Exhibit 10.1
EXECUTION VERSION
$100,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
DSW INC.
DSW SHOE WAREHOUSE, INC.
as Borrowers
THE GUARANTORS PARTY HERETO
THE LENDERS PARTY HERETO
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent
PNC CAPITAL MARKETS LLC
as Sole Book Runner and Sole Lead Arranger
BANK OF AMERICA, N.A.
as Syndication Agent and Documentation Agent
and
FIFTH THIRD BANK and
WELLS FARGO RETAIL FINANCE, LLC
as Managing Agents
Dated as of June 30, 2010

 

 

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TABLE OF CONTENTS

              Page  
 
       
1. CERTAIN DEFINITIONS
    1  
1.1 Certain Definitions
    1  
1.2 Construction
    32  
1.3 Accounting Principles
    32  
 
       
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
    33  
2.1 Revolving Credit Commitments
    33  
2.1.1 Revolving Credit Loans
    33  
2.1.2 Swing Loan Commitment
    33  
2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans;
Permitted Overadvances
    34  
2.2.1 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans
    34  
2.2.2 Permitted Overadvances
    34  
2.3 Commitment Fees
    34  
2.4 Simplified Borrowing Base and Borrowing Base; Permitted Short Term Loans
    35  
2.4.1 Simplified Borrowing Base and Borrowing Base
    35  
2.4.2 Permitted Short Term Loans
    35  
2.5 Revolving Credit Loan Requests; Swing Loan Requests
    35  
2.5.1 Revolving Credit Loan Requests
    36  
2.5.2 Swing Loan Requests
    36  
2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay
Swing Loans
    36  
2.6.1 Making Revolving Credit Loans
    36  
2.6.2 Presumptions by the Administrative Agent
    37  
2.6.3 Making Swing Loans
    37  
2.6.4 Repayment of Revolving Credit Loans
    37  
2.6.5 Borrowings to Repay Swing Loans
    37  
2.6.6 Trigger Event Election Period
    38  
2.7 Notes
    38  
2.8 Use of Proceeds
    38  
2.9 Letter of Credit Subfacility
    38  
2.9.1 Issuance of Letters of Credit
    38  
2.9.2 Letter of Credit Fees
    40  
2.9.3 Disbursements, Reimbursement
    40  
2.9.4 Repayment of Participation Advances
    42  
2.9.5 Documentation
    42  
2.9.6 Determinations to Honor Drawing Requests
    43  
2.9.7 Nature of Participation and Reimbursement Obligations
    43  
2.9.8 Indemnity
    44  
2.9.9 Liability for Acts and Omissions
    45  

 

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              Page  
 
       
2.9.10 Issuing Lender Reporting Requirements
    46  
2.9.11 Cash Collateral
    46  
2.10 Increase in Revolving Credit Commitments
    46  
2.10.1 Increasing Lenders and New Lenders
    46  
2.10.2 Repayment of Outstanding Loans; Borrowing of New Loans
    48  
2.10.3 Outstanding Letters of Credit. Repayment of Outstanding Loans; Borrowing
of New Loans
    48  
2.11 Reduction of Revolving Credit Commitment
    48  
2.11.1 Revolving Credit Commitments
    48  
2.11.2 Canadian Commitments
    48  
2.11.3 Deemed Termination of Canadian Commitments
    48  
 
       
3. INTEREST RATES
    49  
3.1 Interest Rate Options
    49  
3.1.1 Revolving Credit Interest Rate Options; Swing Line Interest Rate
    49  
3.1.2 Rate Quotations
    50  
3.2 Interest Periods
    50  
3.2.1 Amount of Borrowing Tranche
    50  
3.2.2 Renewals
    50  
3.3 Interest and Fees After Default
    50  
3.3.1 Letter of Credit Fees, Interest Rate
    50  
3.3.2 Other Obligations
    50  
3.3.3 Acknowledgment
    50  
3.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available
    50  
3.4.1 Unascertainable
    51  
3.4.2 Illegality; Increased Costs; Deposits Not Available
    51  
3.4.3 Administrative Agent’s and Lenders’ Rights
    51  
3.5 Selection of Interest Rate Options
    52  
3.6 Interest Act (Canada)
    52  
 
       
4. PAYMENTS
    52  
4.1 Payments
    52  
4.2 Pro Rata Treatment of Lenders; Repayment of Advances
    53  
4.2.1 Pro Rata Treatment of Lenders
    53  
4.2.2 Repayment of Advances
    53  
4.3 Sharing of Payments by Lenders
    53  
4.4 Presumptions by Administrative Agent
    54  
4.5 Interest Payment Dates
    54  
4.6 Voluntary Prepayments
    55  
4.6.1 Right to Prepay
    55  
4.6.2 Replacement of a Lender
    55  
4.7 Mandatory Prepayments
    56  
4.7.1 Disposition of Assets; Indebtedness
    56  
4.7.2 Borrowing Base Exceeded; Canadian Borrowing Base Exceeded
    57  

 

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              Page  
 
       
4.7.3 Receipt and Application of Payment
    57  
4.7.4 Application Among Interest Rate Options
    57  
4.8 Increased Costs
    57  
4.8.1 Increased Costs Generally
    57  
4.8.2 Capital Requirements
    58  
4.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing
of New Loans
    58  
4.8.4 Delay in Requests
    58  
4.9 Taxes
    59  
4.9.1 Payments Free of Taxes
    59  
4.9.2 Payment of Other Taxes by the Borrowers
    59  
4.9.3 Indemnification by the Borrowers; Treatment of Certain Refunds
    59  
4.9.4 Evidence of Payments
    60  
4.9.5 Status of Lenders
    60  
4.10 Indemnity
    61  
4.11 Settlement Date Procedures
    62  
 
       
5. REPRESENTATIONS AND WARRANTIES
    62  
5.1 Representations and Warranties
    62  
5.1.1 Organization and Qualification; Power and Authority; Compliance With Laws;
Title to Properties; Event of Default
    62  
5.1.2 Subsidiaries and Owners; Investment Companies
    63  
5.1.3 Validity and Binding Effect
    63  
5.1.4 No Conflict; Material Agreements; Consents
    63  
5.1.5 Litigation
    64  
5.1.6 Financial Statements
    64  
5.1.7 Margin Stock
    64  
5.1.8 Full Disclosure
    65  
5.1.9 Taxes
    65  
5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc
    65  
5.1.11 Liens in the Collateral
    65  
5.1.12 Insurance
    65  
5.1.13 ERISA Compliance
    66  
5.1.14 Environmental Matters
    66  
5.1.15 Solvency
    66  
5.1.16 Labor Matters
    66  
5.1.17 DDAs; Credit Card Arrangements
    67  
5.2 Updates to Schedules
    67  
 
       
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
    67  
6.1 First Loans and Letters of Credit
    68  
6.1.1 Deliveries
    68  
6.1.2 Other Conditions Precedent
    69  
6.1.3 Payment of Fees and Expenses
    70  
6.2 Each Loan or Letter of Credit
    70  

 

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              Page  
 
       
6.3 Initial Loans or Letters of Credit — Canadian Borrower
    70  
 
       
7. COVENANTS
    70  
7.1 Affirmative Covenants
    70  
7.1.1 Preservation of Existence, Etc
    70  
7.1.2 Payment of Liabilities, Including Taxes, Etc
    70  
7.1.3 Maintenance of Insurance
    71  
7.1.4 Maintenance of Properties and Leases
    71  
7.1.5 Visitation Rights
    71  
7.1.6 Keeping of Records and Books of Account
    72  
7.1.7 Compliance with Laws; Use of Proceeds
    72  
7.1.8 Further Assurances
    72  
7.1.9 Anti-Terrorism Laws
    72  
7.1.10 Cash Management
    73  
7.2 Negative Covenants
    74  
7.2.1 Indebtedness
    74  
7.2.2 Liens; Lien Covenants
    76  
7.2.3 Guaranties
    76  
7.2.4 Loans and Investments
    76  
7.2.5 Dividends and Related Distributions
    77  
7.2.6 Liquidations, Mergers, Consolidations, Amalgamations, Acquisitions
    77  
7.2.7 Dispositions of Assets or Subsidiaries
    77  
7.2.8 Affiliate Transactions
    78  
7.2.9 Subsidiaries, Partnerships and Joint Ventures
    78  
7.2.10 Continuation of or Change in Business
    79  
7.2.11 Fiscal Year
    79  
7.2.12 Issuance of Stock
    79  
7.2.13 Changes in Organizational Documents
    79  
7.2.14 Capital Expenditures
    79  
7.2.15 Minimum Fixed Charge Coverage Ratio
    79  
7.2.16 Agreements Restricting Dividends
    80  
7.2.17 DDAs; Credit Card Processors
    80  
7.2.18 Negative Pledges
    80  
7.3 Reporting Requirements
    80  
7.3.1 Quarterly Financial Statements; Monthly Financial Statements
    80  
7.3.2 Annual Financial Statements
    80  
7.3.3 Certificate of the Borrowers
    81  
7.3.4 Simplified Borrowing Base Certificates; Borrowing Base Certificates
    81  
7.3.5 Minimum Cash Requirement; DDAs
    81  
7.3.6 Notices
    81  
 
       
8. DEFAULT
    83  
8.1 Events of Default
    83  
8.1.1 Payments Under Loan Documents
    83  

 

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              Page  
 
       
8.1.2 Breach of Warranty
    83  
8.1.3 Breach of Certain Covenants
    83  
8.1.4 Breach of Other Covenants
    84  
8.1.5 Defaults in Indebtedness; Leases
    84  
8.1.6 Final Judgments or Orders
    84  
8.1.7 Loan Document Unenforceable
    84  
8.1.8 Uninsured Losses; Proceedings Against Assets
    84  
8.1.9 Events Relating to Plans and Benefit Arrangements
    84  
8.1.10 Change of Control
    85  
8.1.11 Relief Proceedings
    85  
8.2 Consequences of Event of Default
    85  
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings
    85  
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings
    86  
8.2.3 Set-off
    86  
8.2.4 Application of Proceeds
    86  
 
       
9. THE ADMINISTRATIVE AGENT
    89  
9.1 Appointment and Authority
    89  
9.2 Rights as a Lender
    89  
9.3 Exculpatory Provisions
    90  
9.4 Reliance by Administrative Agent
    91  
9.5 Delegation of Duties
    91  
9.6 Resignation of Administrative Agent
    91  
9.7 Non-Reliance on Administrative Agent and Other Lenders
    92  
9.8 No Other Duties, etc
    92  
9.9 Administrative Fee
    92  
9.10 Authorization to Release Collateral and Guarantors
    92  
9.11 No Reliance on Administrative Agent’s Customer Identification Program
    93  
9.12 Defaulting Lender
    93  
9.12.1 Failure or Refusal to Comply with Lender Obligations
    93  
9.12.2 Non-Defaulting Lender Rights
    94  
9.12.3 Indemnification
    94  
9.12.4 Risk Participation
    94  
 
       
10. MISCELLANEOUS
    95  
10.1 Modifications, Amendments or Waivers
    95  
10.1.1 Increase of Commitment
    95  
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment
    95  
10.1.3 Release of Collateral or Guarantor
    95  
10.1.4 Availability
    96  
10.1.5 Miscellaneous
    96  
10.2 No Implied Waivers; Cumulative Remedies
    96  
10.3 Expenses; Indemnity; Damage Waiver
    96  
10.3.1 Costs and Expenses
    96  

 

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              Page  
 
       
10.3.2 Indemnification by the Loan Parties
    97  
10.3.3 Reimbursement by Lenders
    98  
10.3.4 Waiver of Consequential Damages, Etc
    98  
10.3.5 Payments
    98  
10.4 Holidays
    98  
10.5 Notices; Effectiveness; Electronic Communication
    99  
10.5.1 Notices Generally
    99  
10.5.2 Electronic Communications
    99  
10.5.3 Change of Address, Etc
    100  
10.6 Severability
    100  
10.7 Duration; Survival
    100  
10.8 Successors and Assigns
    100  
10.8.1 Successors and Assigns Generally
    100  
10.8.2 Assignments by Lenders
    100  
10.8.3 Register
    102  
10.8.4 Participations
    102  
10.8.5 Limitations upon Participant Rights Successors and Assigns Generally
    103  
10.8.6 Certain Pledges; Successors and Assigns Generally
    103  
10.9 Publicity
    103  
10.10 Confidentiality
    103  
10.10.1 General
    103  
10.10.2 Sharing Information With Affiliates of the Lenders
    104  
10.11 Counterparts; Integration; Effectiveness
    104  
10.11.1 Counterparts; Integration; Effectiveness
    104  
10.12 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF
PROCESS; WAIVER OF JURY TRIAL
    104  
10.12.1 Governing Law
    104  
10.12.2 SUBMISSION TO JURISDICTION
    105  
10.12.3 WAIVER OF VENUE
    105  
10.12.4 SERVICE OF PROCESS
    105  
10.12.5 WAIVER OF JURY TRIAL
    105  
10.13 Patriot Act Notice; Proceeds of Crime Act
    106  
10.14 Additional Waivers
    106  
10.14.1 Joint and Several Liability
    106  
10.14.2 No Reduction of Obligations
    106  
10.14.3 Additional Waivers
    107  
10.14.4 Subordination
    107  
10.15 Obligations Upon Receipt of Indefeasible Payment In Full
    108  
10.16 Limitation Of Canadian Borrower’s Liability
    109  
10.17 Judgment Currency
    109  
10.17.1 Judgment Currency
    109  
10.17.2 Change in Exchange Rate
    109  
10.17.3 Canadian Liabilities
    110  
10.17.4 Rate of Exchange
    110  
10.18 Language
    110  

 

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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES

         
SCHEDULE 1.1(A)
  —   PRICING GRID
SCHEDULE 1.1(B)
  —   COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(C)
  —   QUALIFIED CREDIT CARD RECEIVABLES
SCHEDULE 1.1(D)
  —   QUALIFIED INVENTORY
SCHEDULE 1.1(E)
  —   EXISTING LETTERS OF CREDIT
SCHEDULE 1.1(P)
  —   PERMITTED LIENS
SCHEDULE 5.1.1
  —   QUALIFICATIONS TO DO BUSINESS
SCHEDULE 5.1.2
  —   SUBSIDIARIES
SCHEDULE 5.1.14
  —   ENVIRONMENTAL DISCLOSURES
SCHEDULE 5.1.16
  —   LABOR MATTERS
SCHEDULE 5.1.17.1
  —   DDAs
SCHEDULE 5.1.17.2
  —   CREDIT CARD PROCESSORS
SCHEDULE 6.1.1
  —   OPINION OF COUNSEL
SCHEDULE 7.1.3
  —   INSURANCE REQUIREMENTS RELATING TO COLLATERAL
SCHEDULE 7.2.1
  —   PERMITTED INDEBTEDNESS
SCHEDULE 7.2.8
  —   AFFILIATE TRANSACTIONS

EXHIBITS

         
EXHIBIT 1.1(A)
  —   ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C)
  —   COLLATERAL ASSIGNMENT
EXHIBIT 1.1(G)(1)
  —   GUARANTOR JOINDER
EXHIBIT 1.1(G)(2)
  —   GUARANTY AGREEMENT
EXHIBIT 1.1(G)(3)
  —   BORROWER JOINDER
EXHIBIT 1.1(N)(1)
  —   REVOLVING CREDIT NOTE
EXHIBIT 1.1(N)(2)
  —   SWING LOAN NOTE
EXHIBIT 1.1(S)
  —   SECURITY AGREEMENT
EXHIBIT 2.5.1
  —   LOAN REQUEST
EXHIBIT 2.5.2
  —   SWING LOAN REQUEST
EXHIBIT 2.10
  —   LENDER JOINDER
EXHIBIT 7.3.3
  —   COMPLIANCE CERTIFICATE
EXHIBIT 7.3.4.1
  —   SIMPLIFIED BORROWING BASE CERTIFICATE
EXHIBIT 7.3.4.2
  —   BORROWING BASE CERTIFICATE

 

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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (as hereafter amended, the “Agreement”) is dated as of
June 30, 2010 and is made by and among DSW INC., an Ohio corporation (“DSW”),
DSW SHOE WAREHOUSE, INC., a Missouri corporation (“DSW Shoe”, and together with
DSW, individually, a “Borrower”, and collectively, the “Borrowers”, as
hereinafter further defined), each of the GUARANTORS (as hereinafter defined),
the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its
capacity as administrative agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the “Administrative Agent”).
The Borrowers have requested the Lenders to provide a revolving credit facility
to the Borrowers in an aggregate original principal amount not to exceed
$100,000,000, which may be increased in accordance with the terms of
Section 2.10 [Increase in Revolving Credit Commitments] hereof and a
sub-facility in favor of the Canadian Borrower (defined below) in an aggregate
original principal amount not to exceed $10,000,000. In consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions. In addition to words and terms defined elsewhere in
this Agreement, the following words and terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
Account shall mean “accounts” as defined in the UCC (or as regards to the
Canadian Borrower, the PPSA), and also shall mean any account, contract right,
general intangible, chattel paper, instrument or document representing any right
to payment for goods sold or services rendered, whether or not earned by
performance and whether or not evidenced by a contract, instrument or document,
which is now owned or hereafter acquired by a Loan Party. All Accounts, whether
Qualified Credit Card Receivables or not, shall be subject to the Administrative
Agent’s and the Lenders’ Prior Security Interest.
Account Debtor shall mean any Person who is or who may become obligated to a
Loan Party under, with respect to, or on account of, an Account.
Acquisition shall mean, with respect to any Person (a) an investment in, or a
purchase of a controlling interest in, the equity interests of any other Person,
(b) a purchase or other acquisition of all or substantially all of the assets or
properties of, another Person or of any business unit of another Person, (c) any
merger, consolidation or amalgamation of such Person with any other Person or
other transaction or series of transactions resulting in the acquisition of all
or substantially all of the assets, or a controlling interest in the equity
interests, of any Person, or (d) any acquisition of any store locations of any
Person for an aggregate purchase price of $5,000,000 or more, in each case in
any transaction or group of transactions which are part of a common plan.

 

 

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Administrative Agent shall mean PNC Bank, National Association, and its
successors and assigns.
Administrative Fee shall have the meaning specified in Section 9.9
[Administrative Fee].
Affiliate as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds ten percent (10.0%) or more of any
class of the voting or other equity interests of such Person, or (iii) ten
percent (10.0%) or more of any class of voting interests or other equity
interests of which is beneficially owned or held, directly or indirectly, by
such Person.
Agreement shall have the meaning specified in the preamble hereof.
Alternate Source shall have the meaning specified in the definition of “Federal
Funds Open Rate” or “LIBOR Rate”, as applicable.
Anti-Terrorism Laws shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced).
Applicable Commitment Fee Rate shall mean the percentage rate per annum based on
the Average Daily Revolving Credit Availability for the immediately preceding
fiscal quarter according to the pricing grid on Schedule 1.1(A) below the
heading “Commitment Fee.”
Applicable Letter of Credit Fee Rate shall mean the following percentage rate
per annum based upon Average Daily Revolving Credit Availability then in effect
according to the pricing grid on Schedule 1.1(A): (a) with respect to Standby
Letters of Credit, the percentage rate per annum applicable to Revolving Credit
Loans to which the LIBOR Rate Option or the BA Rate Option, as applicable,
applies, and (b) with respect to Commercial Letters of Credit, the percentage
rate per annum equal to fifty percent (50%) of the percentage rate per annum
applicable to Revolving Credit Loans to which the LIBOR Rate Option or the BA
Rate Option, as applicable, applies.
Applicable Margin shall mean, as applicable:
(A) the percentage spread to be added to the Base Rate applicable to Revolving
Credit Loans under the Base Rate Option based on the Average Daily Revolving
Credit Availability according to the pricing grid on Schedule 1.1(A) below the
heading “Revolving Credit Base Rate Spread”, or
(B) the percentage spread to be added to the LIBOR Rate applicable to Revolving
Credit Loans under the LIBOR Rate Option based on the Average Daily Revolving
Credit Availability according to the pricing grid on Schedule 1.1(A) below the
heading “Revolving Credit LIBOR Rate Spread”;

 

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(C) the percentage spread to be added to the Canadian Prime Rate applicable to
Revolving Credit Loans under the Canadian Prime Rate Option based on the Average
Daily Revolving Credit Availability according to the pricing grid on
Schedule 1.1(A) below the heading “Revolving Credit Canadian Prime Rate Spread”;
or
(D) the percentage spread to be added to the BA Rate applicable to Revolving
Credit Loans under the BA Rate Option based on the Average Daily Revolving
Credit Availability according to the pricing grid on Schedule 1.1(A) below the
heading “Revolving Credit BA Rate Spread”.
Approved Fund shall mean any fund that is engaged in making, purchasing, holding
or investing in bank loans and similar extensions of credit in the ordinary
course of business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Arranger shall mean PNC Capital Markets LLC, and its successors and assigns, in
its capacity as sole book runner and sole lead arranger.
Assignment and Assumption Agreement shall mean an assignment and assumption
agreement entered into by a Lender and an assignee permitted under Section 10.8
[Successors and Assigns], in substantially the form of Exhibit 1.1(A) or, with
respect to any assignment by any Canadian Lender, in such other form as is
reasonably acceptable to the Administrative Agent.
Authorized Officer shall mean, with respect to any Loan Party, the Chief
Executive Officer, President, Chief Financial Officer, Treasurer or Assistant
Treasurer of such Loan Party or such other individuals, designated by written
notice to the Administrative Agent from the Borrowers, authorized to execute
notices, reports and other documents on behalf of the Loan Parties required
hereunder. The Borrowers may amend such list of individuals from time to time by
giving written notice of such amendment to the Administrative Agent.
Auto-Extension Letter of Credit shall have the meaning specified in Section
2.9.1 [Issuance of Letters of Credit].
Average Daily Revolving Credit Availability shall mean, at any time of
determination, the average daily Revolving Credit Availability for the
immediately preceding fiscal quarter.
BA Equivalent Loan shall mean any Loan to the Canadian Borrower in CD$ bearing
interest at a rate determined by reference to the BA Rate in accordance with the
provisions of Article II.
BA Equivalent Loan Borrowing shall mean any Borrowing comprised of BA Equivalent
Loans.
BA Rate shall mean, for the Interest Period of each BA Equivalent Loan, the rate
of interest per annum equal to the annual rates applicable to CD$ bankers’
acceptances having an identical or comparable term as the bankers’ acceptances
proposed to be issued displayed and

 

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identified as such on the display referred to as the “CDOR Page” (or any display
substituted therefor) of Reuter Monitor Money Rates Service as at approximately
10:00 A.M. on such day (or, if such day is not a Business Day, as of 10:00 A.M.
on the immediately preceding Business Day), provided that if such rates do not
appear on CDOR Page at such time on such date, the rate for such date will be
the annual discount rate (rounded upward to the nearest whole multiple of 1/100
of 1%) as of 10:00 A.M. on such day at which The Toronto-Dominion Bank is then
offering to purchase CD$ bankers’ acceptances accepted by it having such
specified term (or a term as closely as possible comparable to such specified
term). In the event that the Administrative Agent is unable to obtain any such
quotation as provided above, it will be deemed that a BA Rate pursuant to a BA
Equivalent Loan Borrowing cannot be obtained.
BA Rate Option shall mean the option of the Canadian Borrower to have Loans bear
interest at the rate and under the terms set forth in Section 3.1.1(iv)
[Revolving Credit BA Rate Option].
Bankruptcy Code means each of (i) Title 11, U.S.C., as now or hereafter in
effect, or any successor thereto, and (ii) the Bankruptcy and Insolvency Act
(Canada), the Companies’ Creditors Arrangement Act (Canada) and the Winding-up
and Restructuring Act (Canada), as now or hereafter in effect, or any successor
thereto.
Base Rate shall mean, for any day, a fluctuating per annum rate of interest
equal to the highest of (a) the Federal Funds Open Rate, plus one-half of one
percent (0.5%), and (b) the Prime Rate, and (c) the Daily LIBOR Rate, plus one
percent (1.0%). Any change in the Base Rate (or any component thereof) shall
take effect at the opening of business on the day such change occurs.
Base Rate Option shall mean the option of the Borrowers to have Loans bear
interest at the rate and under the terms set forth in Section 3.1.1(i)
[Revolving Credit Base Rate Option].
Blocked Account shall have the meaning specified in Section 7.1.10 [Cash
Management].
Blocked Account Agreement shall mean with respect to an account established by a
Loan Party, an agreement, in form and substance satisfactory to the
Administrative Agent, establishing control (as defined in the UCC) of such
account by the Administrative Agent and whereby the bank maintaining such
account agrees, upon the occurrence of a Trigger Event Election or the
occurrence and continuance of an Event of Default, to comply only with the
instructions originated by the Administrative Agent without the further consent
of any Loan Party.
Blocked Account Bank shall mean each bank with whom DDAs are maintained in which
any funds of any of the Loan Parties from one or more DDAs are concentrated and
with whom a Blocked Account Agreement has been, or is required to be, executed
in accordance with the terms hereof.

 

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Borrower Joinder shall mean a joinder by a Person as a Borrower under the Loan
Documents in the form of Exhibit 1.1(G)(3), or, with respect to a joinder by the
Canadian Borrower, in such other form as is reasonably acceptable to the
Administrative Agent.
Borrowers shall mean each of (a) DSW Inc., a corporation organized and existing
under the laws of the State of Ohio, (b) DSW Shoe Warehouse, Inc., a corporation
organized and existing under the laws of the State of Missouri, and (c) each
other Person which joins this Agreement as a Borrower after the date hereof.
Borrowing Base shall mean at any time:
(a) ninety percent (90%) of Qualified Credit Card Receivables of the Domestic
Borrowers, plus
(b) the lesser of (i) sixty-five percent (65%) of the book value (determined in
accordance with GAAP) of Qualified Inventory of the Domestic Borrowers at cost
(determined in accordance with GAAP), or (ii) eighty-five percent (85%) of the
appraised net orderly liquidation value expressed as a percentage of cost (as
used in this definition, “NOLV”) of Qualified Inventory of the Domestic
Borrowers multiplied by the cost (determined in accordance with GAAP) of
Qualified Inventory of the Domestic Borrowers, minus
(c) reserves deemed appropriate by the Administrative Agent.
Following the occurrence of a Borrowing Base Trigger Event, until such time as
the Administrative Agent shall have obtained and reviewed an updated audit and
appraisal, in each case in form and substance satisfactory to the Administrative
Agent, NOLV shall be based upon the audit and appraisal delivered to the
Administrative Agent pursuant to Section 7.1.5.2 hereof. Notwithstanding
anything to the contrary, the Administrative Agent may, in its sole discretion,
(i) increase the level of any reserves, or define or maintain such other
reserves, as the Administrative Agent may deem necessary or appropriate, and
(ii) reduce the advance percentages for Qualified Credit Card Receivables and
Qualified Inventory, in the case of this clause (ii) upon the Administrative
Agent’s receipt and review of such updated audit and appraisal to the extent
that, in the Administrative Agent’s reasonable opinion, such updated audit and
appraisal evidence a material change from the audit and appraisal delivered to
the Administrative Agent pursuant to Section 7.1.5.2 hereof. Any such change
shall become effective immediately upon written notice from the Administrative
Agent to the Borrowers for the purpose of calculating the Borrowing Base
hereunder.
Borrowing Base Certificate shall have the meaning specified in Section 7.3.4(ii)
[Simplified Borrowing Base Certificates; Borrowing Base Certificates].
Borrowing Base Trigger Event shall mean the occurrence of any of the following
events: (i) the occurrence of a Trigger Event Election, (ii) the occurrence of
an Event of Default, or (iii) the failure of the Domestic Borrowers to have on
hand the Minimum Cash Requirement.

 

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Borrowing Date shall mean, with respect to any Loan, the date for the making
thereof or the renewal or conversion thereof at or to the same or a different
Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding as follows:
(i) any Loans to which a LIBOR Rate Option applies which become subject to the
same Interest Rate Option under the same Loan Request by the Borrowers and which
have the same Interest Period shall constitute one Borrowing Tranche, (ii) all
Loans to which a Base Rate Option applies shall constitute one Borrowing
Tranche, (iii) any Loans to which a BA Rate Option applies which become subject
to the same Interest Rate Option under the same Loan Request by the Borrowers
and which have the same Interest Period shall constitute one Borrowing Tranche,
and (iv) all Loans to which a Canadian Prime Rate Option applies shall
constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania and if the applicable Business Day relates
to any Loan to which the LIBOR Rate Option applies, such day must also be a day
on which dealings are carried on in the London interbank market; provided
further that when used in connection with any Loan to the Canadian Borrower, the
term “Business Day” shall also exclude any day on which banks are authorized or
required by law to be closed in Toronto, Ontario, Canada.
Canadian Availability means, as of any date of determination thereof by the
Administrative Agent, the result, if a positive number, of (a) the lesser of
(i) CD$10,000,000 or (ii) the Canadian Borrowing Base, minus (b) the Revolving
Facility Usage by the Canadian Borrower, minus (c) the aggregate amount of all
then outstanding and unpaid trade payables and other obligations of the Canadian
Borrower which are more than sixty (60) days past due as of such time (it being
understood that to the extent that the time for payment of any such trade
payables and other obligations has been extended in writing by the applicable
creditor, such trade payables and other obligations shall not be deemed to be
past due until the extended date for payment has passed); provided that Canadian
Availability shall be reduced by that amount necessary in order that Revolving
Credit Availability will not be exceeded. In calculating Canadian Availability
at any time and for any purpose under this Agreement, the Canadian Borrower
shall certify to the Administrative Agent that all of its accounts payable and
taxes are being paid on a timely basis.
Canadian Borrower means a direct or indirect wholly owned Subsidiary of DSW to
be hereafter formed under the laws of the Province of Ontario, Canada, which
joins this Agreement as the Canadian Borrower after the date hereof.
Canadian Borrowing Base shall mean at any time:
(a) ninety percent (90%) of Qualified Credit Card Receivables of the Canadian
Borrower, plus
(b) the lesser of (i) sixty-five percent (65%) of the book value (determined in
accordance with GAAP) of Qualified Inventory of the Canadian Borrower at cost

 

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(determined in accordance with GAAP), or (ii) eighty-five percent (85%) of the
appraised net orderly liquidation value expressed as a percentage of cost (as
used in this definition, “NOLV”) of Qualified Inventory of the Canadian Borrower
multiplied by the cost (determined in accordance with GAAP) of Qualified
Inventory of the Canadian Borrower, minus
(c) reserves deemed appropriate by the Administrative Agent.
Following the occurrence of a Borrowing Base Trigger Event, until such time as
the Administrative Agent shall have obtained and reviewed an updated audit and
appraisal, in each case in form and substance satisfactory to the Administrative
Agent, NOLV shall be based upon the audit and appraisal of the Domestic
Borrowers delivered to the Administrative Agent pursuant to Section 7.1.5.2
hereof. Notwithstanding anything to the contrary, the Administrative Agent may,
in its sole discretion, (i) increase the level of any reserves, or define or
maintain such other reserves, as the Administrative Agent may deem necessary or
appropriate, and (ii) reduce the advance percentages for Qualified Credit Card
Receivables and Qualified Inventory, in the case of this clause (ii) upon the
Administrative Agent’s receipt and review of an audit and appraisal for the
Canadian Borrower to the extent that, in the Administrative Agent’s reasonable
opinion, such updated audit and appraisal evidence a material change from the
audit and appraisal delivered of the Domestic Borrowers to the Administrative
Agent pursuant to Section 7.1.5.2 hereof. Any such change shall become effective
immediately upon written notice from the Administrative Agent to the Borrowers
for the purpose of calculating the Canadian Borrowing Base hereunder.
Canadian Commitment shall mean, as to any Canadian Lender at any time, the
amount initially set forth opposite its name on Schedule 1.1(B) in the column
labeled “Amount of Canadian Commitment for Revolving Credit Loans,” as such
Commitment is thereafter assigned or modified and Canadian Commitments shall
mean the aggregate Canadian Commitments of all of the Canadian Lenders.
Canadian Lender initially means PNC Canada. Any Person may be a Canadian Lender
only if it is a financial institution that is listed on Schedule I, II or III of
the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act
(Canada), and if such financial institution is not resident in Canada and is not
deemed to be resident in Canada for purposes of the Income Tax Act (Canada),
then such financial institution deals at arm’s length with the Canadian Borrower
for purposes of the Income Tax Act (Canada).
Canadian Liabilities shall mean any obligation or liability of the Canadian
Borrower, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due,
under or in connection with (i) this Agreement, the Notes, or any other Loan
Document whether to the Administrative Agent, any of the Canadian Lenders or
their Affiliates provided for under such Loan Documents (including all interest,
fees, expenses, indemnities and other amounts that accrue after the commencement
of any case or proceeding by or against the Canadian Borrower or any of its
Subsidiaries under the Bankruptcy Code, whether or not allowed in such case or
proceeding), (ii) any Lender Provided Interest Rate Hedge to the Canadian
Borrower and (iii) any Other Lender Provided Financial Service Product provided
to the Canadian Borrower.

 

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Canadian Prime Rate means the higher of (a) the annual rate of interest
established from time to time by PNC Canada as its reference rate of interest
for loans made in CD$ to Canadian customers and designated as its “prime” rate,
which rate may not be the lowest or most favorable rate then being charged
commercial borrowers or others by PNC Canada, and (b) the BA Rate applicable to
Canadian dollar banker’s acceptances having a term of one month as displayed on
the “CDOR Page” or otherwise as determined pursuant to the definition of “BA
Rate” plus one percent (1%) per annum. Any change in the Canadian Prime Rate
shall take effect at the opening of business on the day such change is
announced.
Canadian Prime Rate Option shall mean the option of the Canadian Borrower to
have Loans bear interest at the rate and under the terms set forth in
Section 3.1.1(iii) [Revolving Credit Canadian Prime Rate Option].
Capital Expenditures shall mean the expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
Capital Lease shall mean any lease which may be capitalized in accordance with
GAAP.
Cash Collateralize shall mean to pledge and deposit with or deliver to
Administrative Agent, for the benefit of the Issuing Lender and the Lenders, as
collateral for the Letter of Credit Obligations, cash in an amount equal to 105%
of the sum of (i) the maximum amount then or at any time thereafter available to
be drawn or otherwise outstanding in respect of the then outstanding Letters of
Credit, plus (ii) the aggregate Reimbursement Obligations and Letter of Credit
Borrowings. Such cash collateral shall be maintained in blocked,
non-interest-bearing deposit accounts maintained by, and in the name of, the
Administrative Agent.
CD$ shall mean Canadian dollars.
Change in Law shall mean the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any Law, (b) any
change in any Law or in the administration, interpretation or application
thereof by any Official Body or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of Law) by any Official
Body.
CIP Regulations shall have the meaning specified in Section 9.11 [No Reliance on
Administrative Agent’s Customer Identification Program].
Closing Date shall mean the Business Day on which the first Loan shall be made,
which shall be June 30, 2010.
Code shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in effect.
Collateral shall mean (a) the collateral under the (i) Security Agreement,
(ii) the Collateral Assignment, and (iii) the Blocked Account Agreements, and
(b) any cash collateral referred to in the definition of “Cash Collateralize”;
provided however, Collateral shall not

 

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include the Excluded Property; provided further that any assets of the Canadian
Borrower shall secure only the Canadian Liabilities.
Collateral Access Agreement shall mean an agreement reasonably satisfactory in
form and substance to the Administrative Agent executed by (a) a bailee or other
Person in possession of Collateral, and (b) any landlord of real estate leased
by any Loan Party, pursuant to which such Person (i) acknowledges the
Administrative Agent’s Lien on the Collateral, (ii) releases or subordinates
such Person’s Liens in the Collateral held by such Person or located on such
real estate, (iii) provides the Administrative Agent with access to the
Collateral held by such bailee or other Person or located in or on such Real
Estate, (iv) as to any landlord, provides the Administrative Agent with a
reasonable time to sell and dispose of the Collateral from such Real Estate, and
(v) makes such other agreements with the Administrative Agent as the
Administrative Agent may reasonably require.
Collateral Assignment shall mean the Collateral Assignment in the form of
Exhibit 1.1(C), or, with respect to the Canadian Borrower, in such other form as
is reasonably acceptable to the Administrative Agent.
Collateral Documents shall have the meaning specified in Section 5.1.11 [Liens
in the Collateral].
Commercial Letter of Credit shall mean any letter of credit which is a
commercial letter of credit issued in respect of the purchase of goods or
services by one or more of the Loan Parties in the ordinary course of their
business.
Commitment shall mean as to any Lender the aggregate of its Revolving Credit
Commitment and Canadian Commitment and, in the case of PNC, its Swing Loan
Commitment, and Commitments shall mean the aggregate of the Revolving Credit
Commitments, Canadian Commitments and Swing Loan Commitment of all of the
Lenders, including, without limitation, any increased Commitments of any Lender
pursuant to Section 2.10 hereof.
Commitment Fee shall have the meaning specified in Section 2.3 [Commitment
Fees].
Compliance Certificate shall have the meaning specified in Section 7.3.3
[Certificate of the Borrowers].
Concentration Account shall have the meaning specified in Section 7.1.10 [Cash
Management].
Consolidated EBITDA for any period of determination shall mean (i) the sum of
net income, depreciation, amortization, other non-cash charges to net income,
interest expense and income tax expense minus (ii) non-cash credits to net
income, in each case of DSW and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.
Credit Card Notification shall have the meaning specified in Section 7.1.10
[Cash Management].

 

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Credit Card Receivables shall mean each Account together with all income,
payments and proceeds thereof, owed by a major credit or debit card issuer
(including, but not limited to, Visa, MasterCard and American Express and such
other issuers approved by the Administrative Agent) to a Loan Party resulting
from charges by a customer of a Loan Party on credit or debit cards issued by
such issuer in connection with the sale of goods by a Loan Party, or services
performed by a Loan Party, in each case in the ordinary course of its business.
Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the
Administrative Agent by dividing (x) the Published Rate by (y) a number equal to
1.00 minus the LIBOR Reserve Percentage on such day.
DDA shall mean each checking, savings or other demand deposit account maintained
by any of the Loan Parties. All funds in each DDA shall be conclusively presumed
to be Collateral and proceeds of Collateral and the Administrative Agent and the
Lenders shall have no duty to inquire as to the source of the amounts on deposit
in any DDA.
Defaulting Lender shall mean any Lender that (a) has failed to fund any portion
of the Loans, participations with respect to Letters of Credit, or
participations in Swing Line Loans required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder unless such
failure has been cured and all interest accruing as a result of such failure has
been fully paid in accordance with the terms hereof, (b) has otherwise failed to
pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute or unless such failure has been
cured and all interest accruing as a result of such failure has been fully paid
in accordance with the terms hereof, (c) has failed at any time to comply with
the provisions of Section 4.3 with respect to purchasing participations from the
other Lenders, whereby such Lender’s share of any payment received, whether by
setoff or otherwise, is in excess of its Ratable Share of such payments due and
payable to all of the Lenders, or (d) has since the date of this Agreement been
deemed insolvent by an Official Body or become the subject of a bankruptcy,
receivership, monitorship, conservatorship or insolvency proceeding, or has a
parent company that since the date of this Agreement been deemed insolvent by an
Official Body or become the subject of a bankruptcy, receivership, monitorship,
conservatorship or insolvency proceeding.
Deteriorating Lender shall mean any Defaulting Lender or any Lender (a) which
has defaulted in fulfilling its obligations under one or more other syndicated
credit facilities, or (b) as to which a Person that controls such Lender has
been deemed insolvent or become the subject of a bankruptcy, insolvency or
similar proceeding.
Determination Date shall mean the date upon which each of the following has
occurred:
(a) The Commitments have been terminated by the Required Lenders upon the
occurrence of an Event of Default (or are deemed terminated upon the occurrence
of an Event of Default of the type described in Section 8.1.11 [Relief
Proceedings]); and

 

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(b) The Obligations and/or the Canadian Liabilities have been declared to be due
and payable (or has become automatically due and payable) and have not been paid
in accordance with the terms of this Agreement.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the
United States of America.
Domestic Borrower shall mean all Borrowers other than the Canadian Borrower.
Domestic Lender shall mean all Lenders other than the Canadian Lender.
Domestic Subsidiary shall mean any Subsidiary that is organized under the laws
of the United States of America, any State thereof or the District of
Columbia.(excluding, for the avoidance of doubt, any Subsidiary organized under
the laws of Puerto Rico or any other territory).
Drawing Date shall have the meaning specified in Section 2.9.3 [Disbursements,
Reimbursement].
DSW shall mean DSW Inc., a corporation organized and existing under the laws of
the State of Ohio.
DSW Shoe shall mean DSW Shoe Warehouse, Inc., a corporation organized and
existing under the laws of the State of Missouri.
Environmental Laws shall mean all applicable federal, state, local, tribal,
territorial, provincial and foreign Laws (including common law), constitutions,
statutes, treaties, regulations, rules, ordinances and codes and any consent
decrees, settlement agreements, judgments, orders, directives, policies or
programs issued by or entered into with an Official Body pertaining or relating
to: (i) pollution or pollution control; (ii) protection of human health from
exposure to regulated substances; (iii) protection of the environment and/or
natural resources; (iv) employee safety in the workplace; (v) the presence, use,
management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, packaging, sale, transport, storage,
collection, distribution, disposal or release or threat of release of regulated
substances; (vi) the presence of contamination; (vii) the protection of
endangered or threatened species; and (viii) the protection of environmentally
sensitive areas.
Equity Interests shall have the meaning specified in Section 5.1.2 [Subsidiaries
and Owners; Investment Companies].
Equivalent Amount means, on any date, the rate at which CD$ may be exchanged
into Dollars, determined by reference to the Bank of Canada noon rate as
published on the Reuters Screen BOFC on the immediately preceding Business Day.
In the event that such rate does not appear on such Reuters page, “Equivalent
Amount” shall mean, on any date, the amount of Dollars into which an amount of
CD$ may be converted or the amount of CD$ into which an amount of Dollars may be
converted, in either case, at, in the case of the Canadian Borrower, PNC
Canada’s spot buying rate in Toronto as at approximately 12:00 noon (Toronto
time) on such date and, in the case of a Domestic Borrower, the Administrative
Agent’s spot buying rate

 

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in New York as at approximately 12:00 noon (New York City time) on the
immediately preceding Business Day.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.
ERISA Affiliate shall mean any trade or business (whether or not incorporated)
under common control with any Borrower and are treated as a single employer
under Section 414 of the Code.
ERISA Event shall mean (a) a reportable event (under Section 4043 of ERISA and
regulations thereunder) with respect to a Pension Plan; (b) a withdrawal by a
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by a Borrower or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate; or (g) with
respect to the Canadian Borrower, the existence with respect to any Plan of any
due but un-remitted contribution, whether or not waived.
ERISA Group shall mean the Borrowers and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with the Borrowers, are
treated as a single employer under Section 414 of the Internal Revenue Code.
Eurocurrency Liabilities shall have the meaning specified in the definition of
“LIBOR Reserve Percentage”.
Event of Default shall mean any of the events described in Section 8.1 [Events
of Default] and referred to therein as an “Event of Default.”
Excluded Property shall mean any of the following property of any Loan Party:
(i) all rights, priorities and privileges relating to any real property in which
any Loan Party has an interest and any leases or sub-leases of any real
property; (ii) all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign laws or
otherwise, including domain names, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses and trade secrets, and any right
to sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom;
(iii) depository accounts used solely for payroll, medical expenses and
payments, pension benefits, employee withholding or other benefits, taxes, and
stock options;

 

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(iv) interests in life insurance; (v) goods or other tangible property not
located in the US or Canada; and (vi) interests or investments in joint
ventures, the constituent documents or shareholder or member agreements of or
for which prohibit the granting of collateral.
Excluded Taxes shall mean, with respect to the Administrative Agent, any Lender,
the Issuing Lender or any other recipient of any payment to be made by or on
account of any obligation of any Loan Party hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Loan Party is located and (c) in the case
of a Foreign Lender, any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 4.9.5 [Status of Lenders], except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from any Loan
Party with respect to such withholding tax pursuant to Section 4.9.1 [Payment
Free of Taxes].
Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
Existing Letters of Credit shall mean each of the letters of credit issued or
deemed issued under the Existing Loan Agreement and described on
Schedule 1.1(E).
Existing Loan Agreement shall mean that certain Loan and Security Agreement
dated as of July 5, 2005, by and among the Borrowers, PNC (as successor by
merger to National City Business Credit, Inc.), as administrative agent and
collateral agent, PNC (as successor by merger to National City Bank), as Letter
of Credit Issuer, and the other parties thereto, as amended and in effect
immediately prior to the Closing Date.
Expiration Date shall mean, with respect to the Revolving Credit Commitments,
June 30, 2014.
Federal Funds Effective Rate for any day shall mean the rate per annum (based on
a year of 360 days and actual days elapsed and rounded upward to the nearest
1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
“Federal Funds Effective Rate” for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.

 

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Federal Funds Open Rate for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by the Administrative Agent (for purposes of this definition,
an “Alternate Source”) (or if such rate for such day does not appear on the
Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or
if there shall at any time, for any reason, no longer exist a Bloomberg Screen
BTMM (or any substitute screen) or any Alternate Source, a comparable
replacement rate determined by the Administrative Agent at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day. If and when
the Federal Funds Open Rate changes, the rate of interest with respect to any
advance to which the Federal Funds Open Rate applies will change automatically
without notice to the Borrowers, effective on the date of any such change.
Fee Letter shall mean the letter agreement, dated May 18, 2010, among the
Domestic Borrowers, the Administrative Agent and the Arranger.
Financial Statement Accounts shall mean, for the Domestic Borrowers and the
Canadian Borrower, respectively, “accounts receivable, net of bad debt
reserves”, as shown on such Loan Party’s consolidating balance sheet, calculated
in accordance with GAAP.
Financial Statement Inventory shall mean, for the Domestic Borrowers and the
Canadian Borrower, respectively, “inventories”, as shown on such Loan Party’s
consolidating balance sheet, calculated in accordance with GAAP.
Fixed Charge Coverage Ratio shall mean, for DSW and its Subsidiaries on a
consolidated basis, as of any date of determination, the ratio of
(a) Consolidated EBITDA, minus Capital Expenditures, minus income taxes paid in
cash, minus dividends and other distributions on account of, and repurchases of,
DSW’s capital stock, for the applicable period then ending taken as one
accounting period, to (b) Fixed Charges, for the applicable period then ending
taken as one accounting period.
Fixed Charges shall mean, without duplication, the sum of the following for the
Loan Parties on a consolidated basis: (a) Interest Expense, plus (b) scheduled
payments of principal on Indebtedness (including Capital Leases but excluding
the Revolving Credit Loans).
Foreign Lender shall mean any Lender that is organized under the Laws of a
jurisdiction other than that in which any Loan Party is resident for tax
purposes. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
Foreign Subsidiary shall mean any Subsidiary other than a Domestic Subsidiary.
GAAP shall mean generally accepted accounting principles as are in effect from
time to time, subject to the provisions of Section 1.3 [Accounting Principles],
and applied on a

 

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consistent basis both as to classification of items and amounts provided that,
with respect to Foreign Subsidiaries organized under the laws of Canada, “GAAP”
shall mean principles which are consistent with those promulgated or adopted by
the Canadian Institute of Chartered Accountants and its predecessors (or
successors) in effect and applicable to the accounting period in respect of
which reference to GAAP is being made.
General Security Agreement shall mean a General Security Agreement between the
Canadian Borrower and its Subsidiaries and the Administrative Agent, in form and
substance reasonably satisfactory to the Administrative Agent.
Guarantor shall mean, (a) with respect to the Obligations of the Domestic
Borrowers, each of the parties to this Agreement which is designated as a
“Guarantor” on the signature page hereof and each other Person which joins this
Agreement as a Guarantor after the date hereof, and (b) with respect to the
Canadian Liabilities, each of the Domestic Borrowers and their Subsidiaries,
each Subsidiary of the Canadian Borrower and each other Person which joins this
Agreement as a Guarantor after the date hereof.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the Loan
Documents in the form of Exhibit 1.1(G)(1) or, with respect to the Canadian
Liabilities, in such other form as is reasonably acceptable to the
Administrative Agent.
Guaranty of any Person shall mean any obligation of such Person guaranteeing or
in effect guaranteeing any liability or obligation of any other Person in any
manner, whether directly or indirectly, including any agreement to indemnify or
hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except (i) endorsement
of negotiable or other instruments for deposit or collection in the ordinary
course of business, (ii) warranties made in the ordinary course of business,
(iii) liabilities to any lessor by a Loan Party, (iv) indemnities in contracts
of Indebtedness permitted hereunder, and (v) indemnities in respect of statutory
obligations, bonding, brokerage, financial contracts, acquisitions, divestures
and other customary business contracts.
Guaranty Agreement shall mean the Continuing Agreement of Guaranty and
Suretyship in substantially the form of Exhibit 1.1(G)(2) (or, with respect to
the Canadian Liabilities, in such other form as is reasonably acceptable to the
Administrative Agent) executed and delivered by each of the Guarantors.
ICC shall have the meaning specified in Section 10.11.1 [Governing Law].
Increasing Lender shall have the meaning specified in Section 2.10.1 [Increasing
Lenders and New Lenders].
Indebtedness shall mean, as to any Person at any time, any and all indebtedness,
obligations or liabilities (whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, or joint or several)
of such Person for or in respect of: (i) borrowed money, (ii) amounts raised
under or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit agreement, (iv) obligations under any currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, (v) any other

 

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transaction (including forward sale or purchase agreements, Capital Leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses and
liabilities with respect to operating leases incurred in the ordinary course of
business which are not represented by a promissory note or other evidence of
indebtedness and which are not more than sixty (60) days past due), or (vi) any
Guaranty of Indebtedness for borrowed money.
Indemnified Taxes shall mean Taxes other than Excluded Taxes.
Indemnitee shall have the meaning specified in Section 10.3.2 [Indemnification
by the Loan Parties].
Information shall mean all information received from the Loan Parties or any of
their Subsidiaries pursuant to the Loan Documents relating to the Loan Parties
or any of such Subsidiaries or any of their respective businesses, other than
any such information that is available to the Administrative Agent, any Lender
or the Issuing Lender on a non-confidential basis prior to disclosure by the
Loan Parties or any of their Subsidiaries.
Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action
or proceeding with respect to such Person (i) under the Bankruptcy Code,
(ii) before any court or any other Official Body under any bankruptcy,
insolvency, reorganization or other similar Law now or hereafter in effect, or
(iii) for the appointment of a receiver, monitor, interim monitor, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official) of
any Loan Party or otherwise relating to the liquidation, dissolution, winding-up
or relief of such Person, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of such Person’s creditors generally or any substantial
portion of its creditors; undertaken under any Law.
Intercompany Subordination Agreement shall mean a Subordination Agreement among
the Loan Parties and each of their Subsidiaries which is not a Loan Party, in
form and substance reasonably acceptable to the Administrative Agent.
Interest Expense shall mean total interest expense generated during the period
in question (including attributable to conditional sales contracts, Capital
Leases and other title retention agreements in accordance with GAAP) of DSW and
its Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness including accrued interest and interest paid in kind and
capitalized interest, fees, commissions, discounts and other fees owed with
respect to letters of credit and bankers’ acceptance financing, and net costs
under Interest Rate Hedges.
Interest Period shall mean the period of time selected by the Borrowers in
connection with (and to apply to) any election permitted hereunder by the
Borrowers to have Revolving Credit Loans bear interest under the LIBOR Rate
Option or, with respect to the Canadian Borrower, the BA Rate Option. Subject to
the last sentence of this definition, such period shall be one, two, three or
six Months. Such Interest Period shall commence on the effective date of such
Interest Rate Option, which shall be (i) the Borrowing Date if the Borrowers are
requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR

 

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Rate Option or BA Rate Option, as applicable, if the Borrowers are renewing or
converting to the LIBOR Rate Option or BA Rate Option applicable to outstanding
Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which
would otherwise end on a date which is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (B) the Borrowers shall not select, convert to or
renew an Interest Period for any portion of the Loans that would end after the
Expiration Date.
Interest Rate Hedge shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered
into by DSW or any of its Subsidiaries in order to provide protection to, or
minimize the impact upon, the Borrowers, the Guarantors and/or their
Subsidiaries of increasing floating rates of interest applicable to
Indebtedness.
Interest Rate Option shall mean any LIBOR Rate Option, Base Rate Option, BA Rate
Option or Canadian Prime Rate Option.
Inventory shall mean “inventory” as defined in the UCC and, as regards the
Canadian Borrower, includes all “inventory” as defined in the PPSA, and also
shall mean any and all goods, merchandise and other personal property,
including, without limitation, goods in transit, wheresoever located and whether
now owned or hereafter acquired by any Loan Party which are or may at any time
be held as raw materials, finished goods, work-in-process, supplies or materials
used or consumed in the such Loan Party’s business or held for sale or lease,
including, without limitation, (a) all such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by such Loan Party, and (b) all packing,
shipping and advertising materials relating to all or any such property. All
Inventory, whether Qualified Inventory or not, shall be subject to the
Administrative Agent’s and the Lenders’ Prior Security Interest.
IRS shall mean the Internal Revenue Service.
ISP98 shall have the meaning specified in Section 10.12.1 [Governing Law].
Issuing Lender shall mean PNC, in its individual capacity as issuer of Letters
of Credit hereunder, and any other Lender that DSW, Administrative Agent (each
of whose consent shall not be unreasonably withheld or delayed) and such other
Lender may agree may from time to time to issue Letters of Credit hereunder.
Joint Venture shall mean a corporation, partnership, limited liability company
or other entity in which any Person other than the Loan Parties and their
Subsidiaries holds, directly or indirectly, an equity interest.
Judgment Conversion Date shall have the meaning set forth in Section 10.17
[Judgment Currency].
Judgment Currency shall have the meaning set forth in Section 10.17 [Judgment
Currency].

 

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Law shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree, bond, judgment, authorization or approval, lien or award by or
settlement agreement with any Official Body.
Lender Provided Interest Rate Hedge shall mean an Interest Rate Hedge which is
provided by any Lender or its Affiliate and with respect to which the
Administrative Agent confirms: (i) is documented in a standard International
Swap Dealer Association Agreement, and (ii) provides for the method of
calculating the reimbursable amount of the provider’s credit exposure in a
reasonable and customary manner.
Lenders shall mean the financial institutions named on Schedule 1.1(B) and their
respective successors and assigns as permitted hereunder, each of which is
referred to herein as a Lender. For the purpose of any Loan Document which
provides for the granting of a security interest or other Lien to the Lenders or
to the Administrative Agent for the benefit of the Lenders as security for the
Obligations or Canadian Liabilities, respectively, “Lenders” shall include any
Affiliate of a Lender to which such Obligation is owed.
Letter of Credit shall mean each Existing Letter of Credit and shall also have
the meaning specified in Section 2.9.1 [Issuance of Letters of Credit].
Letter of Credit Borrowing shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
Letter of Credit Fee shall have the meaning specified in Section 2.9.2 [Letter
of Credit Fees].
Letter of Credit Obligation shall mean, as of any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit
on such date (if any Letter of Credit shall increase in amount automatically in
the future, such aggregate amount available to be drawn shall currently give
effect to any such future increase) plus the aggregate Reimbursement Obligations
and Letter of Credit Borrowings on such date.
Letter of Credit Sublimit shall have the meaning specified in Section 2.9.1
[Issuance of Letters of Credit].
LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing
Tranche to which the LIBOR Rate Option applies for any Interest Period, the
interest rate per annum determined by the Administrative Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%
per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which U.S. Dollar
deposits are offered by leading banks in the London interbank deposit market),
or the rate which is quoted by another source selected by the Administrative
Agent which has been approved by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying rates at which U.S.
Dollar deposits are offered by leading banks in the London interbank deposit
market (for purposes of this definition, an “Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for

 

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an amount comparable to such Borrowing Tranche and having a borrowing date and a
maturity comparable to such Interest Period (or if there shall at any time, for
any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or
any Alternate Source, a comparable replacement rate determined by the
Administrative Agent at such time (which determination shall be conclusive
absent manifest error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve
Percentage. LIBOR may also be expressed by the following formula:

         
 
      London interbank offered rates quoted by Bloomberg
LIBOR Rate
  =   or appropriate successor as shown on Bloomberg Page BBAM1
 
             1.00 — LIBOR Reserve Percentage

The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR
Rate Option applies that is outstanding on the effective date of any change in
the LIBOR Reserve Percentage as of such effective date. The Administrative Agent
shall give prompt notice to the Borrowers of the LIBOR Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.
LIBOR Rate Option shall mean the option of the Domestic Borrowers to have Loans
bear interest at the rate and under the terms set forth in Section 3.1.1(ii)
[Revolving Credit LIBOR Rate Option].
LIBOR Reserve Percentage shall mean as of any day the maximum percentage in
effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).
Lien shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
and, with respect to the Canadian Borrower, also includes any prior claim or
deemed trust in, on or of such asset, whether voluntarily or involuntarily
given, including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and any filed financing statement or other notice of any of the
foregoing (whether or not a lien or other encumbrance is created or exists at
the time of the filing).
Liquidation Percentage shall mean, for any Lender, a fraction, the numerator of
which is such Lender’s Revolving Credit Commitment (including its Canadian
Commitment) on the Determination Date and the denominator of which is the total
Revolving Credit Commitments (including Canadian Commitments) of all Lenders on
the Determination Date.
Loan Documents shall mean this Agreement, the Fee Letter, the Collateral
Assignment, the Guaranty Agreement, the Intercompany Subordination Agreement,
the Notes, the Blocked Account Agreements, the Security Agreement, the General
Security Agreement, the Simplified Borrowing Base Certificates, the Borrowing
Base Certificates, the Compliance Certificates and any other instruments,
certificates or documents delivered in connection herewith or therewith.

 

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Loan Parties shall mean the Borrowers and the Guarantors.
Loan Party Equity Interests shall have the meaning specified in Section 5.1.2
[Subsidiaries and Owners; Investment Companies].
Loan Request shall have the meaning specified in Section 2.5 [Revolving Credit
Loan Requests; Swing Loan Requests].
Loans shall mean collectively and Loan shall mean separately all Revolving
Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
Material Adverse Change shall mean any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (b) is or could reasonably be expected to be material and adverse
to the business, properties, assets, financial condition, or results of
operations of the Loan Parties taken as a whole, (c) impairs materially or could
reasonably be expected to impair materially the ability of the Loan Parties
taken as a whole to duly and punctually pay or perform any of the Obligations,
or (d) impairs materially or could reasonably be expected to impair materially
the ability of the Administrative Agent or any of the Lenders, to the extent
permitted, to enforce their legal remedies pursuant to this Agreement or any
other Loan Document.
Minimum Cash Requirement shall mean, as of any date of determination, cash and
cash equivalents, and other short-term investments (as determined in accordance
with GAAP), of not less than $125,000,000.
Month, with respect to an Interest Period under the LIBOR Rate Option or BA Rate
Option, shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any LIBOR
Rate Interest Period or BA Rate Interest Period begins on a day of a calendar
month for which there is no numerically corresponding day in the month in which
such Interest Period is to end, the final month of such Interest Period shall be
deemed to end on the last Business Day of such final month.
Multiemployer Plan shall mean any employee benefit plan which is a
“multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to
which any Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
Net Proceeds shall mean:
(a) with respect to any sale of assets by any Loan Party or any of its
Subsidiaries, or any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of (and
payments in lieu thereof), any property or asset of any Loan Party or any of its
Subsidiaries, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such transaction (including any cash or cash
equivalents received by way of deferred payment pursuant to, or by monetization
of, a note receivable or

 

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otherwise, but only as and when so received) over (ii) the sum of (A) the
principal amount of any Indebtedness that is secured by the applicable asset by
a Lien permitted hereunder which is senior to the Administrative Agent’s Lien on
such asset and that is required to be repaid (or to establish an escrow for the
future repayment thereof) in connection with such transaction (other than
Indebtedness under the Loan Documents), plus (B) taxes paid or payable in
connection therewith, provided that after the occurrence of a Trigger Event
Election or an Event of Default, such taxes shall not reduce the amounts
constituting Net Proceeds, plus (C) the reasonable and customary out-of-pocket
expenses incurred by such Loan Party or such Subsidiary in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan
Party to third parties (other than Affiliates)); and
(b) with respect to the incurrence or issuance of any Indebtedness by any Loan
Party or any of its Subsidiaries, the excess of (i) the sum of the cash and cash
equivalents received in connection with such transaction over (ii) the
underwriting discounts and commissions, and other reasonable and customary
out-of-pocket expenses, incurred by such Loan Party or such Subsidiary (other
than to an Affiliate) in connection therewith.
New Lender shall have the meaning specified in Section 2.10.1 [Increasing
Lenders and New Lenders].
NOLV shall have the meaning specified in the definition of “Borrowing Base” or
“Canadian Borrowing Base”, as applicable.
Non-Consenting Lender shall have the meaning specified in Section 10.1
[Modifications, Amendments or Waivers].
Non-Extension Notice Date shall have the meaning specified in Section 2.9.1
[Issuance of Letters of Credit].
Notes shall mean, collectively, the promissory notes in the form of Exhibit
1.1(N)(1) (or, with respect to the Canadian Borrower, in such other form as is
reasonably acceptable to the Administrative Agent) evidencing the Revolving
Credit Loans, and in the form of Exhibit 1.1(N)(2) evidencing the Swing Loan.
Obligation shall mean any obligation or liability of any of the Loan Parties,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under or in
connection with (i) this Agreement, the Notes, the Letters of Credit, the Fee
Letter or any other Loan Document whether to the Administrative Agent, any of
the Lenders or their Affiliates provided for under such Loan Documents
(including all interest, fees, expenses, indemnities and other amounts that
accrue after the commencement of any case or proceeding by or against any
Domestic Borrower or any of its Subsidiaries under the Bankruptcy Code, whether
or not allowed in such case or proceeding), (ii) any Lender Provided Interest
Rate Hedge, and (iii) any Other Lender Provided Financial Service Product.
Without limiting the foregoing, for purposes of clarity, whenever used herein
the term “Obligations” shall include all Canadian Liabilities.

 

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Official Body shall mean the government of the United States of America, Canada
or any other nation, or of any political subdivision thereof, whether state,
local, territorial or provincial, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).
Overadvance shall mean the making of a Loan or the issuing of a Letter of Credit
to the extent that, immediately after such event, Revolving Credit Availability
is less than zero, or, with respect to the Canadian Borrower, Canadian
Availability is less than zero.
Other Lender Provided Financial Service Product shall mean agreements or other
arrangements under which any Lender or Affiliate of a Lender provides any of the
following products or services to any of the Loan Parties: (i) (a) credit cards,
(b) credit card processing services, (c) debit cards, (d) purchase cards,
(e) ACH transactions, (f) cash management, including controlled disbursement,
accounts or services, (g) foreign currency exchange, or (h) such other similar
agreements or arrangements as, with respect to this clause (h), are mutually
agreed by the Administrative Agent and DSW, and (ii) following the occurrence of
a Trigger Event Election or an Event of Default, wire transfer services.
Other Taxes shall mean all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
Order shall have the meaning specified in Section 2.9.9 [Liability for Acts and
Omissions].
Participant has the meaning specified in Section 10.8.4 [Participations].
Participation Advance shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
Payment Date shall mean the first day of each calendar quarter after the date
hereof and on the Expiration Date or upon acceleration of the Notes.
Payment In Full shall mean the indefeasible payment in full in cash of the Loans
and other Obligations hereunder, termination of the Commitments and expiration
or termination of all Letters of Credit (or with respect to any undrawn Letters
of Credit, the full Cash Collateralization thereof or the supporting thereof by
another letter of credit from an issuing bank and on terms reasonably
satisfactory to the Issuing Lender and the Administrative Agent).
PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.
Pension Plan shall mean any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained any Borrower or any
ERISA Affiliate or to which any

 

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Borrower or any ERISA Affiliate contributes or has an obligation to contribute,
or in the case of a multiple employer or other plan described in Section 4064(a)
of ERISA, has made contributions at any times during the immediately preceding
five plan years.
Permitted Acquisition shall mean (a) the Acquisition described in a certain
confidential side letter of even date herewith, or (b) an Acquisition in which
all of the following conditions are satisfied:
(i) No Event of Default or Potential Default then exists or would arise from the
consummation of such Acquisition;
(ii) 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 shall violate applicable Law;
(iii) The Borrowers shall have furnished the Administrative Agent with ten
(10) Business Days’ prior written notice of such intended Acquisition and shall
have furnished the Administrative Agent with a current draft of the Acquisition
Documents (and final copies thereof as and when executed), a summary of any due
diligence undertaken by the 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 Administrative Agent may reasonably
require, all of which shall be reasonably satisfactory to the Administrative
Agent;
(iv) Either (i) the legal structure of the Acquisition shall be reasonably
acceptable to the Administrative Agent in its discretion, or (ii) the Loan
Parties shall have provided the Administrative Agent with a favorable solvency
opinion from an unaffiliated third party valuation firm reasonably satisfactory
to the Administrative Agent;
(v) After giving effect to the Acquisition, if the Acquisition is an Acquisition
of equity interests, a Loan Party shall acquire and own, directly or indirectly,
a majority of the equity interests in the Person being acquired and shall
control a majority of any voting interests or shall otherwise control the
governance of the Person being acquired;
(vi) Any assets acquired shall be utilized in, and if the Acquisition involves a
merger, consolidation, amalgamation or stock acquisition, the Person which is
the subject of such Acquisition shall be engaged in, a business otherwise
permitted to be engaged in by a Loan Party under this Agreement;
(vii) If the Person which is the subject of such Acquisition will be maintained
as a Subsidiary of a Loan Party, or if the assets acquired in an Acquisition
will be transferred to a Subsidiary which is not then a Loan Party, such
Subsidiary shall have been joined as a Borrower

 

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or as a Guarantor hereunder, as the Administrative Agent shall determine, and
the Administrative Agent shall have received a first priority security and/or
mortgage interest in such Subsidiary’s equity interests and property of such
Subsidiary and of the same nature as constitutes Collateral under the Collateral
Documents; and
(viii) unless the Domestic Borrowers shall have on hand the Minimum Cash
Requirement immediately prior to and after giving effect to such Acquisition and
no Trigger Event Election shall have occurred, (A) the total consideration paid
for all such Acquisitions (whether in cash, tangible property, notes or other
property) shall not exceed in the aggregate the sum of $25,000,000 in any fiscal
year, and (B) Revolving Credit Availability immediately prior to, and after
giving effect to, such Acquisition is greater than $50,000,000, or such
Acquisition shall have been approved in writing by the Required Lenders.
Permitted Investments shall mean any Investment that is permitted by DSW’s
investment policy as in effect on the Closing Date or as thereafter modified
with the consent of the Required Lenders (such consent not to be unreasonably
withheld or delayed); provided that in no event shall any auction rate
securities constitute a Permitted Investment hereunder; provided further that
(a) Permitted Investments consisting of (i) corporate bonds may not exceed
twenty-five percent (25%) of all Permitted Investments, (ii) preferred stock
shall not exceed $10,000,000 in the aggregate outstanding at any time, and
(iii) corporate owned life insurance policies shall not exceed $5,000,000 in the
aggregate outstanding at any time.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar charges, incurred in the ordinary
course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business to secure
payment of workmen’s compensation, or to participate in any fund in connection
with workmen’s compensation, unemployment insurance, old-age pensions or other
social security programs;
(iii) Statutory Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable, Liens of customs brokers, freight
forwarders and common carriers incurred in the ordinary course of business that
are not overdue and which attach solely to the property in their possession, and
Liens of landlords securing obligations to pay lease payments that are not yet
due and payable or in default;
(iv) Good-faith pledges or deposits made in the ordinary course of business to
secure performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, not in excess of the aggregate amount due thereunder,
or to secure statutory obligations, or surety, appeal, indemnity, performance or
other similar bonds required in the ordinary course of business;
(v) Encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the
use of such property or the value thereof, and none of which is violated in any
material respect by existing or proposed structures or land use;

 

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(vi) Liens, security interests and mortgages in favor of the Administrative
Agent for the benefit of the Lenders and their Affiliates securing the
Obligations and/or the Canadian Liabilities (including Lender Provided Interest
Rate Hedges and Other Lender Provided Financial Services Obligations);
(vii) Liens on property leased by any Loan Party or Subsidiary of a Loan Party
under Capital Leases and operating leases permitted in Section 7.2.14 [Capital
Expenditures] securing obligations of such Loan Party or Subsidiary to the
lessor under such leases;
(viii) Any Lien existing on the date of this Agreement and described on Schedule
1.1(P), provided that the principal amount secured thereby is not hereafter
increased, and no additional assets become subject to such Lien;
(ix) Purchase Money Security Interests and Capital Leases; provided that the
aggregate amount of loans and deferred payments secured by such Purchase Money
Security Interests and Capital Leases shall not exceed $20,000,000 at any time
outstanding (excluding for the purpose of this computation any loans or deferred
payments secured by Liens described on Schedule 1.1(P));
(x) Liens on unearned insurance premiums in connection with insurance premium
financing in the ordinary course of business;
(xi) Liens in favor of landlords on leasehold improvements financed by
allowances or advances provided by such landlords pursuant to lease
arrangements;
(xii) Liens in favor of consignors on (A) inventory consigned by such consignors
to a Loan Party, and (B) proceeds of such inventory; and
(xiii) The following, (A) if the validity or amount thereof is being contested
in good faith by appropriate and lawful proceedings diligently conducted so long
as levy and execution thereon have been stayed and continue to be stayed or
(B) if a final judgment is entered and such judgment is discharged within
forty-five (45) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of any Loan Party
to perform the Obligations (or with respect to the Canadian Borrower, the
Canadian Liabilities) hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges due and payable and
subject to interest or penalty; provided that the applicable Loan Party
maintains such reserves or other appropriate provisions as shall be required by
GAAP and pays all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to, real or
personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen, carriers, or other
statutory nonconsensual Liens; or

 

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(4) Liens resulting from final judgments or orders described in Section 8.1.6
[Final Judgments or Orders].
Permitted Overadvance shall mean an Overadvance made by the Administrative Agent
in its discretion following the occurrence of a Trigger Event Election or an
Event of Default, which:
(a) Is made to maintain, protect or preserve the Collateral and/or the
Administrative Agent’s, the Lenders’ and the Issuing Lender’s rights under the
Loan Documents, including to preserve the Loan Parties’ business assets and
infrastructure (such as the payment of insurance premiums, taxes, necessary
suppliers, rent and payroll);
(b) Is made to fund an orderly liquidation or wind-down of the Loan Parties’
assets or business in a bankruptcy or another insolvency proceeding (whether or
not occurring prior to or after the commencement of such a bankruptcy or
insolvency proceeding);
(c) Is made to enhance the likelihood of, or to maximize the amount of,
repayment of any Obligation;
(d) Is made to pay any other amount chargeable to any Loan Party hereunder; or
(e) Is otherwise made for the benefit of the Administrative Agent, the Lenders
and the Issuing Lender, collectively; and
(f) Together with all other Permitted Overadvances then outstanding, shall not
(i) exceed five percent (5%) of the Borrowing Base or the Canadian Borrowing
Base, as applicable, at any time or (ii) unless a Liquidation is occurring,
remain outstanding for more than forty-five (45) consecutive Business Days,
unless in each case, the Required Lenders otherwise agree,
provided however, that the foregoing shall not (i) modify or abrogate any of the
provisions of Section 2.9.3 regarding the Lenders’ obligations with respect to
Letters of Credit or of the provisions of Section 2.6.5 regarding the Lenders’
obligations with respect to Swing Loans, or (ii) result in any claim or
liability against the Administrative Agent (regardless of the amount of any
Overadvance) for Unintentional Overadvances, and such Unintentional Overadvances
shall not reduce the amount of Permitted Overadvances allowed hereunder, and
further provided that in no event shall the Administrative Agent make an
Overadvance, if after giving effect thereto, (i) the Revolving Facility Usage
would exceed the Revolving Credit Commitments (as in effect prior to any
termination of the Commitments pursuant to Section 2.11 [Reduction of Revolving
Credit Commitment]), or (ii) with respect to the Canadian Borrower, the
Revolving Facility Usage of the Canadian Borrower would exceed the Canadian
Commitments (in each case as in effect prior to any termination of the
Commitments pursuant to Section 2.11 [Reduction of Revolving Credit
Commitment]).
Permitted Short Term Loans shall have the meaning specified in Section 2.4.2
[Permitted Short Term Loans].

 

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Person shall mean any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated organization,
joint venture, government or political subdivision or agency thereof, or any
other entity.
Plan shall mean at any time (a) an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards under Section 412 of
the Code and either (i) is maintained by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at any time within the
preceding five years been maintained by any entity which was at such time a
member of the ERISA Group for employees of any entity which was at such time a
member of the ERISA Group or (b) in respect of the Canadian Borrower, any
pension benefit or retirement savings plan maintained by the Canadian Borrower
and its Subsidiaries for its employees or its former employees to which the
Canadian Borrower or any of its Subsidiaries contribute or are required to
contribute with respect to which the Canadian Borrower or any of its
Subsidiaries has incurred or may incur liability, including contingent
liability.
PNC shall mean PNC Bank, National Association, its successors and assigns.
PNC Canada shall mean PNC Bank Canada Branch, its successors and assigns.
Potential Default shall mean any event or condition which with notice or passage
of time, or both, would constitute an Event of Default.
PPSA shall mean the Personal Property Security Act of Ontario (or any successor
statute) or similar legislation of any other Canadian jurisdiction, including,
without limitation, the Civil Code of Quebec, the laws of which are required by
such legislation to be applied in connection with the issue, perfection,
enforcement, opposability, priority, validity or effect of security interests.
Prime Rate shall mean the interest rate per annum announced from time to time by
the Administrative Agent at its Principal Office as its then prime rate, which
rate may not be the lowest or most favorable rate then being charged commercial
borrowers or others by the Administrative Agent. Any change in the Prime Rate
shall take effect at the opening of business on the day such change is
announced.
Principal Office shall mean the main banking office of the Administrative Agent
in Pittsburgh, Pennsylvania.
Prior Security Interest shall mean a valid and enforceable perfected
first-priority security interest under the UCC or PPSA, as applicable, in the
Collateral which is subject only to statutory Liens for taxes not yet due and
payable, Purchase Money Security Interests or other Permitted Liens having
priority by operation of Law.
Published Rate shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the rate at
which U.S. Dollar deposits are offered by leading banks in the London

 

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interbank deposit market for a one month period as published in another
publication selected by the Administrative Agent).
Purchase Money Security Interest shall mean Liens upon tangible personal
property securing loans to any Loan Party or Subsidiary of a Loan Party or
deferred payments by such Loan Party or Subsidiary for the purchase of such
tangible personal property.
Qualified Credit Card Receivables shall have the meaning specified in Schedule
1.1(c).
Qualified Inventory shall have the meaning specified in Schedule 1.1(d).
Ratable Share shall mean (a) with respect to the Canadian Lenders, the
proportion that a Lender’s Canadian Commitment bears to the Canadian Commitments
of all of the Canadian Lenders, provided that if the Canadian Commitments have
terminated or expired, the Ratable Shares shall be determined based upon the
Canadian Commitments most recently in effect, giving effect to any assignments,
(b) with respect to the Lenders (other than the Canadian Lenders), the
proportion that a Lender’s Commitment (excluding its Canadian Commitment and
Swing Loan Commitment) bears to the Commitments (excluding its Canadian
Commitment and Swing Loan Commitment) of all of the Lenders (other than the
Canadian Lenders), provided further that if the Commitments have terminated or
expired, the Ratable Shares shall be determined based upon the Commitments
(excluding the Canadian Commitment and Swing Loan Commitment) most recently in
effect, giving effect to any assignments, and (c) with respect to all Lenders,
the proportion that a Lender’s Commitment (excluding the Swing Loan Commitment)
bears to the Commitments (excluding the Swing Loan Commitment) of all of the
Lenders; and further provided that if the Commitments have terminated or
expired, the Ratable Shares shall be determined based upon the Commitments
(excluding the Swing Loan Commitment) most recently in effect, giving effect to
any assignments.
Reimbursement Obligation shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
Related Parties shall mean, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
Relief Proceeding shall mean any proceeding seeking a decree or order for relief
in respect of any Loan Party or Subsidiary of a Loan Party in a voluntary or
involuntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect (including, without limitation, the
Bankruptcy Code), or for the appointment of a receiver, monitor, interim
monitor, liquidator, assignee, custodian, trustee, sequestrator, conservator (or
similar official) of any Loan Party or Subsidiary of a Loan Party for any
substantial part of its property, or for the winding-up or liquidation of its
affairs, or an assignment for the benefit of its creditors.
Required Lenders shall mean

 

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(A) If there exists fewer than three (3) Lenders, all Lenders (other than any
Defaulting Lender), and
(B) If there exist three (3) or more Lenders, Lenders (other than any Defaulting
Lender or any Deteriorating Lender) having more than fifty percent (50%) of the
aggregate amount of the Revolving Credit Commitments of the Lenders (excluding
any Defaulting Lender) or, after the termination of the Revolving Credit
Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter
of Credit Obligations of the Lenders (excluding any Defaulting Lender or any
Deteriorating Lender).
Required Share shall have the meaning specified in Section 4.11 [Settlement Date
Procedures].
Revolving Credit Availability shall mean, as of any date of determination
thereof by the Administrative Agent with respect to the Domestic Borrowers, the
result, if a positive number, of (a) the lesser of (i) the Revolving Credit
Commitments, or (ii) (A) until the occurrence of a Borrowing Base Trigger Event,
the Simplified Borrowing Base, or (B) thereafter, the Borrowing Base, minus
(b) the Revolving Facility Usage, minus (c) the aggregate amount of all then
outstanding and unpaid trade payables and other obligations of Domestic
Borrowers which are more than sixty (60) days past due as of such time (it being
understood that to the extent that the time for payment of any such trade
payables and other obligations has been extended in writing by the applicable
creditor, such trade payables and other obligations shall not be deemed to be
past due until the extended date for payment has passed). In calculating
Revolving Credit Availability at any time and for any purpose under this
Agreement, the Borrowers shall certify to the Administrative Agent that all
accounts payable and taxes are being paid on a timely basis.
Revolving Credit Commitment shall mean, as to any Lender at any time, the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled
“Amount of Commitment for Revolving Credit Loans,” as such Commitment is
thereafter assigned or modified and Revolving Credit Commitments shall mean the
aggregate Revolving Credit Commitments of all of the Lenders.
Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall
mean separately all Revolving Credit Loans or any Revolving Credit Loan made by
the Lenders or one of the Lenders to the Borrowers pursuant to Section 2.1
[Revolving Credit Commitments] or Section 2.9.3 [Disbursements, Reimbursement].
Revolving Facility Usage shall mean at any time the sum of the outstanding
Revolving Credit Loans, the outstanding Swing Loans, and the Letter of Credit
Obligations.
Security Agreement shall mean the Security Agreement in substantially the form
of Exhibit 1.1(S) executed and delivered by each of the Loan Parties to the
Administrative Agent for the benefit of the Lenders.
Settlement Date shall mean each Business Day on which the Administrative Agent
elects to effect settlement pursuant Section 4.11 [Settlement Date Procedures].

 

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Simplified Borrowing Base shall mean at any time the sum of (i) sixty percent
(60%) of the Financial Statement Accounts, plus (ii) fifty percent (50%) of the
Financial Statement Inventory, in each case determined in accordance with GAAP.
Simplified Borrowing Base Certificate shall have the meaning specified in
Section 7.3.4(i) [Simplified Borrowing Base Certificates; Borrowing Base
Certificates].
Solvent shall mean, with respect to any Person on any date of determination,
taking into account such right of reimbursement, contribution or similar right
available to such Person from other Persons, that on such date (i) the fair
value of the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent 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 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 after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability. 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 business in which such properties are used or useful is in
process or is demonstrably imminent.
Standby Letter of Credit shall mean a Letter of Credit issued to support
obligations of one or more of the Loan Parties, contingent or otherwise, which
finance the working capital and business needs of the Loan Parties incurred in
the ordinary course of business.
Statements shall have the meaning specified in Section 5.1.6(i) [Historical
Statements].
Subordinated Indebtedness shall mean Indebtedness which is expressly
subordinated in right of payment to prior Payment In Full and which is in form
and on terms approved in writing by the Administrative Agent.
Subsidiary of any Person at any time shall mean any corporation, trust,
partnership, any limited liability company or other business entity (i) of which
more than fifty percent (50%) of the outstanding voting securities or other
interests normally entitled to vote for the election of one or more directors or
trustees (regardless of any contingency which does or may suspend or dilute the
voting rights) is at such time owned directly or indirectly by such Person or
one or more of such Person’s Subsidiaries, or (ii) which is controlled or
capable of being controlled by such Person or one or more of such Person’s
Subsidiaries.

 

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Subsidiary Equity Interests shall have the meaning specified in Section 5.1.2
[Subsidiaries and Owners; Investment Companies].
Substantial Liquidation shall mean either (a) the liquidation of substantially
all of the Collateral, or (b) the sale or other disposition of substantially all
of the Collateral by the Loan Parties.
Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the
Domestic Borrowers pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in
an aggregate principal amount up to $10,000,000.
Swing Loan Note shall mean the Swing Loan Note of the Domestic Borrowers in the
form of Exhibit 1.1(N)(2) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
Swing Loan Request shall mean a request for Swing Loans made in accordance with
Section 2.5.2 [Swing Loan Requests] hereof.
Swing Loans shall mean collectively and Swing Loan shall mean separately all
Swing Loans or any Swing Loan made by PNC to the Domestic Borrowers pursuant to
Section 2.1.2 [Swing Loan Commitment] hereof.
Taryn Rose shall mean the investment by DSW in JLPDS-TRI LLC and its
Subsidiaries.
Taxes shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Official Body, including any interest, additions to tax or penalties applicable
thereto.
Trigger Event shall mean any of the following events: (i) Revolving Credit
Availability is less than $50,000,000 (including Letter of Credit Outstandings),
and (ii) the making of a Loan (other than a Permitted Short Term Loan)
hereunder. A Trigger Event shall be deemed to be continuing at all times
following the occurrence of a Trigger Event Election.
Trigger Event Election shall mean, with respect to any Trigger Event, the
Required Lenders’ election to cause the Borrowers to be subject to the Borrowing
Base rather than the Simplified Borrowing Base in accordance with Section 2.4.1
[Simplified Borrowing Base and Borrowing Base].
Trigger Event Election Period shall have the meaning specified in Section 2.4.1
[Simplified Borrowing Base and Borrowing Base].
UCC shall mean the Uniform Commercial Code as in effect from time to time in the
State of Ohio; provided, however, that if a term is defined in Article 9 of the
Uniform Commercial Code differently than in another Article thereof, the term
shall have the meaning set forth in Article 9; provided further that, if by
reason of mandatory provisions of law, perfection, or the effect of perfection
or non-perfection, of a security interest in any Collateral or the availability
of any remedy hereunder is governed by the Uniform Commercial Code as in effect

 

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in a jurisdiction other than the State of Ohio, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy, as the case may be.
UCP shall have the meaning specified in Section 10.11.1 [Governing Law].
Unintentional Overadvance shall mean an Overadvance which, to the Administrative
Agent’s knowledge, did not constitute an Overadvance when made but which has
become an Overadvance resulting from changed circumstances beyond the control of
the Administrative Agent, the Lenders and the Issuing Lender, including, without
limitation, a reduction in the value of property or assets included in the
Borrowing Base or the Canadian Borrowing Base or misrepresentation by the Loan
Parties.
USA Patriot Act shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
1.2 Construction. Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this Agreement and
each of the other Loan Documents: (i) references to the plural include the
singular, the plural, the part and the whole and the words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole; (iii) article, section,
subsection, clause, schedule and exhibit references are to this Agreement or
other Loan Document, as the case may be, unless otherwise specified;
(iv) reference to any Person includes such Person’s successors and assigns;
(v) reference to any agreement, including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto, document or
instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated; (vi) relative to the
determination of any period of time, “from” means “from and including,” “to”
means “to but excluding,” and “through” means “through and including”; (vii) 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,
(viii) section headings herein and in each other Loan Document are included for
convenience and shall not affect the interpretation of this Agreement or such
Loan Document, and (ix) unless otherwise specified, all references herein to
times of day shall be references to Eastern Time.
1.3 Accounting Principles. Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP; provided, however, that all accounting
terms used in Section 7.2 [Negative Covenants] (and all defined terms used in
the definition of any accounting term used in Section 7.2 [Negative Covenants]
shall have the meaning given to such terms (and defined terms) under GAAP as in
effect on the date hereof

 

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applied on a basis consistent with those used in preparing Statements referred
to in Section 5.1.6(i) [Historical Statements]. In the event of any change after
the date hereof in GAAP, and if such change would affect the computation of any
of the financial covenants set forth in Section 7.2 [Negative Covenants], then
the parties hereto agree to endeavor, in good faith, to agree upon an amendment
to this Agreement that would adjust such financial covenants in a manner that
would preserve the original intent thereof , provided that, until so amended
such financial covenants shall continue to be computed in accordance with GAAP
prior to such change therein.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Revolving Credit Commitments.
2.1.1 Revolving Credit Loans. Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, each Domestic
Lender severally agrees to make Revolving Credit Loans to the Domestic Borrowers
and each Canadian Lender severally agrees to make Revolving Credit Loans to the
Canadian Borrower at any time or from time to time on or after the date hereof
to the Expiration Date; provided that after giving effect to each such Loan,
(i) the aggregate amount of Revolving Credit Loans from such Lender shall not
exceed such Lender’s Revolving Credit Commitment or Canadian Commitment, as
applicable, minus such Lender’s Ratable Share of the outstanding Swing Loans and
Letter of Credit Obligations, (ii) the Revolving Facility Usage of the Domestic
Borrowers shall not exceed (x) with respect to any such Loan other than a
Permitted Short Term Loan, the lesser of (a) the Revolving Credit Commitments,
and (b) (1) until the occurrence of a Borrowing Base Trigger Event, the
Simplified Borrowing Base, or (2) thereafter, the Borrowing Base, minus, in each
case the Revolving Facility Usage of the Canadian Borrower, or (y) with respect
to any such Loan that is a Permitted Short Term Loan, the Revolving Credit
Commitments minus outstanding Letter of Credit Obligations, minus the Revolving
Facility Usage of the Canadian Borrower. Within such limits of time and amount
and subject to the other provisions of this Agreement, the Borrowers may borrow,
repay and reborrow pursuant to this Section 2.1, and (iii) the aggregate
outstanding amount of the Revolving Credit Loans to the Canadian Borrower shall
not at any time exceed Canadian Availability.
2.1.2 Swing Loan Commitment. Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, and in order
to facilitate loans and repayments between Settlement Dates, PNC may, at its
option, cancelable at any time for any reason whatsoever, make swing loans (the
“Swing Loans”) to the Domestic Borrowers at any time or from time to time after
the date hereof to, but not including, the Expiration Date, in an aggregate
principal amount up to but not in excess of $10,000,000 (the “Swing Loan
Commitment”), provided that after giving effect to such Loan, the Revolving
Facility Usage shall not exceed the lesser of (a) the Revolving Credit
Commitments, and (b) (1) until the occurrence of a Borrowing Base Trigger Event,
the Simplified Borrowing Base, or (2) thereafter, the Borrowing Base, minus, in
each case the Revolving Facility Usage of the Canadian Borrower. Within such
limits of time and amount and subject to the other provisions of this Agreement,
the Domestic Borrowers may borrow, repay and reborrow pursuant to this
Section 2.1.2. No Permitted Short Term Loan shall be a Swing Loan hereunder.

 

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2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans;
Permitted Overadvances.
2.2.1 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans.
Each Lender shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan
Requests] in accordance with its Ratable Share. The aggregate of each Lender’s
Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall
never exceed its Revolving Credit Commitment or Canadian Commitment, as
applicable, minus its Ratable Share of the outstanding Swing Loans and Letter of
Credit Obligations. The obligations of each Lender hereunder are several. The
failure of any Lender to perform its obligations hereunder shall not affect the
Obligations of the Borrowers to any other party nor shall any other party be
liable for the failure of such Lender to perform its obligations hereunder. The
Lenders shall have no obligation to make Revolving Credit Loans hereunder on or
after the Expiration Date.
2.2.2 Permitted Overadvances. The Administrative Agent, the Lenders and Issuing
Lender shall have no obligation to make any Loan or to provide any Letter of
Credit if an Overadvance would result. The Administrative Agent may, in its
discretion, make Permitted Overadvances without the consent of the Borrowers,
the Lenders and the Issuing Lender and the Borrowers and each Lender shall be
bound thereby. Any Permitted Overadvance (other than one made with respect to
the Canadian Borrower) may constitute a Swing Loan. A Permitted Overadvance is
for the account of the Borrowers and shall constitute a Revolving Credit Loan to
which the Base Rate Option (or, with respect to the Canadian Borrower, the
Canadian Prime Rate Option) applies and an Obligation and shall be repaid by the
Domestic Borrowers or Canadian Borrower, as applicable, on demand. The making of
any such Permitted Overadvance on any one occasion shall not obligate the
Administrative Agent or any Lender to make or permit any Permitted Overadvance
on any other occasion or to permit such Permitted Overadvances to remain
outstanding. The making by the Administrative Agent of a Permitted Overadvance
shall not modify or abrogate any of the provisions of Section 2.9.3 regarding
the Lenders’ obligations to purchase participations with respect to Letter of
Credits or of Section 2.6.5 regarding the Lenders’ obligations to purchase
participations with respect to Swing Loans. The Administrative Agent shall have
no liability for, and no Borrower, Lender or Issuing Bank shall have the right
to, or shall, bring any claim of any kind whatsoever against the Administrative
Agent with respect to Unintentional Overadvances regardless of the amount of any
such Overadvance(s).
2.3 Commitment Fees. Accruing from the date hereof until the Expiration Date,
the Borrowers agree to pay to the Administrative Agent for the account of each
Lender according to its Ratable Share, a nonrefundable commitment fee (the
“Commitment Fee”) equal to the Applicable Commitment Fee Rate (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed)
multiplied by the average daily difference between the amount of (i) with
respect to the Domestic Borrowers, (A) the Revolving Credit Commitments (for
purposes of this computation, PNC’s Swing Loans shall be deemed to be borrowed
amounts under its Revolving Credit Commitment) and (B) the Revolving Facility
Usage of the Domestic Borrowers, and (ii) with respect to the Canadian Borrower,
(A) the Canadian Commitments and (B) the Revolving Facility Usage of the
Canadian Borrower; provided, however, that any Commitment Fee accrued with
respect to the Revolving Credit Commitment or Canadian Commitment of a
Defaulting Lender during the period prior to the time such Lender became a

 

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Defaulting Lender and unpaid at such time shall not be payable by the Borrowers
so long as such Lender shall be a Defaulting Lender except to the extent that
such Commitment Fee shall otherwise have been due and payable by the Borrowers
prior to such time; and provided further that no Commitment Fee shall accrue
with respect to the Revolving Commitment or Canadian Commitment of a Defaulting
Lender so long as such Lender shall be a Defaulting Lender. Subject to the
proviso in the directly preceding sentence, all Commitment Fees shall be payable
in arrears on each Payment Date.
2.4 Simplified Borrowing Base and Borrowing Base; Permitted Short Term Loans.
2.4.1 Simplified Borrowing Base and Borrowing Base. From and after the Closing
Date until the occurrence of a Borrowing Base Trigger Event, the Domestic
Borrowers and the Canadian Borrower shall be subject to the Simplified Borrowing
Base (as calculated for the Domestic Borrowers or the Canadian Borrower, as
applicable) rather than the Borrowing Base or the Canadian Borrowing Base. From
and after the occurrence of a Borrowing Base Trigger Event, until the Expiration
Date, the Domestic Borrowers shall be subject to the Borrowing Base and the
Canadian Borrower shall be subject to the Canadian Borrowing Base, as
applicable, rather than the Simplified Borrowing Base. With respect to each
Borrowing Base Trigger Event, the Required Lenders may, in their reasonable
discretion, make a Trigger Event Election by notifying the Borrowers of such
Trigger Event Election within five (5) Business Days following the Lenders’
receipt of written notice of the occurrence of such Borrowing Base Trigger Event
(which notice the Administrative Agent agrees to promptly furnish upon its
obtaining knowledge thereof) (with respect to each Borrowing Base Trigger Event,
the period commencing on the date on which the Lenders receive such notice and
terminating on the earlier to occur of (i) a Trigger Event Election, or (ii) the
expiration of such five (5) Business Day period, is herein referred to as a
“Trigger Event Election Period”). The failure of the Required Lenders to provide
a notice with respect to such Trigger Event during the applicable Trigger Event
Election Period shall constitute a waiver of the Required Lenders’ right to make
a Trigger Event Election with respect to such Trigger Event. No such waiver
shall affect the Required Lenders’ right to make a Trigger Event Election
following the occurrence of any other Trigger Event.
2.4.2 Permitted Short Term Loans. The Domestic Borrowers shall be permitted to
request, and the Lenders shall make, short term Revolving Credit Loans hereunder
(each, a “Permitted Short Term Loan”) in an amount not to exceed $25,000,000
(exclusive of Letter of Credit Outstandings), provided that (i) immediately
prior to and after giving effect to the making of any such Permitted Short Term
Loan, the Domestic Borrowers shall have on hand the Minimum Cash Requirement,
(ii) no Trigger Event Election, Potential Default or Event of Default shall have
occurred and be continuing or would result from the making of such Permitted
Short Term Loan, (iii) no Permitted Short Term Loan shall be outstanding for
more than ten (10) consecutive Business Days at any time and (iv) no Permitted
Short Term Loan previously made in accordance with this Section 2.4.2 may
continue to remain outstanding at any time where the Domestic Borrowers do not
have on hand the Minimum Cash Requirement. No more than two (2) Permitted Short
Term Loans shall be permitted during any fiscal year. Each Permitted Short Term
Loan shall be a Revolving Credit Loan to which the Base Rate Option applies.
2.5 Revolving Credit Loan Requests; Swing Loan Requests.

 

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2.5.1 Revolving Credit Loan Requests. Except as otherwise provided herein, the
Borrowers may from time to time prior to the Expiration Date request the Lenders
to make Revolving Credit Loans, or renew or convert the Interest Rate Option
applicable to existing Revolving Credit Loans to Section 3.2 [Interest Periods],
by delivering to the Administrative Agent, not later than 1:00 p.m., (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the LIBOR Rate Option or BA Rate
Option applies or the conversion to or the renewal of the LIBOR Rate Option or
BA Rate Option for any Loans; and (ii) the same Business Day of the proposed
Borrowing Date with respect to the making of a Revolving Credit Loan to which
the Base Rate Option or the Canadian Prime Rate Option applies or the last day
of the preceding Interest Period with respect to the conversion to the Base Rate
Option or the Canadian Prime Rate Option for any Loan, of a duly completed
request therefor substantially in the form of Exhibit 2.5.1 (or, with respect to
the Canadian Borrower, in such other form as is reasonably acceptable to the
Administrative Agent) or a request by telephone immediately confirmed in writing
by letter, facsimile or telex in such form (each, a “Loan Request”), it being
understood that the Administrative Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of
such written confirmation. Each Loan Request shall be irrevocable and shall
specify the aggregate amount of the proposed Loans comprising each Borrowing
Tranche, and, if applicable, the Interest Period, which amounts shall be in
(x) integral multiples of $500,000 and not less than $1,000,000 for each
Borrowing Tranche under the LIBOR Rate Option and integral multiples of
CD$500,000 and not less than CD$1,000,000 for each Borrowing Tranche under the
BA Rate Option, and (y) integral multiples of $100,000 and not less than
$500,000 for each Borrowing Tranche under the Base Rate Option or integral
multiples of CD$100,000 and not less than CD$500,000 for each Borrowing Tranche
under the Canadian Prime Rate Option.
2.5.2 Swing Loan Requests. Except as otherwise provided herein, the Domestic
Borrowers may from time to time prior to the Expiration Date request PNC to make
Swing Loans by delivery to PNC not later than 1:00 p.m. on the proposed
Borrowing Date of a duly completed request therefor substantially in the form of
Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing
by letter, facsimile or telex (each, a “Swing Loan Request”), it being
understood that the Administrative Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of
such written confirmation. Each Swing Loan Request shall be irrevocable and
shall specify the proposed Borrowing Date and the principal amount of such Swing
Loan, which shall be in integral multiples of $100,000.
2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay
Swing Loans.
2.6.1 Making Revolving Credit Loans. The Administrative Agent shall, promptly
after receipt by it of a Loan Request pursuant to Section 2.5 [Revolving Credit
Loan Requests; Swing Loan Requests], notify the applicable Lenders of its
receipt of such Loan Request specifying the information provided by the
Borrowers and the apportionment among the Lenders of the requested Revolving
Credit Loans as reasonably determined by the Administrative Agent in accordance
with Section 2.2.1 [Nature of Lenders’ Obligations with Respect to Revolving
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Revolving Credit Loan to the Administrative Agent such that the Administrative
Agent is able to, and the Administrative Agent shall, to the extent the Lenders
have made funds available to it for such purpose and subject to Section 6.2
[Each Loan or Letter of Credit], fund such Revolving Credit Loans to the
Domestic Borrowers in U.S. Dollars and to the Canadian Borrower in CD$ and
immediately available funds at the Principal Office prior to 1:00 p.m., on the
applicable Borrowing Date; provided that if any Lender fails to remit such funds
to the Administrative Agent in a timely manner, the Administrative Agent may
elect in its sole discretion to fund with its own funds the Revolving Credit
Loans of such Lender on such Borrowing Date, and such Lender shall be subject to
the repayment obligation in Section 2.6.2 [Presumptions by the Administrative
Agent].
2.6.2 Presumptions by the Administrative Agent. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any Loan
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Loan, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with
Section 2.6.1 [Making Revolving Credit Loans] and may, in reliance upon such
assumption, make available to the applicable Borrowers a corresponding amount.
In such event, if a Lender has not in fact made its share of the applicable Loan
available to the Administrative Agent, then the applicable Lender and the
Domestic Borrowers or the Canadian Borrower, as applicable, severally agree to
pay to the Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such amount is
made available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation (ii) in the case of a payment to be made by the Domestic Borrowers,
the interest rate applicable to Loans under the Base Rate Option, and (iii) in
the case of a payment to be made by the Canadian Borrower, the interest rate
applicable to Loans under the Canadian Prime Rate Option or the BA Rate Option,
as applicable. If such Lender pays its share of the applicable Loan to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan. Any payment by the Borrowers shall be without prejudice to any claim any
Borrower may have against a Lender that shall have failed to make such payment
to the Administrative Agent.
2.6.3 Making Swing Loans. So long as PNC elects to make Swing Loans, PNC shall,
after receipt by it of a Swing Loan Request pursuant to Section 2.5.2, [Swing
Loan Requests] fund such Swing Loan to the Domestic Borrowers in U.S. Dollars
and immediately available funds at the Principal Office prior to 4:00 p.m. on
the Borrowing Date.
2.6.4 Repayment of Revolving Credit Loans. The Borrowers shall repay the
Revolving Credit Loans together with all outstanding interest thereon on the
Expiration Date; provided that the Domestic Borrowers shall repay each Permitted
Short Term Loan together with all outstanding interest thereon no later than the
earlier to occur of (i) the tenth (10th) Business Day following the Lenders’
making of such Permitted Short Term Loan, and (ii) the first date on which the
Domestic Borrowers shall not have on hand the Minimum Cash Requirement following
the Lenders’ making of such Permitted Short Term Loan.
2.6.5 Borrowings to Repay Swing Loans. PNC may, at its option, exercisable at
any time for any reason whatsoever, demand repayment of the Swing Loans, and
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Domestic Lender shall make a Revolving Credit Loan in an amount equal to such
Lender’s Ratable Share of the aggregate principal amount of the outstanding
Swing Loans, plus, if PNC so requests, accrued interest thereon, provided that
no Domestic Lender shall be obligated in any event to make Revolving Credit
Loans in excess of its unused Revolving Credit Commitment after deducting
therefrom its Ratable Share of Letter of Credit Obligations and other Revolving
Credit Loans then outstanding. Revolving Credit Loans made pursuant to the
preceding sentence shall bear interest at the Base Rate Option and shall be
deemed to have been properly requested in accordance with Section 2.5.1
[Revolving Credit Loan Requests] without regard to any of the requirements of
that provision. PNC shall provide notice to the Domestic Lenders (which may be
telephonic or written notice by letter, facsimile or telex) that such Revolving
Credit Loans are to be made under this Section 2.6.5 and of the apportionment
among the Domestic Lenders, and the Domestic Lenders shall be unconditionally
obligated to fund such Revolving Credit Loans (whether or not the conditions
specified in Section 2.5.1 [Revolving Credit Loan Requests] are then satisfied)
by the time PNC so requests, which shall not be earlier than 1:00 p.m. on the
Business Day next after the date the Domestic Lenders receive such notice from
PNC.
2.6.6 Trigger Event Election Period. Notwithstanding anything to the contrary,
the Borrowers shall not be permitted to request, and the Lenders shall not be
obligated to make, any Loans (including, without limitation, Permitted Short
Term Loans and Swing Loans) during any Trigger Event Election Period.
2.7 Notes. The Obligation of the Borrowers to repay the aggregate unpaid
principal amount of the Revolving Credit Loans and Swing Loans made to it by
each Lender, together with interest thereon, shall be evidenced by a revolving
credit Note (to the extent requested by such Lender) and a swing Note, dated the
Closing Date payable to the order of such Lender in a face amount equal to the
Revolving Credit Commitment, Canadian Commitment or Swing Loan Commitment, as
applicable, of such Lender.
2.8 Use of Proceeds. The proceeds of the Loans shall be used to (i) refinance
Indebtedness of the Borrowers under the Existing Loan Agreement, (ii) pay fees
and expenses associated with the financing contemplated herein, (iii) finance
any Permitted Acquisition, (iv) provide for the ongoing working capital
requirements and for other general corporate purposes of the Borrowers, in the
case of each of clauses (i), (ii), (iii) and (iv) to the extent permitted
hereunder.
2.9 Letter of Credit Subfacility.
2.9.1 Issuance of Letters of Credit. Borrowers may at any time prior to the
Expiration Date request the issuance of a Standby Letter of Credit or a
Commercial Letter of Credit (each, a “Letter of Credit”) on behalf of itself or,
with respect to the Domestic Borrowers only, another Loan Party, or the
amendment or extension of an existing Letter of Credit, by delivering or having
such other Loan Party deliver to the Issuing Lender (with a copy to the
Administrative Agent) a completed application and agreement for letters of
credit, or request for such amendment or extension, as applicable, in such form
as the Issuing Lender may specify from time to time by no later than 1:00 p.m.
at least two (2) Business Days, or such shorter period as may be agreed to by
the Issuing Lender, in advance of the proposed date of issuance. Promptly after
receipt of any letter of credit application, the Issuing Lender shall confirm
with the Administrative Agent (by telephone or in writing) that the
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a copy of such Letter of Credit application and if not, the Issuing Lender will
provide Administrative Agent with a copy thereof. Unless the Issuing Lender has
received notice from any Lender, Administrative Agent or any Loan Party, at
least one day prior to the requested date of issuance, amendment or extension of
the applicable Letter of Credit, that one or more applicable conditions in
Section 6 [Conditions of Lending and Issuance of Letters of Credit] is not
satisfied, then, subject to the terms and conditions hereof and in reliance on
the agreements of the other Lenders set forth in this Section 2.9, the Issuing
Lender or any of the Issuing Lender’s Affiliates will issue a Letter of Credit
or agree to such amendment or extension; provided that each Letter of Credit
shall (A) have a maximum maturity of twelve (12) months from the date of
issuance, and (B) in no event expire later than the date which is 364 days after
the Expiration Date; and provided further that in no event shall (i) the Letter
of Credit Obligations exceed, at any one time, $50,000,000 (the “Letter of
Credit Sublimit”) or (ii) the Revolving Facility Usage of the Domestic Borrowers
exceed, at any one time, the lesser of (a) the Revolving Credit Commitments, and
(b) (i) until the occurrence of a Borrowing Base Trigger Event, the Simplified
Borrowing Base of the Domestic Borrowers, or (ii) thereafter, the Borrowing
Base, or (iii) the Revolving Facility Usage by the Canadian Borrower exceed, at
any one time, the lesser of (a) the Canadian Commitments, and (b) (i) until the
occurrence of a Borrowing Base Trigger Event, the Simplified Borrowing Base of
the Canadian Borrower, or (ii) thereafter, the Canadian Borrowing Base. Each
request by the Borrowers for the issuance, amendment or extension of a Letter of
Credit shall be deemed to be a representation by the Borrowers that the
Borrowers shall be in compliance with the preceding sentence and with Section 6
[Conditions of Lending and Issuance of Letters of Credit] after giving effect to
the requested issuance, amendment or extension of such Letter of Credit.
Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to the beneficiary thereof, the Issuing Lender will also deliver to
Borrowers and Administrative Agent a true and complete copy of such Letter of
Credit or amendment. The Borrowers, the Administrative Agent, the Lenders and
the Issuing Lender agree that the Existing Letters of Credit shall be deemed
Letters of Credit hereunder as if issued by an Issuing Lender.
If the Borrowers so request in any applicable application for a Letter of
Credit, the Issuing Lender may, in its reasonable discretion, agree to issue a
Standby Letter of Credit that has automatic extension provisions (each, an
“Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter
of Credit must permit the Issuing Lender to prevent any such extension at least
once in each twelve-month period (commencing with the date of issuance of such
Standby Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date” ) in each such twelve-month
period to be agreed upon at the time such Standby Letter of Credit is issued.
Unless otherwise directed by the Issuing Lender, the Borrowers shall not be
required to make a specific request to the Issuing Lender for any such
extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders
shall be deemed to have authorized (but may not require) the Issuing Lender to
permit the extension of such Standby Letter of Credit at any time to an expiry
date not later than the Letter of Credit Expiration Date; provided, however,
that the Issuing Lender shall not permit any such extension if (A) the Issuing
Lender has determined that it would not be permitted, or would have no
obligation, at such time to issue such Standby Letter of Credit in its revised
form (as extended) under the terms hereof, or (B) it has received notice (which
may be by telephone or in writing) on or before the day that is five
(5) Business Days before the Non-Extension Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to permit such

 

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extension or (2) from the Administrative Agent, any Lender or the Borrowers that
one or more of the applicable conditions specified in Section 6.2 [Each Loan or
Letter of Credit] is not then satisfied, and in each such case directing the
Issuing Lender not to permit such extension.
Notwithstanding any other provision hereof, the Issuing Lender shall not be
required to issue any Letter of Credit, if (a) any Lender is at such time a
Defaulting Lender or a Deteriorating Lender hereunder, unless the Issuing Lender
has entered into satisfactory arrangements with the Borrowers or such Defaulting
Lender or Deteriorating Lender to eliminate the Issuing Lender’s risk with
respect to such Defaulting Lender or Deteriorating Lender (it being understood
that the Issuing Lender shall consider the Borrowers or such Defaulting Lender
or Deteriorating Lender providing cash collateral to the Administrative Agent,
for the benefit of the Issuing Lender, to secure such Defaulting Lender’s or
Deteriorating Lender’s Ratable Share of the Letter of Credit, a satisfactory
arrangement), or (b) any order, judgment or decree of any Official Body or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender
from issuing the Letter of Credit, or any Law applicable to the Issuing Lender
or any request or directive (whether or not having the force of Law) from any
Official Body with jurisdiction over the Issuing Lender shall prohibit, or
request that the Issuing Lender refrain from, the issuance of letters of credit
generally or the Letter of Credit in particular or shall impose upon the Issuing
Lender with respect to the Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Lender is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the Issuing
Lender any unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Issuing Lender in good faith deems material to it.
2.9.2 Letter of Credit Fees. The Domestic Borrowers and the Canadian Borrower
shall pay (i) to the Administrative Agent for the ratable account of the
Domestic Lenders or Canadian Lenders, as applicable, a fee (the “Letter of
Credit Fee”) equal to the Applicable Letter of Credit Fee Rate, and (ii) to the
Issuing Lender for its own account a fronting fee equal to one-quarter of one
percent (0.25%) per annum (in each case computed on the basis of a year of
360 days and actual days elapsed), which fees shall be computed on the daily
average Letter of Credit Obligations of the Domestic Borrowers and the Canadian
Borrower, as applicable, and shall be payable quarterly in arrears on each
Payment Date following issuance of each Letter of Credit. The Domestic Borrowers
and the Canadian Borrower shall also pay to the Issuing Lender for the Issuing
Lender’s sole account the Issuing Lender’s then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the
Issuing Lender may generally charge or incur from time to time in connection
with the issuance, maintenance, amendment (if any), assignment or transfer (if
any), negotiation, and administration of Letters of Credit.
2.9.3 Disbursements, Reimbursement. Immediately upon the issuance of each Letter
of Credit, (a) each Domestic Lender shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the Issuing Lender a participation
in such Letter of Credit issued for the account of a Domestic Borrower and each
drawing thereunder in an amount equal to such Lender’s Ratable Share of the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively, and (b) each Canadian Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the Issuing
Lender a participation in such Letter of Credit issued for the account of the
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Borrower and each drawing thereunder in an amount equal to such Lender’s Ratable
Share of the maximum amount available to be drawn under such Letter of Credit
and the amount of such drawing, respectively.
2.9.3.1 In the event of any request for a drawing under a Letter of Credit by
the beneficiary or transferee thereof, the Issuing Lender will promptly notify
the applicable Borrowers and the Administrative Agent thereof. Provided that it
shall have received such notice, the applicable Borrowers shall reimburse (such
obligation to reimburse the Issuing Lender shall sometimes be referred to as a
“Reimbursement Obligation”) the Issuing Lender prior to 1:00 p.m. on each date
that an amount is paid by the Issuing Lender under any Letter of Credit (each
such date, a “Drawing Date”) by paying to the Administrative Agent for the
account of the Issuing Lender an amount equal to the amount so paid by the
Issuing Lender. In the event the applicable Borrowers fail to reimburse the
Issuing Lender (through the Administrative Agent) for the full amount of any
drawing under any Letter of Credit by 1:00 p.m. on the Drawing Date, the
Administrative Agent will promptly notify each Domestic Lender and Canadian
Lender thereof, as applicable, and the applicable Borrowers shall be deemed to
have requested that Revolving Credit Loans be made by the applicable Lenders
under the Base Rate Option or Canadian Prime Rate Option to be disbursed on the
Drawing Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Credit Commitment and subject to the
conditions set forth in Section 6.2 [Each Loan or Letter of Credit] other than
any notice requirements. Any notice given by the Administrative Agent or the
Issuing Lender pursuant to this Section 2.9.3.1 may be oral if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
2.9.3.2 Each Domestic Lender or Canadian Lender, as applicable, shall upon any
notice pursuant to Section 2.9.3.1 make available to the Administrative Agent
for the account of the Issuing Lender an amount in immediately available funds
equal to its Ratable Share of the amount of the drawing, whereupon the
participating Lenders shall (subject to Section 2.9.3 [Disbursement;
Reimbursement]) each be deemed to have made a Revolving Credit Loan under the
Base Rate Option or Canadian Prime Rate Option to the applicable Borrowers in
that amount. If any Lender so notified fails to make available to the
Administrative Agent for the account of the Issuing Lender the amount of such
Lender’s Ratable Share of such amount by no later than 1:00 p.m. on the Drawing
Date, then interest shall accrue on such Lender’s obligation to make such
payment, from the Drawing Date to the date on which such Lender makes such
payment (i) at a rate per annum equal to the Federal Funds Effective Rate during
the first three (3) days following the Drawing Date and (ii) at a rate per annum
equal to the rate applicable to Loans under the Revolving Credit Base Rate
Option or Canadian Prime Rate Option, as applicable, on and after the fourth day
following the Drawing Date. The Administrative Agent and the Issuing Lender will
promptly give notice (as described in Section 2.9.3.1 above) of the occurrence
of the Drawing Date, but failure of the Administrative Agent or the Issuing
Lender to give any such notice on the Drawing Date or in sufficient time to
enable any Lender to effect such payment on such date shall not relieve such
Lender from its obligation under this Section 2.9.3.2.
2.9.3.3 With respect to any unreimbursed drawing that is not converted into
Revolving Credit Loans under the Base Rate Option or Canadian Prime Rate Option
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applicable Borrowers in whole or in part as contemplated by Section 2.9.3.1,
because of the Borrowers’ failure to satisfy the conditions set forth in
Section 6.2 [Each Loan or Letter of Credit] other than any notice requirements,
or for any other reason, the Borrowers shall be deemed to have incurred from the
Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the amount
of such drawing. Such Letter of Credit Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at the rate per annum
applicable to the Revolving Credit Loans under the Base Rate Option or Canadian
Prime Rate Option, as applicable. Each Lender’s payment to the Administrative
Agent for the account of the Issuing Lender pursuant to Section 2.9.3
[Disbursements, Reimbursement] shall be deemed to be a payment in respect of its
participation in such Letter of Credit Borrowing (each a “Participation
Advance”) from such Lender in satisfaction of its participation obligation under
this Section 2.9.3.
2.9.4 Repayment of Participation Advances.
2.9.4.1 Upon (and only upon) receipt by the Administrative Agent for the account
of the Issuing Lender of immediately available funds from the applicable
Borrowers (i) in reimbursement of any payment made by the Issuing Lender under
the Letter of Credit with respect to which any Lender has made a Participation
Advance to the Administrative Agent, or (ii) in payment of interest on such a
payment made by the Issuing Lender under such a Letter of Credit, the
Administrative Agent on behalf of the Issuing Lender will pay to each Lender, in
the same funds as those received by the Administrative Agent, the amount of such
Lender’s Ratable Share of such funds, except the Administrative Agent shall
retain for the account of the Issuing Lender the amount of the Ratable Share of
such funds of any Lender that did not make a Participation Advance in respect of
such payment by the Issuing Lender.
2.9.4.2 If the Administrative Agent is required at any time to return to any
Loan Party, or to a trustee, receiver, monitor, interim monitor, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of any
payment made by any Loan Party to the Administrative Agent for the account of
the Issuing Lender pursuant to this Section in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Domestic Lender or
Canadian Lender, as applicable, shall, on demand of the Administrative Agent,
forthwith return to the Administrative Agent for the account of the Issuing
Lender the amount of its Ratable Share of any amounts so returned by the
Administrative Agent plus interest thereon from the date such demand is made to
the date such amounts are returned by such Lender to the Administrative Agent,
at a rate per annum equal to the Federal Funds Effective Rate in effect from
time to time.
2.9.5 Documentation. Each Loan Party agrees to be bound by the terms of the
Issuing Lender’s application and agreement for Letters of Credit and the Issuing
Lender’s written regulations and customary practices relating to Letters of
Credit, though such interpretation may be different from such Loan Party’s own.
In the event of a conflict between such application or agreement and this
Agreement, this Agreement shall govern. It is understood and agreed that, except
in the case of gross negligence or willful misconduct (as determined by a final
non-appealable judgment of a court of competent jurisdiction), the Issuing
Lender shall not be liable for any error, negligence and/or mistakes, whether of
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Loan Party’s instructions or those contained in the Letters of Credit or any
modifications, amendments or supplements thereto.
2.9.6 Determinations to Honor Drawing Requests. In determining whether to honor
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Lender shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit.
2.9.7 Nature of Participation and Reimbursement Obligations. Each Lender’s
obligation in accordance with this Agreement to make the Revolving Credit Loans
or Participation Advances, as contemplated by Section 2.9.3 [Disbursements,
Reimbursement], as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrowers to reimburse the Issuing Lender upon a draw under a
Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Section 2.9 under all
circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the Issuing Lender or any of its Affiliates, any
Borrower or any other Person for any reason whatsoever, or which any Loan Party
may have against the Issuing Lender or any of its Affiliates, any Lender or any
other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply, in connection
with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1
[Revolving Credit Commitments], Section 2.5 [Revolving Credit Loan Requests;
Swing Loan Requests], Section 2.6 [Making Revolving Credit Loans and Swing
Loans; Etc.] or Section 6.2 [Each Loan or Letter of Credit] or as otherwise set
forth in this Agreement for the making of a Revolving Credit Loan, it being
acknowledged that such conditions are not required for the making of a Letter of
Credit Borrowing and the obligation of the Lenders to make Participation
Advances under Section 2.9.3 [Disbursements, Reimbursement];
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Loan Party or any
Lender against any beneficiary of a Letter of Credit, or the existence of any
claim, set-off, recoupment, counterclaim, crossclaim, defense or other right
which any Loan Party or any Lender may have at any time against a beneficiary,
successor beneficiary any transferee or assignee of any Letter of Credit or the
proceeds thereof (or any Persons for whom any such transferee may be acting),
the Issuing Lender or its Affiliates or any Lender or any other Person, whether
in connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between any Loan
Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter
of Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in or forgery
of any signature or endorsement on) or the form of or lack of validity,
sufficiency, accuracy, enforceability or genuineness of any draft, demand,
instrument, certificate or other document presented under or in connection with
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connection with any Letter of Credit, or the transport of any property or
provision of services relating to a Letter of Credit, in each case even if the
Issuing Lender or any of its Affiliates has been notified thereof;
(vi) payment by the Issuing Lender or any of its Affiliates under any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(vii) the solvency of, or any acts or omissions by, any beneficiary of any
Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;
(viii) any failure by the Issuing Lender or any of its Affiliates to issue any
Letter of Credit in the form requested by any Loan Party, unless the Issuing
Lender has received written notice from such Loan Party of such failure within
three Business Days after the Issuing Lender shall have furnished such Loan
Party and the Administrative Agent a copy of such Letter of Credit and such
error is material and no drawing has been made thereon prior to receipt of such
notice;
(ix) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Loan Party or
Subsidiaries of a Loan Party;
(x) any breach of this Agreement or any other Loan Document by any party
thereto;
(xi) the occurrence or continuance of an Insolvency Proceeding with respect to
any Loan Party;
(xii) the fact that an Event of Default or a Potential Default shall have
occurred and be continuing;
(xiii) the fact that the Expiration Date shall have passed or this Agreement or
the Commitments hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, other than circumstances described in clauses (A) or
(B) of Section 2.9.8 [Indemnity].
2.9.8 Indemnity. Each Borrower hereby agrees to protect, indemnify, pay and save
harmless the Issuing Lender and any of its Affiliates that has issued a Letter
of Credit from and against any and all claims, demands, liabilities, damages,
taxes, penalties, interest, judgments, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which the Issuing Lender or any of its Affiliates may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit, other than as a result of (A) the gross negligence or
willful misconduct of the Issuing Lender as determined by a final non-appealable
judgment of a court of competent jurisdiction or (B) the wrongful dishonor by
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Lender’s Affiliates of a proper demand for payment made under any Letter of
Credit, except if such dishonor resulted from any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Official Body. Notwithstanding anything to the contrary contained herein, the
Canadian Borrower’s obligation to pay and indemnify shall be limited to matters,
fees, expenses charges and disbursement, or losses, claims, damages and
liabilities which the Administrative Agent determines in its reasonable judgment
to be properly attributable or allocable to the Canadian Borrower.
2.9.9 Liability for Acts and Omissions As between any Loan Party and the Issuing
Lender, or the Issuing Lender’s Affiliates, such Loan Party assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Lender shall not be responsible for any of the
following, including any losses or damages to any Loan Party or other Person or
property relating therefrom: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for an issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged (even if the Issuing Lender or its Affiliates
shall have been notified thereof); (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) the failure of the beneficiary of any such Letter of Credit, or
any other party to which such Letter of Credit may be transferred, to comply
fully with any conditions required in order to draw upon such Letter of Credit
or any other claim of any Loan Party against any beneficiary of such Letter of
Credit, or any such transferee, or any dispute between or among any Loan Party
and any beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of the Issuing Lender or its Affiliates, as
applicable, including any act or omission of any Official Body, and none of the
above shall affect or impair, or prevent the vesting of, any of the Issuing
Lender’s or its Affiliates rights or powers hereunder. Nothing in the preceding
sentence shall relieve the Issuing Lender from liability for the Issuing
Lender’s gross negligence or willful misconduct (as determined by a final
non-appealable judgment of a court of competent jurisdiction) in connection with
actions or omissions described in such clauses (i) through (viii) of such
sentence. In no event shall the Issuing Lender or its Affiliates be liable to
any Loan Party for any indirect, consequential, incidental, punitive, exemplary
or special damages or expenses (including without limitation attorneys’ fees),
or for any damages resulting from any change in the value of any property
relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Issuing Lender and each of
its Affiliates (i) may rely on any oral or other communication believed in good
faith by the Issuing Lender or such Affiliate to have been authorized or given
by or on behalf of the applicant for a Letter of Credit, (ii) may honor any
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substantially to comply with the terms and conditions of the relevant Letter of
Credit; (iii) may honor a previously dishonored presentation under a Letter of
Credit, whether such dishonor was pursuant to a court order, to settle or
compromise any claim of wrongful dishonor, or otherwise, and shall be entitled
to reimbursement to the same extent as if such presentation had initially been
honored, together with any interest paid by the Issuing Lender or its Affiliate;
(iv) may honor any drawing that is payable upon presentation of a statement
advising negotiation or payment, upon receipt of such statement (even if such
statement indicates that a draft or other document is being delivered
separately), and shall not be liable for any failure of any such draft or other
document to arrive, or to conform in any way with the relevant Letter of Credit;
(v) may pay any paying or negotiating bank claiming that it rightfully honored
under the laws or practices of the place where such bank is located; and
(vi) may settle or adjust any claim or demand made on the Issuing Lender or its
Affiliate in any way related to any order issued at the applicant’s request to
an air carrier, a letter of guarantee or of indemnity issued to a carrier or any
similar document (each an “Order”) and honor any drawing in connection with any
Letter of Credit that is the subject of such Order, notwithstanding that any
drafts or other documents presented in connection with such Letter of Credit
fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions
set forth above, any action taken or omitted by the Issuing Lender or its
Affiliates under or in connection with the Letters of Credit issued by it or any
documents and certificates delivered thereunder, if taken or omitted in good
faith, shall not put the Issuing Lender or its Affiliates under any resulting
liability to the Borrowers or any Lender.
2.9.10 Issuing Lender Reporting Requirements. The Issuing Lender shall, on the
first Business Day of each month, provide to Administrative Agent and Borrowers
a schedule of the Letters of Credit issued by it, in form and substance
reasonably satisfactory to Administrative Agent, showing the date of issuance of
each Letter of Credit, the account party, the original face amount (if any), and
the expiration date of any Letter of Credit outstanding at any time during the
preceding month, and any other information relating to such Letter of Credit
that the Administrative Agent may request.
2.9.11 Cash Collateral. Without limiting and in addition to the provisions of
Section 8.2.1 [Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings], upon the request of Administrative Agent, (i) if
the Issuing Lender has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an Letter of Credit Borrowing,
or (ii) if, on the Expiration Date, any Letter of Credit Obligation for any
reason remains outstanding, the Domestic Borrowers or the Canadian Borrower, as
applicable, shall, in each case, immediately Cash Collateralize the then
outstanding amount of all Letter of Credit Obligations. The Borrowers hereby
grant to the Administrative Agent, for the benefit of the Issuing Lender and the
Lenders, a security interest in all cash collateral pledged pursuant to this
Section or otherwise under this Agreement provided that any cash collateral of
the Canadian Borrower shall secure only the Canadian Liabilities.
2.10 Increase in Revolving Credit Commitments.
2.10.1 Increasing Lenders and New Lenders. The Domestic Borrowers may at any
time request that (1) the current Domestic Lenders increase their Revolving
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Commitments (any current Domestic Lender which elects to increase its Revolving
Credit Commitment shall be referred to as an “Increasing Lender”) or (2) one or
more new lenders (each a “New Lender”) join this Agreement and provide a
Revolving Credit Commitment hereunder, subject to the following terms and
conditions:
(i) No Obligation to Increase. No current Domestic Lender shall be obligated to
increase its Revolving Credit Commitment and any increase in the Revolving
Credit Commitment by any current Domestic Lender shall be in the reasonable
discretion of such current Lender; or
(ii) Minimum Increase Amount; Number of Requests. Each request for an increase
in the Revolving Credit Commitments shall be in an amount of not less than
$25,000,000, and the Domestic Borrowers may make not more than three (3) such
requests from and after the Closing Date.
(iii) Maximum Amount of All Increases. The aggregate amount of all increases in
the Revolving Credit Commitments requested hereunder shall not exceed
$75,000,000.
(iv) Resolutions; Opinion. The Borrowers shall deliver to the Administrative
Agent on or before the effective date of such increase the following documents
in a form reasonably acceptable to the Administrative Agent: (1) certifications
of their corporate secretaries with attached resolutions certifying that the
increase in the Revolving Credit Commitment has been approved by such Borrowers,
and (2) an opinion of counsel addressed to the Administrative Agent and the
Lenders addressing the authorization and execution of the Loan Documents by, and
enforceability of the Loan Documents against, the Loan Parties.
(v) Notes. The Domestic Borrowers shall execute and deliver (1) to each
Increasing Lender so requesting, a replacement revolving credit Note reflecting
the new amount of such Increasing Lender’s Revolving Credit Commitment after
giving effect to the increase (and the prior Note issued to such Increasing
Lender shall be deemed to be terminated) and (2) to each New Lender so
requesting, a revolving credit Note reflecting the amount of such New Lender’s
Revolving Credit Commitment.
(vi) Approval of New Lenders. Any New Lender shall be subject to the approval of
the Administrative Agent and the Domestic Borrowers (which approval of the
Domestic Borrowers shall not be unreasonably withheld or delayed).
(vii) Increasing Lenders. Each Increasing Lender shall confirm its agreement to
increase its Revolving Credit Commitment pursuant to an acknowledgement in a
form acceptable to the Administrative Agent, signed by it and the Domestic
Borrowers and delivered to the Administrative Agent at least five (5) days
before the effective date of such increase.
(viii) New Lenders — Joinder. Each New Lender shall execute a lender joinder in
substantially the form of Exhibit 2.10 pursuant to which such New Lender shall
join and become a party to this Agreement and the other Loan Documents with a
Revolving Credit Commitment in the amount set forth in such lender joinder.

 

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2.10.2 Repayment of Outstanding Loans; Borrowing of New Loans. On the effective
date of such increase, the Domestic Borrowers shall repay all Loans then
outstanding, subject to the Domestic Borrowers’ indemnity obligations under
Section 4.10 [Indemnity]; provided that it may borrow new Loans with a Borrowing
Date on such date. Each of the Domestic Lenders shall participate in any new
Loans made on or after such date in accordance with their respective Ratable
Shares after giving effect to the increase in Revolving Credit Commitments
contemplated by this Section 2.10.
2.10.3 Outstanding Letters of Credit. Repayment of Outstanding Loans; Borrowing
of New Loans. On the effective date of such increase, each Increasing Lender and
each New Lender (i) will be deemed to have purchased a participation in each
then outstanding Letter of Credit equal to its Ratable Share of such Letter of
Credit and the participation of each other Lender in such Letter of Credit shall
be adjusted accordingly and (ii) will acquire (and will pay to the
Administrative Agent, for the account of each Lender, in immediately available
funds, an amount equal to) its Ratable Share of all outstanding Participation
Advances.
2.11 Reduction of Revolving Credit Commitment.
2.11.1 Revolving Credit Commitments. The Domestic Borrowers shall have the right
at any time after the Closing Date upon five (5) days’ prior written notice to
the Administrative Agent to permanently reduce (ratably among the Domestic
Lenders in proportion to their Ratable Shares) the Revolving Credit Commitments,
in whole multiples of $5,000,000, or to terminate completely the Revolving
Credit Commitments, without penalty or premium except as hereinafter set forth;
provided that any such reduction or termination shall be accompanied by
prepayment of the Loans, together with outstanding Commitment Fees, the full
amount of interest accrued on the principal sum to be prepaid (and all amounts
referred to in Section 4.10 [Indemnity] hereof) to the extent necessary to cause
the aggregate Revolving Facility Usage after giving effect to such prepayments
to be equal to or less than the Revolving Credit Commitments as so reduced or
terminated. Any notice to reduce or terminate the Revolving Credit Commitments
under this Section 2.11 shall be irrevocable.
2.11.2 Canadian Commitments. The Canadian Borrower shall have the right at any
time after the Closing Date upon five (5) days’ prior written notice to the
Administrative Agent to permanently reduce (ratably among the Canadian Lenders
in proportion to their Ratable Shares) the Canadian Commitments, in whole
multiples of CD$5,000,000, or to terminate completely the Canadian Commitments,
without penalty or premium except as hereinafter set forth; provided that any
such reduction or termination shall be accompanied by prepayment of the Loans,
together with outstanding Commitment Fees, the full amount of interest accrued
on the principal sum to be prepaid (and all amounts referred to in Section 4.10
[Indemnity] hereof) to the extent necessary to cause the aggregate Revolving
Facility Usage of the Canadian Borrower after giving effect to such prepayments
to be equal to or less than the Canadian Commitments as so reduced or
terminated. Any notice to reduce or terminate the Canadian Commitments under
this Section 2.11 shall be irrevocable.
2.11.3 Deemed Termination of Canadian Commitments. In the event that the
Domestic Borrowers terminate the Domestic Commitments, the Canadian Commitments
shall be deemed to have also been terminated, without any further action by the
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3. INTEREST RATES
3.1 Interest Rate Options. The Borrowers shall pay interest in respect of the
outstanding unpaid principal amount of the Loans as selected by it from the Base
Rate Option, the LIBOR Rate Option, the Canadian Prime Rate Option or the BA
Rate Option set forth below applicable to the Loans, it being understood that,
subject to the provisions of this Agreement, the Borrowers may select different
Interest Rate Options and different Interest Periods to apply simultaneously to
the Loans comprising different Borrowing Tranches and may convert to or renew
one or more Interest Rate Options with respect to all or any portion of the
Loans comprising any Borrowing Tranche; provided that there shall not be at any
one time outstanding more than six (6) Borrowing Tranches in the aggregate among
all of the Loans and provided further that if an Event of Default or Potential
Default exists and is continuing, the Borrowers may not request, convert to, or
renew the LIBOR Rate Option or the BA Rate Option, as applicable, for any Loans
and the Required Lenders may demand that all existing Borrowing Tranches bearing
interest under the LIBOR Rate Option or the BA Rate Option, as applicable, shall
be converted immediately to the Base Rate Option or the Canadian Prime Rate
Option, as applicable, subject to the obligation of the Borrowers to pay any
indemnity under Section 4.10 [Indemnity] in connection with such conversion. If
at any time the designated rate applicable to any Loan made by any Lender
exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s
Loan shall be limited to such Lender’s highest lawful rate.
3.1.1 Revolving Credit Interest Rate Options; Swing Line Interest Rate. The
Borrowers shall have the right to select from the following Interest Rate
Options applicable to the Revolving Credit Loans:
(i) Revolving Credit Base Rate Option: With respect to Loans to the Domestic
Borrowers only, a fluctuating rate per annum (computed on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed) equal to the Base
Rate plus the Applicable Margin, such interest rate to change automatically from
time to time effective as of the effective date of each change in the Base Rate;
(ii) Revolving Credit LIBOR Rate Option: With respect to Loans to the Domestic
Borrowers only, a rate per annum (computed on the basis of a year of 360 days
and actual days elapsed) equal to the LIBOR Rate plus the Applicable Margin;
(iii) Revolving Credit Canadian Prime Rate Option: With respect to Loans to the
Canadian Borrower only, a fluctuating rate per annum (computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed) equal to
the Canadian Prime Rate plus the Applicable Margin, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate; or
(iv) Revolving Credit BA Rate Option: With respect to Loans to the Canadian
Borrower only, a rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) equal to the BA Rate plus the Applicable Margin.
Subject to Section 3.3 [Interest and Fees After Default], only the Base Rate
Option applicable to Revolving Credit Loans shall apply to the Swing Loans.

 

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3.1.2 Rate Quotations. The Borrowers may call the Administrative Agent on or
before the date on which a Loan Request is to be delivered to receive an
indication of the rates then in effect, but it is acknowledged that such
projection shall not be binding on the Administrative Agent or the Lenders nor
affect the rate of interest which thereafter is actually in effect when the
election is made.
3.2 Interest Periods. At any time when the Borrowers shall select, convert to or
renew a LIBOR Rate Option or BA Rate Option, as applicable, the Borrowers shall
notify the Administrative Agent thereof at least three (3) Business Days prior
to the effective date of such LIBOR Rate Option or such BA Rate Option, as
applicable, by delivering a Loan Request. The notice shall specify an Interest
Period during which such Interest Rate Option shall apply. Notwithstanding the
preceding sentence, the following provisions shall apply to any selection of,
renewal of, or conversion to a LIBOR Rate Option or a BA Rate Option, as
applicable:
3.2.1 Amount of Borrowing Tranche. Each Borrowing Tranche of Loans under the
LIBOR Rate Option shall be in integral multiples of $500,000 and not less than
$1,000,000 and Each Borrowing Tranche of Loans under the BARate Option shall be
in integral multiples of CD$500,000 and not less than CD$1,000,000; and
3.2.2 Renewals. In the case of the renewal of a LIBOR Rate Option or a BA Rate
Option, as applicable, at the end of an Interest Period, the first day of the
new Interest Period shall be the last day of the preceding Interest Period,
without duplication in payment of interest for such day.
3.3 Interest and Fees After Default. To the extent permitted by Law, upon the
occurrence of an Event of Default and until such time such Event of Default
shall have been cured or waived, and at the discretion of the Administrative
Agent or upon written demand by the Required Lenders to the Administrative
Agent:
3.3.1 Letter of Credit Fees, Interest Rate. The Letter of Credit Fees and the
rate of interest for each Loan otherwise applicable pursuant to Section 2.9.2
[Letter of Credit Fees] or Section 3.1 [Interest Rate Options], respectively,
shall be increased by two percent (2.0%) per annum;
3.3.2 Other Obligations. Each other Obligation hereunder (excluding Lender
Provided Interest Rate Hedges and Other Lender Provided Financial Service
Products) if not paid when due shall bear interest at a rate per annum equal to
the sum of the rate of interest applicable under the Revolving Credit Base Rate
Option or the Canadian Prime Rate Option, as applicable, plus an additional two
percent (2.0%) per annum from the time such Obligation becomes due and payable
and until it is paid in full; and
3.3.3 Acknowledgment. Each Borrower acknowledges that the increase in rates
referred to in this Section 3.3 reflects, among other things, the fact that such
Loans or other amounts have become a substantially greater risk given their
default status and that the Lenders are entitled to additional compensation for
such risk; and all such interest shall be payable by Borrowers upon demand by
Administrative Agent.
3.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.

 

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3.4.1 Unascertainable. If on any date on which a LIBOR Rate or BA Rate would
otherwise be determined, the Administrative Agent shall have reasonably
determined that:
(i) adequate and reasonable means do not exist for ascertaining such LIBOR Rate
or BA Rate, or
(ii) a contingency has occurred which materially and adversely affects the
London interbank eurodollar market relating to the LIBOR Rate,
then the Administrative Agent shall have the rights specified in Section 3.4.3
[Administrative Agent’s and Lenders’ Rights].
3.4.2 Illegality; Increased Costs; Deposits Not Available. If at any time any
Lender shall have reasonably determined that:
(i) the making, maintenance or funding of any Loan to which a LIBOR Rate Option
or a BA Rate Option applies has been made impracticable or unlawful by
compliance by such Lender in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or
(ii) such LIBOR Rate Option or BA Rate Option will not adequately and fairly
reflect the cost to such Lender of the establishment or maintenance of any such
Loan, or
(iii) after making all reasonable efforts, deposits of the relevant amount in
Dollars for the relevant Interest Period for a Loan, or to banks generally, to
which a LIBOR Rate Option applies, respectively, are not available to such
Lender with respect to such Loan, or to banks generally, in the interbank
eurodollar market,
then the Administrative Agent shall have the rights specified in Section 3.4.3
[Administrative Agent’s and Lenders’ Rights].
3.4.3 Administrative Agent’s and Lenders’ Rights. In the case of any event
specified in Section 3.4.1 [Unascertainable] above, the Administrative Agent
shall promptly so notify the Lenders and the Borrowers thereof, and in the case
of an event specified in Section 3.4.2 [Illegality; Increased Costs; Deposits
Not Available] above, such Lender shall promptly so notify the Administrative
Agent and endorse a certificate to such notice as to the specific circumstances
of such notice, and the Administrative Agent shall promptly send copies of such
notice and certificate to the other Lenders and the Borrowers. Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given), the obligation of (A) the Lenders, in the case of such notice
given by the Administrative Agent, or (B) such Lender, in the case of such
notice given by such Lender, to allow the Borrowers to select, convert to or
renew a LIBOR Rate Option or a BA Rate Option shall be suspended until the
Administrative Agent shall have later notified the Borrowers, or such Lender
shall have later notified the Administrative Agent, of the Administrative
Agent’s or such Lender’s, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist. If at
any time the Administrative Agent makes a determination under Section 3.4.1
[Unascertainable] and the Borrowers have previously notified the Administrative
Agent of their

 

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selection of, conversion to or renewal of a LIBOR Rate Option or a BA Rate
Option and such Interest Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option or the Canadian Prime Rate Option otherwise
available with respect to such Loans. If any Lender notifies the Administrative
Agent of a determination under Section 3.4.2 [Illegality; Increased Costs;
Deposits Not Available], the Borrowers shall, subject to the Borrowers’
indemnification Obligations under Section 4.10 [Indemnity], as to any Loan of
the Lender to which a LIBOR Rate Option or a BA Rate Option applies, on the date
specified in such notice either convert such Loan to the Base Rate Option or the
Canadian Prime Rate Option otherwise available with respect to such Loan or
prepay such Loan in accordance with Section 4.6 [Voluntary Prepayments]. Absent
due notice from the Borrowers of conversion or prepayment, such Loan shall
automatically be converted to the Base Rate Option or the Canadian Prime Rate
Option otherwise available with respect to such Loan upon such specified date.
3.5 Selection of Interest Rate Options. If the Borrowers fail to select a new
Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR Rate
Option or the BA Rate Option at the expiration of an existing Interest Period
applicable to such Borrowing Tranche in accordance with the provisions of
Section 3.2 [Interest Periods], the Borrowers shall be deemed to have converted
such Borrowing Tranche to the Revolving Credit Base Rate Option or the Canadian
Prime Rate Option, as applicable, commencing upon the last day of the existing
Interest Period.
3.6 Interest Act (Canada). For the purposes of the Interest Act (Canada) and
disclosure thereunder, whenever interest to be paid hereunder is to be
calculated on the basis of a year of 360 days or any other period of time that
is less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by either 360 or such other period of time, as
the case may be. Calculations of interest shall be made using the nominal rate
method of calculation, and will not be calculated using the effective rate
method of calculation or any other basis that gives effect to the principle of
deemed reinvestment of interest.
4. PAYMENTS
4.1 Payments. All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Letter of Credit Fees, Administrative Fee or other
fees or amounts due from the Borrowers hereunder shall be payable prior to 1:00
p.m. on the date when due without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrowers, and without
set-off, counterclaim or other deduction of any nature, and an action therefor
shall immediately accrue. Such payments shall be made to the Administrative
Agent at its Principal Office for the account of PNC with respect to the Swing
Loans in U.S. Dollars and to the Administrative Agent at the Principal Office
for the ratable accounts of the applicable Lenders with respect to the Revolving
Credit Loans in the currency in which such Revolving Credit Loans were made, and
in each case in immediately available funds, and the Administrative Agent shall
promptly distribute such amounts to the Lenders in immediately available funds;
provided that in the event payments are received by 1:00 p.m. by the
Administrative Agent with respect to the Loans and such payments are not
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applicable Lenders on the same day received by the Administrative Agent, the
Administrative Agent shall pay the applicable Lenders the Federal Funds
Effective Rate with respect to the amount of such payments for each day held by
the Administrative Agent and not distributed to such Lenders. The Administrative
Agent’s and each Lender’s statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Loans and other amounts owing under
this Agreement and shall be deemed an “account stated.”
4.2 Pro Rata Treatment of Lenders; Repayment of Advances.
4.2.1 Pro Rata Treatment of Lenders. Each borrowing of Revolving Credit Loans
shall be allocated to each Lender according to its Ratable Share, and each
selection of, conversion to or renewal of any Interest Rate Option and each
payment or prepayment by the Borrowers with respect to principal, interest,
Commitment Fees, Letter of Credit Fees, or other fees (except for the
Administrative Fee and the Issuing Lender’s fronting fee) or amounts due from
the Borrowers hereunder to the Lenders with respect to the Commitments and
Loans, shall (except as otherwise may be provided with respect to a Defaulting
Lender and except as provided in Section 3.4.3 [Administrative Agent’s and
Lenders’ Rights] in the case of an event specified in Section 3.4 [LIBOR Rate
Unascertainable; Etc.], Section 4.6.2 [Replacement of a Lender] or Section 4.8
[Increased Costs]) be payable ratably among the Lenders entitled to such payment
in accordance with the amount of principal, interest, Commitment Fees, Letter of
Credit Fees, and other fees or amounts then due or payable such Lenders as set
forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or
payment or prepayment by the Borrowers of principal, interest, fees or other
amounts from the Borrowers with respect to Swing Loans shall be made by or to
PNC according to Section 2.6.5 [Borrowings to Repay Swing Loans].
4.2.2 Repayment of Advances. If the Administrative Agent is required at any time
to return to any Loan Party, or to a trustee, receiver, monitor, interim
monitor, liquidator, custodian, or any official in any Insolvency Proceeding,
any portion of any payment made by any Loan Party to the Administrative Agent
for the account of any Lender pursuant to this Section, such Lender shall, on
demand of the Administrative Agent, forthwith return to the Administrative Agent
for the account of the Administrative Agent any amounts so returned by the
Administrative Agent plus interest thereon from the date such demand is made to
the date such amounts are returned by such Lender to the Administrative Agent,
at a rate per annum equal to the Federal Funds Effective Rate in effect from
time to time.
4.3 Sharing of Payments by Lenders. If any Lender shall, by exercising any right
of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by
realization upon security, or by any other non-pro rata source, obtain payment
in respect of any principal of or interest on any of its Loans or other
obligations hereunder resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of its Loans and accrued interest thereon or
other such obligations greater than the pro-rata share of the amount such Lender
is entitled thereto, then the Lender receiving such greater proportion shall
(a) notify the Administrative Agent of such fact, and (b) purchase (for cash at
face value) participations in the Loans and such other obligations of the other
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in
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the aggregate amount of principal of and accrued interest on their respective
Loans and other amounts owing them, provided that:
(i) any amounts of the Canadian Borrower so offset shall be applied solely to
the Canadian Liabilities and any participations purchased by a Canadian Lender
shall solely be participations in the Canadian Liabilities of other Canadian
Lenders;
(ii) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by Law (including court order) to be
paid by the Lender or the holder making such purchase; and
(iii) the provisions of this Section 4.3 shall not be construed to apply to
(x) any payment made by the Borrowers pursuant to and in accordance with the
express terms of the Loan Documents or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or Participation Advances to any assignee or participant, other than to
any Loan Party or any Subsidiary thereof (as to which the provisions of this
Section 4.3 shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may, during the continuance
of an Event of Default, exercise against each Loan Party rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of each Loan Party in the amount of such participation.
Any Lender that fails at any time to comply with the provisions of this
Section 4.3 shall be deemed a Defaulting Lender until such time as it performs
its obligations hereunder and is not otherwise a Defaulting Lender for any other
reason.
4.4 Presumptions by Administrative Agent. Unless the Administrative Agent shall
have received notice from any Borrower prior to the date on which any payment is
due to the Administrative Agent for the account of the Lenders or the Issuing
Lender hereunder that such Borrower will not make such payment, the
Administrative Agent may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the applicable Lenders or the Issuing Lender, as the case may be,
the amount due. In such event, if the Borrowers have not in fact made such
payment, then each of the Lenders or the Issuing Lender, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or the Issuing Lender, with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate reasonably determined by
the Administrative Agent in accordance with banking industry rules on interbank
compensation.
4.5 Interest Payment Dates. Interest on Loans to which the Base Rate Option or
the Canadian Prime Rate Option applies shall be due and payable in arrears on
each Payment Date. Interest on Loans to which the LIBOR Rate Option or the BA
Rate Option applies shall be due and payable on the last day of each Interest
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longer than three (3) Months, also on the 90th day of such Interest Period.
Interest on mandatory prepayments of principal under Section 4.7 [Mandatory
Prepayments] shall be due on the date such mandatory prepayment is due. Interest
on the principal amount of each Loan or other monetary Obligation shall be due
and payable on demand after such principal amount or other monetary Obligation
becomes due and payable (whether on the stated Expiration Date, upon
acceleration or otherwise).
4.6 Voluntary Prepayments.
4.6.1 Right to Prepay. The Borrowers shall have the right at their option from
time to time to prepay the Loans in whole or part without premium or penalty
(except as provided in Section 4.6.2 [Replacement of a Lender] below, in
Section 4.8 [Increased Costs] and Section 4.10 [Indemnity]). Whenever the
Borrowers desire to prepay any part of the Loans, they shall provide a
prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1)
Business Day prior to the date of prepayment of the Revolving Credit Loans or no
later than 1:00 p.m. on the date of prepayment of Swing Loans, setting forth the
following information:
(w) the date, which shall be a Business Day, on which the proposed prepayment is
to be made;
(x) a statement indicating the application of the prepayment between the
Revolving Credit Loans and Swing Loans;
(y) a statement indicating the application of the prepayment between Loans to
which the Base Rate Option or the Canadian Prime Rate Option, as applicable,
applies and Loans to which the LIBOR Rate Option or the BA Rate Option, as
applicable, applies; and
(z) the total principal amount of such prepayment, which shall not be less than
the lesser of (i) the Revolving Facility Usage or (ii) $100,000 for any Swing
Loan or $500,000 for any Revolving Credit Loan (or CD$500,000 for any Revolving
Credit Loan owing by the Canadian Borrower).
All prepayment notices shall be irrevocable. The principal amount of the Loans
for which a prepayment notice is given, together with interest on such principal
amount except with respect to Loans to which the Base Rate Option or Canadian
Prime Rate Option, as applicable, applies, shall be due and payable on the date
specified in such prepayment notice as the date on which the proposed prepayment
is to be made. Except as provided in Section 3.4.3 [Administrative Agent’s and
Lenders’ Rights], if the Borrowers prepay a Loan but fail to specify the
applicable Borrowing Tranche which the Borrowers are prepaying, the prepayment
shall be applied first to Loans to which the Base Rate Option or the Canadian
Prime Rate Option, as applicable, applies, then to Loans to which the LIBOR Rate
Option or the BA Rate Option, as applicable, applies. Any prepayment hereunder
shall be subject to the Borrowers’ Obligation to indemnify the Lenders under
Section 4.10 [Indemnity].
4.6.2 Replacement of a Lender. In the event any Lender or the Issuing Lender (i)
gives notice under Section 3.4 [LIBOR Rate Unascertainable, Etc.], (ii) requests
compensation under Section 4.8 [Increased Costs], or requests that the Borrowers
to pay any additional amount to any Lender or Issuing Lender or any Official
Body for the account of any Lender or Issuing Lender pursuant to Section 4.9
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Deteriorating Lender, (iv) becomes subject to the control of an Official Body
(other than normal and customary supervision), or (v) is a Non-Consenting Lender
referred to in Section 10.1 [Modifications, Amendments or Waivers], then in any
such event the Borrowers may, at their sole expense, upon notice to such Lender
and the Administrative Agent, require such Lender or Issuing Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.8 [Successors
and Assigns]), all of its interests, rights and obligations under this Agreement
and the related Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment),
provided that:
(i) the Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 10.8 [Successors and Assigns];
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and Participation Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 4.10 [Indemnity])
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts);
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 4.8.1 [Increased Costs Generally] or payments required to be made
pursuant to Section 4.9 [Taxes], such assignment will result in a reduction in
such compensation or payments thereafter; and
(iv) such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrrowers to require such assignment and delegation
cease to apply.
4.7 Mandatory Prepayments.
4.7.1 Disposition of Assets; Indebtedness. Within five (5) Business Days of any
sale of assets in excess of $2,500,000 in the aggregate in any fiscal year
[authorized] by Section 7.2.7(v) or Section 7.2.7(vi) [Disposition of Assets or
Subsidiaries], the Borrowers shall make a mandatory prepayment of principal on
the Revolving Credit Loans equal to the Net Proceeds of such sale, together with
accrued interest on such principal amount; provided that prior to the occurrence
of an Event of Default or a Trigger Event Election, the Borrowers may, in lieu
of making such mandatory prepayment, utilize such Net Proceeds for purposes of
replacing the assets in respect of which such Net Proceeds were received within
180 days of the occurrence of such sale. Within five (5) Business Days of any
casualty or other insured damage to, or any taking under power of eminent domain
or by condemnation or similar proceeding of (and payments in lieu thereof), any
property or asset of any Loan Party, except as provided in Schedule 7.1.3, the
Borrowers shall make a mandatory prepayment of principal on the Revolving Credit
Loans equal to the Net Proceeds received by the Loan Parties in connection
therewith, together with accrued interest on such principal amount. Within five
(5) Business Days of the incurrence by any Loan Party of any Indebtedness other
than Indebtedness described in Section

 

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7.2.1 [Indebtedness], the Borrowers shall make a mandatory prepayment of
principal on the Revolving Credit Loans equal to the Net Proceeds of such
Indebtedness received by the Loan Parties, together with accrued interest on
such principal amount. All prepayments pursuant to this Section 4.7.1 shall not
reduce the Revolving Credit Commitments hereunder. All prepayments pursuant to
this Section 4.7.1 made by the Canadian Borrower or its Subsidiaries shall be
applied solely to the Canadian Liabilities.
4.7.2 Borrowing Base Exceeded; Canadian Borrowing Base Exceeded. From and after
the occurrence of a Trigger Event Election or an Event of Default, whenever the
Revolving Facility Usage exceeds the lesser of (i) the Revolving Credit
Commitments, and (ii) the Borrowing Base, the Borrowers shall make, within one
(1) Business Day after the Borrowers learn of such excess and whether or not the
Administrative Agent has given notice to such effect, a mandatory prepayment of
principal equal to the excess of the outstanding principal balance of the
Revolving Credit Loans over the Borrowing Base, together with accrued interest
on such principal amount, and, if necessary thereafter, Cash Collateralize the
outstanding Letter of Credit Obligations in an aggregate amount equal to such
excess. From and after the occurrence of a Trigger Event Election or an Event of
Default, whenever the Revolving Facility Usage of the Canadian Borrower exceeds
the lesser of (i) the Canadian Commitments, and (ii) the Canadian Borrowing
Base, the Canadian Borrower shall make, within one (1) Business Day after the
Canadian Borrower learns of such excess and whether or not the Administrative
Agent has given notice to such effect, a mandatory prepayment of principal equal
to the excess of the outstanding principal balance of the Revolving Credit Loans
with respect to the Canadian Borrower over the Canadian Borrowing Base, together
with accrued interest on such principal amount, and, if necessary thereafter,
Cash Collateralize the outstanding Letter of Credit Obligations in an aggregate
amount equal to such excess.
4.7.3 Receipt and Application of Payment. The Borrowers shall prepay the Loans
in accordance with the provisions of Section 7.1.10 [Cash Management].
4.7.4 Application Among Interest Rate Options. All prepayments required pursuant
to this Section 4.7 shall first be applied among the Interest Rate Options to
the principal amount of the Loans subject to the Base Rate Option or the
Canadian Prime Rate Option, as applicable, then to Loans subject to a LIBOR Rate
Option or a BA Rate Option, as applicable. In accordance with Section 4.10
[Indemnity], the Borrowers shall indemnify the Lenders for any loss or expense
incurred with respect to any such prepayments applied against Loans subject to a
LIBOR Rate Option or a BA Rate Option, as applicable, on any day other than the
last day of the applicable Interest Period.
4.8 Increased Costs.
4.8.1 Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement reflected in the LIBOR Rate) or the Issuing
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(ii) subject any Lender or the Issuing Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any participation in a
Letter of Credit or any Loan under the LIBOR Rate Option or BA Rate Option made
by it, or change the basis of taxation of payments to such Lender or the Issuing
Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 4.9 [Taxes] and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the Issuing Lender); or
(iii) impose on any Lender, the Issuing Lender or the London interbank market
any other condition, cost or expense affecting this Agreement or any Loan under
the LIBOR Rate Option made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan under the LIBOR Rate Option or BA Rate
Option (or of maintaining its obligation to make any such Loan), or to increase
the cost to such Lender or the Issuing Lender of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of any
sum received or receivable by such Lender or the Issuing Lender hereunder
(whether of principal, interest or any other amount) then, upon request of such
Lender or the Issuing Lender, the Borrowers will pay to such Lender or the
Issuing Lender, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Lender, as the case may be, for such
additional costs incurred or reduction suffered.
4.8.2 Capital Requirements. If any Lender or the Issuing Lender determines that
any Change in Law affecting such Lender or the Issuing Lender or any lending
office of such Lender or such Lender’s or the Issuing Lender’s holding company,
if any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the Issuing Lender’s capital or on the
capital of such Lender’s or the Issuing Lender’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Lender, to a level below that which such Lender
or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company
could have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or
the Issuing Lender’s holding company with respect to capital adequacy), then
from time to time the Borrowers will pay to such Lender or the Issuing Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding
company for any such reduction suffered.
4.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing
of New Loans. A certificate of a Lender or the Issuing Lender setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Lender or
its holding company, as the case may be, as specified in Section 4.8.1
[Increased Costs Generally] or Section 4.8.2 [Capital Requirements] and
delivered to the Borrowers shall be conclusive absent manifest error. The
Borrowers shall pay such Lender or the Issuing Lender, as the case may be, the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.
4.8.4 Delay in Requests. Failure or delay on the part of any Lender or the
Issuing Lender to demand compensation pursuant to this Section shall not
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such Lender’s or the Issuing Lender’s right to demand such compensation,
provided that the Borrowers shall not be required to compensate a Lender or the
Issuing Lender pursuant to this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender or
the Issuing Lender, as the case may be, notifies the Borrowers of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s or
the Issuing Lender’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine (9) month period referred to above shall be extended
to include the period of retroactive effect thereof).
4.9 Taxes.
4.9.1 Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if the Borrowers shall be required by
applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Lender, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrowers shall make
such deductions and (iii) the Borrowers shall timely pay the full amount
deducted to the relevant Official Body in accordance with applicable Law.
4.9.2 Payment of Other Taxes by the Borrowers. Without limiting the provisions
of Section 4.9.1 [Payments Free of Taxes] above, the Borrowers shall timely pay
any Other Taxes to the relevant Official Body in accordance with applicable Law.
4.9.3 Indemnification by the Borrowers; Treatment of Certain Refunds.
4.9.3.1 Indemnification By the Borrowers. The Borrowers shall indemnify the
Administrative Agent, each Lender and the Issuing Lender, within ten (10) days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the Issuing Lender, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Official Body. A certificate as to the
amount of such payment or liability delivered to the Borrowers by a Lender or
the Issuing Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Lender, shall be conclusive absent manifest error.
4.9.3.2 Treatment of Certain Refunds. If the Administrative Agent, any Lender or
the Issuing Lender determines, in its sole discretion, that it has received a
refund of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrowers or with respect to which the Borrowers have paid
additional amounts pursuant to Section 4.9.3.1 [Indemnification By the
Borrowers], it shall pay to the Borrowers an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
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Borrowers under this Section with respect to the Indemnified Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent, such Lender or the Issuing Lender, as the case may be, and
without interest (other than any interest paid by the relevant Official Body
with respect to such refund), provided that the Borrowers, upon the request of
the Administrative Agent, such Lender or the Issuing Lender, agree to repay the
amount paid over to the Borrowers (plus any penalties, interest or other charges
imposed by the relevant Official Body) to the Administrative Agent, such Lender
or the Issuing Lender in the event that the Administrative Agent, such Lender or
the Issuing Lender is required to repay such refund to such Official Body. This
Section 4.9.3.2 shall not be construed to require the Administrative Agent, any
Lender or the Issuing Lender to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to the Borrowers
or any other Person.
4.9.4 Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrowers to an Official Body, the
Borrowers shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Official Body evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
4.9.5 Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the Law of the jurisdiction in which
any Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrowers (with a copy to the Administrative
Agent), at the time or times prescribed by applicable Law or reasonably
requested by the Borrowers or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable Law as will permit such
payments to be made without withholding or at a reduced rate of withholding.
Notwithstanding the submission of such documentation claiming a reduced rate of
or exemption from U.S. withholding tax, the Administrative Agent shall be
entitled to withhold United States federal income taxes at the full thirty
percent (30%) withholding rate if in its reasonable judgment it is required to
do so under the due diligence requirements imposed upon a withholding agent
under § 1.1441-7(b) of the United States Income Tax Regulations. Further, the
Administrative Agent is indemnified under § 1.1461-1(e) of the United States
Income Tax Regulations against any claims and demands of any Lender or assignee
or participant of a Lender for the amount of any tax it deducts and withholds in
accordance with regulations under § 1441 of the Internal Revenue Code. In
addition, any Lender, if requested by the Borrowers or the Administrative Agent,
shall deliver such other documentation prescribed by applicable Law or
reasonably requested by the Borrowers or the Administrative Agent as will enable
the Borrowers or the Administrative Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.
Without limiting the generality of the foregoing, in the event that any Borrower
is resident for tax purposes in the United States of America, any Foreign Lender
shall deliver to the Borrowers and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
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Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:
(i) two (2) duly completed valid originals of IRS Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,
(ii) two (2) duly completed valid originals of IRS Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Loan
Party within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) two duly completed valid originals of IRS Form W-8BEN,
(iv) any other form prescribed by applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable Law to permit the Borrowers to determine the withholding or deduction
required to be made, or
(v) To the extent that any Lender is not a Foreign Lender, such Lender shall
submit to the Administrative Agent two (2) originals of an IRS Form W-9 or any
other form prescribed by applicable Law demonstrating that such Lender is not a
Foreign Lender.
4.10 Indemnity. In addition to the compensation or payments required by Section
4.8 [Increased Costs] or Section 4.9 [Taxes], the Borrowers shall indemnify each
Lender against all liabilities, losses or expenses (including loss of
anticipated profits, any foreign exchange losses and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain such
Loan, from fees payable to terminate the deposits from which such funds were
obtained or from the performance of any foreign exchange contract) which such
Lender sustains or incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal of any Loan to which a LIBOR Rate
Option or BA Rate Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or not such payment or prepayment
is then due),
(ii) attempt by any Borrower to revoke (expressly, by later inconsistent notices
or otherwise) in whole or part any Loan Requests under Section 2.5 [Revolving
Credit Loan Requests; Swing Loan Requests] or Section 3.2 [Interest Periods] or
notice relating to prepayments under Section 4.6 [Voluntary Prepayments],
(iii) claims of, or amounts paid by the Administrative Agent, any Lender or any
Affiliate of any Lender to a Blocked Account Bank or other Person which has
entered into a control agreement (including, without limitation, a Blocked
Account Agreement) with the Administrative Agent, any Lender or any Affiliate of
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(iv) default by any Borrower in the performance or observance of any covenant or
condition contained in this Agreement or any other Loan Document, including any
failure of any Borrower to pay when due (by acceleration or otherwise) any
principal, interest, Commitment Fee or any other amount due hereunder.
If any Lender sustains or incurs any such loss or expense, it shall from time to
time notify the Borrowers of the amount determined in good faith by such Lender
(which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Lender shall deem
reasonable) to be necessary to indemnify such Lender for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrowers to such
Lender ten (10) Business Days after such notice is given.
4.11 Settlement Date Procedures. In order to minimize the transfer of funds
between the Lenders and the Administrative Agent, the Borrowers may borrow,
repay and reborrow Swing Loans and PNC may make Swing Loans as provided in
Section 2.1.2 [Swing Loan Commitments] hereof during the period between
Settlement Dates. The Administrative Agent shall notify each Lender of its
Ratable Share of the total of the Revolving Credit Loans and the Swing Loans
(each a “Required Share”). On such Settlement Date, each Lender shall pay to the
Administrative Agent the amount equal to the difference between its Required
Share and its Revolving Credit Loans, and the Administrative Agent shall pay to
each Lender its Ratable Share of all payments made by the Borrowers to the
Administrative Agent with respect to the Revolving Credit Loans. The
Administrative Agent shall also effect settlement in accordance with the
foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans
and may at its option effect settlement on any other Business Day. These
settlement procedures are established solely as a matter of administrative
convenience, and nothing contained in this Section 4.11 shall relieve the
Lenders of their obligations to fund Revolving Credit Loans on dates other than
a Settlement Date pursuant to Section 2.1.2 [Swing Loan Commitment]. The
Administrative Agent may at any time at its option for any reason whatsoever
require each Lender to pay immediately to the Administrative Agent such Lender’s
Ratable Share of the outstanding Revolving Credit Loans and each Lender may at
any time require the Administrative Agent to pay immediately to such Lender its
Ratable Share of all payments made by the Borrowers to the Administrative Agent
with respect to the Revolving Credit Loans.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties. The Loan Parties, jointly and severally,
represent and warrant to the Administrative Agent and each of the Lenders as
follows:
5.1.1 Organization and Qualification; Power and Authority; Compliance With Laws;
Title to Properties; Event of Default. Each Loan Party and each Subsidiary of
each Loan Party (i) is a corporation, partnership or limited liability company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) has the lawful power to own or lease its
properties and to engage in the business it presently conducts or proposes to
conduct, (iii) is duly licensed or qualified and in good standing in each
jurisdiction listed on Schedule 5.1.1 and in all other jurisdictions where the
property owned or leased by it or the nature of the business transacted by it or
both makes such licensing or qualification

 

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necessary, except where the failure to be so licensed, qualified and in good
standing is not reasonably likely to result in a Material Adverse Change,
(iv) has full power to enter into, execute, deliver and carry out this Agreement
and the other Loan Documents to which it is a party, to incur the Indebtedness
contemplated by the Loan Documents and to perform its Obligations under the Loan
Documents to which it is a party, and all such actions have been duly authorized
by all necessary proceedings on its part, (v) is in compliance in all material
respects with all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.1.14 [Environmental Matters]) in all
jurisdictions in which any Loan Party or Subsidiary of any Loan Party is
presently or will be doing business except where the failure to do so would not
constitute a Material Adverse Change, and (vi) has good and, as to real
property, marketable title to or valid leasehold interest in all properties,
assets and other rights which it purports to own or lease or which are reflected
as owned or leased on its books and records, free and clear of all Liens and
encumbrances except Permitted Liens. No Event of Default or Potential Default
exists or is continuing.
5.1.2 Subsidiaries and Owners; Investment Companies. As of the Closing Date,
Schedule 5.1.2 states (i) the name of each of the Loan Parties’ Subsidiaries,
its jurisdiction of organization and the amount, percentage and type of equity
interests in such Subsidiary (the “Subsidiary Equity Interests”), (ii) the name
of each holder of an equity interest in each Loan Party (other than DSW), the
amount, percentage and type of such equity interest (the “Loan Party Equity
Interests”), and (iii) any options, warrants or other rights outstanding to
purchase any such equity interests referred to in clause (i) or (iii)
(collectively the “Equity Interests”). Each Loan Party and each Subsidiary of
each Loan Party has good and marketable title to all of the Subsidiary Equity
Interests it purports to own, free and clear in each case of any Lien and all
such Subsidiary Equity Interests have been validly issued, fully paid and
nonassessable. None of the Loan Parties or Subsidiaries of any Loan Party is an
“investment company” registered or required to be registered under the
Investment Company Act of 1940 or under the “control” of an “investment company”
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an “investment company” or under such “control.”
5.1.3 Validity and Binding Effect. This Agreement and each of the other Loan
Documents (i) has been duly and validly executed and delivered by each Loan
Party, and (ii) constitutes, or will constitute, legal, valid and binding
obligations of each Loan Party which is or will be a party thereto, enforceable
against such Loan Party in accordance with its terms.
5.1.4 No Conflict; Material Agreements; Consents. Neither the execution and
delivery of this Agreement or the other Loan Documents by any Loan Party nor the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof or thereof by any of them will conflict
with, constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company agreement or other organizational documents of any Loan Party or (ii) in
any material respect, any Law or any agreement or instrument or order, writ,
judgment, injunction or decree to which any Loan Party or any of its
Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to
which it is subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or hereafter acquired)
of any Loan Party or any of its Subsidiaries (other than Liens granted under the
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under such material agreement (referred to above) and none of the Loan Parties
or their Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which is
reasonably likely to result in a Material Adverse Change. No consent, approval,
exemption, order or authorization of, or a registration or filing with, any
Official Body or any other Person is required by any Law or any agreement in
connection with the execution, delivery and carrying out of this Agreement and
the other Loan Documents.
5.1.5 Litigation. There are no actions, suits, proceedings or investigations
pending or, to the knowledge of any Loan Party, threatened against such Loan
Party or any Subsidiary of such Loan Party at law or in equity before any
Official Body which individually or in the aggregate are reasonably likely to
result in any Material Adverse Change. None of the Loan Parties or any
Subsidiaries of any Loan Party is in violation of any order, writ, injunction or
any decree of any Official Body which is reasonably likely to result in any
Material Adverse Change.
5.1.6 Financial Statements.
(i) Historical Statements. The Borrowers have delivered to the Administrative
Agent copies of their audited consolidated year-end financial statements for and
as of the end of the Borrowers’ fiscal year ended January 30, 2010. In addition,
the Borrowers have delivered to the Administrative Agent copies of their
unaudited consolidated interim financial statements for the fiscal year to date
and as of the end of the fiscal quarter ended May 1, 2010 (all such annual and
interim statements being collectively referred to as the “Statements”). The
Statements were compiled from the books and records maintained by the Borrowers’
management, are correct and complete and fairly represent the consolidated
financial condition of the Borrowers and their Subsidiaries as of the respective
dates thereof and the results of operations for the fiscal periods then ended
and have been prepared in accordance with GAAP consistently applied, subject (in
the case of the interim statements) to normal year-end audit adjustments.
(ii) Accuracy of Financial Statements. As of the respective dates of the
Statements, no Loan Party nor any Subsidiary of any Loan Party has any
liabilities, contingent or otherwise, or forward or long-term commitments that
are not disclosed in the Statements or in the notes thereto, and except as
disclosed therein there are no unrealized or anticipated losses from any
commitments of any Loan Party or any Subsidiary of any Loan Party which may
cause a Material Adverse Change. Since January 30, 2010, no Material Adverse
Change has occurred.
5.1.7 Margin Stock. None of the Loan Parties or any Subsidiaries of any Loan
Party engages or intends to engage principally, or as one of its important
activities, in the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin stock (within the
meaning of Regulation U, T or X as promulgated by the Board of Governors of the
Federal Reserve System). No part of the proceeds of any Loan has been or will be
used, immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock or which is inconsistent with the provisions of the regulations
of the Board of Governors of the Federal Reserve System. None of the Loan
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Loan Party holds or intends to hold margin stock in such amounts that more than
twenty-five percent (25%) of the reasonable value of the assets of any Loan
Party or Subsidiary of any Loan Party are or will be represented by margin
stock.
5.1.8 Full Disclosure. Neither this Agreement nor any other Loan Document, nor
any certificate, statement, agreement or other documents furnished to the
Administrative Agent or any Lender in connection herewith or therewith, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which they were made, not misleading. There is no
fact known to any Loan Party which, individually or in the aggregate, is
reasonably likely to result in a Material Adverse Change except for those which
have been disclosed to the Administrative Agent and the Lenders prior to or at
the date hereof in connection with the transactions contemplated hereby.
5.1.9 Taxes. All federal, state, territorial, provincial and material local and
other tax returns required to have been filed with respect to each Loan Party
and each Subsidiary of each Loan Party have been filed, and payment or adequate
provision has been made for the payment of all taxes, fees, assessments and
other governmental charges which have or may become due pursuant to said returns
or to assessments received, except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made.
5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc. Each Loan Party and each
Subsidiary of each Loan Party owns or possesses all the material patents,
trademarks, service marks, trade names, copyrights, licenses, registrations,
franchises, permits and rights necessary to own and operate its properties and
to carry on its business as presently conducted and planned to be conducted by
such Loan Party or Subsidiary, without known possible, alleged or actual
conflict with the rights of others, other than where any such failure or
conflict is not reasonably likely to result in a Material Adverse Change.
5.1.11 Liens in the Collateral. The Liens in the Collateral granted to the
Administrative Agent for the benefit of the Lenders pursuant to the Collateral
Assignment, the Blocked Account Agreements, and the Security Agreement
(collectively, the “Collateral Documents”) constitute and will continue to
constitute Prior Security Interests (other than with respect to any DDAs not
then subject to a Blocked Account Agreement). All filing fees and other expenses
in connection with the perfection of such Liens have been or will be paid by the
Loan Parties in accordance with Section 10.3.1 [Costs and Expenses] hereof.
5.1.12 Insurance. The properties of each Loan Party and each of its Subsidiaries
are insured pursuant to policies and other bonds which are valid and in full
force and effect and which provide adequate coverage from reputable and
financially sound insurers in amounts sufficient to insure the assets and risks
of each such Loan Party and Subsidiary in accordance with prudent business
practice in the industry of such Loan Parties and Subsidiaries.

 

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5.1.13 ERISA Compliance. In each instance set forth in this Section 5.1.13,
except for those instances which are not reasonably likely to result in a
Material Adverse Change:
(i) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code (A)(1) has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto, or (2) is relying
on a letter from the IRS issued to the sponsor of a pre-approved Plan, and,
(B) to the best knowledge of the Borrowers, nothing has occurred which would
prevent, or cause the loss of, such qualification. Each Borrower and each ERISA
Affiliate have made in all material respects all required contributions to each
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(ii) No ERISA Event has occurred or, based upon facts known to the Loan Parties
as of the Closing Date, is reasonably likely to occur; (a) no Pension Plan has
any unfunded pension liability (i.e. excess of benefit liabilities over the
current value of that Pension Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan for the applicable plan year);
(b) no Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (c) no
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (d) no Borrower nor any
ERISA Affiliate has engaged in a transaction that is reasonably likely to be
subject to Sections 4069 or 4212(c) of ERISA.
5.1.14 Environmental Matters. Each Loan Party is and, to the knowledge of each
respective Loan Party and each of its Subsidiaries is and has been in compliance
with applicable Environmental Laws, other than any noncompliance which when
aggregated with all such noncompliance is not reasonably likely to result in a
Material Adverse Change and except as disclosed on Schedule 5.1.14; provided
that such matters so disclosed are not reasonably likely in the aggregate to
result in a Material Adverse Change.
5.1.15 Solvency. Before and after giving effect to each Loan and each issuance
of a Letter of Credit hereunder, each of the Loan Parties is, on a consolidated
basis, Solvent.
5.1.16 Labor Matters. In each instance set forth in this Section 5.1.16, except
for those matters which are not reasonably likely to result in a Material
Adverse Change, (a) there are no strikes, lockouts, slowdowns or other material
labor disputes against any Loan Party or any Subsidiary thereof pending or, to
the knowledge of any Loan Party, threatened, (b) the hours worked by and
payments made to employees of the Loan Parties comply with the Fair Labor
Standards Act and any other applicable federal, state, provincial, territorial,
local or foreign Law dealing with such matters, (c).no Loan Party or any of its
Subsidiaries has incurred any liability or obligation under the Worker
Adjustment and Retraining Act or similar state Law, (d) all payments due from
any Loan Party and its Subsidiaries, or for which any claim may be

 

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made against any Loan Party or any of its Subsidiaries, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
properly accrued in accordance with GAAP as a liability on the books of such
Loan Party, (e) except as set forth on Schedule 5.1.16, no Loan Party or any
Subsidiary is a party to or bound by any collective bargaining agreement,
management agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement, (f) there are no representation proceedings pending or, to any
Loan Party’s knowledge, threatened to be filed with the National Labor Relations
Board, and no labor organization or group of employees of any Loan Party or any
Subsidiary has made a pending demand for recognition, (g) there are no
complaints, unfair labor practice charges, grievances, arbitrations, unfair
employment practices charges or any other claims or complaints against any Loan
Party or any Subsidiary pending or, to the knowledge of any Loan Party,
threatened to be filed with any Official Body or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any employee of any Loan Party or any of its
Subsidiaries, and (h) the consummation of the transactions contemplated by the
Loan Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party or any of its Subsidiaries is bound.
5.1.17 DDAs; Credit Card Arrangements.
5.1.17.1 DDAs. Annexed hereto as Schedule 5.1.17.1 is a list of all DDAs
maintained by the Loan Parties as of the Closing Date, which Schedule includes,
with respect to each DDA (i) the name and address of the depository; (ii) the
account number(s) maintained with such depository; (iii) a contact person at
such depository, and (iv) the identification of each Blocked Account Bank.
5.1.17.2 Credit Card Arrangements. Annexed hereto as Schedule 5.1.17.2 is a list
describing all arrangements as of the Closing Date to which any Loan Party is a
party with respect to the processing and/or payment to such Loan Party of the
proceeds of any credit card charges and debit card charges for sales made by
such Loan Party.
5.2 Updates to Schedules. Should any of the information or disclosures provided
on any of the Schedules attached hereto become outdated or incorrect in any
material respect, the Borrowers shall promptly provide the Administrative Agent
in writing with such revisions or updates to such Schedule as may be necessary
or appropriate to update or correct same. No Schedule shall be deemed to have
been amended, modified or superseded by any such correction or update, nor shall
any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Lenders, in their sole and absolute discretion, shall
have accepted in writing such revisions or updates to such Schedule.
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans and of the Issuing Lender to issue
Letters of Credit hereunder is subject to the performance by each of the Loan
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to be performed hereunder at or prior to the making of any such Loans or
issuance of such Letters of Credit and to the satisfaction of the following
further conditions:
6.1 First Loans and Letters of Credit.
6.1.1 Deliveries. On the Closing Date, the Administrative Agent shall have
received each of the following in form and substance reasonably satisfactory to
the Administrative Agent:
(i) A certificate of each of the Loan Parties signed by an Authorized Officer of
each Borrower, dated the Closing Date stating that (v) all representations and
warranties of the Loan Parties set forth in this Agreement are true and correct
in all material respects as of the Closing Date, except to the extent such
representations and warranties are modified by “materiality” or “Material
Adverse Change” or words of similar import, in which case they are true and
correct in all respects, (w) the Loan Parties are in compliance with each of the
covenants and conditions hereunder, (x) no Potential Default or Event of Default
exists, and (y) no Material Adverse Change has occurred since January 30, 2010;
(ii) A Simplified Borrowing Base Certificate prepared as of the Closing Date in
substantially the form of Exhibit 7.3.4.1, showing the sum of Revolving Credit
Availability plus the Borrowers’ cash and cash equivalents then on hand, in each
case after giving effect to the Loans to be made on the Closing Date and
consummation of the transactions contemplated hereby (including repayment of
Indebtedness under the Existing Loan Agreement (including in respect of any
outstanding letters of credit issued thereunder) and payment of fees and
expenses owing on the Closing Date), of at least $300,000,000;
(iii) A certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary of each of the Loan Parties, certifying as appropriate as
to: (a) all action taken by each Loan Party in connection with this Agreement
and the other Loan Documents; (b) the names of the Authorized Officers
authorized to sign the Loan Documents and their true signatures; and (c) copies
of its organizational documents as in effect on the Closing Date certified by
the appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the
continued existence and good standing of each Loan Party in each state where
organized or qualified to do business;
(iv) This Agreement and each of the other Loan Documents signed by an Authorized
Officer of each Loan Party and all appropriate financing statements and
appropriate stock powers and certificates and other documents, instruments and
agreements evidencing the pledged Collateral, and evidence of filing of all
Collateral Documents as may be necessary to reflect valid and perfected first
priority Liens in the Collateral;
(v) A written opinion of each of Porter Wright Morris & Arthur LLP and
Sonnenschein Nath & Rosenthal LLP, counsel for the Loan Parties, each dated as
of the Closing Date and opining as to the matters set forth in Schedule 6.1.1;
(vi) Evidence that adequate insurance required to be maintained under this
Agreement is in full force and effect, with additional insured and lender loss
payable

 

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endorsements attached thereto in form and substance satisfactory to the
Administrative Agent and its counsel naming the Administrative Agent as
additional insured and lender loss payee;
(vii) A duly completed Compliance Certificate as of the last day of the fiscal
quarter of DSW most recently ended prior to the Closing Date, signed by an
Authorized Officer of DSW;
(viii) All material consents required to effectuate the transactions
contemplated hereby;
(ix) Evidence that the Existing Loan Agreement has been terminated, and all
outstanding obligations thereunder have been paid and all Liens securing such
obligations have been released;
(x) Results of searches or other evidence reasonably satisfactory to the
Administrative Agent (in each case dated as of a date reasonably satisfactory to
the Administrative Agent) indicating the absence of Liens on the assets of the
Loan Parties, except for Permitted Liens and Liens for which termination
statements and releases reasonably satisfactory to the Administrative Agent are
being tendered concurrently with such extension of credit or other arrangements
reasonably satisfactory to the Administrative Agent for the delivery of such
termination statements and releases have been made;
(xi) An executed Collateral Access Agreement or other lien waiver agreement from
the lessor, or other applicable Person for the fulfillment center and the main
distribution center as required under the Security Agreement; and
(xii) Such other documents, instruments and agreements in connection with such
transactions as the Administrative Agent or its counsel may reasonably request.
6.1.2 Other Conditions Precedent. On the Closing Date, each of the following
conditions precedent shall have been satisfied in a manner acceptable to the
Administrative Agent:
(i) The Administrative Agent shall have received and be satisfied with such
financial or other information as reasonably requested by the Administrative
Agent.
(ii) The Administrative Agent shall have received and be satisfied with such
other due diligence materials (including, without limitation, in respect of
ERISA, and labor matters) as reasonably requested by the Administrative Agent.
(iii) There shall not be pending any litigation or other proceeding, the result
of which, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Change.
(iv) There shall have been no Material Adverse Change since January 30, 2010.

 

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6.1.3 Payment of Fees and Expenses. The Borrowers shall have paid all fees and
expenses invoiced to the Borrowers and payable on or before the Closing Date as
required by this Agreement, the Fee Letter or any other Loan Document.
6.2 Each Loan or Letter of Credit. At the time of making any Loans or issuing,
extending or increasing any Letters of Credit and after giving effect to the
proposed extensions of credit and the application of proceeds therefrom: (i) the
representations, warranties of the Loan Parties shall then be true and correct
in all material respects as of the date of such extension of credit, except to
the extent such representations and warranties (1) relate to an earlier date, in
which case they are true and correct in all material respects as of such earlier
date, or (2) are modified by “materiality” or “Material Adverse Change” or words
of similar import, in which case they are true and correct in all such respects,
(ii) no Event of Default or Potential Default shall have occurred and be
continuing, (iii) the making of the Loans or issuance, extension or increase of
such Letter of Credit shall not contravene any Law applicable to any Loan Party
or Subsidiary of any Loan Party or any of the Lenders, and (iv) the Borrowers
shall have delivered to the Administrative Agent a duly executed and completed
Loan Request or Swing Loan Request, as applicable, or to the Issuing Lender an
application for a Letter of Credit, as the case may be.
6.3 Initial Loans or Letters of Credit — Canadian Borrower. On or prior to the
time of the Canadian Lenders’ making the initial Loans to the Canadian Borrower
or the Issuing Lender’s issuing the initial Letter of Credit for the account of
the Canadian Borrower, the Canadian Borrower shall join this Agreement as the
Canadian Borrower and shall have complied in all respects with the requirements
of Section 7.2.9 [Subsidiaries, Partnerships and Joint Ventures] with respect to
the joinder of a Subsidiary as a Borrower hereto and all other conditions set
forth in this Section 6 [Conditions of Lending and Issuance of Letters of
Credit] with respect to the Canadian Borrower and its Subsidiaries shall have
been satisfied.
7. COVENANTS
The Loan Parties, jointly and severally, covenant and agree that until Payment
In Full, the Loan Parties shall comply at all times with the following
covenants:
7.1 Affirmative Covenants.
7.1.1 Preservation of Existence, Etc. Each Loan Party shall, and shall cause
each of its Subsidiaries to, maintain its legal existence as a corporation,
limited partnership or limited liability company and its license or
qualification and good standing (a) in its jurisdiction of incorporation or
organization, and (b) in each other jurisdiction in which its ownership or lease
of property or the nature of its business makes such license or qualification
necessary, except as otherwise expressly permitted in Section 7.2.6
[Liquidations, Mergers, Consolidations, Amalgamations, Acquisitions] and, with
respect to clause (b), except where the failure to so maintain any license or
qualification is not reasonably likely to result in a Material Adverse Change.
7.1.2 Payment of Liabilities, Including Taxes, Etc. Each Loan Party shall, and
shall cause each of its Subsidiaries to, duly pay and discharge all liabilities
in the aggregate in excess of $1,000,000 to which it is subject or which are
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the same shall become due and payable, including all taxes, assessments and
governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that (A) the validity or amount of any such liability (including taxes,
assessments or charges) is being contested in good faith by appropriate and
lawful proceedings diligently conducted so long as levy and execution thereon
have been stayed and continue to be stayed or (B) if a final judgment is
entered, such judgment is discharged within forty-five (45) days of entry, and
in either case, such contesting or judgment does not affect the Collateral or,
in the aggregate, materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Loan Documents; provided that the
applicable Loan Party maintains such reserves or other appropriate provisions as
shall be required by GAAP and pays all such taxes, assessments or charges
forthwith upon the commencement of proceedings to foreclose any such Lien.
7.1.3 Maintenance of Insurance. Each Loan Party shall, and shall cause each of
its Subsidiaries to, insure its properties and assets against loss or damage by
fire and such other insurable hazards as such assets are commonly insured
(including fire, extended coverage, property damage, workers’ compensation,
public liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary, all reasonably satisfactory to the
Administrative Agent. The Loan Parties shall comply with the covenants and
provide the endorsement set forth on Schedule 7.1.3 relating to property and
related insurance policies covering the Collateral.
7.1.4 Maintenance of Properties and Leases. Each Loan Party shall, and shall
cause each of its Subsidiaries to, maintain in good repair, working order and
condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all of those
properties useful or necessary to its business, and from time to time, such Loan
Party will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
7.1.5 Visitation Rights.
7.1.5.1 General. Each Loan Party shall, and shall cause each of its Subsidiaries
to, permit any of the officers or authorized employees or representatives of the
Administrative Agent or any of the Lenders to visit and inspect any of its
properties and to examine and make excerpts from its books and records and
discuss its business affairs, finances and accounts with its officers, all in
such detail and at such times and as often as any of the Lenders may reasonably
request, provided that each Lender shall provide the Borrowers and the
Administrative Agent with reasonable notice prior to any visit or inspection.
Following the occurrence of a Borrowing Base Trigger Event, the Administrative
Agent may undertake or cause to be undertaken by third parties satisfactory to
the Administrative Agent and the Arranger, in each case at the Borrowers’
expense, such audits and appraisals as the Administrative Agent may require from
time to time in the Administrative Agent’s reasonable discretion. The
Administrative Agent shall use reasonable efforts to minimize expenses and shall
furnish estimates of the expenses in respect of audits and appraisals to be
undertaken after the Closing Date under the Loan Documents. The Administrative
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Borrowers upon its becoming aware that actual expenses in respect of such audits
and appraisals will likely exceed the estimates previously provided therefor,
and (ii) that the Administrative Agent shall not charge the Borrowers’ account
with respect to such expenses until the Borrowers have had a reasonable
opportunity to review the invoices with respect thereto, it being understood
that all such expenses with respect to the audits and appraisals shall be paid
as and when due hereunder.
7.1.5.2 Post-Closing Covenant. In addition to the Administrative Agent’s rights
set forth in Section 7.1.5.1, the Loan Parties shall cooperate with and assist
the Administrative Agent and its representatives in order that the
Administrative Agent may cause, in each case at the Borrowers’ expense, one
(1) audit of the Loan Parties’ business and one (1) appraisal of the Loan
Parties’ Inventory to be prepared by third parties reasonably satisfactory to
the Administrative Agent and the Arranger and completed and delivered to the
Administrative Agent within sixty (60) days following the Closing Date.
7.1.6 Keeping of Records and Books of Account. Each Loan Party shall, and shall
cause each of its Subsidiaries to, maintain and keep proper books of record and
account which enable the Loan Parties and their Subsidiaries to issue financial
statements in accordance with GAAP and as otherwise required by applicable Laws
of any Official Body having jurisdiction over any Loan Party or any Subsidiary
of any Loan Party, and in which full, true and correct entries shall be made in
all material respects of all its dealings and business and financial affairs.
7.1.7 Compliance with Laws; Use of Proceeds. Each Loan Party shall, and shall
cause each of its Subsidiaries to, comply with all applicable Laws, including
all Environmental Laws, in all respects; provided that it shall not be deemed to
be a violation of this Section 7.1.7 if any failure to comply with any Law would
not result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which in the aggregate are reasonably likely to constitute a
Material Adverse Change. The Loan Parties will use the Letters of Credit and the
proceeds of the Loans only in accordance with Section 2.8 [Use of Proceeds] and
as permitted by applicable Law.
7.1.8 Further Assurances. Each Loan Party shall, from time to time, at its
expense, faithfully preserve and protect the Administrative Agent’s Lien on and
Prior Security Interest in the Collateral whether now owned or hereafter
acquired as a continuing first priority perfected Lien, subject only to
Permitted Liens having priority by operation of Law, and shall do such other
acts and things as the Administrative Agent in its reasonable discretion may
deem necessary or advisable from time to time in order to preserve, perfect and
protect the Liens granted under the Loan Documents and to exercise and enforce
its rights and remedies thereunder with respect to the Collateral.
7.1.9 Anti-Terrorism Laws. None of the Loan Parties is or shall be (i) a Person
with whom any Lender is restricted from doing business under Executive Order
No. 13224 or any other Anti-Terrorism Law, (ii) engaged in any business involved
in making or receiving any contribution of funds, goods or services to or for
the benefit of such a Person or in any transaction that evades or avoids, or has
the purpose of evading or avoiding, the prohibitions set forth in any
Anti-Terrorism Law, or (iii) otherwise in violation of any Anti-Terrorism Law.

 

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The Loan Parties shall provide to the Lenders any certifications or information
that a Lender requests to confirm compliance by the Loan Parties with
Anti-Terrorism Laws.
7.1.10 Cash Management.
7.1.10.1 On or prior to the Closing Date, the Loan Parties shall:
(i) deliver to the Administrative Agent copies of notifications (each, a “Credit
Card Notification”), each in form and substance reasonably satisfactory to the
Administrative Agent, which have been executed on behalf of such Loan Party and
delivered to such Loan Party’s credit card clearinghouses and processors listed
on Schedule 5.1.17.1; and
(ii) enter into a Blocked Account Agreement in form and substance reasonably
satisfactory to the Administrative Agent with each Blocked Account Bank on terms
consistent with the provisions of Section 7.1.10.3 hereof (collectively, the
“Blocked Accounts”).
7.1.10.2 The Loan Parties shall ACH or wire transfer no less frequently than
daily (and whether or not there are then any outstanding Obligations) to a
Blocked Account all amounts in excess of $2,500 on deposit in each such DDA and
all payments due from credit card processors.
7.1.10.3 Each Blocked Account Agreement shall require after the occurrence of a
Trigger Event Election or an Event of Default the ACH or wire transfer no less
frequently than daily (and whether or not there are then any outstanding
Obligations) to the concentration account maintained at PNC or, with respect to
the Canadian Borrower and its Subsidiaries, to the concentration account
maintained at PNC Canada (each, as further described in a certain confidential
side letter of even date herewith, a “Concentration Account”), of all cash
receipts and collections, including, without limitation, the following:
(i) all available cash receipts from the sale of Inventory (including without
limitation, proceeds of credit card charges) and other assets (whether or not
constituting Collateral);
(ii) all proceeds of collections of Accounts;
(iii) all Net Proceeds and all other cash payments received by a Loan Party from
any Person or from any source or on account of any sale or other transaction or
event;
(iv) the then contents of each DDA (net of any minimum balance, not to exceed
$2,500.00, as may be required to be kept in the subject DDA by the depository
institution at which such DDA is maintained);
(v) the then entire ledger balance of each Blocked Account (net of any minimum
balance, not to exceed $2,500.00, as may be required to be kept in the subject
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(iv) all other proceeds of Collateral.
The Concentration Account shall at all times be under the sole dominion and
control of the Administrative Agent or PNC Canada, as applicable. The Loan
Parties hereby acknowledge and agree that (i) the Loan Parties have no right of
withdrawal from the Concentration Accounts, (ii) the funds on deposit in the
Concentration Accounts shall at all times be collateral security for all of the
Obligations or the Canadian Liabilities, as applicable, and (iii) the funds on
deposit in the Concentration Accounts shall be applied as provided in this
Agreement. In the event that, notwithstanding the provisions of this
Section 7.1.10, any Loan Party receives or otherwise has dominion and control of
any such proceeds or collections, such proceeds and collections shall be held in
trust by such Loan Party for the Administrative Agent, shall not be commingled
with any of such Loan Party’s other funds or deposited in any account of such
Loan Party and shall, not later than the Business Day after receipt thereof, be
deposited into a Concentration Account or dealt with in such other fashion as
such Loan Party may be instructed by the Administrative Agent.
7.1.10.4 Upon the request of the Administrative Agent, the Loan Parties shall
cause bank statements and/or other reports to be delivered to the Administrative
Agent not less often than monthly, accurately setting forth all amounts
deposited in each Blocked Account to ensure the proper transfer of funds as set
forth above.
7.1.10.5 Each Loan Party hereby authorizes the Administrative Agent, after the
occurrence and during the continuance of an Event of Default, to (i) notify any
or all Account Debtors that the Accounts have been assigned to the Lenders and
that the Lenders have a security interest therein, and (ii) direct such Account
Debtors to make all payments due from them to the Loan Parties upon the Accounts
directly to the Administrative Agent or to a lockbox designated by the
Administrative Agent. The Administrative Agent shall promptly furnish the
Borrowers with a copy of any such notice sent. Any such notice, in the
Administrative Agent’s sole discretion, may be sent on any Loan Party’s
stationery, in which event such Loan Party shall co-sign such notice with the
Administrative Agent. To the extent that any Law or custom or any contract or
agreement with any Account Debtor requires notice to or the approval of the
Account Debtor in order to perfect such assignment of a security interest in
Accounts, each Loan Party agrees to give such notice or obtain such approval.
7.2 Negative Covenants.
7.2.1 Indebtedness. Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on Schedule 7.2.1 (including any
extensions or renewals thereof; provided there is no increase in the amount
thereof or other significant change in the terms thereof unless otherwise
specified on Schedule 7.2.1);

 

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(iii) as and to the extent permitted pursuant to clause (ix) of the definition
of “Permitted Liens”, Indebtedness incurred with respect to Purchase Money
Security Interests and Capital Leases;
(iv) Indebtedness of a Loan Party to another Loan Party;
(v) Indebtedness of a Loan Party to a Subsidiary which is not a Loan Party which
is subordinated pursuant to the Intercompany Subordination Agreement;
(vi) Any (i) Lender Provided Interest Rate Hedge, (ii) other Interest Rate Hedge
approved by the Administrative Agent, or (iii) Indebtedness under any Other
Lender Provided Financial Services Product; provided, however, the Loan Parties
and their Subsidiaries shall enter into a Lender Provided Interest Rate Hedge or
another Interest Rate Hedge only for hedging (rather than speculative) purposes;
(vii) Indebtedness in connection with Permitted Acquisitions (A) to sellers in
an amount not to exceed $25,000,000 in the aggregate outstanding at any time,
provided that such Indebtedness has a maturity of at least 180 days following
the Expiration Date and is subordinated to the Obligations on terms reasonably
acceptable to the Administrative Agent, and (B) as disclosed in a certain
confidential side letter of even date herewith;
(viii) Indebtedness in respect of financing of insurance premiums; incurred in
the ordinary course of business;
(ix) Indebtedness in respect to any Lender’s credit card program incurred in the
ordinary course of business;
(x) Indebtedness to customs brokers, freight forwarders, common carriers,
landlords and like persons incurred in the ordinary course of business;
(xi) Indebtedness with respect to indemnities, warranties, statutory
obligations, and surety, appeal and supersedeas bonds incurred in the ordinary
course of business and which is not overdue;
(xii) Indebtedness consisting of obligations of a Loan Party or any Subsidiary
under any lease (i) which is accounted for by the lessee thereof as an operating
lease, and (ii) under which such lessee is intended to be the “owner” of the
leased property for federal income tax purposes; and
(xiii) other Indebtedness not specifically described herein in an aggregate
principal amount not to exceed $20,000,000 in any fiscal year of the Borrowers.
Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries
to, prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner any Indebtedness, or make any payment
in violation of any subordination terms of any Subordinated Indebtedness in
excess of the sum of $2,500,000, except (a) as long as no Trigger Event Election
has occurred and no Event of Default or Potential Default then exists or would
arise therefrom and, after giving effect to any such payment, the Borrowers have
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Minimum Cash Requirement, regularly scheduled repayments, prepayments,
repurchases, redemptions or defeasances of Indebtedness described in this
Section 7.2.1 (other than Subordinated Indebtedness), and (b) as long as no
Trigger Event Election has occurred and no Event of Default or Potential Event
of Default then exists or would arise therefrom, and, after giving effect to any
such payment, the Borrowers have on hand the Minimum Cash Requirement,
repayments, defeasances and prepayments of Subordinated Indebtedness in
accordance with the subordination terms thereof.
7.2.2 Liens; Lien Covenants. Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create, incur, assume or suffer
to exist any Lien on any of its property or assets, tangible or intangible, now
owned or hereafter acquired, or agree or become liable to do so, except
Permitted Liens.
7.2.3 Guaranties. Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time, directly or indirectly, become or be liable
in respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for
Guaranties of Indebtedness of the Loan Parties permitted hereunder.
7.2.4 Loans and Investments. Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time make or suffer to remain
outstanding any loan or advance to, or purchase, acquire or own any stock,
bonds, notes or securities of, or any partnership interest (whether general or
limited) or limited liability company interest in, or any other investment or
interest in, or make any capital contribution to, or make an Acquisition of, any
other Person, or agree, become or remain liable to do any of the foregoing,
except:
(i) trade credit and similar advances extended on usual and customary terms in
the ordinary course of business (including , without limitation, pursuant to any
Loan Party’s leased departments, supply agreements or similar arrangements);
(ii) advances to employees to meet expenses incurred by such employees in the
ordinary course of business;
(iii) Permitted Investments;
(iv) Permitted Acquisitions;
(v) loans, advances and investments in other Loan Parties;
(vi) investments in Taryn Rose in an amount not to exceed $5,000,000 at any time
outstanding;
(vii) investments pursuant to a certain confidential side letter of even date
herewith; and
(viii) other investments not specifically described herein and not exceeding
$20,000,000 in the aggregate in any fiscal year of the Borrowers.

 

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7.2.5 Dividends and Related Distributions. Each of the Loan Parties shall not,
and shall not permit any of its Subsidiaries to, make or pay, or agree to become
or remain liable to make or pay, any dividend or other distribution of any
nature (whether in cash, property, securities or otherwise) on account of or in
respect of its shares of capital stock, partnership interests or limited
liability company interests on account of the purchase, redemption, retirement
or acquisition of its shares of capital stock (or warrants, options or rights
therefor), partnership interests or limited liability company interests, except:
(i) dividends or other distributions payable to another Loan Party; and
(ii) in any fiscal year of the Borrowers, dividends or other distributions, and
share repurchases, share redemptions or retirements, in the aggregate of up to
fifty percent (50%) of the Borrowers’ net income (as determined in accordance
with GAAP) from the immediately preceding fiscal year, provided that (x) prior
to and after giving effect to the making of such dividend or other distribution,
no Trigger Event Election or Event of Default shall have occurred and the
Borrowers shall have on hand the Minimum Cash Requirement, and (y) the aggregate
amount of all such dividends or other distributions in such fiscal year does not
exceed $50,000,000.
7.2.6 Liquidations, Mergers, Consolidations, Amalgamations, Acquisitions. Each
of the Loan Parties shall not, and shall not permit any of its Subsidiaries to,
dissolve, liquidate or wind-up its affairs, or become a party to any merger,
consolidation or amalgamation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other Person, except:
(i) any Loan Party other than a Borrower may consolidate, merge or amalgamate
with and into another Loan Party which is wholly-owned by one or more of the
other Loan Parties; and
(ii) Permitted Acquisitions;
(iii) pursuant to a confidential side letter delivered to the Administrative
Agent of even date herewith.
7.2.7 Dispositions of Assets or Subsidiaries. Each of the Loan Parties shall
not, and shall not permit any of its Subsidiaries to, sell, convey, assign,
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including sale, assignment, discount or other disposition of accounts, contract
rights, chattel paper, equipment or general intangibles with or without recourse
or of capital stock, shares of beneficial interest, partnership interests or
limited liability company interests of a Subsidiary of such Loan Party), except:
(i) transactions involving the sale of inventory in the ordinary course of
business;
(ii) any sale, transfer or lease of assets in the ordinary course of business
which are no longer necessary or required in the conduct of such Loan Party’s or
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Subsidiary’s business so long as no Event of Default shall have occurred and be
continuing or will result therefrom;
(iii) any sale, transfer or lease of assets by any wholly owned Subsidiary of
such Loan Party to another Loan Party;
(iv) any sale, transfer or lease of assets in the ordinary course of business
which are replaced by substitute assets acquired or leased within the parameters
of Section 7.2.14 [Capital Expenditures] so long no Event of Default shall have
occurred and be continuing or will result therefrom; provided such substitute
assets are subject to the Administrative Agent’s and the Lenders’ Prior Security
Interest;
(v) any other sale, transfer or lease of assets to another Person in an amount
not to exceed $20,000,000 in the aggregate for all such other sales, transfers
or leases in any fiscal year of the Borrowers so long as (a) a Trigger Event
Election has not occurred and (b) no Potential Default or Event of Default shall
have occurred and be continuing or will result therefrom (it being understood
that following the earlier to occur of a Trigger Event Election or the
occurrence of such Potential Default or Event of Default, any such sale,
transfer of lease shall require the Required Lenders’ prior written consent);
(vi) Licenses of intellectual property or licensed departments of a Loan Party
or any of its Subsidiaries in the ordinary course of business; and
(vii) Leases or subleases of leases.
7.2.8 Affiliate Transactions. Except as disclosed on Schedule 7.2.8, each of the
Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter
into or carry out any transaction with any Affiliate of any Loan Party
(including purchasing property or services from or selling property or services
to any Affiliate of any Loan Party or other Person) unless such transaction is
not otherwise prohibited by this Agreement, is entered into in the ordinary
course of business upon fair and reasonable arm’s-length terms and conditions
which are fully disclosed to the Administrative Agent and is in accordance with
all applicable Law.
7.2.9 Subsidiaries, Partnerships and Joint Ventures. Each of the Loan Parties
shall not, and shall not permit any of its Subsidiaries to own or create
directly or indirectly any Subsidiaries other than (i) any Subsidiary which has
joined this Agreement as Guarantor on the Closing Date; and (ii) any Domestic
Subsidiary formed or acquired after the Closing Date which joins this Agreement
as a Borrower or as a Guarantor, and, to the extent not resulting in material
adverse tax consequences, any Foreign Subsidiary formed or acquired after the
Closing Date which joins this Agreement as a Borrower or as a Guarantor, in each
case by delivering to the Administrative Agent (A) a signed Borrower Joinder or
Guarantor Joinder, as appropriate; (B) documents in the forms described in
Section 6.1 [First Loans] modified as appropriate; (C) documents necessary to
grant and perfect the Prior Security Interests to the Administrative Agent for
the benefit of the Lenders in the equity interests of, and Collateral held by,
such Subsidiary; and (D) such diligence materials in respect of such Subsidiary
(including, without limitation, “know your customer”, liens, ERISA and labor
matters) as the Administrative Agent shall reasonably request. Each of the Loan
Parties shall not become or agree to become a party

 

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to a Joint Venture other than Permitted Investments and other investments
permitted pursuant to Section 7.2.4 [Loans and Investments]. For purposes of
clarity, any Subsidiary organized under the laws of Canada or any political
subdivision thereof that is formed or acquired by the Canadian Borrower after
the Closing Date shall join this Agreement as a Guarantor of the Canadian
Liabilities in accordance with the terms of this Section 7.2.9.
7.2.10 Continuation of or Change in Business. Each of the Loan Parties shall
not, and shall not permit any of its Subsidiaries to, engage in any business
other than (a) operation of designer and name brand shoe stores and related
accessories, or (b) operation of licensed shoe departments, and any other
business reasonably incidental thereto in each case, as to the existing
business, substantially as conducted and operated by such Loan Party or
Subsidiary during the present fiscal year, and such Loan Party or Subsidiary
shall not permit any material change in such business.
7.2.11 Fiscal Year. No Loan Party shall, nor shall permit any Subsidiary of any
Loan Party to, change its fiscal year from the fifty-two (52) or fifty-three
(53) week period ending on the Saturday nearest to January 31 in such year.
7.2.12 Issuance of Stock. Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, issue any additional shares of its capital
stock or any options, warrants or other rights in respect thereof, except that
(i) DSW may issue shares of its capital stock and options, warrants or other
rights in respect thereof, and (ii) any other Loan Party or Subsidiary may issue
to such Person’s immediate parent any shares of such Person’s capital stock or
any options, warrants or other rights in respect thereof.
7.2.13 Changes in Organizational Documents. Other than as disclosed in that
certain confidential side letter of even date herewith, each of the Loan Parties
shall not, and shall not permit any of its Subsidiaries to, amend in any
material respect its certificate of incorporation (including any provisions or
resolutions relating to capital stock), by-laws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company agreement or other organizational documents, without providing at least
ten (10) Business Days’ prior written notice to the Administrative Agent and the
Lenders and, in the event any change (whether or not such change is deemed
material by the Loan Parties) could reasonably be expected to materially
adversely affect the interests of the Lenders as determined by the
Administrative Agent in its sole discretion, obtaining the prior written consent
of the Required Lenders.
7.2.14 Capital Expenditures. Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, make any payments exceeding $75,000,000 in
the aggregate in any fiscal year on account of any Capital Expenditures.
7.2.15 Minimum Fixed Charge Coverage Ratio. From and after the occurrence of a
Trigger Event Election, the Loan Parties shall not permit the Fixed Charge
Coverage Ratio, calculated as of the end of each month for the twelve
(12) fiscal months then ended, to be less than 1.1 to 1.0.

 

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7.2.16 Agreements Restricting Dividends. Each of the Loan Parties covenants and
agrees that it shall not, and shall not permit any of its Subsidiaries to, enter
into any Agreement with any Person which restricts any of the Loan Parties’
right to pay dividends or other distributions to any Borrower or any other Loan
Party or to repay intercompany loans from any Borrower to any other Loan Party.
7.2.17 DDAs; Credit Card Processors. No Loan Party shall open new Blocked
Accounts unless the Loan Parties shall have delivered to the Administrative
Agent appropriate Blocked Account Agreements consistent with the provisions of
Section 7.1.10 [Cash Management] and otherwise reasonably satisfactory to the
Administrative Agent. No Loan Party shall maintain any bank accounts or enter
into any agreements with credit card processors other than the ones expressly
contemplated herein or in Section 7.1.10 [Cash Management].
7.2.18 Negative Pledges. Each of the Loan Parties covenants and agrees that it
shall not, and shall not permit any of its Subsidiaries to, enter into any
Agreement with any Person which, in any manner, whether directly or
contingently, prohibits, restricts or limits the right of any of the Loan
Parties from granting any Liens to the Administrative Agent or the Lenders.
7.3 Reporting Requirements. The Loan Parties will furnish or cause to be
furnished to the Administrative Agent and each of the Lenders:
7.3.1 Quarterly Financial Statements; Monthly Financial Statements.
(i) Within forty-five (45) calendar days after the end of each of the first
three fiscal quarters in each fiscal year, financial statements of DSW,
consisting of a consolidated balance sheet, together with consolidating
schedules with respect thereto, as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, stockholders’ equity,
retained earnings and cash flows for the fiscal quarter then ended and the
fiscal year through that date, all in reasonable detail and certified (subject
to normal year-end audit adjustments) by an Authorized Officer of DSW as having
been prepared in accordance with GAAP, consistently applied, and setting forth
in comparative form the respective financial statements for the corresponding
date and period in the previous fiscal year.
(ii) From and after the occurrence of a Trigger Event Election, within thirty
(30) calendar days after the end of each of the first two fiscal months in each
fiscal quarter, financial statements of DSW, consisting of a consolidated
balance sheet, together with consolidating schedules with respect thereto as of
the end of such fiscal month and related consolidated and consolidating
statements of income, stockholders’ equity, retained earnings and cash flows for
the fiscal month then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by an Authorized Officer of DSW as having been prepared in accordance with GAAP,
consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
fiscal year.
7.3.2 Annual Financial Statements. Within ninety (90) days after the end of each
fiscal year of DSW, financial statements of DSW consisting of a consolidated
audited

 

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balance sheet as of the end of such fiscal year, together with consolidating
schedules with respect thereto, and related consolidated and consolidating
statements of income, stockholders’ equity, retained earnings and cash flows for
the fiscal year then ended, all in reasonable detail and setting forth in
comparative form the financial statements as of the end of and for the preceding
fiscal year, and certified by independent certified public accountants of
nationally recognized standing reasonably satisfactory to the Administrative
Agent. The certificate or report of accountants shall be free of qualifications
(other than any consistency qualification that may result from a change in the
method used to prepare the financial statements as to which such accountants
concur) and shall not indicate the occurrence or existence of any event,
condition or contingency which would materially impair the prospect of payment
or performance of any covenant, agreement or duty of any Loan Party under any of
the Loan Documents.
7.3.3 Certificate of the Borrowers. Concurrently with the financial statements
of DSW furnished to the Administrative Agent and to the Lenders pursuant to
Section 7.3.1 [Quarterly Financial Statements; Monthly Financial Statements] and
Section 7.3.2 [Annual Financial Statements], a certificate (each a “Compliance
Certificate”) of DSW signed by an Authorized Officer thereof, in the form of
Exhibit 7.3.3.
7.3.4 Simplified Borrowing Base Certificates; Borrowing Base Certificates.
(i) Prior to the occurrence of a Borrowing Base Trigger Event, as soon as
available, but in any event within twenty (20) days following the end of each
fiscal quarter, a certificate showing the Simplified Borrowing Base for each of
the Domestic Borrowers and the Canadian Borrower (a “Simplified Borrowing Base
Certificate”) as of the last day of such fiscal quarter, in the form of
Exhibit 7.3.4.1 (or such other form as the Administrative Agent may reasonably
require from time to time), appropriately completed, executed and delivered by
an Authorized Officer of DSW.
(ii) From and after the occurrence of a Borrowing Base Trigger Event, as soon as
available: by the twentieth (20th) Business Day of each month (or with such
greater frequency as the Administrative Agent may require), a certificate
showing the Borrowing Base and the Canadian Borrowing Base (a “Borrowing Base
Certificate”) as of the last day of the immediately preceding month in the form
of Exhibit 7.3.4.2 (or such other form as the Administrative Agent may
reasonably require from time to time), appropriately completed, executed and
delivered by an Authorized Officer of each of DSW and the Canadian Borrower,
together with a detailed sales register, a cash receipts journal and a purchase
journal showing sales, receipts and purchases for the preceding month.
7.3.5 Minimum Cash Requirement; DDAs. No later than the twentieth (20th) day of
each month, a certificate duly executed by the Borrowers certifying (i) that the
Borrowers had on hand the Minimum Cash Requirement at all times during the
immediately preceding month, together with supporting documentation evidencing
such compliance, and (ii) as to the account numbers and depository banks with
respect to any DDAs opened since the date of the last certification delivered
pursuant to this Section 7.3.5, in each case in form and substance reasonably
satisfactory to the Administrative Agent.
7.3.6 Notices.

 

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7.3.6.1 Default. Promptly after any Authorized Officer of DSW has learned of the
occurrence of an Event of Default, a certificate signed by an Authorized Officer
of such Loan Party setting forth the details of such Event of Default and the
action which such Loan Party proposes to take with respect thereto.
7.3.6.2 Litigation. Promptly after the commencement thereof, notice of all
actions, suits, proceedings or investigations before or by any Official Body or
any other Person against any Loan Party or Subsidiary of any Loan Party which
relate to the Collateral, involve a claim or series of claims in excess of
$10,000,000 or which if adversely determined would constitute a Material Adverse
Change.
7.3.6.3 Organizational Documents. Within the time limits set forth in and to the
extent required pursuant to Section 7.2.13 [Changes in Organizational
Documents], any amendment to the organizational documents of any Loan Party.
7.3.6.4 Erroneous Financial Information. Promptly in the event that any Loan
Party or any of such Loan Party’s accountants conclude or advise that any
previously issued financial statement, audit report or interim review should no
longer be relied upon or that disclosure should be made or action should be
taken to prevent future reliance.
7.3.6.5 ERISA Event. Promptly upon the occurrence of any ERISA Event.
7.3.6.6 Change in Officers. Promptly after the occurrence thereof, any change in
any Loan Party’s President, chief executive officer, chief operating officer,
and chief financial officer (without regard to the title(s) actually given to
the Persons discharging the duties customarily discharged by officers with those
titles).
7.3.6.7 Material Adverse Change. Promptly upon the occurrence of a Material
Adverse Change.
7.3.6.8 Change in Accountants. Promptly upon the occurrence of any discharge by
DSW of its present independent accountants or any withdrawal or resignation by
such independent accountants from their acting in such capacity.
7.3.6.9 Consignment or Other Arrangement. Promptly following the occurrence
thereof, any Loan Party’s entering into with any other Person (other than a Loan
Party) a consignment arrangement or licensing or other similar agreement
(whether for intellectual property, leased departments in stores or otherwise).
7.3.6.10 Leases; Licenses. Concurrently with the delivery of the financial
statements described in Section 7.3.1(i) [Quarterly Financial Statements] and
Section 7.3.2 [Annual Financial Statements], any Loan Party’s entering into a
Capital Lease, operating lease or license agreement during the three (3) month
period ending as of the date of such financial statements.

 

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7.3.6.11 Trigger Event. Promptly after any Authorized Officer of DSW has learned
of the occurrence of a Trigger Event, a certificate signed by an Authorized
Officer of DSW setting forth the details of such Trigger Event.
7.3.6.12 SEC Reports; Shareholder Communications. (i) Promptly upon any
Borrower’s filing any reports (including Forms 10-K, 10-Q and 8-K, registration
statements and prospectuses and other shareholder communications) with the
Securities and Exchange Commission, notice of such filing, and (ii) promptly
upon their becoming available to DSW, copies of correspondence from the SEC,
other than routine general communications from the SEC.
7.3.6.13 Other Reports. Promptly upon their becoming available to the Loan
Parties:
(i) Annual Budget. The annual budget and any forecasts or projections of the
Loan Parties, to be supplied on the earlier of (a) five (5) Business Days
following the approval thereof by DSW’s board of directors, or (b) March 31 of
each year.
(ii) Management Letters. Any reports including management letters submitted to
the Loan Parties by independent accountants in connection with any annual,
interim or special audit.
(iii) Other Information. Such other reports and information as any of the
Lenders may from time to time reasonably request to the extent the Loan Parties
have the ability to generate such information based on their then current
systems.
8. DEFAULT
8.1 Events of Default. An Event of Default shall mean the occurrence or
existence of any one or more of the following events or conditions (whatever the
reason therefor and whether voluntary, involuntary or effected by operation of
Law):
8.1.1 Payments Under Loan Documents. Any Loan Party shall fail to pay any
principal of any Loan (including scheduled installments, mandatory prepayments
or the payment due at maturity), Reimbursement Obligation or Letter of Credit or
Obligation or any interest on any Loan, Reimbursement Obligation or Letter of
Credit Obligation on the date on which such principal, interest or other amount
becomes due in accordance with the terms hereof or thereof;
8.1.2 Breach of Warranty. Any representation or warranty made at any time by any
of the Loan Parties herein or by any of the Loan Parties in any other Loan
Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished;
8.1.3 Breach of Certain Covenants. Any of the Loan Parties shall default in the
observance or performance of any covenant contained in Section 7.1.2 [Payment of
Liabilities, Including Taxes, Etc.], Section 7.1.5 [Visitation Rights], Section
7.1.10 [Cash Management] or Section 7.2 [Negative Covenants];

 

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8.1.4 Breach of Other Covenants. Any of the Loan Parties shall default in the
observance or performance of any other covenant, condition or provision hereof
or of any other Loan Document and such default shall continue unremedied for a
period of ten (10) Business Days following the earlier to occur of (i) the
Administrative Agent’s notifying an Authorized Officer of DSW of such default,
or (ii) the obtaining of knowledge of such default by any Authorized Officer of
any Loan Party;
8.1.5 Defaults in Indebtedness; Leases. (a) A breach, default or event of
default shall occur at any time under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness under which
any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or
guarantor in excess of $5,000,000 in the aggregate, or (b) a breach, default or
event of default shall occur at any time under the terms of a lease pursuant to
which a Loan Party is the lessee, where the aggregate of such lease and all
other such leases with respect to which there exists a breach, default or event
of default, constitutes more than five percent (5%) of all leases of the Loan
Parties existing from time to time that could be terminated due to a default by
a Loan Party thereunder (whether or not the subject creditor or lessor takes any
action on account of such occurrence);
8.1.6 Final Judgments or Orders. Any final judgments or orders for the payment
of money in excess of $10,000,000 in the aggregate shall be entered against any
Loan Party by a court having jurisdiction in the premises, which judgment is not
discharged, vacated, bonded or stayed pending appeal within a period of
forty-five (45) days from the date of entry;
8.1.7 Loan Document Unenforceable. Except for Simplified Borrowing Base
Certificates, Borrowing Base Certificates and Compliance Certificates that are
customarily updated (and have been so updated) pursuant to the terms of this
Agreement, any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party’s
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
as a result of any action or inaction by any Person other than the
Administrative Agent, the Issuing Lender or any Lender, or shall in any way be
challenged or contested or cease to give or provide the respective Liens,
security interests, rights, titles, interests, remedies, powers or privileges
intended to be created thereby;
8.1.8 Uninsured Losses; Proceedings Against Assets. There shall occur any
material uninsured damage to or loss, theft or destruction of any of the
Collateral in excess of $5,000,000 or the Collateral or any other of the Loan
Parties’ or any of their Subsidiaries’ assets with a book value (determined in
accordance with GAAP) in excess of $5,000,000 in the aggregate are attached,
seized, levied upon or subjected to a writ or distress warrant; or such come
within the possession of any receiver, monitor, interim monitor, trustee,
custodian or assignee for the benefit of creditors and the same is not cured
within forty-five (45) days thereafter;
8.1.9 Events Relating to Plans and Benefit Arrangements. (i) An ERISA Event
occurs with respect to a Pension Plan or Multiemployer Plan which has resulted
or could reasonably be expected to result in liability of any Borrower under
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Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount that is
reasonably likely to result in a Material Adverse Change, (ii) any Borrower or
any ERISA Affiliate fails to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount that is reasonably likely to result in a Material Adverse Change,
(iii) or any similar event or condition shall occur or exist with respect to a
Plan with respect to the Canadian Borrower that could, in the Administrative
Agent’s judgment, subject the Canadian Borrower or any of its Subsidiaries to
any tax, penalty or other liabilities under the Pension Benefits Act (Ontario)
or any other applicable Laws, in an aggregate amount that is reasonably likely
to result in a Material Adverse Change, or (iv) the Canadian Borrower or any of
its Subsidiaries is in default with respect to required payments to a Plan or
any Lien arises (save for contribution amounts not yet due) in connection with
any Plan in an aggregate amount that is reasonably likely to result in a
Material Adverse Change.
8.1.10 Change of Control. Except as provided in a confidential side letter of
even date herewith, (i) any person or group of persons (within the meaning of
Sections 13(d) or 14(a) of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership of (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act)
twenty-five percent (25%) or more of the voting capital stock of any Loan Party;
or (ii) within a period of twelve (12) consecutive calendar months, individuals
who were directors of a Loan Party on the first day of such period shall cease
to constitute a majority of the board of directors of such Loan Party other than
in respect of any death, disability, resignation, or replacement of any director
by a majority of such directors or replacement directors.
8.1.11 Relief Proceedings. (i) A Relief Proceeding shall have been instituted
against any Loan Party and such Relief Proceeding shall remain undismissed or
unstayed and in effect for a period of forty-five (45) consecutive days or such
court shall enter a decree or order granting any of the relief sought in such
Relief Proceeding, (ii) any Loan Party institutes, or takes any action in
furtherance of, a Relief Proceeding, or (iii) any Loan Party ceases to be
Solvent or admits in writing its inability to pay its debts as they mature.
8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings. If an Event of Default specified under Sections 8.1.1 through
8.1.10 shall occur and be continuing, the Lenders and the Administrative Agent
shall be under no further obligation to make Loans and the Issuing Lender shall
be under no obligation to issue Letters of Credit and the Administrative Agent
may, and upon the request of the Required Lenders, shall (i) by written notice
to the Borrowers, declare the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrowers to the Lenders hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Administrative Agent for the benefit of each
Lender without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, and (ii) require the Borrowers to, and the
Borrowers shall thereupon, Cash Collateralize all outstanding Letters of Credit,
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Administrative Agent and the Lenders, and grants to the Administrative Agent and
the Lenders a security interest in, all such cash as security for such
Obligations; and
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of
Default specified under Section 8.1.11 [Relief Proceedings] shall occur, the
Lenders shall be under no further obligations to make Loans hereunder and the
Issuing Lender shall be under no obligation to issue Letters of Credit and the
unpaid principal amount of the Loans then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Lenders hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; and
8.2.3 Set-off. If an Event of Default shall have occurred and be continuing,
with the prior written consent of the Administrative Agent or the Required
Lenders, each Lender, the Issuing Lender, and each of their respective
Affiliates and any Participant of such Lender or Affiliate which has agreed in
writing to be bound by the provisions of Section 4.3 [Sharing of Payments] is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, the Issuing Lender or any such Affiliate or Participant to or for the
credit or the account of any Loan Party against any and all of the Obligations
of such Loan Party now or hereafter existing under this Agreement or any other
Loan Document to such Lender, the Issuing Lender, Affiliate or Participant,
irrespective of whether or not such Lender, Issuing Lender, Affiliate or
Participant shall have made any demand under this Agreement or any other Loan
Document and although such Obligations of the Borrowers or such other Loan Party
may be contingent or unmatured or are owed to a branch or office of such Lender
or the Issuing Lender different from the branch or office holding such deposit
or obligated on such Indebtedness. Notwithstanding the foregoing, any amounts of
the Canadian Borrower so offset shall be applied solely to the Canadian
Liabilities. The rights of each Lender, the Issuing Lender and their respective
Affiliates and Participants under this Section are in addition to other rights
and remedies that such Lender, the Issuing Lender or their respective Affiliates
and Participants may have under any Loan Document in respect of any obligation
or liability arising in connection with this Agreement or any other Loan
Document. Each Lender and the Issuing Lender agrees to notify the Borrowers and
the Administrative Agent promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of
such setoff and application; and
8.2.4 Application of Proceeds. From and after the date on which the
Administrative Agent has taken any action pursuant to this Section 8.2 and until
all Obligations of the Loan Parties have been paid in full, any and all proceeds
received by the Administrative Agent from any sale or other disposition of the
Collateral, or any part thereof, or the exercise of any other remedy by the
Administrative Agent, shall be applied as follows:
8.2.4.1 With respect to Collateral and Payments from the Domestic Borrowers and
Guarantors:

 

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First, to payment of that portion of the Obligations (other than Canadian
Liabilities) constituting fees, indemnities, costs and expenses and other
amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Section 3.4) payable to the
Administrative Agent;
Second, to payment of that portion of the Obligations (other than Canadian
Liabilities) constituting indemnities, costs and expenses, and other amounts
(other than principal, interest and fees) payable to the Domestic Lenders and
the Issuing Lender (including costs and expenses to the respective Domestic
Lenders and the Issuing Lender and amounts payable under Section 3.4), ratably
among them in proportion to the amounts described in this clause Second payable
to them;
Third, to the extent not previously reimbursed by the Domestic Lenders, to
payment to the Administrative Agent of that portion of the Obligations
constituting principal and accrued and unpaid interest on any Permitted
Overadvances (other than those made to the Canadian Borrower);
Fourth, to the extent that Swing Loans have not been refinanced by a Revolving
Credit Loan provided by the Domestic Lenders pursuant to Section 2.6.5, payment
to the Swing Lender of that portion of the Obligations constituting accrued and
unpaid interest on the Swing Loans;
Fifth, to the extent that Swing Loans have not been refinanced by a Revolving
Credit Loan provided by the Domestic Lenders pursuant to Section 2.6.5, to
payment to the Swing Lender of that portion of the Obligations constituting
unpaid principal of the Swing Loans;
Sixth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Revolving Credit Loans, Reimbursement Obligations, Letter
of Credit Borrowings and other Obligations (excluding the Canadian Liabilities
and any Obligations of the type specified in clauses (ii) and (iii) of the
definition thereof), and fees (including Letter of Credit Fees), ratably among
the Domestic Lenders and the Issuing Lender in proportion to the respective
amounts described in this clause Sixth payable to them;
Seventh, to payment of that portion of the Obligations constituting unpaid
principal of the Revolving Credit Loans, Reimbursement Obligations and Letter of
Credit Borrowings (other than, in each case, Canadian Liabilities), ratably
among the Domestic Lenders and the Issuing Lender in proportion to the
respective amounts described in this clause Seventh held by them;
Eighth, to the Administrative Agent for the account of the Issuing Lender, to
Cash Collateralize the aggregate undrawn amount of Letters of Credit issued on
behalf or for the account of the Domestic Borrowers or Guarantors;
Ninth, to payment of all other Obligations (including without limitation the
cash collateralization of any unliquidated indemnification obligations but
excluding the Canadian Liabilities and any Obligations of the type specified in
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the definition thereof), ratably among the Administrative Agent, the Issuing
Lender and the Domestic Lenders in proportion to the respective amounts
described in this clause Ninth held by them;
Tenth, to payment of the Obligations of the type specified in clauses (ii) and
(iii) of the definition thereof, ratably among the Administrative Agent, the
Issuing Lender and the Domestic Lenders in proportion to the respective amounts
described in this clause Tenth held by them;
Eleventh, to payment of the Canadian Liabilities in the order set forth in
Section 8.2.4.2 hereof;
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.
Subject to Section 2.9.3, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit issued on behalf or for the account of the
Domestic Borrowers or Guarantors pursuant to clause Eighth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
8.2.4.2 With respect to Collateral and Payments From the Canadian Borrower:
First, to payment of that portion of the Canadian Liabilities constituting fees,
indemnities, costs and expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Section 3.4) payable to the Administrative Agent;
Second, to payment of that portion of the Canadian Liabilities constituting
indemnities, costs and expenses, and other amounts (other than principal,
interest and fees) payable to the Canadian Lenders and the Issuing Lender
(including costs and expenses to the respective Canadian Lenders and the Issuing
Lender and amounts payable under Section 3.4), ratably among them in proportion
to the amounts described in this clause Second payable to them;
Third, to the extent not previously reimbursed by the Canadian Lenders, to
payment to the Administrative Agent of that portion of the Canadian Liabilities
constituting principal and accrued and unpaid interest on any Permitted
Overadvances to the Canadian Borrower;
Fourth, to payment of that portion of the Canadian Liabilities constituting
accrued and unpaid interest on the Revolving Credit Loans, Reimbursement
Obligations, Letter of Credit Borrowings, in each case, made to or for the
account of the Canadian Borrower, and fees (including Letter of Credit Fees),
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Issuing Lender in proportion to the respective amounts described in this clause
Fourth payable to them;
Fifth, to payment of that portion of the Canadian Liabilities constituting
unpaid principal of the Revolving Credit Loans, Reimbursement Obligations and
Letter of Credit Borrowings, in each case, made to or for the account of the
Canadian Borrower, ratably among the Canadian Lenders and the Issuing Lender in
proportion to the respective amounts described in this clause Fifth held by
them;
Sixth, to the Administrative Agent for the account of the Issuing Lender, to
Cash Collateralize the aggregate undrawn amount of Letters of Credit issued on
behalf or for the account of the Canadian Borrower;
Seventh, to payment of all other Canadian Liabilities (including without
limitation the cash collateralization of any unliquidated indemnification
obligations, ratably among the Administrative Agent, the Issuing Lender and the
Canadian Lenders in proportion to the respective amounts described in this
clause Seventh held by them;
Eighth, to payment of the Canadian Liabilities of the type specified in clauses
(ii) and (iii) of the definition thereof, ratably among the Administrative
Agent, the Issuing Lender and the Canadian Lenders in proportion to the
respective amounts described in this clause Tenth held by them;
Last, the balance, if any, after all of the Canadian Lenders have been
indefeasibly paid in full, to the Canadian Borrower or as otherwise required by
Law.
Subject to Section 2.9.3, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit issued for the account of the Canadian
Borrower pursuant to clause Sixth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit as
Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Canadian
Liabilities, if any, in the order set forth above.
9. THE ADMINISTRATIVE AGENT
9.1 Appointment and Authority. Each of the Lenders and the Issuing Lender hereby
irrevocably appoints PNC to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Section 9 are solely for the benefit of the Administrative
Agent, the Lenders and the Issuing Lender, and none of the Borrowers or any
other Loan Party shall have rights as a third party beneficiary of any of such
provisions.
9.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative Agent
and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated
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include the Person serving as the Administrative Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with any Loan Party or any
Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the
Lenders.
9.3 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Administrative
Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Potential Default or Event of Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents); provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable Law; and
(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Loan Party or any Affiliate of any
Loan Party that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Section 10.1 [Modifications, Amendments or Waivers]
and Section 8.2 [Consequences of Event of Default]) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Potential Default or Event of Default
unless and until notice describing such Potential Default or Event of Default is
given to the Administrative Agent by the Borrowers, a Lender or the Issuing
Lender.
The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Potential Default or Event of
Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Section 6
[Conditions of Lending and Issuance of Letters of Credit] or

 

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elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Administrative Agent also may
rely upon any statement made to it orally or by telephone and believed by it to
have been made by the proper Person, and shall not incur any liability for
relying thereon. In determining compliance with any condition hereunder to the
making of a Loan, or the issuance of a Letter of Credit, that by its terms must
be fulfilled to the satisfaction of a Lender or the Issuing Lender, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the Issuing Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender or the Issuing Lender prior to the
making of such Loan or the issuance of such Letter of Credit. The Administrative
Agent may consult with legal counsel (who may be counsel for the Loan Parties),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
9.5 Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Section 9 shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
9.6 Resignation of Administrative Agent. The Administrative Agent may at any
time give notice of its resignation to the Lenders, the Issuing Lender and the
Borrowers. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, with approval from the Borrowers (so long as no Event of
Default has occurred and is continuing), to appoint a successor, such approval
not to be unreasonably withheld or delayed. If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent gives notice of
its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Lender, appoint a successor Administrative Agent;
provided that if the Administrative Agent shall notify the Borrowers and the
Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (i) the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder and under the other Loan Documents (except that in the
case of any collateral security held by the Administrative Agent on behalf of
the Lenders or the Issuing Lender under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (ii) all payments,
communications and determinations provided to be made by, to or through the
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Agent shall instead be made by or to each Lender and the Issuing Lender
directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 9.6. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section). The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed among the Borrowers and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Section 9 and
Section 10.3 [Expenses; Indemnity; Damage Waiver] shall continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
If PNC resigns as Administrative Agent under this Section 9.6, PNC shall also
resign as an Issuing Lender. Upon the appointment of a successor Administrative
Agent hereunder, such successor shall (i) succeed to all of the rights, powers,
privileges and duties of PNC as the retiring Issuing Lender and Administrative
Agent and PNC shall be discharged from all of its respective duties and
obligations as Issuing Lender and Administrative Agent under the Loan Documents,
and (ii) issue letters of credit in substitution for the Letters of Credit
issued by PNC, if any, outstanding at the time of such succession or make other
arrangement satisfactory to PNC to effectively assume the obligations of PNC
with respect to such Letters of Credit.
9.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the
Issuing Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
the Issuing Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.
9.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none
of the Syndication Agent, the Documentation Agent or the Managing Agents listed
on the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as a Lender or an Issuing Lender hereunder.
9.9 Administrative Fee. The Borrowers shall pay to the Administrative Agent a
nonrefundable fee (the “Administrative Fee”) under the terms of the Fee Letter.
9.10 Authorization to Release Collateral and Guarantors. The Lenders and Issuing
Lenders authorize the Administrative Agent to release (i) any Collateral
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equity interests sold or otherwise disposed of in a sale or other disposition or
transfer permitted under Section 7.2.7 [Disposition of Assets or Subsidiaries]
or Section 7.2.6 [Liquidations, Mergers, Consolidations, Amalgamations,
Acquisitions], and (ii) any Guarantor from its obligations under the Guaranty
Agreement if the ownership interests in such Guarantor are sold or otherwise
disposed of or transferred to persons other than Loan Parties or Subsidiaries of
the Loan Parties in a transaction permitted under Section 7.2.7 [Disposition of
Assets or Subsidiaries] or Section 7.2.6 [Liquidations, Mergers, Consolidations,
Amalgamations, Acquisitions]. The Administrative Agent shall have no liability
whatsoever to any Lender or Issuing Lender as a result of any release of
Collateral by it as permitted (or which the Administrative Agent in good faith
believes to be permitted) by this Agreement or any other Loan Document.
9.11 No Reliance on Administrative Agent’s Customer Identification Program. Each
Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Administrative Agent to
carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any of
the Loan Parties, their Affiliates or their agents, the Loan Documents or the
transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists,
(iv) customer notices or (v) other procedures required under the CIP Regulations
or such other Laws.
9.12 Defaulting Lender.
9.12.1 Failure or Refusal to Comply with Lender Obligations. If for any reason
any Lender shall become a Defaulting Lender or shall fail or refuse to abide by
its obligations under this Agreement, including without limitation its
obligation to make available to the Administrative Agent its Ratable Share of
any Loans, expenses or setoff or purchase its Ratable Share of a participation
interest in the Swing Loans or Letter of Credit Borrowings and such failure is
not cured within one (1) Business Day after receipt from the Administrative
Agent of written notice thereof, then, in addition to the rights and remedies
that may be available to the Administrative Agent and the other Lenders, the
Loan Parties or any other party at law or in equity, and not in limitation
thereof, (i) such Defaulting Lender’s right to participate in the administration
of, or decision-making rights related to, the Obligations, this Agreement or the
other Loan Documents shall be suspended during the pendency of such failure or
refusal, and (ii) a Defaulting Lender shall be deemed to have assigned any and
all payments due to it from the Loan Parties, whether on account of outstanding
Loans, interest, fees or otherwise, to the remaining non-Defaulting Lenders for
application to, and reduction of, their proportionate shares of all outstanding
Obligations until, as a result of application of such assigned payments the
Lenders’ respective Ratable Shares of all outstanding Obligations shall have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency, and (iii) at the
option of the Administrative Agent, any amount payable to such Defaulting Lender
hereunder (whether on account of principal, interest, fees or otherwise) shall,
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Administrative Agent as cash collateral for future funding obligations of the
Defaulting Lender in respect of any Loan or existing or future participating
interest in any Swing Loan or Letter of Credit. The Defaulting Lender’s
decision-making and participation rights and rights to payments as set forth in
clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Defaulting Lender of its Ratable Share of any Obligations, any participation
obligation, or expenses as to which it is delinquent, together with interest
thereon at a rate per annum equal to the rate applicable to Loans under the
Revolving Credit Base Rate Option from the date when originally due until the
date upon which any such amounts are actually paid.
9.12.2 Non-Defaulting Lender Rights. The non-Defaulting Lenders shall also have
the right, but not the obligation, in their respective, sole and absolute
discretion, to cause the termination and assignment, without any further action
by the Defaulting Lender for no cash consideration (pro rata, based on the
respective Commitments of those Lenders electing to exercise such right), of the
Defaulting Lender’s Commitment to fund future Loans. Upon any such purchase of
the Ratable Percentage of any Defaulting Lender, the Defaulting Lender’s share
in future Credit Extensions and its rights under the Loan Documents with respect
thereto shall terminate on the date of purchase, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance.
9.12.3 Indemnification. Each Defaulting Lender shall indemnify the
Administrative Agent and each non-Defaulting Lender from and against any and all
loss, damage or expenses, including but not limited to reasonable attorneys’
fees and funds advanced by the Administrative Agent or by any non-Defaulting
Lender, on account of a Defaulting Lender’s failure to timely fund its Ratable
Share of a Loan or to otherwise perform its obligations under the Loan
Documents.
9.12.4 Risk Participation.
9.12.4.1 Upon the earlier of Substantial Liquidation or the Determination Date,
if all Canadian Liabilities have not been repaid in full, then the Domestic
Lenders shall purchase from the Canadian Lenders (on the date of Substantial
Liquidation or the Determination Date, as applicable) such portion of the
Canadian Liabilities so that each Lender shall, after giving effect to any such
purchases, hold its Liquidation Percentage of all outstanding Canadian
Liabilities and all other Obligations.
9.12.4.2 Upon the earlier of Substantial Liquidation or the Determination Date,
if all Obligations of the Domestic Borrowers (other than those relating to the
Canadian Liabilities) have not been repaid in full, then the Canadian Lenders
shall purchase from the Domestic Lenders (on the date of Substantial Liquidation
or the Determination Date, as applicable) such portion of such Obligations so
that each Lender shall, after giving effect to any such purchases, hold its
Liquidation Percentage of all outstanding Obligations of the Domestic Borrowers
and the Canadian Liabilities.
9.12.4.3 All purchases of Obligations under this Section 9.12.4 shall be at par,
for cash, with no premium, discount or reduction.

 

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9.12.4.4 No Lender shall be responsible for any default of any other Lender in
respect of any other Lender’s obligations under this Section 9.12.4, nor shall
the obligations of any Lender hereunder be increased as a result of such default
of any other Lender. Each Lender shall be obligated to the extent provided
herein regardless of the failure of any other Lender to fulfill its obligations
hereunder.
9.12.4.5 Each Lender shall execute such instruments, documents and agreements
and do such other actions as may be necessary or proper in order to carry out
more fully the provisions and purposes of this Section 9.12.4 and the purchase
of Obligations or the Canadian Liabilities, as applicable, as provided herein.
9.12.4.6 The obligations of each Lender under this Section 9.12.4 are
irrevocable and unconditional and shall not be subject to any qualification or
exception whatsoever including, without limitation, lack of validity or
enforceability of this Agreement or any of the Loan Documents or the existence
of any claim, setoff, defense or other right which any Loan Party may have at
any time against any of the Lenders.
9.12.4.7 No fees required to be paid on any assignment pursuant to
Section 10.8.2(iv) of this Agreement shall be payable in connection with any
assignment under this Section 9.12.4.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers. With the written consent of the
Required Lenders, the Administrative Agent, acting on behalf of all the Lenders,
and the Borrowers, on behalf of the Loan Parties, may from time to time enter
into written agreements amending or changing any provision of this Agreement or
any other Loan Document or the rights of the Lenders or the Loan Parties
hereunder or thereunder, or may grant written waivers or consents hereunder or
thereunder. Any such agreement, waiver or consent made with such written consent
shall be effective to bind all the Lenders and the Loan Parties; provided, that
no such agreement, waiver or consent may be made which will:
10.1.1 Increase of Commitment. Increase the amount of the Revolving Credit
Commitment or Canadian Commitment of any Lender hereunder without the consent of
such Lender;
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment. Whether or not any Loans are outstanding,
extend the Expiration Date or the time for payment of principal or interest of
any Loan (excluding the due date of any mandatory prepayment of a Loan), the
Commitment Fee or any other fee payable to any Lender, or reduce the principal
amount of or the rate of interest borne by any Loan or reduce the Commitment Fee
or any other fee payable to any Lender, without the consent of each Lender
directly affected thereby;
10.1.3 Release of Collateral or Guarantor. Except for sales of assets permitted
by Section 7.2.7 [Disposition of Assets or Subsidiaries], release all or
substantially all of the Collateral or any Guarantor from its Obligations under
the Guaranty Agreement without the consent of all Lenders (other than Defaulting
Lenders); or

 

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10.1.4 Availability. Modify the definition of “Simplified Borrowing Base”,
“Borrowing Base”, “Revolving Credit Availability”, “Canadian Availability”,
“Canadian Borrowing Base” or any component definition thereof such the amounts
available for borrowing by the Borrowers hereunder would be increased thereby,
without the consent of all Lenders (other than Defaulting Lenders); or
10.1.5 Miscellaneous. Amend Section 4.2 [Pro Rata Treatment of Lenders;
Repayment of Advances], Section 9.3 [Exculpatory Provisions, Etc.], Section 4.3
[Sharing of Payments by Lenders] or this Section 10.1, or alter any provision
regarding the pro rata treatment of the Lenders or requiring all Lenders to
authorize the taking of any action or reduce any percentage specified in the
definition of Required Lenders, in each case without the consent of all of the
Lenders (other than Defaulting Lenders);
provided that no agreement, waiver or consent which would modify the interests,
rights or obligations of the Administrative Agent or the Issuing Lender may be
made without the written consent of the Administrative Agent or the Issuing
Lender, as applicable, provided, further that, if in connection with any
proposed waiver, amendment or modification referred to in Sections 10.1.1
through 10.1.5 above, the consent of the Required Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not
obtained (each a “Non-Consenting Lender”), then the Borrowers shall have the
right to replace any such Non-Consenting Lender with one or more replacement
Lenders pursuant to Section 4.6.2 [Replacement of a Lender]. Notwithstanding
anything to the contrary herein, no Deteriorating Lender or Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or Consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender.
10.2 No Implied Waivers; Cumulative Remedies. No course of dealing and no delay
or failure of the Administrative Agent or any Lender in exercising any right,
power, remedy or privilege under this Agreement or any other Loan Document shall
affect any other or future exercise thereof or operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any further exercise
thereof or of any other right, power, remedy or privilege. The rights and
remedies of the Administrative Agent and the Lenders under this Agreement and
any other Loan Documents are cumulative and not exclusive of any rights or
remedies which they would otherwise have.
10.3 Expenses; Indemnity; Damage Waiver.
10.3.1 Costs and Expenses. The Loan Parties shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Arranger and
their respective Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent and the Arranger), and
shall pay all fees and time charges and disbursements for attorneys who may be
employees of the Administrative Agent or the Arranger, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
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amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Arranger, any Lender or the Issuing Lender (including
the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, the Arranger, any Lender or the Issuing Lender), and shall
pay all fees and time charges for attorneys who may be employees of the
Administrative Agent, the Arranger, any Lender or the Issuing Lender, in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit, and (iv) all reasonable out-of-pocket expenses of the Administrative
Agent’s regular employees and agents engaged periodically to perform audits of
the Loan Parties’ books, records and business properties. The Administrative
Agent shall use reasonable efforts to minimize expenses and shall furnish
estimates of the expenses in respect of audits and appraisals to be undertaken
after the Closing Date under the Loan Documents. The Administrative Agent agrees
(i) to advise the Borrowers upon its becoming aware that actual expenses in
respect of such audits and appraisals will likely exceed the estimates
previously provided therefor, and (ii) that the Administrative Agent shall not
charge the Borrowers’ account with respect to such expenses until the Borrowers
have had a reasonable opportunity to review the invoices with respect thereto,
it being understood that all such expenses with respect to the audits and
appraisals shall be paid as and when due hereunder. The Administrative Agent
agrees to provide the Borrowers with (i) a preliminary billing statement five
(5) days before any payments referenced therein are due, and (ii) a final
billing statement one (1) day before any payments referenced therein are due, it
being understood that all such payments shall be made as and when due hereunder.
10.3.2 Indemnification by the Loan Parties. The Loan Parties shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the Issuing
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee), and
shall indemnify and hold harmless each Indemnitee from all fees and time charges
and disbursements for attorneys who may be employees of any Indemnitee, incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrowers or any other Loan Party arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance or nonperformance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Issuing
Lender to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) breach of representations, warranties or
covenants of the Loan Parties under the Loan Documents, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, including any such items or losses relating to or arising under
Environmental Laws or pertaining to environmental matters, whether based on
contract, tort or any other theory, whether brought by a third party or by any
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee,

 

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be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by any
Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if
such Borrower or such other Loan Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent
jurisdiction. Notwithstanding anything to the contrary herein, the Canadian
Borrower’s obligation to pay and indemnify shall be limited to matters, fees,
expenses charges and disbursement, or losses, claims, damages and liabilities
which the Administrative Agent determines in its reasonable judgment to be
properly attributable or allocable to the Canadian Borrower.
10.3.3 Reimbursement by Lenders. To the extent that any Loan Party for any
reason fails to indefeasibly pay any amount required under Section 10.3.1 [Costs
and Expenses] or Section 10.3.2 [Indemnification by the Loan Parties] to be paid
by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender
or any Related Party of any of the foregoing, each Lender severally agrees to
pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or
such Related Party, as the case may be, such Lender’s Ratable Share (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent) or the Issuing Lender in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or Issuing Lender in connection with such capacity.
10.3.4 Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, no Loan Party shall assert, and hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof. No Indemnitee referred to in Section 10.3.2 [Indemnification by Loan
Parties] shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby unless as a result of the Indemnitee’s gross
negligence or willful misconduct, as determined by a final non-appealable
judgment of a court of competent jurisdiction.
10.3.5 Payments. All amounts due under this Section shall be payable not later
than ten (10) days after (i) written demand therefor and (ii) the furnishing to
an Authorized Officer of DSW of supporting documentation.
10.4 Holidays. Whenever payment of a Loan to be made or taken hereunder shall be
due on a day which is not a Business Day such payment shall be due on the next
Business Day (except as provided in Section 3.2 [Interest Periods]) and such
extension of time shall be included in computing interest and fees, except that
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preceding the Expiration Date if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than payment
of the Loans) shall be stated to be due on a day which is not a Business Day,
such payment or action shall be made or taken on the next following Business
Day, and such extension of time shall not be included in computing interest or
fees, if any, in connection with such payment or action.
10.5 Notices; Effectiveness; Electronic Communication.
10.5.1 Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
Section 10.5.2 [Electronic Communications]), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier (i) if to a Lender, to it at its address set forth in its
administrative questionnaire, or (ii) if to any other Person, to it at its
address set forth on Schedule 1.1(B).
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient). Notices delivered through electronic communications to the extent
provided in Section 10.5.2 [Electronic Communications], shall be effective as
provided in such Section.
10.5.2 Electronic Communications. Notices and other communications to the
Lenders and the Issuing Lender hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices to any Lender or the Issuing Lender if such
Lender or the Issuing Lender, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication. Each of the Administrative Agent or any Loan Party may, in such
Person’s discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications. Unless the Administrative Agent otherwise prescribes, (i)
notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement); provided that if such notice or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.

 

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10.5.3 Change of Address, Etc. Any party hereto may change its address, e-mail
address or telecopier number for notices and other communications hereunder by
notice to the other parties hereto.
10.6 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
10.7 Duration; Survival. All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the execution and
delivery of this Agreement, the completion of the transactions hereunder and
Payment In Full. All covenants and agreements of the Loan Parties contained
herein relating to the payment of principal, interest, premiums, additional
compensation or expenses and indemnification, including those set forth in the
Notes, Section 4 [Payments] and Section 10.3 [Expenses; Indemnity; Damage
Waiver], shall survive Payment In Full. All other covenants and agreements of
the Loan Parties shall continue in full force and effect from and after the date
hereof and until Payment In Full.
10.8 Successors and Assigns.
10.8.1 Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns permitted hereby, except that no Borrower or
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of Section 10.8.2 [Assignments by Lenders], (ii) by way of
participation in accordance with the provisions of Section 10.8.4
[Participations], or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 10.8.6 [Certain Pledges; Successors and
Assigns Generally] (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Section 10.8.4 [Participations] and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
10.8.2 Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that any such assignment shall be subject to the following
conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an

 

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assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and
(B) in any case not described in clause (i)(A) of this Section 10.8.2, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Assumption
Agreement with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption
Agreement, as of the Trade Date) shall not be less than $5,000,000, in the case
of any assignment in respect of the Revolving Credit Commitment of the assigning
Lender, unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrowers otherwise consent (each
such consent not to be unreasonably withheld or delayed).
(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned.
(iii) Required Consents. No consent shall be required for any assignment except
for the consent of the Administrative Agent (which shall not be unreasonably
withheld or delayed) and:
(A) the consent of the Borrowers (such consent not to be unreasonably withheld
or delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund; provided that the Borrowers shall
be deemed to have consented to any such assignment unless they shall object
thereto by written notice to the Administrative Agent within five (5) Business
Days after having received notice thereof; and
(B) the consent of the Issuing Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding).
(iv) Assignment and Assumption Agreement. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption
Agreement, together with a processing and recordation fee of $3,500, and the
assignee, if it is not a Lender, shall deliver to the Administrative Agent an
administrative questionnaire provided by the Administrative Agent.
(v) No Assignment to Loan Parties. No such assignment shall be made to any Loan
Party or any of any Loan Party’s Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 10.8.3 [Register], from and after the effective date specified in
each Assignment and Assumption

 

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Agreement, the assignee thereunder shall be a party to this Agreement and, to
the extent of the interest assigned by such Assignment and Assumption Agreement,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption Agreement, be released from its obligations under
this Agreement (and, in the case of an Assignment and Assumption Agreement
covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) but shall continue to
be entitled to the benefits of Section 3.4 [LIBOR Rate Unascertainable;
Illegality; Increased Costs; Deposits Not Available], Section 4.8 [Increased
Costs], and Section 10.3 [Expenses, Indemnity; Damage Waiver] with respect to
facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 10.8.2 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 10.8.4
[Participations].
10.8.3 Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain a record of the names and addresses of
the Lenders, and the Commitments of, and principal amounts of the Loans owing
to, each Lender pursuant to the terms hereof from time to time. Such register
shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders
may treat each Person whose name is in such register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. Such register shall be available for inspection by any
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
10.8.4 Participations. Provided that such Lender obtains a confidentiality and
non-disclosure agreement prior to any sale of a participation, any Lender may at
any time, without the consent of, or notice to, the Loan Parties or the
Administrative Agent, sell participations to any Person (other than a natural
person, any competitor of any Loan Party (but such limitation shall apply only
if no Event of Default then exists) or any Loan Party or any of any Loan Party’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Loan Parties, the Administrative
Agent and the Lenders, the Issuing Lender shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to Section 10.1.1
[Increase of Commitment, Etc.], Section 10.1.2 [Extension of Payment, Etc.], or
Section 10.1.3 [Release of Collateral or Guarantor]). Subject to Section 10.8.5
[Limitations upon Participant Rights Successors and Assigns Generally], each
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Participant shall be entitled to the benefits of Section 3.4 [LIBOR Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available] and
Section 4.8 [Increased Costs] to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 10.8.2 [Assignments by
Lenders]. To the extent permitted by Law, each Participant also shall be
entitled to the benefits of Section 8.2.3 [Setoff] as though it were a Lender;
provided such Participant agrees to be subject to Section 4.3 [Sharing of
Payments by Lenders] as though it were a Lender.
10.8.5 Limitations upon Participant Rights Successors and Assigns Generally. A
Participant shall not be entitled to receive any greater payment under
Section 4.8 [Increased Costs], Section 4.9 [Taxes] or Section 10.3 [Expenses;
Indemnity; Damage Waiver] than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrowers’ prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 4.9 [Taxes] unless the
Loan Parties are notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Loan Parties, to comply with
Section 4.9.5 [Status of Lenders] as though it were a Lender.
10.8.6 Certain Pledges; Successors and Assigns Generally. Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
10.9 Publicity. Each Loan Party consents to the publication by the
Administrative Agent of customary trade advertising material in tombstone format
relating to the financing transactions contemplated by this Agreement using any
Loan Party’s name, logo or trademark. The Administrative Agent shall provide a
draft of any advertising material to the Borrowers for approval reasonably in
advance of the publication thereof (but the approval of the Borrowers of such
material shall not be unreasonably delayed or withheld). The Administrative
Agent reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.
10.10 Confidentiality.
10.10.1 General. Each of the Administrative Agent, the Lenders and the Issuing
Lender agrees to maintain the confidentiality of the Information, except that
Information may be disclosed (i) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (iii) to the extent required by
applicable Laws or regulations or by any subpoena or similar legal process,
(iv) to any other party hereto, (v) as required in connection with the exercise
of any remedies hereunder or under any other Loan Document or any action or
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other Loan Document or the enforcement of rights hereunder or thereunder,
(vi) subject to an agreement containing provisions substantially the same as
those of this Section, to (A) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (B) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to any Loan Party and
its obligations, (vii) with the consent of the Borrowers or (viii) to the extent
such Information (Y) becomes publicly available other than as a result of a
breach of this Section or (Z) becomes available to the Administrative Agent, any
Lender, the Issuing Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrowers or the other Loan
Parties. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
10.10.2 Sharing Information With Affiliates of the Lenders. Each Loan Party
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Loan Parties or one or more of
their Affiliates (in connection with this Agreement or otherwise) by any Lender
or by one or more Subsidiaries or Affiliates of such Lender and each of the Loan
Parties hereby authorizes each Lender to share any information delivered to such
Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any
such Subsidiary or Affiliate subject to the provisions of Section 10.10.1
[General].
10.11 Counterparts; Integration; Effectiveness.
10.11.1 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents,
and any separate letter agreements with respect to fees payable to the
Administrative Agent, constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof including
any prior confidentiality agreements and commitments. Except as provided in
Section 6 [Conditions Of Lending And Issuance Of Letters Of Credit], this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy or e-mail shall be effective as delivery of a
manually executed counterpart of this Agreement.
10.12 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF
PROCESS; WAIVER OF JURY TRIAL.
10.12.1 Governing Law. This Agreement shall be deemed to be a contract under the
Laws of the State of Ohio without regard to its conflict of laws principles.
Each Standby Letter of Credit issued under this Agreement shall be subject
either to the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International

 

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Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules of
the International Standby Practices (ICC Publication Number 590) (“ISP98”), as
determined by the Issuing Lender, and each Commercial Letter of Credit shall be
subject to UCP, and in each case to the extent not inconsistent therewith, the
Laws of the State of Ohio without regard to is conflict of laws principles.
10.12.2 SUBMISSION TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF OHIO SITTING IN FRANKLIN COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF OHIO, EASTERN
DIVISION, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH OHIO STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT,
ANY LENDER OR THE ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY
BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
10.12.3 WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN THIS SECTION 10.12. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
10.12.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.5 [NOTICES;
EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.
10.12.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE

 

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LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.13 Patriot Act Notice; Proceeds of Crime Act. Each Lender that is subject to
the USA Patriot Act and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies Loan Parties that pursuant to the requirements of
the USA Patriot Act and the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada) (the “Proceeds of Crime Act”), it is required to obtain,
verify and record information that identifies the Loan Parties, which
information includes the name and address of Loan Parties and other information
that will allow such Lender or Administrative Agent, as applicable, to identify
the Loan Parties in accordance with the USA Patriot Act and the Proceeds of
Crime Act. Each Loan Party is in compliance, in all material respects, with the
Patriot Act and the Proceeds of Crime Act. No part of the proceeds of the Loans
will be used by the Loan Parties, directly or indirectly, for any purpose which
would contravene or breach the Proceeds of Crime Act or for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
10.14 Additional Waivers.
10.14.1 Joint and Several Liability. The Obligations are the joint and several
obligation of each Loan Party provided that the Canadian Borrower and its
Subsidiaries shall be liable only for the Canadian Liabilities. To the fullest
extent permitted by Law, the obligations of each Loan Party shall not be
affected by (i) the failure of the Administrative Agent, the Issuing Lender or
any Lender to assert any claim or demand or to enforce or exercise any right or
remedy against any other Loan Party under the provisions of this Agreement, any
other Loan Document or otherwise, (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, this
Agreement or any other Loan Document, or (iii) the failure to perfect any
security interest in, or the release of, any of the Collateral or other security
held by or on behalf of the Administrative Agent, the Issuing Lender or any
Lender.
10.14.2 No Reduction of Obligations. The obligations of each Loan Party shall
not be subject to any reduction, limitation, impairment or termination for any
reason (other than the indefeasible payment in full in cash of the Obligations
(including the Canadian Liabilities) after the termination of the Commitments),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or

 

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setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of any of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Loan Party hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent, the Issuing Lender or any
Lender to assert any claim or demand or to enforce any remedy under this
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, any default, failure or delay,
willful or otherwise, in the performance of any of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Loan Party or that would otherwise operate as a discharge of any
Loan Party as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations (including the Canadian Liabilities) after
the termination of the Commitments).
10.14.3 Additional Waivers. To the fullest extent permitted by Law, each Loan
Party waives any defense based on or arising out of any defense of any other
Loan Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the indefeasible payment in full in cash of all the
Obligations and Canadian Liabilities and the termination of the Commitments. The
Administrative Agent, the Issuing Lender and the Lenders, at their election, may
foreclose on any security held by one or more of them by one or more judicial or
non-judicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Obligations and Canadian Liabilities have been indefeasibly paid in full
in cash and the Commitments have been terminated. Each Loan Party waives any
defense arising out of any such election even though such election operates,
pursuant to Law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Loan Party against any other Loan
Party, as the case may be, or any security.
10.14.4 Subordination. Upon payment by any Loan Party of any Obligations, all
rights of such Loan Party against any other Loan Party arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full in cash of all the Obligations and the
Canadian Liabilities and the termination of the Commitments. In addition, any
indebtedness of any Loan Party now or hereafter held by any other Loan Party is
hereby subordinated in right of payment to the prior indefeasible payment in
full of the Obligations and Canadian Liabilities and no Loan Party will demand,
sue for or otherwise attempt to collect any such indebtedness. Each Loan Party
waives and agrees it will not exercise any rights against any other Loan Party
arising in connection with, or any Collateral securing, the Obligations
(including rights of subrogation, contribution, reimbursement, indemnity and the
like) until the Obligations and Canadian Liabilities have been indefeasibly paid
in full in cash, and all Commitments have been terminated and all Letters of
Credit have expired. If any amount shall erroneously be paid to any Loan Party
on account of (i) such subrogation, contribution, reimbursement, indemnity or
similar right or (ii) any such indebtedness of any Loan Party, such amount shall
be deemed to have been paid to such Loan Party for the benefit of, and shall be
held in trust for the benefit of, the Administrative Agent and shall forthwith
be paid to the Administrative Agent to be credited and applied upon the
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unmatured, in accordance with the terms of this Agreement. Subject to the
foregoing, to the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Revolving
Credit Loans made to another Borrower hereunder or other Obligations incurred
directly and primarily by any other Borrower (an “Accommodation Payment”), then
the Borrower making such Accommodation Payment shall be entitled to contribution
and indemnification from, and be reimbursed by, each of the other Borrowers in
an amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower’s
Allocable Amount and the denominator of which is the sum of the Allocable
Amounts of all of the Borrowers. As of any date of determination, the “Allocable
Amount” of each Borrower shall be equal to the maximum amount of liability for
Accommodation Payments which could be asserted against such Borrower hereunder
without (a) rendering such Borrower (1) “insolvent” within the meaning of
Section 101 (31) of the Bankruptcy Code described in clause (i) of the
definition thereof, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or
Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), or (2) in the case
of the Canadian Borrower, an “insolvent person” within the meaning of such term
in the Bankruptcy Code described in clause (ii) of the definition thereof,
(b) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code described in clause (i) of the
definition thereof, Section 4 of the UFTA, or Section 5 of the UFCA, or
(c) leaving such Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code described in clause (i) of the
definition thereof or Section 4 of the UFTA, or Section 5 of the UFCA.
10.15 Obligations Upon Receipt of Indefeasible Payment In Full.
Upon full, final and indefeasible payment in full in cash of the Obligations
(including the Canadian Liabilities), the expiration of all Commitments and
Letters of Credit, termination of the Commitments and expiration or termination
of all Letters of Credit (or with respect to any undrawn Letters of Credit, the
full Cash Collateralization thereof or the supporting thereof by another letter
of credit from an issuing bank and on terms satisfactory to the Issuing Lender
and the Administrative Agent), (i) all rights and remedies of each Loan Party
and each Lender hereunder shall cease, so long as any payment so made and
applied to the Obligations (including the Canadian Liabilities) is not
thereafter recovered from or repaid by the Administrative Agent or any other
Secured Party in whole or in part in any bankruptcy, insolvency or similar
proceeding instituted by or against a Loan Party, whereupon this Agreement and
the other Loan Documents shall be automatically reinstated without any further
action by a Loan Party and the Administrative Agent and shall continue to be
fully applicable to such Obligations (including the Canadian Liabilities) to the
same extent as though the payment so recovered or repaid had never been
originally made on such Obligations (including the Canadian Liabilities), and
(ii) the Administrative Agent agrees to execute and/or deliver, as applicable,
to DSW, in each case at the Loan Parties’ sole cost and expense, (1) all
property pledged and delivered to the Administrative Agent under this Agreement
or any other Loan Document (including without limitation stock or other
certificates, notes receivable, certificates of title, direct pay notices to
account debtors, change of address forms and other instruments, together with
accompanying stock powers and allonges in the forms delivered to the
Administrative Agent); (2) the original promissory notes executed in connection
with the Obligations (including the Canadian Liabilities) marked “CANCELLED”;
(3) all guaranty agreements, indemnification agreements and other accommodation
agreements executed by any guarantor, marked “CANCELLED”; and (4) UCC-

 

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3 termination statements with respect to the UCC filings made by the
Administrative Agent in respect of each Loan Party, as applicable, and releases
of any other liens or encumbrances filed against any property.
In connection with the termination of this Agreement, the Administrative Agent
may require such indemnities as it shall reasonably deem necessary or
appropriate to protect the Administrative Agent, the Lenders and the Issuing
Lender against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, (y) any Obligations
that may thereafter arise under Section 10.3.1 [Costs and Expenses] and
Section 10.3.2 [Indemnification by the Loan Parties].
10.16 Limitation Of Canadian Borrower’s Liability.
Notwithstanding anything to the contrary herein contained, the liability of the
Canadian Borrower hereunder and under any other Loan Documents shall be limited
to the Canadian Liabilities, and the Canadian Borrower shall have no liability
whatsoever under the Loan Documents with respect to any other Obligations of the
Domestic Borrowers.
10.17 Judgment Currency.
10.17.1 Judgment Currency. If, for the purpose of obtaining or enforcing
judgment against the Canadian Borrower in any court in any jurisdiction, it
becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section 10.17 referred to as the “Judgment Currency”) an
amount due in CD$ or Dollars under this Agreement, the conversion will be made
at the rate of exchange prevailing on the Business Day immediately preceding:
10.17.1.1 the date of actual payment of the amount due, in the case of any
proceeding in the courts of the Province of Ontario or in the courts of any
other jurisdiction that will give effect to such conversion being made on such
date; or
10.17.1.2 the date on which the judgment is given, in the case of any proceeding
in the courts of any other jurisdiction (the date as of which such conversion is
made pursuant to this Section 10.17 being hereinafter in this Section 10.17
referred to as the “Judgment Conversion Date”).
10.17.2 Change in Exchange Rate. If, in the case of any proceeding in the court
of any jurisdiction referred to in Section 10.17.1.2, there is a change in the
rate of exchange prevailing between the Judgment Conversion Date and the date of
actual payment of the amount due, the Canadian Borrower will pay such additional
amount (if any, but in any event not a lesser amount) as may be necessary to
ensure that the amount paid in the Judgment Currency, when converted at the rate
of exchange prevailing on the date of payment, will produce the amount of CD$ or
Dollars, as the case may be, which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the rate of
exchange prevailing on the Judgment Conversion Date.

 

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10.17.3 Canadian Liabilities. Any amount due from the Canadian Borrower under
the provisions of Section 10.17.2 will be due as a separate debt and will not be
affected by judgment being obtained for any other amounts due under or in
respect of this Agreement.
10.17.4 Rate of Exchange. The term “rate of exchange” in this Section 10.17
means:
10.17.4.1 for a conversion of CD$ to the Judgment Currency, the reciprocal of
the official noon rate of exchange published by the Bank of Canada for the date
in question for the conversion of the Judgment Currency to CD$;
10.17.4.2 for a conversion of Dollars to the Judgment Currency when the Judgment
Currency is CD$, the official noon rate of exchange published by the Bank of
Canada for the date in question for the conversion of Dollars to CD$;
10.17.4.3 for a conversion of Dollars to the Judgment Currency when the Judgment
Currency is not CD$, the effective rate obtained when a given amount of Dollars
is converted to CD$ at the rate determined pursuant to this Section 10.17.4.2
and the result thereof is then converted to the Judgment Currency pursuant to
Section 10.17.4.1; or
10.17.4.4 if a required rate is not so published by the Bank of Canada for any
such date, the spot rate quoted by the Canadian Agent at Toronto, Canada at
approximately noon (Toronto time) on that date in accordance with its normal
practice for the applicable currency conversion in the wholesale market.
10.18 Language.
The parties herein have expressly requested that this Agreement and all related
documents be drawn up in the English language. A la demande expresse des parties
aux présentes, cette convention et tout document y afférent ont été rédigés en
langue anglaise.
[signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.

                  ATTEST:   BORROWERS:    
 
                    DSW INC.    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam
 
    
 
      Title:   Vice President and Treasurer 
 
   
 
                    DSW SHOE WAREHOUSE, INC.    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam
 
    
 
      Title:   Vice President and Treasurer 
 
   

Signature Page to Credit Agreement

 

 

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                      GUARANTORS:    
 
                    ETAILDIRECT LLC    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam 
 
    
 
      Title:   Vice President and Treasurer 
 
    
 
                    DSW INFORMATION TECHNOLOGY LLC    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam 
 
    
 
      Title:   Vice President and Treasurer 
 
    
 
                    BRAND CARD SERVICES LLC    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam 
 
    
 
      Title:   Vice President and Treasurer 
 
    
 
                    MINT STUDIO LLC    
 
               
 
  By:   /s/ Kurt Gatterdam                
 
      Name:   Kurt Gatterdam 
 
    
 
      Title:   Vice President and Treasurer 
 
    

Signature Page to Credit Agreement

 

 

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                      PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent,
as a Lender and as Issuing Lender    
 
               
 
  By:   /s/ George M. Gevas                
 
      Name:   George M. Gevas 
 
    
 
      Title:   Senior Vice President 
 
   
 
                    PNC BANK CANADA BRANCH, as a Canadian Lender    
 
               
 
  By:   /s/ Mike Danby                
 
      Name:   Mike Danby 
 
    
 
      Title:   Assistant Vice President 
 
   

Signature Page to Credit Agreement

 

 

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                      BANK OF AMERICA, N.A., as Syndication Agent, a
Documentation Agent and as a Lender    
 
               
 
  By:   /s/ Maria L. Mendes                
 
      Name:   Maria L. Mendes 
 
    
 
      Title:   Vice President 
 
   
 
                    WELLS FARGO RETAIL FINANCE, LLC, as a Managing Agent and as
a Lender    
 
               
 
  By:   /s/ Adam B. Davis                
 
      Name:   Adam B. Davis 
 
    
 
      Title:   Vice President 
 
   
 
                    FIFTH THIRD BANK, as a Managing Agent and as a Lender    
 
               
 
  By:   /s/ Mike Mendenhall                
 
      Name:   Mike Mendenhall 
 
    
 
      Title:   Vice President 
 
   
 
                    THE HUNTINGTON NATIONAL BANK, as a Lender    
 
               
 
  By:   /s/ Frederick G. Hadley                
 
      Name:   Frederick G. Hadley 
 
    
 
      Title:   Senior Vice President 
 
   
 
                    CITIZENS BANK OF PENNSYLVANIA, as a Lender    
 
               
 
  By:   /s/ Curtis C. Hunter III                
 
      Name:   Curtis C. Hunter III 
 
    
 
      Title:   Vice President