan
Party, DSW and DSWSW, certified as of
a recent date not more than thirty (30)
days prior to the Effective Date (except
as otherwise agreed by the Agent) by an
appropriate official of the state of
organization of such Person, which shall
set forth the same complete name of
such Person as is set forth herein and the
organizational number, if an
organizational number is issued in such
jurisdiction, and Federal employee
identification number as of the Effective
Date of such Person;
-35-
<PAGE>
(xiii) a copy of the by-laws, limited liability company
agreement, operating agreement, agreement
of limited partnership or other
organizational document of each Loan Party,
DSW and DSWSW, together with all
amendments thereto, certified as of the
Effective Date by an Authorized Officer
of such Person;
(xiv) a certificate of an Authorized Officer of each
Loan Party and DSW, certifying the names
and true signatures of the
representatives of such Person authorized
to sign each Loan Document to which
such Person is or will be a party and the
other documents to be executed and
delivered by such Person in connection
herewith and therewith, together with
evidence of the incumbency of such
Authorized Officers;
(xv) a certificate of an Authorized Officer of the
Parent certifying that each of the Material
Contracts remains in full force and
effect in all material respects and that
none of the Loan Parties has breached
or defaulted on, or is reasonably likely to
breach or default on, any of its
obligations under such agreements in any
material respect, as a result of the
IPO or otherwise;
(xvi) certificate of the chief financial officer of each
Loan Party, certifying as to the Solvency
of the Loan Parties taken as a whole,
both before and after giving effect to the
IPO and the transactions contemplated
hereby and thereby, which certificate shall
be satisfactory in form and
substance to the Agent;
(xvii) a certificate of an Authorized Officer of each
Loan Party, certifying as to the matters
set forth in subsection (b) of this
Section 4.01 and the satisfaction of each
of the conditions set forth in Section
4.02 hereof;
(xviii) 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 reasonably
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;
(xix) release documents, duly executed by the Revolving
Credit Agents, accompanied by appropriate
UCC financing statement amendments, in
form and substance satisfactory to the
Agent, evidencing the release of the Lien
granted in favor of the Revolving Credit
Agents with respect to the Capital
Stock of DSW;
(xx) a copy of the Business Plan, certified as true and
correct by an Authorized Officer of the
Borrower; and
(xxi) such other agreements, instruments, approvals,
opinions and other documents, each
satisfactory to the Agent in form and
substance, as the Agent deems, in its
reasonable business judgment, to be
necessary hereunder.
-36-
<PAGE>
(e) Material Adverse Effect. The Agent shall have determined,
in its sole judgment (acting reasonably),
that no event or development shall
have occurred since January 29, 2005 which
could reasonably be expected to 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 (i)
required in connection with amending
this Agreement or the maintaining of the
Loan, or (ii) materially required in
connection with the conduct of the Loan
Parties' business, shall have been
obtained and shall be in full force and
effect.
(g) Warrant Stock. DSW shall have reserved, out of its
authorized and unissued Class A Shares,
solely for the purpose of permitting the
Parent to comply with its obligations under
the Warrants and the Conversion
Warrants, _____ Class A Shares issuable
upon the exercise of the Warrants or the
Conversion Warrants to provide for the
issuance of the Warrant Stock in
accordance with the terms of the Warrants
and the Conversion Warrants. The
Common Stock and, following, the IPO, the
Class A Common Shares shall have been
listed on the New York Stock Exchange.
(h) Senior Indebtedness. The Obligations under this Agreement
and the other Loan Documents rank at least
pari passu in right of payment to all
existing and future senior Indebtedness and
senior to all other Indebtedness of
each Loan Party.
(i) Consummation of IPO. The IPO shall have been consummated
in accordance with each of the conditions
set forth in Section 4.02 below, as
determined by the Agent in its sole
discretion, exercised reasonably.
Section 4.02 Consent to IPO. The Agent and the Lenders hereby
consent to the consummation of the IPO;
provided that each of the following
conditions has been satisfied or
waived:
(a) The IPO shall
constitute a Qualifying IPO;
(b) On the IPO Effective Date, the Net Cash Proceeds of the
IPO shall be immediately applied (i) by DSW
to repay to Parent in full the
obligations outstanding under the DSW Note,
(ii) by Parent to repay to the
Borrower a portion of the obligations
outstanding under the RVI Note, and (iii)
by the Borrower to repay in full (x) all
Obligations (as defined in the Term
Loan Agreement) outstanding under the Term
Loan Agreement and (y) $25,000,000 of
the principal amount of the Old Notes under
the Original Agreement, in each
case, in immediately available funds;
(c) Following prepayment by the Borrower in full of all of the
Obligations (as defined in the Term Loan
Agreement) outstanding under the Term
Loan Agreement, the Term Loan Agreement
shall be terminated (other than with
respect to the provisions thereof that
expressly survive the termination
thereof);
(d) Each of the conditions precedent to the effectiveness of
(i) this Agreement set forth in Section
4.01 hereof shall be satisfied or
waived, as determined by the Agent in its
sole discretion, exercised reasonably,
and (ii) the amendment of the Revolving
Loan
-37-
<PAGE>
Documents shall be satisfied to the
satisfaction of the Agent and the agents and
the lenders thereunder;
(e) The IPO shall be consummated in accordance with all
requirements of Applicable Law and on terms
and conditions reasonably
satisfactory to Agent, (it being
acknowledged that the terms of the IPO set
forth in the Form S-1 filed with the SEC on
June 15, 2005 (without giving effect
to any subsequent amendments thereto), are
satisfactory to the Agent) and 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 IPO shall
have been obtained and shall be in
full force and effect; and
(f) The Agent shall
have received, immediately prior to the
consummation of the IPO, a certificate of
an Authorized Officer of each Loan
Party, in form and substance satisfactory
to the Agent, certifying that each of
the conditions set forth in this Section
4.02 has been, or concurrently with the
consummation of the IPO will be,
satisfied.
Section 4.03 Release of DSW and DSWSW. Following the
satisfaction
(or waiver) of each of the conditions set
forth in Sections 4.01 and 4.02
hereof, DSW and DSWSW shall be released and
discharged from any liability under
the Original Agreement and each of the
other Loan Documents to which it is a
party pursuant to the Original Agreement,
other than liabilities under such Loan
Documents that expressly survive the
termination thereof and all liens and
security interests granted by DSW and DSWSW
to secure the Obligations shall be
released and discharged and the Parent, DSW
and DSWSW are hereby authorized, in
the Agent's name, to file UCC-3 termination
statements and such other documents,
instruments and releases with respect to
any mortgages, liens, encumbrances or
other security interests on any property of
DSW and DSWSW to evidence the
release provided by this Section 4.03. Upon
satisfaction of each of the
conditions set forth in Sections 4.01 and
4.02 hereof, the Agent (at the expense
of the Parent) hereby agrees (A) to execute
and deliver to the Parent, DSW and
DSWSW such instruments and documents in
form and substance reasonably
satisfactory to the Parent and the Agent,
which are reasonably requested by the
Parent, for the purpose of effecting the
intent of this Section 4.03 including,
without limitation, to release of record
any and all liens and security
interests and collateral and to terminate
with respect to DSW and DSWSW any and
all control agreements, lockbox agreements,
landlord's or similar waivers and
like documents (B) to return to DSW and
DSWSW all certificates of and stock
powers with respect to DSWSW, pledged
promissory notes of DSW and DSWSW and
other physical collateral provided by DSW
and DSWSW to, and held by, the Agent
pursuant to the Loan Documents, and (C) to
return to the Parent any certificate
representing the Capital Stock of DSW
permitted to be sold pursuant to the IPO
(together with any applicable stock power).
This release does not and shall not
affect (a) any of the obligations or
liabilities of the other Loan Parties under
this Agreement, the Original Agreement or
any other Loan Document, or (b) any of
the obligations of DSW under any of the
Loan Documents to which it is a party
under this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties. Each Loan Party
hereby
-38-
<PAGE>
represents and warrants to the Agent and
the Lenders as follows:
(a) Organization; Good Standing, Etc. Each of the Loan
Parties, DSW and DSWSW (i) is a
corporation, limited liability company or
limited partnership duly organized, validly
existing and in good standing under
the laws of the state or jurisdiction of
its organization; (ii) has all
requisite power and authority to conduct
its business as now conducted and as
presently contemplated and, to execute and
deliver each Loan Document to which
it is a party, and to consummate the
transactions contemplated thereby; and
(iii) is duly qualified to do business and
is in good standing in each
jurisdiction in which the character of the
properties owned or leased by it or
in which the transaction of its business
makes such qualification necessary,
except where the failure to so qualify is
not reasonably likely to have a
Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and
performance by each Loan Party and DSW of
each Loan Document to which it is or
will be a party (i) have been duly
authorized by all necessary action; (ii) do
not and will not contravene in any material
respect its charter or by-laws, its
limited liability company or operating
agreement or its certificate of
partnership or partnership agreement, as
applicable, or any Applicable Law or
any contractual restriction binding on or
otherwise affecting it or any of its
properties; (iii) do not and will not
result in or require the creation of any
Lien upon or with respect to any of its
properties; and (iv) do not and will not
result in any default, noncompliance,
suspension, revocation, impairment,
forfeiture or nonrenewal of any material
permit, license, authorization or
approval applicable to its operations or
any of its properties.
(c) Governmental Approvals. No authorization or approval or
other action by, and no notice to or filing
with, any Governmental Authority is
required in connection with (i) the due
execution, delivery and performance by
any Loan Party or DSW of any Loan Document
to which it is or will be a party, or
(ii) in connection with the IPO.
(d) Enforceability of Loan Documents. This Agreement is, and
each other Loan Document to which any Loan
Party or DSW is or will be a party,
when delivered hereunder, will be, a legal,
valid and binding obligation of such
Person, enforceable against such Person in
accordance with its terms, except as
may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium
or oth
