Exhibit 10.1
CONSENT AND RATIFICATION AGREEMENT
     This CONSENT AND RATIFICATION AGREEMENT (this “Agreement”) is entered into
as of April 21, 2009 by and among:
NATIONAL CITY BUSINESS CREDIT, INC., as Administrative Agent and Collateral
Agent (in such capacities, the “Agent”) for the Revolving Credit Lenders party
to the Loan Agreement referenced below;
     THE REVOLVING CREDIT LENDERS;
     FILENE’S BASEMENT, INC., a Delaware corporation (the “Borrower”);
     RETAIL VENTURES, INC., an Ohio corporation (“RVI”); and
     FB II ACQUISITION CORP., a Delaware corporation (the “Purchaser”),
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
     WHEREAS, reference is made to that certain Second Amended and Restated Loan
and Security Agreement dated as of January 23, 2008 (as amended, modified,
supplemented or restated and in effect from time to time, the “Loan Agreement”)
by, among others, (i) the Borrower, (ii) the Revolving Credit Lenders named
therein, (iii) the Agent, and (iv) National City Bank, as Issuer, pursuant to
which the Agent and the Revolving Credit Lenders have agreed to provide loans
and other financial accommodations to or for the benefit of the Borrower;
     WHEREAS, reference is further made to that certain Second Amended and
Restated Guaranty dated as of January 23, 2008 (as amended, modified,
supplemented or restated and in effect from time to time, the “Guaranty”) by RVI
and the other Facility Guarantors party thereto, in favor of the Agent and the
Secured Parties referenced therein, pursuant to which RVI and the other Facility
Guarantors jointly and severally unconditionally guarantied the payment and
performance of the Liabilities (as defined therein) of the Borrower;
     WHEREAS, reference is further made to that certain Second Amended and
Restated Security Agreement dated as of January 23, 2008 (as amended, modified,
supplemented or restated and in effect from time to time, the “Security
Agreement”) by and among RVI and the other Facility Guarantors party thereto (as
Debtors thereunder) and the Collateral Agent, pursuant to which RVI and the
other Facility Guarantors granted a security interest in substantially all of
their assets (other than the Excluded Assets (as defined therein)) to the
Collateral Agent, for the ratable benefit of the Secured Parties (as defined
therein) to secure their obligations arising under the Guaranty;
     WHEREAS, reference is further made to that certain Second Amended and
Restated Ownership Interest Pledge Agreement dated as of January 23, 2008 (as
amended, modified,

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supplemented or restated and in effect from time to time, the “Pledge
Agreement”) by RVI and the Collateral Agent, pursuant to which, among other
things, RVI pledged to the Collateral Agent, as security for its obligations
arising under the Guaranty and as a supplement to the grant of security interest
provided in the Security Agreement, all of RVI’s right, title and interest in
and to (i) the shares of capital stock and other equity interests of the
Borrower (the “Borrower Shares”), and (ii) the limited liability company
interests of FB Services LLC (“Services LLC”) (the “Services LLC Interests”) and
its wholly-owned subsidiary, FB Leasing Services LLC (“Leasing LLC”) (the
“Leasing LLC Interests”, and together with the Services LLC Interests, the “LLC
Interests”, and together with the Borrower Shares, collectively, the
“Transferred Interests”);
     WHEREAS, reference is made to that certain Purchase Agreement dated as of
April 21, 2009 (the “Purchase Agreement”), by and between the Purchaser and RVI
(as Seller thereunder), a true and complete copy of which is annexed hereto as
Exhibit A, pursuant to which RVI has agreed to sell, and the Purchaser has
agreed to purchase, the Transferred Interests (the “Sale”) subject to the
security interests in the Transferred Interests held by the Agent, for the
ratable benefit of the Secured Parties;
     WHEREAS, the Borrower has advised the Agent and the Revolving Credit
Lenders that contemporaneously with the execution of the Purchase Agreement, the
Borrower intends to incur Indebtedness in favor of Mesirow Insurance Services,
Inc. (the “Insurance Lender”) in the amount of $681,451.83 (the “Insurance
Indebtedness”) pursuant to that certain Premium Finance Agreement dated as of
April 21, 2009 (the “Insurance Agreement”) by and between the Borrower and the
Insurance Lender, a true and complete copy of which is annexed hereto as
Exhibit B, for the purpose of financing the premiums due under the Borrower’s
insurance policies being issued on or about the date hereof, and that as
security for such Insurance Indebtedness, the Borrower intends to grant a
security interest (the “Insurance Lien”) in favor of the Insurance Lender on all
unearned premiums or other sums which may become payable under the insurance
policies described in the Insurance Agreement;
     WHEREAS, pursuant to the Loan Agreement, the incurrence of the Insurance
Indebtedness and the granting of the Insurance Lien (collectively, the
“Insurance Transactions”) are prohibited absent the prior written consent of the
Agents and the Revolving Credit Lenders;
     WHEREAS, the Purchase Agreement provides that following the Closing (as
defined in the Purchase Agreement), the Purchaser shall transfer the Services
LLC Interests to the Borrower (the “LLC Transfer”);
     WHEREAS, pursuant to the Loan Agreement, the Security Agreement and the
Pledge Agreement, RVI is prohibited from selling any Collateral, including,
without limitation, the Transferred Interests, without the prior written consent
of the Agent and the Revolving Credit Lenders (except to the extent otherwise
set forth in the Loan Agreement);

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          WHEREAS, RVI and the Borrower have requested that the Agent and the
Revolving Credit Lenders consent to the Sale, the LLC Transfer, and the
Insurance Transactions and make the other agreements described herein;
     WHEREAS, the Agent and the Revolving Credit Lenders are willing to so
consent and make such other agreements, subject in each case to the terms and
conditions of this Agreement;
     NOW, THEREFORE, the parties hereto hereby agree as follows:

1.   Definitions. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings set forth in the Loan Agreement.   2.   Consent.
In express reliance upon the terms and conditions of this letter agreement,
including without limitation, the Borrower’s, RVI’s, and the Purchaser’s
representations and warranties herein, the Agent and the Revolving Credit
Lenders hereby consent to the Sale, the Insurance Transactions, and the LLC
Transfer and waive any Event of Default which otherwise would be occasioned
thereby, subject in each case to the terms and conditions set forth herein.   3.
  Purchase Price. RVI and the Purchaser each hereby acknowledges and agrees that
the entire Purchase Price to be paid by the Purchaser and all proceeds to be
received by RVI pursuant to the Purchase Agreement, including, without
limitation, any Applicable Proceeds (as defined in the Purchase Agreement)
(collectively, the “Sale Proceeds”) shall be paid directly to the Agent by
federal wire transfer in immediately available funds for application to the
outstanding Liabilities.   4.   Purchase Agreement; Insurance Agreement. The
foregoing consent of, and waiver by, the Agent and the Revolving Credit Lenders
is also based on (i) the Sale being consummated and the LLC Transfer occurring
in accordance with the terms and conditions of the Purchase Agreement annexed
hereto as Exhibit A, and (ii) the Insurance Transactions being consummated in
accordance with the terms and conditions of the Insurance Agreement annexed
hereto as Exhibit B. Without the prior written consent of the Agent, (x) no
material provisions of the Purchase Agreement may be modified, amended, or
waived by RVI or the Purchaser, and (y) no material provisions of the Insurance
Agreement may be modified, amended, or waived by the Borrower.   5.   Joinder by
Services LLC and Leasing LLC. The foregoing consent of, and waiver by, the Agent
and the Revolving Credit Lenders is also conditioned upon Services LLC’s and
Leasing LLC’s having previously entered into a joinder agreement, in form and
substance reasonably satisfactory to the Agent, pursuant to which, among other
things, each of Services LLC and Leasing LLC shall have joined the Loan
Documents as a Facility Guarantor and shall have granted to the Agent a security
interest in its assets of the type constituting Collateral.   6.   No Assumption
of Duties. Under no circumstances shall the Agent or any Revolving Credit Lender
be obligated to perform, discharge, or assume, nor do the Agent or the

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    Revolving Credit Lenders agree to perform, discharge, or assume, any
obligation, duty, or liability of RVI or the Purchaser under Purchase Agreement.
  7.   No Waiver of Loan Documents. The foregoing consent of, and waiver by, the
Agent and the Revolving Credit Lenders shall in no way constitute a modification
or waiver of any of the other terms and conditions of the Loan Agreement or any
of the other Loan Documents, and the sale or other transfer of any additional
Collateral must strictly comply with the terms and conditions of the Loan
Agreement and the other Loan Documents. The consent and waiver furnished herein
relates solely to the Sale, the Insurance Transactions, and the LLC Transfer and
is not a continuing waiver.   8.   Amendment and Ratification of Loan Documents.

  a.   Upon consummation of the Sale and effectiveness of the consent provided
hereby, (i) the Pledge Agreement shall be deemed amended by deleting from Annex
A thereof the references to “Filene’s Basement, Inc.” and “FB Services LLC” and
all information relating thereto. and (ii) the Agent shall deliver or cause to
be delivered to RVI or its counsel Certificate Number 2, evidencing 100 shares
of capital stock of the Borrower owned by RVI, together with the stock power
previously delivered to the Agent in connection therewith, copies of each of
which are annexed hereto as Exhibit C, provided that in exchange therefor, the
Purchaser shall have delivered or caused to be delivered to the Agent all stock
certificates and stock powers evidencing the Purchaser’s right, title and
interest in and to the capital stock of the Borrower as further described in
Section 11 hereof.     b.   Except as expressly provided herein, the Loan
Agreement and each other Loan Document, including, without limitation, the
Guaranty, the Pledge Agreement, and the Security Agreement, remain in full force
and effect.     c.   Without limiting the generality of the foregoing, (i) each
of RVI and each other Facility Guarantor hereby (A) ratifies, confirms, and
reaffirms all of the terms and conditions of the Guaranty and each of the
warranties and representations made therein, (B) confirms that all such terms
and conditions remain in full force and effect, and (C) acknowledges and agrees
that the Liabilities guarantied pursuant to the Guaranty include, without
limitation, any Liabilities arising under the Loan Agreement and the other Loan
Documents and any modification, supplement, or extension thereof (the
“Guaranteed Debt”), provided, however, that the aggregate principal amount of
the Guaranteed Debt shall not be increased following the commencement by the
Borrower of a bankruptcy case as described in Section 13 below (except to the
extent such increase arises as a result of a drawing on an L/C issued and
outstanding on the date thereof or the incurrence of any Costs of Collection),
and (ii) each of the Borrower, RVI and each other Facility Guarantor hereby
acknowledges and agrees that the Collateral continues to secure all of the
Guaranteed Debt.

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  d.   RVI and each Facility Guarantor acknowledges and agrees that the
foregoing ratification of the Guaranty includes the indemnification therein, and
that the indemnification would cover any claim, demand, threat, action, or cause
of action brought or asserted against any of the Agent and/or the Revolving
Credit Lenders arising out of or in any way related to the consent granted
herein.     e.   As further security for its obligations under the Guaranty, RVI
covenants and agrees that it shall maintain with National City Bank an
interest-bearing deposit account, under the control of the Agent, having a
balance of not less than $2,500,000.00 at all times until such time as
Guaranteed Debt (excluding the Participation (as defined in the Participation
Agreement)) shall have been indefeasibly paid in full in cash, the Revolving
Credit Lenders’ commitment to provide loans or other financial accommodations to
the Borrower shall have been terminated, and all outstanding L/Cs shall have
expired, been returned undrawn or otherwise cash collateralized in a manner
reasonably satisfactory to the Agent and the Issuing Bank (collectively, “Paid
In Full”).

9.   Insurance Transactions. As a condition precedent to the effectiveness of
the consent to the Insurance Transactions, the Borrower shall have provided to
the Agent, in form and substance reasonably satisfactory to the Agent, evidence
of the Borrower’s insurance policies of the types and with the terms required by
the Loan Agreement, together with endorsements to such insurance policies naming
the Agent as loss payee and/or additional insured and otherwise in form and
substance reasonably satisfactory to the Agent.   10.   Transferred Interests
Remain Subject to Lien of Agent. As provided in Section 1.1(a) of the Purchase
Agreement, RVI is selling the Transferred Interests to the Purchaser subject to
the security interests granted by RVI to the Agent, for the ratable benefit of
the Secured Parties. The Purchaser hereby (i) confirms, acknowledges and agrees
that the Purchaser is purchasing the Transferred Interests subject to such
security interests on a non-recourse basis, which shall remain in full force and
effect following the Sale, and (ii) ratifies the grant of such security
interests (on a non-recourse basis) to the Agent, for the ratable benefit of the
Secured Parties.   11.   Security Interest in Transferred Interests. As a
condition precedent to the effectiveness of the consent provided hereby, the
Purchaser shall execute and deliver to the Agent (A) a pledge and security
agreement, in form and substance satisfactory to the Agent, evidencing the grant
of security interest by the Purchaser (on a non-recourse basis) to the Agent,
for the ratable benefit of the Secured Parties, in the Transferred Interests, as
security for (i) RVI’s obligations arising under the Guaranty, and (ii) the
Liabilities (including, without limitation, any Liabilities arising under the
Loan Agreement and the other Loan Documents and any modification, supplement, or
extension thereof), whether now existing or hereafter arising, and (B) all stock
certificates and other equity interest certificates representing the Transferred
Interests, accompanied by stock powers or other appropriate instruments of
assignment thereof duly executed in blank by the Purchaser. As a further
condition precedent to the effectiveness of the consent provided hereby, (x) the
Borrower shall execute and deliver a pledge and security agreement, in form and

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    substance satisfactory to the Agent, evidencing the grant of security
interest by the Borrower to the Agent, for the ratable benefit of the Secured
Parties, in the Services LLC Interests, and (y) Services LLC shall execute and
deliver a pledge and security agreement, in form and substance satisfactory to
the Agent, evidencing the grant of security interest by Services LLC to the
Agent, for the ratable benefit of the Secured Parties, in the Leasing LLC
Interests.   12.   Retention of Chief Restructuring Officer and Independent
Consultant. The Borrower acknowledges, agrees, and covenants that until such
time as the Guaranteed Debt shall have been Paid In Full, the Borrower shall
continue to retain (i) as Chief Restructuring Officer, Alan Cohen of Abacus
Advisors Group LLC, or such other Person as approved by the board of directors
of the Borrower and accepted by the Agent and the Revolving Credit Lenders in
their discretion, and (ii) as Financial Consultant, Perry Mandarino of
PricewaterhouseCoopers, or such other Person as approved by the board of
directors of the Borrower and accepted by the Agent and the Revolving Credit
Lenders in their discretion. RVI and the Purchaser each acknowledges, agrees,
and covenants that it will not take any actions inconsistent with the foregoing
agreement by the Borrower until such time as the Guaranteed Debt shall have been
Paid In Full. This Section 12 may be amended by the Borrower, the Purchaser, the
Agent and the Revolving Credit Lenders from time to time without the consent of
RVI, provided, that any such amendment shall not increase the obligations or
liabilities of RVI in any respect (except to the extent such obligations or
liabilities may otherwise be increased in accordance with the terms of this
Agreement) without the prior written consent of RVI.   13.   Forbearance From
Enforcement of Guaranty. The Agent and the Revolving Credit Lenders agree to
forbear from making demand upon RVI for payment under the Guaranty until the
substantial completion of the sale and/or liquidation of the Borrower’s business
and assets, so long as (i) all terms and conditions of this letter agreement are
performed and there is no breach hereunder by the Borrower, RVI, or the
Purchaser, (ii) the Agent, the Revolving Credit Lenders, and the Borrower agree
upon all terms and conditions of a mutually acceptable order for use of cash
collateral (the “Cash Collateral Order”) containing terms and conditions
customary and usual for cases involving retail bankruptcy sales/liquidations,
prior to the commencement by the Borrower of a bankruptcy case, which the
Borrower expects to commence on or about April 21, 2009, and (iii) no Event of
Default has occurred under the Cash Collateral Order, provided, that the Cash
Collateral Order shall provide that in the event RVI shall cause the Guaranteed
Debt to be Paid In Full as a result of an Event of Default under the Cash
Collateral Order, RVI shall immediately assume and benefit from all rights and
obligations of the Agent under the Cash Collateral Order (including, without
limitation, to the extent permitted under applicable law, all claims, suits,
causes of action and any other right of the Agent against the Borrower).   14.  
Consent Fee. Upon execution of this letter agreement, RVI shall pay to the Agent
for the ratable benefit of the Revolving Credit Lenders a consent fee in the
amount of $100,000.00. The consent fee shall be fully earned upon the execution
of this letter

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    agreement and shall not be refunded or disgorged in whole or in part under
any circumstances.   15.   Miscellaneous.

  a.   This Agreement may be executed in several counterparts and by each party
on a separate counterpart, each of which, when so executed and delivered, shall
be an original, and all of which together shall constitute one instrument.    
b.   This Agreement expresses the entire understanding of the parties with
respect to the matters set forth herein. No prior discussions or negotiations
shall limit, modify, or otherwise affect the provisions hereof.     c.   Any
determination that any provision of this Agreement or any application hereof is
invalid, illegal or unenforceable in any respect and in any instance shall not
effect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other provisions of
this Agreement.     d.   The Borrower shall pay on demand all costs and expenses
of the Agent and the Revolving Credit Lenders, including, without limitation,
reasonable attorneys’ fees, in connection with the preparation, negotiation,
execution and delivery of this Agreement.     e.   The Borrower, RVI, and the
Purchaser, at their expense, shall execute such additional documents and
undertake such additional actions as the Agent may reasonably request in order
to more fully evidence the agreements set forth herein, provided, that as
between RVI and the Purchaser, RVI shall reimburse the Purchaser for any of the
foregoing expenses.     f.   This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of the State of Ohio, without regard to principles of
conflicts of law thereof.     g.   This Agreement shall constitute a Loan
Document for all purposes.

[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.

                  NATIONAL CITY BUSINESS CREDIT, INC., as Agent and as     a
Revolving Credit Lender    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Signature Page to Consent and Ratification Agreement

 

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                  WELLS FARGO RETAIL FINANCE, LLC, as a Revolving Credit Lender
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Signature Page to Consent and Ratification Agreement

 

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                  FILENE’S BASEMENT, INC., as Borrower    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Signature Page to Consent and Ratification Agreement

 

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                  RETAIL VENTURES, INC., as RVI    
 
           
 
  By:        
 
  Name:  
 
James A. McGrady    
 
  Title:   Chief Executive Officer, Chief Financial Officer, Treasurer and
Secretary    

Signature Page to Consent and Ratification Agreement

 

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                  FB II ACQUISITION CORP., as Purchaser    
 
           
 
  By:        
 
  Name:  
 
Scott Rusczyk    
 
  Title:   President    

Signature Page to Consent and Ratification Agreement

 

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Acknowledged and Agreed (for purposes of Section 8 and 15 only):

          RETAIL VENTURES LICENSING, INC., as a Facility Guarantor    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   
 
        RETAIL VENTURES IMPORTS, INC., as a Facility Guarantor    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   
 
        RETAIL VENTURES SERVICES, INC., as a Facility Guarantor    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   
 
        FB SERVICES LLC, as a Facility Guarantor    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   
 
        FB LEASING SERVICES LLC, as a Facility Guarantor    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   

Signature Page to Consent and Ratification Agreement