UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 25, 1997
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10590
VENTURE STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0914490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 East Terra Lane, O'Fallon, Missouri 63366-0110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 281-5500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
Common Stock, par value $1 per share New York Stock Exchange
(including Rights)
$3.25 Depository Shares, each New York Stock Exchange
representing 1/10 of a share
of Cumulative Convertible
Preferred Stock, par value
$1 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant based on the closing price of $2.25
on April 15, 1997 was $39,647,027.
The number of shares of registrant's common stock, par value $1
per share, outstanding as of April 15, 1997 was 18,268,961.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Registrant's Annual Report to Shareowners for
the fiscal year ended January 25, 1997 (the "1996 Annual
Report to Shareowners") are incorporated by reference into
Parts I and II.
2. Portions of Registrant's Proxy Statement dated April 29,
1997 are incorporated by reference into Part III.
PART I
Item 1. BUSINESS
The information included in the first two paragraphs of Note 1
"Description of Business and Summary of Significant Accounting
Policies" of the Notes to Financial Statements included in the
Company's 1996 Annual Report to Shareowners is incorporated
herein by reference.
Venture Stores, Inc. (the "Company") operated as a division of
The May Department Stores Company ("May") from its inception in
1970 until the fall of 1989 when, in anticipation of its
disposition, May transferred all of the Venture division's assets
and liabilities to the Company. The Company was spun off as an
independent publicly-held corporation on November 3, 1990 (the
"Spin-off").
Prior to March 7, 1996, the Company operated as a regional
general merchandise discount retailer. On March 7, 1996, the
Company completed phase one of its repositioning as a chain of
value-oriented family stores focusing on quality apparel, home,
and leisure merchandise (the "Repositioning"). The Repositioning
was launched in response to the very difficult environment which
faced the retail industry, particularly regional discount store
chains. Phase one of the Repositioning resulted in the
reconfiguration of the store interiors and the expansion of
various merchandise assortments in order for the Company to
become a more dominant retailer in the family apparel, home and
leisure merchandise categories. The reconfiguration provides for
destination shops showcasing category-dominant lines with
additional floor space, distinctive fixtures, graphics, and
displays. In phase one of the Repositioning, the Company
downsized or eliminated several categories of historically low-
margin businesses, including automotive, hardware and sporting
goods, to make room for new or expanded businesses such as the
Petite Shop, Big & Tall Shop, Women's Sizes, Sports Shop and Home
Shop areas.
The Company continued to adjust its family value store concept
and merchandise mix in 1996 with phase two of the Repositioning,
which was completed in October 1996. Phase two included
expanding the gift department, further expansion of new wire weld
fixturing in domestics, introduction of a bath and body shop,
expansion of the luggage department, debut of a women's
coordinates fashion line, and introduction of convenience
automotive accessories. Phase three of the Repositioning, which
is being rolled out in 1997, includes opening or expanding 14
more departments, including live plants, convenience hardware,
and golf and fishing equipment, expansion of opening price point
items and the intensification of the everyday low pricing
strategy. The Company intends to continue to evaluate its
merchandise assortments throughout 1997.
Markets
As of January 25, 1997, the Company operated 113 family value
stores in 31 markets in nine states across the Midwest and
Southwest as set forth below:
Multi-Store Markets Single-Store Markets
Number Number
of Stores of Stores
Chicago, IL 31 Fort Smith, AR 1
Evansville, IN 2 Bradley, IL 1
Gary, IN 2 Decatur, IL 1
Indianapolis, IN 4 Moline, IL 1
South Bend, IN 2 Peoria, IL 1
Des Moines, IA 2 Rockford, IL 1
Wichita, KS 2 Springfield, IL 1
Kansas City, MO 7 Davenport, IA 1
St. Louis, MO 16 Dubuque, IA 1
Oklahoma City, OK 4 Waterloo, IA 1
Tulsa, OK 2 Topeka, KS 1
Dallas/Fort Worth, TX 8 Paducah, KY 1
Houston, TX 13 Cape Girardeau, MO 1
95 Joplin, MO 1
St. Joseph, MO 1
Springfield, MO 1
Amarillo, TX 1
Corpus Christi, TX 1
18
The Company opened one new family value store in 1996, which was
a conversion of an existing building. On March 30, 1996, the
company closed six stores and converted four stores to temporary
chain-wide clearance centers. During 1996, the Company reopened
all four clearance centers and three of the closed stores as
family value stores.
During the fourth quarter of 1996, the Company opened nine
Venture Dollar stores in existing trade areas to test-market the
new concept. The Venture Dollar stores carry convenience-
oriented, low-priced items and are approximately 7,000 to 10,000
square feet in size.
Approximately 74% of the Company's family value stores are
located in the Chicago, St. Louis, Houston, Dallas/Fort Worth,
Kansas City, and Oklahoma City markets. The Company uses a
defined trade area strategy to determine locations for its new
family value stores. The trade area strategy requires that each
store's primary trade area be large enough and sufficiently
independent of existing Company stores' trade areas to generate
sales levels sufficient to meet Company financial return
standards.
Merchandise
The Company provides a wide assortment of value-priced
merchandise for basic and fashion needs. By micro marketing, the
Company tailors key merchandise categories in its stores to meet
the distinct needs of customers in each of the Company's markets.
The Company offers leading brand name merchandise lines and
supplements these lines with other branded and private label
products. During 1996, the Company significantly expanded and
updated its private label branding program.
Merchandise offerings by the Company include "hardline" products
such as home furnishings, housewares, consumer electronics, home
textiles, toys, outdoor sports and home fitness equipment, and
household consumables. Additionally, the Company offers
"softline" products such as women's, men's and children's
clothing, intimate apparel, licensed team merchandise, shoes,
jewelry, cosmetics and fashion accessories. The following table
summarizes the Company's sales by merchandise category for the
last three fiscal years.
(in millions) 1996 1995 1994
Hardlines $ 947 64% $1,228 64% $1,269 63%
Softlines 528 35 681 35 725 36
Other 11 1 20 1 23 1
$1,486 100% $1,929 100% $2,017 100%
Seasonality of Business
The operations of the Company are highly seasonal with the fourth
quarter (the Christmas selling season) contributing 32% of sales
in 1996, compared with 30% of sales in 1995. The demand for
working capital generally increases significantly prior to this
peak selling season. Note 16 "Quarterly Results (unaudited)" of
the Notes to Financial Statements included in the Company's 1996
Annual Report to Shareowners is incorporated herein by reference.
Distribution
The Company operates three distribution centers located in
Chicago, Illinois; O'Fallon, Missouri; and Corsicana, Texas.
Merchandise is ordered centrally by Associates at the corporate
office for all stores and is shipped by vendors either directly
to individual stores or to the distribution centers which then
make deliveries to stores.
Employees
The Company employs approximately 12,600 Associates.
Competition
In each of its markets, the Company operates in a highly
competitive environment which includes department stores, mass
merchandisers, specialty stores, and discounters. The Company
considers value, product selection, quality, availability,
merchandise mix, customer satisfaction, and store location to be
the most significant competitive factors. The Company's primary
competitors include Wal-Mart, Kmart, Target, Sears, J.C. Penney,
Kohl's and Mervyn's. Most of the Company's primary competitors
are significantly larger and generally have greater resources
than the Company, and many of these competitors are expanding in
one or more of the Company's markets. Each of the Company's
stores competes in its market with at least one of these
competitors, and a substantial number of the Company's stores
compete with two or more of these competitors, as well as
additional regional and local competitors.
Trademarks, Trade names, and Logos
The Company owns all rights to the "Venture" name for retail
department store services, which it uses as a trade name and as a
service mark, and it owns and licenses to others the right to use
"Venture" as a trademark in connection with various merchandise.
The Company also owns all rights to the distinctive black and
white striped Venture logo and the striped wave Venture logo for
retail department store services which it uses in its signs and
advertising. The Company believes that the Venture trade name
and mark and the Venture logos are material to its competitive
position in the industry.
Environmental Matters
In connection with financing transactions related to the Spin-
off, environmental audits were conducted at 47 facilities owned
or operated by the Company. Those audits revealed certain
environmental problems, including soil and groundwater
contamination at some sites formerly operated as automotive
service or gasoline stations. The Company's estimate of cleanup
costs of $4.9 million for problems identified by the consultants
performing the environmental audits was recorded in 1989.
Environmental audits were not conducted, and are not required by
law to be conducted, at most of the other facilities owned or
operated by the Company at the time of the spin-off, some of
which were formerly operated by the Company or other parties as
automotive service or gasoline stations or as manufacturing
facilities. The Company has spent $2.8 million for cleanup at
the audited facilities through January 25, 1997 and believes that
the actual total cost of cleanup at the audited facilities will
not exceed the $4.9 million charge recorded in 1989.
During 1994, the Company completed asbestos inspections at all of
its stores constructed before 1984 which had not previously been
inspected for asbestos. Based on these inspections, the Company
recorded a $2.6 million charge for the estimated cost to abate
asbestos. The Company believes that the actual cost to abate
asbestos identified during these inspections will not exceed the
$2.6 million charge recorded in 1994.
Item 2. PROPERTIES
The information set forth under the headings "Description of
Business", "Property and Equipment", and "Deferred Gain on
Sale/Leaseback" in Note 1 "Description of Business and Summary of
Significant Accounting Policies", Note 8 "Long-Term Debt" and
Note 9 "Lease Obligations" of the Notes to Financial Statements
included in the Company's 1996 Annual Report to Shareowners, and
the information under the heading "Markets" under Part I, Item 1,
of this report are incorporated herein by reference. The Company
opened one new family value store in St. Louis, Missouri in 1996.
The Company closed three family value stores in 1996, one in
Champaign, Illinois, one in Chicago, Illinois, and one in
Indianapolis, Indiana. The Company's average store size is
approximately 100,000 square feet. Sixteen of the Company's
family value stores are mortgaged to Principal Mututal Life
Insurance Company and five family value stores, one distribution
center, one photo studio, and one undeveloped new store site are
mortgaged to BT Commercial Corporation. The Company operates a
423,900 square foot distribution facility in Chicago, Illinois
and a 601,400 square foot facility in O'Fallon, Missouri (20
miles west of St. Louis), which consists of a 197,000 square foot
general office and a 404,400 square foot distribution center. In
1993, the Company opened a 350,000 square foot distribution
center in Corsicana, Texas. This distribution center serves as
the hub of the Company's distribution network for its Texas
stores and can be expanded to approximately 700,000 square feet
to add capacity for approximately 59 additional stores.
Item 3. LEGAL PROCEEDINGS
The company is not a party to any material pending legal
proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the quarter ended January 25, 1997.
EXECUTIVE OFFICERS
For information on executive officers, see Part III, Item 10 of
this report.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information set forth under the heading "Shareowner
Information" and Note 7 "Notes Payable" of the Notes to
Financial Statements included in the Company's 1996 Annual Report
to Shareowners is incorporated herein by reference. There were
19,264 shareowners of record of the Company's common stock as of
April 15, 1997.
COMMON STOCK DATA
FISCAL YEAR ENDED JANUARY 25, 1997 JANUARY 27, 1996
Market Market
Price Dividends Price Dividends
High Low Per Share High Low Per Share
Fourth quarter $ 3 5/8 $ 2 3/8 - $ 5 5/8 $ 3 -
Third quarter $ 5 3/4 $ 3 1/4 - $ 7 5/8 $ 3 7/8 -
Second quarter $ 8 1/2 $ 5 - $10 7/8 $ 6 1/4 $0.070
First quarter $ 8 1/2 $ 3 5/8 - $14 3/4 $10 5/8 $0.145
The Company's common stock is traded on the New York Stock
Exchange under the symbol VEN.
Item 6. SELECTED FINANCIAL DATA
The information for 1992 through 1996 set forth under the heading
"Five-Year Summary" in the Company's 1996 Annual Report to
Shareowners is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth under the heading "Management's
Discussion and Analysis" in the Company's 1996 Annual Report to
Shareowners is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Public Accountants, Statement of
Earnings, Balance Sheet, Statement of Shareowners' Investment,
Statement of Cash Flows, and Notes to Financial Statements
included in the Company's 1996 Annual Report to Shareowners are
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) Directors - The information under the headings "Nominees and
Continuing Directors", "Security Ownership of Management"
and "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Company's Proxy Statement dated April 29,
1997 is incorporated herein by reference.
b) Executive Officers - Information regarding the Executive
Officers of the Company as of April 15, 1997 is set forth
below. All positions held are with the Company, unless
otherwise indicated.
Name Age Positions and Business Experience Dates
Robert N. Wildrick 53 Chairman of the Board 1996-Present
President, Chief Executive 1995-Present
Officer and Director
Corporate Executive Vice 1991-1995
President for Merchandising and
Sales Promotion and Chief
Merchandising Officer of Belk
Stores Services, Inc. ("Belk")
(a group of family and
management-owned retail
department stores)
Eugene Caldwell 42 Senior Vice President-Chief 1994-Present
Financial Officer, Chief
Accounting Officer and Treasurer
Controller 1991-1994
James H. Ferstl 54 Executive Vice President and 1996-Present
Chief Merchandising Officer
Executive Vice President of 1995-1996
Product Development and
Marketing
Corporate Vice President and 1987-1995
General Merchandise Manager of
Gottschalks Department Stores,
Inc. (a central California
regional department store)
Russell E. Solt 49 Secretary 1996-Present
Executive Vice President-Finance 1995-Present
and Administration
Senior Vice President and Chief 1994-1995
Financial Officer at Williams-
Sonoma, Inc.
Executive Vice President and 1989-1994
Chief Financial Officer of Belk
Items 11 and 12. EXECUTIVE COMPENSATION AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the headings "Security Ownership
Of Certain Beneficial Owners", "Nominees and Continuing
Directors", "Board of Directors and Committees", "Director
Compensation", "Security Ownership of Management", "Executive
Compensation", "Compensation Committee Interlocks and Insider
Participation", and "Stock Performance Graph" of the Company's
Proxy Statement dated April 29, 1997 are incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
The following documents are filed as part of this report:
(a) (1) Listing of Financial Statements:
The following are incorporated herein by reference to the
Company's 1996 Annual Report to Shareowners:
Statement of Earnings for the fiscal years ended January 25,
1997, January 27, 1996, and January 28, 1995
Balance Sheet as of January 25, 1997 and January 27, 1996
Statement of Shareowners' Investment for the fiscal years
ended January 25, 1997, January 27, 1996, and January
28, 1995
Statement of Cash Flows for the fiscal years ended
January 25, 1997, January 27, 1996, and January 28,
1995
Notes to Financial Statements
Report of Independent Public Accountants
(a) (2) All financial statement schedules for which provision
is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required
under the related instructions, are inapplicable or the
information is included in the financial statements or
the notes thereto, and therefore have been omitted.
(a) (3) Listing of Exhibits:
The Exhibits filed as part of this Form 10-K are listed
on the Exhibit Index immediately preceding such
Exhibits, incorporated herein by reference.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter
ended January 25, 1997.
(c) Exhibits:
See Response to Item 14 (a)(3).
(d) Financial statement schedules:
See the response to Item 14(a)(2).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: April 24, 1997 VENTURE STORES, INC.
(Registrant)
By:/s/Eugene Caldwell
Eugene Caldwell
Senior Vice President-
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
Date: April 24, 1997 /s/Robert N. Wildrick
Robert N. Wildrick
President, Chief Executive
Officer, Chairman of the Board
and a Director
Date: April 24, 1997 /s/Eugene Caldwell
Eugene Caldwell
Senior Vice President -
Chief Financial Officer
(Principal Financial Officer)
DIRECTORS
Date: April 24, 1997 /s/James H. Ferstl
James H. Ferstl
Executive Vice President and a
Director
Robert L. Berra*
Kimberly A. Delsing*
Timothy F. Finley*
H. Edwin Trusheim*
Lawrence J. Young*
Date: April 24, 1997 *By/s/Robert N. Wildrick
Robert N. Wildrick
Attorney-in-fact
Supplemental Information to Be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have
Not Registered Securities Pursuant to Section 12 of the Act:
Not Applicable
VENTURE STORES, INC.
EXHIBIT INDEX
Exhibit No.
3.1 Restated Certificate of Incorporation, filed
as Exhibit 3.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended
February 2, 1991, is incorporated herein by
reference.
3.2 Amended and Restated By-laws, filed as Exhibit
3.2 to the Company's Annual Report on Form
10-K for the fiscal year ended January 27,
1996, is incorporated herein by reference.
3.3 Certificate of Designations, Preferences and
Rights of Junior Participating Preferred
Stock, filed as Exhibit 3.3 to the Company's
Annual Report on Form 10-K for the fiscal
year ended February 2, 1991, is incorporated
herein by reference.
3.4 Certificate of Designations of Cumulative
Convertible Preferred Stock, filed as Exhibit
4.1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-46583), is
incorporated herein by reference.
4.1(a) Rights Agreement between the Company and
Boatmen's Trust Company, filed as Exhibit 4.1
to the Company's Annual Report on Form 10-K
for the fiscal year ended February 2, 1991,
is incorporated herein by reference.
4.1(b) Assignment and Assumption Agreement between
the Company, Boatmen's Trust Company and
Mellon Securities Trust Company, filed as
Exhibit 4.1(b) to the Company's Annual Report
on Form 10-K for the fiscal year ended
January 30, 1993, is incorporated herein by
reference.
4.1(c) Assignment and Assumption Agreement between
the Company, Mellon Securities Trust Company,
and the Bank of New York, filed as Exhibit
4.1(c) to the Company's Annual Report on Form
10-K for the fiscal year ended January 27,
1996, is incorporated herein by reference.
4.2 Deposit Agreement between the Company and
Mellon Securities Trust Company (New York),
As Depositary, filed as Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for
the 13 weeks ended May 2, 1992, is
incorporated herein by reference.
4.3 Form of Depositary Receipt (included in
Exhibit 4.2), filed as part of Exhibit 4.2 to
the Company's Quarterly Report on Form 10-Q
for the 13 weeks ended May 2, 1992, is
incorporated herein by reference.
4.4 Form of Cumulative Convertible Preferred Stock
Certificate, filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-1
(Registration No. 33-46583), is incorporated
herein by reference.
4.5(a) Indenture, dated as of October 1, 1994, between
the Company and The First National Bank of
Chicago, filed as Exhibit 4(a) to the
Company's Current Report on Form 8-K dated
October 12, 1994, is incorporated herein by
reference.
4.5(b) First Supplemental Indenture, dated as of
March 29, 1996, between the Company, Fleet
National Bank, and the First National Bank of
Chicago, filed as Exhibit 4.5(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended January 27, 1996, is
incorporated herein by reference.
4.6 Officers' Certificate, dated October 12, 1994,
establishing the forms and terms of certain
notes (Exhibits 4.7 and 4.8), filed as
Exhibit 4(b) to the Company's Current Report
on Form 8-K dated October 12, 1994, is
incorporated herein by reference.
4.7 Form of Book-Entry Fixed Rate Note, filed as
Exhibit 4(c) to the Company's Current Report
on Form 8-K dated October 12, 1994, is
incorporated herein by reference.
4.8 Form of Book-Entry Floating Rate Note, filed
as Exhibit 4(d) to the Company's Current
Report on Form 8-K dated October 12, 1994, is
incorporated herein by reference.
10.1 Tax Sharing Agreement dated August 8, 1990,
between the Company and May, filed as Exhibit
10.1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-35452), is
incorporated herein by reference.
10.2(a) Loan and Security Agreement, dated as of
June 28, 1996, between the Company and
BankAmerica Business Credit, Inc. as Agent,
filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the 13 and
26 weeks ended July 27, 1996, is incorporated
herein by reference.
10.2(b) First Amendment, dated October 15, 1996, to
the Loan and Security Agreement, dated as of
June 28, 1996, between the Company and
BankAmerica Business Credit, Inc. as Agent,
filed as Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the 13 and
39 weeks ended October 26, 1996, is
incorporated herein by reference.
10.2(c) Second Amendment, dated January 8, 1997, to
the Loan and Security Agreement, dated as of
June 28, 1996, between the Company and
BankAmerica Business Credit, Inc. as Agent.
10.2(d) Agreement Relating to Second Amendment to Loan
and Security Agreement, dated January, 8,
1997, between the Company and BankAmerica
Business Credit, Inc. as Agent.
10.2(e) Third Amendment, dated January 28, 1997, to
the Loan and Security Agreement, dated as of
June 28, 1996, between the Company and
BankAmerica Business Credit, Inc. as Agent.
10.2(f) Fourth Amendment and Limited Term Waiver,
dated as of March 31, 1997, to the Loan and
Security Agreement, dated as of June 28,
1996, between the Company and BankAmerica
Business Credit, Inc. as Agent.
10.3 Credit Agreement, dated as of April 8, 1997,
between the Company and BT Commercial
Corporation, as Agent.
10.4 General Security Agreement, dated as of
April 8, 1997, between the Company and BT
Commercial Corporation, as Agent.
10.5(a) Agreement of Sale and Purchase, dated May 18,
1990, between the Company and Metropolitan
Life Insurance Company, filed as Exhibit
10.3(a) to the Company's Registration
Statement on Form S-1 (Registration No. 33-
35452), is incorporated herein by reference.
10.5(b) Bedford Park Agreement of Sale and Purchase,
dated May 18, 1990, between the Company and
Metropolitan Life Insurance Company, filed as
Exhibit 10.3(b) to the Company's Registration
Statement on Form S-1 (Registration No. 33-
35452), is incorporated herein by reference.
10.5(c) Lease Agreement, dated May 18, 1990, between
the Company and Metropolitan Life Insurance
Company, filed as Exhibit 10.3(c) to the
Company's Registration Statement on Form S-1
(Registration No. 33-35452), is incorporated
herein by reference.
10.5(d) Bedford Park Lease Agreement, dated May 18,
1990, between the Company and Metropolitan
Life Insurance Company, filed as Exhibit
10.3(d) to the Company's Registration
Statement on Form S-1 (Registration No. 33-
35452), is incorporated herein by reference.
10.6(a) Loan Agreement, dated July 3, 1990, between
the Company and Principal Mutual Life
Insurance Company, filed as Exhibit 10.4 to
the Company's Registration Statement on Form
S-1 (Registration No. 33-35452), is
incorporated herein by reference.
10.6(b) Letter Agreement, dated April 17, 1995,
amending the Loan Agreement dated July 3,
1990, between the Company and Principal
Mutual Life Insurance Company, filed as
Exhibit 10.4(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 28, 1995, is incorporated herein by
reference.
10.6(c) Second Amendment, dated October 28, 1995, to
the Loan Agreement dated July 3, 1990,
between the Company and Principal Mutual Life
Insurance Company, filed as Exhibit 10(a) to
the Company's Quarterly Report on Form 10-Q
for the 13 and 39 weeks ended October 28,
1995, is incorporated herein by reference.
*10.7 Venture Stores, Inc. Stock Option Plan,
effective March 1, 1990, filed as Exhibit
10.5 to the Company's Registration Statement
on Form S-1 (Registration No. 33-35452), is
incorporated herein by reference.
*10.8 Venture Stores, Inc. Stock Appreciation Rights
Plan, as amended effective March 3, 1992,
filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-1
(Registration No. 33-46583), is incorporated
herein by reference.
*10.9 Venture Stores, Inc. 1992 Long-Term
Performance Plan, as amended March 1, 1994,
and as amended March 7, 1996, filed as
Exhibit 10.7 to the Company's Annual Report
on Form 10-K for the fiscal year ended
January 27, 1996, is incorporated herein by
reference.
*10.10 Venture Stores, Inc. 1997 Stock Option Plan,
effective March 6, 1997.
*10.11(a) Venture Stores, Inc. Executive Incentive
Compensation Plan, effective February 25,
1994, filed as Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 29, 1994, is incorporated
herein by reference.
*10.11(b) Amendment to Venture Stores, Inc. Executive
Incentive Compensation Plan, effective May
20, 1994, filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for
the 13 and 26 weeks ended July 30, 1994, is
incorporated herein by reference.
*10.12(a) Venture Stores, Inc. Retirement Plan and First
Amendment thereto, effective January 1, 1990,
filed as Exhibit 10.9 to the Company's
Registration Statement on Form S-1
(Registration No. 33-35452), is incorporated
herein by reference.
*10.12(b) Second Amendment to Venture Stores, Inc.
Retirement Plan, effective December 27, 1990,
filed as Exhibit 10.27 to the Company's
Annual Report on Form 10-K for the fiscal
year ended February 2, 1991, is incorporated
herein by reference.
*10.12(c) Third and Fourth Amendments to Venture Stores,
Inc. Retirement Plan, executed June 30, 1994,
filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the 13 and
26 weeks ended July 30, 1994, is incorporated
herein by reference.
*10.12(d) Fifth Amendment to the Venture Stores, Inc.
Retirement Plan, executed November 8, 1995,
filed as Exhibit 10.10(d) to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 27, 1996, is incorporated
herein by reference.
*10.12(e) Sixth Amendment to the Venture Stores, Inc.
Retirement Plan, executed December 15, 1995,
filed as Exhibit 10.10(e) to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 27, 1996, is incorporated
herein by reference.
*10.13(a) Venture Stores, Inc. Supplementary Retirement
Plan, effective January 1, 1990, filed as
Exhibit 10.10 to the Company's Registration
Statement on Form S-1 (Registration No. 33-
35452), is incorporated herein by reference.
*10.13(b) First Amendment to Venture Stores, Inc.
Supplementary Retirement Plan, dated March
29, 1995, filed as Exhibit 10.11(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended January 28, 1995, is
incorporated herein by reference.
*10.13(c) Addendum No. 1 to the Supplementary Retirement
Plan dated April 17, 1995, filed as Exhibit
10.11(c) to the Company's Annual Report on
Form 10-K for the fiscal year ended January
28, 1995, is incorporated herein by
reference.
*10.14(a) Venture Stores, Inc. Profit Sharing Plan,
as amended and restated as of January 1,
1994, filed as Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the 13 and
26 weeks ended July 30, 1994, is incorporated
herein by reference.
*10.14(b) First Amendment to the Venture Stores, Inc.
Profit Sharing Plan, executed November 14,
1995, filed as Exhibit 10.12(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended January 27, 1996, is
incorporated herein by reference.
*10.14(c) Second Amendment to the Venture Stores, Inc.
Profit Sharing Plan, executed December 15,
1995, filed as Exhibit 10.12(c) to the
Company's Annual Report on Form 10-K for the
fiscal year ended January 27, 1996, is
incorporated herein by reference.
*10.15 Employment Agreement, effective April 17, 1995,
between the Company and Robert N. Wildrick,
filed as Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 28, 1995, is incorporated
herein by reference.
*10.16 Employment Agreement, effective August 30,
1995, between the Company and James Ferstl.
*10.17(a) Employment Agreement, effective December 4,
1995, between the Company and Russell E. Solt.
*10.17(b) Amendment to the Employment Agreement, effective
July 1,1996, between the Company and Russell
E. Solt.
*10.18(a) Employment Agreement, effective May 30,
1995, between the Company and Peter Mihaltian.
*10.18(b) Amendment to the Employment Agreement, effective
July 1,1996, between the Company and Peter
Mihaltian.
*10.19(a) Employment Agreement, effective May 1, 1994,
between the Company and Eugene Caldwell.
*10.19(b) Amendment to the Employment Agreement, effective
May 1, 1995, between the Company and Eugene
Caldwell.
*10.19(c) Second Amendment to the Employment Agreement,
effective July 1, 1996, between the Company
and Eugene Caldwell.
*10.20 Severance Agreement between the Company
and Robert N. Wildrick, effective April 17,
1995, filed as Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 28, 1995, is incorporated
herein by reference.
*10.21 Severance Agreement between the Company
and James Ferstl, effective July 12, 1995.
*10.22 Severance Agreement between the Company
and Russell E. Solt, effective November 18,
1995.
*10.23 Severance Agreement between the Company
and Peter Mihaltian, effective May 30, 1995.
*10.24 Severance Agreement between the Company
and Eugene Caldwell, effective August 10,
1995.
10.25 Indemnification Agreement between the Company
and Robert N. Wildrick, dated April 17, 1995,
filed as Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the fiscal
year ended January 28, 1995, is incorporated
herein by reference.
10.26 Indemnification Agreement between the Company
and James H. Ferstl, dated January 31, 1996.
10.27 Indemnification Agreement between the Company
and Russell E. Solt, dated December 4, 1995.
10.28 Indemnification Agreement between the Company
and Eugene Caldwell, dated April 21, 1994.
10.29(a) Restricted Stock Plan for Non-Management
Directors of Venture Stores, Inc., as amended
effective September 28, 1990 and March 3,
1992, filed as Exhibit 10.7 to the Company's
Registration Statement on Form S-1
(Registration No. 33-46583), is incorporated
herein by reference.
10.29(b) Third Amendment to the Restricted Stock Plan
for Non-Management Directors of Venture
Stores, Inc., executed May 10, 1996, filed as
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the 13 weeks ended
April 27, 1996, is incorporated herein by
reference.
10.30(a) Retirement Plan for Non-Management Directors
of Venture Stores, Inc., filed as Exhibit
10.24 to the Company's Annual Report on Form
10-K for the fiscal year ended January 30,
1993, is incorporated herein by reference.
10.30(b) First Amendment to the Retirement Plan for
Non-Management Directors of Venture Stores,
Inc., executed May 10, 1996, filed as Exhibit
10.2 to the Company's Quarterly Report on
Form 10-Q for the 13 weeks ended April 27,
1996, is incorporated herein by reference.
10.31 Retainer Stock and Option Plan for Non-
Management Directors of Venture Stores, Inc.
is incorporated herein by reference from
Exhibit A to the Company's Proxy Statement
dated April 7, 1995.
11 Computation of Earnings per Share
13 The Company's 1996 Annual Report to
Shareowners (only those portions specifically
incorporated by reference are filed with the
Commission)
23 Consent of Independent Public Accountants
24 Power of Attorney
27 Financial Data Schedule
* Exhibit represents a management contract or compensatory plan.
EXHIBIT 10.2(c)
January 8, 1997
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Missouri 63366-0110
Re: Second Amendment to Loan and Security Agreement
(this "Second Amendment")
Ladies/Gentlemen:
Reference is hereby made to that certain Loan and Security
Agreement, as amended prior to the date hereof (the "Agreement"),
dated as of June 28, 1996 and executed by and among Venture
Stores, Inc. (the "Borrower"), the financial institutions party
thereto (collectively, the "Lenders") and BankAmerica Business
Credit, Inc., as agent for the Lenders (in such capacity as
agent, the "Agent"). Certain capitalized terms used herein and
not otherwise defined shall have the meanings attributed to them
in the Agreement.
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Agent, the Lenders and the
Borrower hereby agree as follows:
1. The definition of "Maximum Revolver Amount" appearing in
Section 1.1 of the Agreement is hereby amended by adding the
phrase "; and" immediately following "clause (iv)" appearing
therein, and by adding a new "clause (v)" immediately
following such new phrase which new "clause(v)" shall read
in its entirety as follows:
(v) an inventory reserve in the amount of $20,000,000
(the "Inventory Reserve"), which Inventory Reserve
shall continue until both of the following events shall
have occurred: (A) the Agent and the Lenders shall have
received and reviewed an inventory appraisal
satisfactory in form and substance to the Agent, and
pursuant to the terms of this Agreement the Agent shall
have made any corresponding adjustments to the
Borrowing Base relating to such inventory appraisal,
and (B) an amendment to this Agreement (the terms of
which are to be negotiated), satisfactory in form and
substance to the Borrower, the Agent and the Lenders,
shall have been executed and delivered by the Borrower,
the Agent and the Lenders and shall have become
effective in accordance with its terms, which amendment
is anticipated, among other things, to reset the
financial covenants contained herein for the fiscal
year ending on or about January 31, 1998, to establish
a negative cash flow reserve, and to provide for the
elimination or adjustment of the Inventory Reserve, and
which amendment shall contain such other terms and
provisions as may be deemed necessary or desirable by
the Lenders.
2. Section 8.21 of the Agreement is hereby amended as follows:
(a) The minimum ratio "1.0 to 1" appearing therein is
hereby deleted INSOFAR AND ONLY INSOFAR as said minimum
ratio relates to the period entitled "Three fiscal
quarter period ending nearest January 31, 1997", and is
hereby replaced with the minimum ratio "0.30 to 1", it
being expressly understood and agreed by the parties
that the minimum ratio of "1.0 to 1" shall remain
applicable to the periods entitled "Four fiscal quarter
period ending at each fiscal quarter thereafter"; and
(b) The following three new sentences are hereby added to
the end of said Section 8.21 and made a part thereof:
In addition, the Borrower will maintain a minimum Fixed
Charge Coverage Ratio of 1.0 to 1 for the nine-month
fiscal period ending nearest February 28, 1997 provided
that such required minimum Fixed Charge Coverage Ratio
shall not become effective unless and until the
Required Lenders shall have elected, in the exercise of
their sole discretion, to require that the Borrower
maintain such minimum Fixed Charge Coverage Ratio. The
Agent, upon the direction of the Required Lenders,
shall notify the Borrower in writing of any such
election before March 31, 1997, and upon such
notification such minimum Fixed Charge Coverage Ratio
requirement shall become effective on March 31, 1997
for such nine-month fiscal period ending nearest
February 28, 1997. For purposes of this Section 8.21,
and notwithstanding any provision to the contrary
contained in Section 10.1(d), any failure of the
Borrower to deliver the financial statements for the
month ending nearest February 28, 1997 by March 31,
1997 shall be deemed to constitute an immediate Event
of Default under this Agreement.
It is expressly understood and agreed by the parties hereto that
this Second Amendment only outlines certain, but not all,
provisions of a proposed further amendment to the Agreement (as
amended by this Second Amendment), shall not constitute a
commitment or contract of any kind on the part of the Agent or
any Lender for any such amendment, and is not to be construed or
relied upon by the Borrower or anyone else as a commitment for
any such amendment. This Second Amendment, insofar as it
describes such a proposed further amendment to the Agreement, is
merely a proposal which is subject to the completion of due
diligence and formal approval by each Lender and the satisfactory
negotiation of the terms and provisions thereof.
Except to the extent modified herein, the Agreement and the other
Loan Documents remain in full force and effect and are each
hereby ratified and confirmed. Please evidence your agreement
with the terms of this Second Amendment by signing in the space
below. This Second Amendment may be executed by one or more of
the parties hereto on any number of counterparts, and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. This Second Amendment shall become
effective in accordance with its terms upon its execution by the
Agent, the Majority Lenders and the Borrower, whereupon each
reference to the Agreement in the Agreement and in any and all
other Loan Documents shall, except where the context otherwise
requires, be deemed a reference to the Agreement as amended by
this Second Amendment.
Sincerely,
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:\s\Kevin Y. Caragay
Name:Kevin Y. Caragay
Title:Assistant Secretary
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:\s\Thomas C. Lannon
Name:Thomas C. Lannon
Title:Vice President
LA SALLE BUSINESS CREDIT, INC.,
as a Lender
By:\s\Jeffrey J. Podwika
Name:Jeffrey J. Podwika
Title:Asset Based Lending Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:\s\Timothy S. Van Kirk
Name:Timothy S. Van Kirk
Title:Duly Authorized Signatory
ACCEPTED AND AGREED:
VENTURE STORES, INC.
By:\s\Russell Solt
Name:Russell Solt
Title:Executive Vice President
Date: January 8, 1997
EXHIBIT 10.2(d)
January 8, 1997
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Missouri 63366-0110
Re: Agreement Relating to Second Amendment to Loan and Security
Agreement
Ladies/Gentlemen:
Reference is hereby made to that certain Loan and Security
Agreement, as amended prior to the date hereof (the "Agreement"),
dated as of June 28, 1996 and executed by and among Venture
Stores, Inc. (the "Borrower"), the financial institutions party
thereto (collectively, the "Lenders") and BankAmerica Business
Credit, Inc., as agent for the Lenders (in such capacity as
agent, the "Agent"). Reference is hereby also made to that
certain letter agreement (the "Second Amendment"), dated even
date herewith and proposed to be entered into by and among the
Borrower, the Lenders and the Agent, which Second Amendment would
amend the Agreement in certain respects. Certain capitalized
terms used herein and not otherwise defined shall have the
meanings attributed to them in the Agreement.
To induce the parties hereto to enter into the Second Amendment,
and in consideration thereof, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower hereby agrees that it shall pay to the
Agent on the date of the Borrower's acceptance of this letter
agreement, for the account of the Lenders, ratably in accordance
with their respective Pro Rata Shares, an amendment fee (the
"Amendment Fee") in the amount of $500,000, which Amendment Fee
shall be fully earned by the Lenders on such date.
This letter agreement shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with
the internal laws (as opposed to the conflict of laws provisions)
of the State of Illinois.
The Agreement and the other Loan Documents remain in full force
and effect and are each hereby ratified and confirmed. Please
evidence your agreement with the terms of this letter agreement
by signing in the space below. This letter agreement may be
executed by one or more of the parties hereto on any number of
counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. This letter
agreement shall become effective in accordance with its terms
upon its execution by the Agent, the Majority Lenders and the
Borrower.
Sincerely,
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:\s\Kevin Y. Caragay
Name:Kevin Y. Caragay
Title:Assistant Secretary
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:\s\Thomas C. Lannon
Name:Thomas C. Lannon
Title:Vice President
LA SALLE BUSINESS CREDIT, INC.,
as a Lender
By:\s\Jeffrey J. Podwika
Name:Jeffrey J. Podwika
Title:Asset Based Lending Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:\s\Timothy S. Van Kirk
Name:Timothy S. Van Kirk
Title:Duly Authorized Signatory
ACCEPTED AND AGREED:
VENTURE STORES, INC.
By:\s\Russell Solt
Name:Russell Solt
Title:Executive Vice President
Date:January 8, 1997
EXHIBIT 10.2(e)
January 28, 1997
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Missouri 63366-0110
Re: Third Amendment to Loan and Security Agreement (this "Third
Amendment")
Ladies/Gentlemen:
Reference is hereby made to that certain Loan and Security
Agreement, as amended prior to the date hereof (the "Agreement"),
dated as of June 28, 1996 and executed by and among Venture
Stores, Inc. (the "Borrower"), the financial institutions party
thereto (collectively, the "Lenders") and BankAmerica Business
Credit, Inc., as agent for the Lenders (in such capacity as
agent, the "Agent"). Certain capitalized terms used herein and
not otherwise defined shall have the meanings attributed to them
in the Agreement.
For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Agent, the Lenders and the
Borrower hereby agree as follows:
1. The definition of "Maximum Revolver Amount" appearing in
Section 1.1 of the Agreement is hereby amended and restated
to read in its entirety as follows:
""Maximum Revolver Amount" means, at any time,
(a) the lesser of (1) the Revolver Facility; or (2) the
Borrowing Base at such time; minus (b) the sum of (i)
reserves for accrued interest on the Obligations; (ii)
reserves in the amount equal to two (2) months rent at
any premises leased by the Borrower where any Eligible
Inventory is located, unless the Borrower has obtained
a landlord's waiver reasonably acceptable to the Agent
with respect to such premises; (iii) reserves covering
equipment excluded from the definition of "Equipment"
pursuant to clause (c) of the last sentence of such
definition; and (iv) all other reserves which the Agent
reasonably deems necessary or desirable to maintain
with respect to the Borrower's account, including,
without limitation, any reserves for any amounts which
the Agent or any Lender may be obligated to pay in the
future for the account of the Borrower."
2. The definition of "Maximum Revolver Amount" appearing in
Section 1.1 of the Agreement permits the Agent to establish
certain reserves to be deducted from the amount otherwise
available to be advanced to the Borrower under the
Agreement. On the Closing Date the Agent established a
reserve in the amount of $2,500,000 relating to the
Borrower's equipment located at its property in O'Fallon,
Missouri. The Agent and the Lenders hereby agree, and the
Borrower hereby acknowledges, that effective as of the date
hereof such reserve in the amount of $2,500,000 is hereby
eliminated, provided, however, that the elimination of such
reserve shall not have any effect upon any other reserves
established by the Agent and in effect on the date hereof
(after giving effect to this Amendment),and also shall not
have any effect on the ability of the Agent to establish
reserves under clauses (i) through (iv) of the definition of
"Maximum Revolver Amount" after the date hereof.
3. The Agent, the Lenders and the Borrower have received the
most recently completed appraisal of the Borrower's
Inventory, which appraisal is required to be delivered
pursuant to the provisions of Section 5.5 of the Agreement.
The Agent, the Lenders and the Borrower hereby (i)
acknowledge and agree that such appraisal and the
conclusions appearing therein are acceptable to them, and
(b) further acknowledge and agree that, as a result of such
appraisal, the GOB Percentage will be 54.28% effective as of
the date hereof and continuing until such time as another
appraisal of the Borrower's Inventory is delivered pursuant
to the requirements of said Section 5.5.
4. The Borrower hereby acknowledges that the Agent intends to
engage KPMG Peat Marwick LLP ("Peat Marwick") as a
consultant to the Agent and the Lenders in connection with
the Agreement. The Borrower hereby agrees to cooperate
fully with the Agent and Peat Marwick (and any other
consultant engaged by or on behalf of the Agent and the
Lenders), and to furnish, and to cause its auditors and
accountants to furnish promptly to the Agent and Peat
Marwick (and any such other consultant) any and all such
information as any of them may reasonably request. The
Borrower hereby further agrees that the Agent and each
Lender may provide to Peat Marwick (and any such other
consultant) any and all information held by the Agent or
such Lender regarding the Borrower and its condition
(financial or otherwise).
5. Section 14.6 of the Agreement is hereby amended by adding
the word "and" and the following new "clause (i)" to the end
of the first sentence thereof, immediately following "clause
(h)" of said Section 14.6, which new "clause (i)" shall read
in its entirety as follows:
"(i) fees and expenses of any and all consultants
(including without limitation KPMG Peat Marwick LLP)
engaged by or on behalf of the Agent in connection with
this Agreement provided that the maximum aggregate
amount that the Borrower shall be required to pay to
the Agent pursuant to the terms of this clause (i)
shall be $150,000"
6. The Borrower hereby agrees that is shall, on or before
February 24, 1997, execute and deliver to the agent
mortgages, deeds of trust or other similar real estate
collateral security instruments, together with any Uniform
Commercial Code financing statements relating thereto as may
be requested by the Agent or its counsel, all of which items
shall be in form and substance satisfactory to the Agent and
its counsel. The Borrower shall, pursuant to such
mortgages, deeds of trust and other instruments, grant a
lien on and security interest in the real estate listed on
Schedule A hereto and all property and other interests
related thereto, which lien and security interest shall be
in favor of the Agent, for the ratable benefit of the Agent
and the Lenders, as security for all Obligations. The
Borrower further agrees to execute and deliver, or cause to
be executed and delivered, to the Agent such documents and
agreements, and to take or cause to be taken such actions,
as the Agent may from time to time, reasonably request to
carry out the terms and conditions of this paragraph 6. Any
failure by the Borrower to comply with the provisions of
this paragraph 6 shall constitute an Event of Default under
the Agreement.
7. Article 8 of the Agreement is hereby amended by the addition
of a new Section 8.24 thereto, which new Section 8.24 shall
read in its entirety as follows:
"8.24 Minimum Availability. The Borrower shall
not permit Availability to be less than $1,000,000 at
any time."
Except to the extent expressly modified in paragraphs numbered 1
through 7 above, the Agreement and the other Loan Documents
remain in full force and effect and are each hereby ratified and
confirmed. Please evidence your agreement with the terms of this
Third Amendment by signing in the space below. This Third
Amendment may be executed by one or more of the parties hereto on
any number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument. This third Amendment shall become effective in
accordance with its terms upon its execution by the Agent, all
Lenders and the Borrower, whereupon each reference to the
Agreement in the Agreement and in any and all other Loan
Documents shall, except where the context otherwise requires, be
deemed a reference to the Agreement as amended by this Third
Amendment.
Sincerely,
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:\s\Kevin Y. Caragay
Name:Kevin Y. Caragay
Title:Assistant Secretary
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:\s\Thomas C. Lannon
Name:Thomas C. Lannon
Title:Vice President
LA SALLE BUSINESS CREDIT, INC.,
as a Lender
By:\s\Jeffrey J. Podwika
Name:Jeffrey J. Podwika
Title:Asset Based Lending Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:\s\Timothy S. Van Kirk
Name:Timothy S. Van Kirk
Title:Duly Authorized Signatory
ACCEPTED AND AGREED:
VENTURE STORES, INC.
By:\s\Russell Solt
Name:Russell Solt
Title:Executive Vice President
Date:January 29, 1997
SCHEDULE A TO THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
Real Estate
1. East Indy - V66
7339 East Washington Street
Indianapolis, IN 46219-6798
2. Skillman - V67
600 Skillman Street
Dallas, TX 75231-7721
3. Corsicana D.C. - V99
1600 N. Business 45
Corsicana, TX 75110-2713
4. Willowbrook - V121/164
17717 State Hwy. 249
Houston, TX 77064-1010
5. Edmond - V137
2501 S. Broadway St.
Edmond, OK 73013-4028
6. Elston - V168
5033 North Elston
Chicago, IL 60630-1707
7. Photo Studio - V90
1835 E. Terra Lane
O'Fallon, MO 63366
EXHIBIT 10.2(f)
FOURTH AMENDMENT and LIMITED TERM WAIVER
dated as of March 31, 1997
to
LOAN AND SECURITY AGREEMENT
dated as of June 28, 1996
This FOURTH AMENDMENT and LIMITED TERM WAIVER to LOAN AND
SECURITY AGREEMENT dated as of March 31, 1997 (this "Amendment")
is made by VENTURE STORES, INC., a Delaware corporation (the
"Borrower"), the financial institutions named on the signature
pages of this Amendment as "Lenders" and BANKAMERICA BUSINESS
CREDIT, INC., as agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein but not defined herein
shall have the meanings provided in the Loan Agreement referred
to below.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties
to a Loan and Security Agreement dated as of June 28, 1996, as
amended by the First Amendment thereto dated October 15, 1996,
the Second Amendment thereto dated January 8, 1997, and the Third
Amendment thereto dated January 28, 1997 (the "Loan Agreement");
WHEREAS, the Borrower, the Lenders and the Agent have agreed
to amend the Loan Agreement, and the Lenders and the Agent have
agreed to temporarily waive the Borrower's failure to comply with
certain provisions of the Loan Agreement, in each case, on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises set forth
above, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Borrower,
the Lenders and the Agent hereby agree as follows:
Section 1. Amendments to Loan Agreement. Subject to the
fulfillment of the conditions precedent set forth in Section 3
below, the Loan Agreement is hereby amended as follows:
(a) the definition of "Borrowing Base" found in
Section 1.1 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
" 'Borrowing Base' means:
(a) from April 1, 1997 to April 30, 1997, the
greater of (x) the sum of (i) 57.1% of the
amount of Eligible Inventory at such time,
minus (ii) the advertising load and transfer
freight relating to inventory reflected on
the books of the Borrower at such time and at
all other times, minus (iii) the Special
Reserve and (y) the sum of (i) 54.28% of the
amount of Eligible Inventory at such time,
minus (ii) the advertising load and transfer
freight relating to inventory reflected on
the books of the Borrower at such time; and
(b) at all other times, the sum of (i) the
lesser of (1) 60% and (2) the GOB Percentage,
of the amount of Eligible Inventory at such
time, minus (ii) the advertising load and
transfer freight relating to inventory
reflected on the books of the Borrower at
such time."
(b) Section 1.1 of the Loan Agreement is hereby further
amended to insert the following new definition in
appropriate alphabetical order therein:
" 'Special Reserve' means, at any time, an
amount equal to $40,000,000 minus 7.9% of the
amount of Eligible Inventory at such time."
Section 2. Waiver. Each of the Lenders and the Agent, upon
the effectiveness of this Amendment pursuant to Section 3 below,
hereby waives the Borrower's failure to:
(a) deliver the unaudited financial statements for the
month of January 1997 (the "January Financials")
required to be delivered by March 2, 1997 pursuant to
Section 6.2(c) of the Loan Agreement;
(b) maintain a Fixed Charge Coverage Ratio of 0.3 to 1 for
the three fiscal quarter period ending nearest January 31,
1997 as required by Section 8.21 of the Loan Agreement;
and
(c) maintain a Fixed Charge Coverage Ratio of 1.0 to 1 for
the nine-month fiscal period ending nearest February 28,
1997 as required by Section 8.21 of the Loan Agreement,
provided, that the waivers contained in clauses 2(b) and 2(c)
above shall only remain in effect until the earliest and (i)
April 30, 1997, (ii) the date on which the "Commitment Letter"
(as defined below) shall either expire or otherwise terminate,
and (iii) any other Event of Default shall occur under the Loan
Agreement, at which time, unless the Borrower shall have paid all
Obligations under the Loan Agreement in full, an Event of Default
shall have occurred and be continuing as a result of the
termination of the foregoing waivers (in addition, in the case of
item (iii) above, to any other Events of Default which may occur)
and the Agent and the Lenders shall have the right to exercise
all rights and remedies available to them under the Loan
Agreement in respect of such Event of Default. The Borrower
hereby agrees that it shall immediately notify the Agent if the
Commitment Letter shall expire or otherwise terminate.
Section 3. Condition Precedent. This amendment shall
become effective upon the date first above-written upon the
receipt by the Agent of:
(a) signed counterparts of this Amendment executed by the
Majority Lenders and the Borrower;
(b) the January Financials together with those unaudited
financials for the month of February 1997 which are required
pursuant to Section 6.2(c) of the Loan Agreement; and
(c) a waiver fee, for the account of the Lenders, in
accordance with their respective Pro Rata Shares, in the
amount of $250,000.
Notwithstanding anything herein to the contrary, in the event the
conditions to effectiveness set forth in this Section 3 are not
either satisfied or waived in writing by the Majority Lenders
prior to 5:00 p.m. (Chicago time) on March 31, 1997, then this
Amendment shall be of no force and effect.
Section 4. Representations and Warranties. The Borrower
hereby represents and warrants that (i) the representations and
warranties contained in the Loan Agreement are correct in all
material respects as though made on and as of the date of this
Amendment, other than any such representation or warranty which
relates to a specified prior date, (ii) after giving effect to
this Amendment, no Default or Event of Default has occurred and
is continuing and (iii) attached hereto as Exhibit A is a true,
correct and complete copy of the commitment letter provided to
the Borrower on March 27, 1997, by BT Commercial Corporation (the
"Commitment Letter") and such Commitment Letter has been duly
accepted and agreed to by the Borrower and all of the conditions
precedent to the effectiveness of the Commitment Letter have been
satisfied.
Section 5. Effect on the Loan Agreement. Except as
specifically set forth above, (i) the Loan Agreement and all
other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and
effect and are hereby ratified and confirmed; and (ii) the
execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Agent or
the Lenders under the Loan Agreement, nor constitute a waiver of
any provision of the Loan Agreement or of any Default or Event of
Default in existence on the date of this Amendment.
Section 6. Release. In further consideration of the
Lenders' and the Agent's execution of this Amendment, the
Borrower hereby releases the Lenders, the Agent and their
respective affiliates, officers, employees, directors, agents and
attorneys (collectively, the "Releasees") from any and all
claims, demands, liabilities, responsibilities, disputes, causes
of action (whether at law or in equity) and obligations of every
nature whatsoever, whether liquidated or unliquidated, known or
unknown, matured or unmatured, fixed or contingent that the
Borrower may have against the Releasees which arise from or
relate to any actions which the Releasees may have taken or
omitted to take prior to the date hereof with respect to the
Obligations, any Collateral, the Loan Documents and any third
parties liable in whole or in part for the Obligations. For
purposes of the release contained in this paragraph, the term
"Borrower" shall mean and include such party's successors and
assigns, including, without limitation, any trustees acting on
behalf of such party and any debtor-in-possession in respect of
such party.
Section 7. Execution in Counterparts. This amendment may
be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument.
Section 8. Governing Law. This Amendment shall be governed
by and construed in accordance with the internal laws (as opposed
to the conflicts of laws provisions) of the State of Illinois.
Section 9. Section Titles. The section titles contained in
this Amendment are and shall be without substance, meaning or
content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the date first
above written.
VENTURE STORES, INC.
By: /s/ Russell Solt
Title: Executive V.P.
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as a Lender
By: /s/ Gregory Eck
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By: /s/ Timothy S. Van Kirk
Vice President
CONGRESS FINANCIAL CORPORATION,
as a Lender
By: /s/ Thomas C. Lannon
Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Kevin Y. Caragay
Assistant Secretary
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Jeffrey J. Podwika
Asset Based Lending Officer
Exhibit 10.3
==================================================================
CREDIT AGREEMENT
$250,000,000
among
VENTURE STORES, INC.
as Borrower,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent
Dated as of April 8, 1997
==================================================================
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General Definitions. . . . . . . . . . . . . . 1
1.2 Accounting Terms and Determinations. . . . . . 15
1.3 Other Terms; Headings. . . . . . . . . . . . . 16
ARTICLE 2. REVOLVING LOANS. . . . . . . . . . . . . . . . . . . . . 16
2.1 Revolving Credit Commitments . . . . . . . . . 16
2.2 Borrowing of Revolving Loans . . . . . . . . . 16
2.3 Notice of Request for Lender
Advances.. . . . . . . . . . . . . . . . . . . 18
2.4 Periodic Settlement of Agent Advances;
Interest and Fees; Statements. . . . . . . . . 18
2.5 Sharing of Payments. . . . . . . . . . . . . . 19
2.6 Defaulting Lenders . . . . . . . . . . . . . . 20
ARTICLE 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . 21
3.1 Issuance of Letters of Credit. . . . . . . . . 21
3.2 Terms of Letters of Credit . . . . . . . . . . 21
3.3 Notice of Issuance . . . . . . . . . . . . . . 21
3.4 Lenders' Participation . . . . . . . . . . . . 22
3.5 Payments of Amounts Drawn Under Letters
of Credit. . . . . . . . . . . . . . . . . . . 22
3.6 Payment by Lenders . . . . . . . . . . . . . . 22
3.7 Obligations Absolute . . . . . . . . . . . . . 22
3.8 Agent's Execution of Applications
and Other Issuing Bank Documentation;
Reliance on Credit Agreement by
Issuing Bank . . . . . . . . . . . . . . . . . 23
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . 23
4.1 Interest on Revolving Loans. . . . . . . . . . 23
4.2 Unused Line Fee. . . . . . . . . . . . . . . . 24
4.3 Letter of Credit Fees. . . . . . . . . . . . . 24
4.4 Interest and Letter of Credit Fees After
Event of Default.. . . . . . . . . . . . . . . 25
4.5 Collateral Monitoring Fee. . . . . . . . . . . 25
4.6 Expenses . . . . . . . . . . . . . . . . . . . 25
4.7 Mandatory Payment; Reductions of
Commitments. . . . . . . . . . . . . . . . . . 25
4.8 Maintenance of Loan Account; Statements
of Account . . . . . . . . . . . . . . . . . . 26
4.9 Payment Procedures . . . . . . . . . . . . . . 26
4.10 Collection of Accounts . . . . . . . . . . . . 26
4.11 Distribution and Application of
Collections and other Amounts. . . . . . . . . 27
4.12 Calculations . . . . . . . . . . . . . . . . . 27
4.13 Special Provisions Relating to LIBOR
Rate Loans . . . . . . . . . . . . . . . . . . 28
4.14 Indemnification in Certain Events. . . . . . . 31
ARTICLE 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 33
5.1 Conditions Precedent to Initial Revolving
Loan and Letter of Credit. . . . . . . . . . . 33
5.2 Conditions Precedent to All Revolving Loans
and Letters of Credit. . . . . . . . . . . . . 33
ARTICLE 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 34
6.1 Organization and Qualification . . . . . . . . 34
6.2 Authority. . . . . . . . . . . . . . . . . . . 35
6.3 Enforceability . . . . . . . . . . . . . . . . 35
6.4 No Conflict. . . . . . . . . . . . . . . . . . 35
6.5 Consents and Filings . . . . . . . . . . . . . 35
6.6 Government Regulation. . . . . . . . . . . . . 35
6.7 Solvency . . . . . . . . . . . . . . . . . . . 35
6.8 Rights in Collateral; Priority of
Liens. . . . . . . . . . . . . . . . . . . . . 36
6.9 Financial Data . . . . . . . . . . . . . . . . 36
6.10 Locations of Offices, Records and
Inventory. . . . . . . . . . . . . . . . . . . 36
6.11 Subsidiaries; Ownership of Stock . . . . . . . 37
6.12 No Judgments or Litigation . . . . . . . . . . 37
6.13 No Defaults. . . . . . . . . . . . . . . . . . 37
6.14 Labor Matters. . . . . . . . . . . . . . . . . 37
6.15 Compliance with Law. . . . . . . . . . . . . . 37
6.16 ERISA. . . . . . . . . . . . . . . . . . . . . 37
6.17 Compliance with Environmental Laws . . . . . . 38
6.18 Intellectual Property. . . . . . . . . . . . . 38
6.19 Licenses and Permits . . . . . . . . . . . . . 39
6.20 Taxes and Tax Returns. . . . . . . . . . . . . 39
6.21 Material Contracts . . . . . . . . . . . . . . 40
6.22 Accuracy and Completeness of
Information. . . . . . . . . . . . . . . . . . 40
6.23 No Change. . . . . . . . . . . . . . . . . . . 40
ARTICLE 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 40
7.1 Financial Reporting. . . . . . . . . . . . . . 40
7.2 Collateral Reporting . . . . . . . . . . . . . 42
7.3 Notification Requirements. . . . . . . . . . . 43
7.4 Corporate Existence. . . . . . . . . . . . . . 44
7.5 Books and Records; Inspections . . . . . . . . 45
7.6 Insurance. . . . . . . . . . . . . . . . . . . 45
7.7 Taxes. . . . . . . . . . . . . . . . . . . . . 45
7.8 Compliance with Laws . . . . . . . . . . . . . 45
7.9 Use of Proceeds. . . . . . . . . . . . . . . . 46
7.10 Fiscal Year. . . . . . . . . . . . . . . . . . 46
7.11 Maintenance of Property. . . . . . . . . . . . 46
7.12 ERISA Documents. . . . . . . . . . . . . . . . 46
7.13 Environmental and Other Matters. . . . . . . . 47
7.14 Further Assurances . . . . . . . . . . . . . . 47
ARTICLE 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 48
8.1 Minimum EBITDA to Interest Expense
Ratio. . . . . . . . . . . . . . . . . . . . . 48
8.1A Minimum Shareowner's Investment. . . . . . . . 49
8.2 Minimum Inventory to Trade Accounts
Payable Ratio. . . . . . . . . . . . . . . . . 49
8.3 Capital Expenditures . . . . . . . . . . . . . 49
8.4 Additional Indebtedness. . . . . . . . . . . . 49
8.5 Liens. . . . . . . . . . . . . . . . . . . . . 50
8.6 Contingent Obligations . . . . . . . . . . . . 51
8.7 Sale of Assets . . . . . . . . . . . . . . . . 51
8.8 Restricted Payments. . . . . . . . . . . . . . 52
8.9 Investments. . . . . . . . . . . . . . . . . . 52
8.10 Affiliate Transactions . . . . . . . . . . . . 53
8.11 Additional Bank Accounts . . . . . . . . . . . 53
8.12 Excess Cash. . . . . . . . . . . . . . . . . . 53
8.13 Additional Negative Pledges. . . . . . . . . . 53
8.14 Additional Subsidiaries. . . . . . . . . . . . 54
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . 54
9.1 Events of Default. . . . . . . . . . . . . . . 54
9.2 Acceleration, Termination of
Commitments and Cash
Collateralization. . . . . . . . . . . . . . . 55
9.3 Rescission of Acceleration . . . . . . . . . . 56
9.4 Remedies . . . . . . . . . . . . . . . . . . . 56
9.5 Right of Setoff. . . . . . . . . . . . . . . . 56
9.6 License of Use of Software and Other
Intellectual Property. . . . . . . . . . . . . 56
9.7 Application of Proceeds; Surplus;
Deficiencies . . . . . . . . . . . . . . . . . 56
ARTICLE 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 57
10.1 Appointment of Agent . . . . . . . . . . . . . 57
10.2 Nature of Duties of Agent. . . . . . . . . . . 57
10.3 Lack of Reliance on Agent. . . . . . . . . . . 58
10.4 Certain Rights of the Agent. . . . . . . . . . 58
10.5 Reliance by Agent. . . . . . . . . . . . . . . 59
10.6 Indemnification of Agent . . . . . . . . . . . 59
10.7 The Agent in its Individual Capacity . . . . . 59
10.8 Holders of Revolving Notes . . . . . . . . . . 59
10.9 Successor Agent. . . . . . . . . . . . . . . . 60
10.10 Collateral Matters . . . . . . . . . . . . . . 60
ARTICLE 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 62
11.1 GOVERNING LAW. . . . . . . . . . . . . . . . . 62
11.2 SUBMISSION TO JURISDICTION . . . . . . . . . . 62
11.3 SERVICE OF PROCESS . . . . . . . . . . . . . . 62
11.4 JURY TRIAL . . . . . . . . . . . . . . . . . . 63
11.6 Delays . . . . . . . . . . . . . . . . . . . . 63
11.7 Notices. . . . . . . . . . . . . . . . . . . . 63
11.8 Assignments and Participations . . . . . . . . 64
11.9 Confidentiality. . . . . . . . . . . . . . . . 65
11.10 Indemnification. . . . . . . . . . . . . . . . 66
11.11 Amendments and Waivers . . . . . . . . . . . . 67
11.12 Counterparts and Effectiveness . . . . . . . . 67
11.13 Severability . . . . . . . . . . . . . . . . . 68
11.14 Maximum Rate . . . . . . . . . . . . . . . . . 68
11.15 Entire Agreement; Successors and
Assigns. . . . . . . . . . . . . . . . . . . . 69
ANNEXES
Annex I List of Lenders; Commitment Amounts;
and Applicable Lending Offices
SCHEDULES
Schedule A Closing Document List
Schedule B Disclosure Schedules
Schedule B, Part 6.1 States in which Qualified
Schedule B, Part 6.9 Contingent Obligations and Other
Liabilities
Schedule B, Part 6.10 Principal Places of Business;
Locations of Collateral
Schedule B, Part 6.12 Pending Judgments, Litigation and
other Claims
Schedule B, Part 6.14 Labor Contracts
Schedule B, Part 6.16 Plans
Schedule B, Part 6.17 Environmental Matters
Schedule B, Part 6.20 Tax Matters; Tax Sharing Agreements
Schedule B, Part 6.21 Material Contracts
Schedule B, Part 8.4 Existing Indebtedness
Schedule B, Part 8.5 Existing Liens
Schedule B, Part 8.9 Existing Investments
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Revolving Note
Exhibit D Form of Notice of Continuation
Exhibit E Form of Notice of Conversion
Exhibit F Form of Accountant's Letter
Exhibit G Form of Compliance Certificate
Exhibit H Form of Assignment and Assumption
Agreement
THIS CREDIT AGREEMENT ("Credit Agreement") is entered into as of
April 8, 1997, among VENTURE STORES, INC., a Delaware corporation
("Borrower"); each financial institution identified on Annex I (together
with its successors and assigns, hereinafter referred to individually as
a "Lender" and collectively as the "Lenders"); and BT COMMERCIAL
CORPORATION, a Delaware corporation (in its individual capacity, "BTCC"),
acting in its capacity as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").
ARTICLE 1. DEFINITIONS.
1.1 General Definitions.
Account has the meaning set forth in the Security Agreement.
Advance Rate means a percentage amount equal to:
(1) sixty percent (60%), during the period commencing February
1st through and including August 31st in each calendar
year;
(2) sixty-two percent (62%), during the period commencing
September 1st through and including October 31st in each
calendar year; and
(3) sixty-five percent (65%), during the period commencing
November 1st through and including January 31st in each
calendar year;
provided that, notwithstanding the foregoing, the Advance Rate shall in
any event be (i) sixty-five percent (65%), during the period commencing
on the Closing Date through and including June 30, 1997 and (ii) sixty
percent (60%), during the period commencing on July 1, 1997 through and
including August 31, 1997.
Affiliate of a Person means another Person who directly or
indirectly controls, is controlled by, is under common control with or is
a director or officer of, such Person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to
vote five percent (5%) or more of the securities having ordinary voting
power for the election of directors or the direct or indirect power to
direct the management and policies of a business.
Agent Advances has the meaning set forth in Section 2.2.
Applicable Lending Office means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
Assignment and Assumption Agreement has the meaning set forth in
Section 11.8.
Auditors means a nationally recognized firm of independent public
accountants selected by the Borrower and reasonably satisfactory to the
Agent; provided, that, for purposes of this Credit Agreement, the firm of
Arthur Andersen LLP shall be deemed to be satisfactory to the Agent.
Bankruptcy Code means Title 11 of the U.S. Code (11 U.S.C. Section 101 et
seq.), as amended from time to time, and any successor statute.
Benefit Plan means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which the Borrower, any of its Subsidiaries or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
Borrowing means a borrowing of Revolving Loans of the same Type by
the Borrower on a pro rata basis from each of the Lenders on a given date
(whether pursuant to Section 2.2 or resulting from continuations or
conversions of Revolving Loans on a given date pursuant to Sections
4.13(a) and (b), respectively) having, in the case of LIBOR Loans, the
same Interest Period.
Borrowing Base means, at any time, the value at such time
(determined at the lower of cost or market on a basis consistent with
Borrower's current and historical accounting practices) of Eligible
Inventory (as defined below) multiplied by the Advance Rate in effect at
such time.
In addition, the Agent, in the exercise of its Permitted Discretion,
may (i) establish and increase or decrease reserves against Eligible
Inventory and (ii) impose additional restrictions (or eliminate the same)
to the standards of eligibility set forth in the definition of "Eligible
Inventory."
Borrowing Base Certificate means the certificate of the Borrower
concerning the Borrowing Base to be provided under Section 7.2,
substantially in the form of Exhibit A.
BT Account has the meaning set forth in Section 4.10.
Business Day means any day that is not a Saturday, a Sunday or a day
on which commercial banks in Chicago, Illinois are required or permitted
by law to be closed and, when used in connection with LIBOR Rate Loans,
this definition will also exclude any day on which commercial banks are
not open for dealing in United States dollar deposits in the London
(U.K.) interbank market.
Capital Expenditures means, for any Person for any period, the sum
of all expenditures capitalized by such Person for financial statement
purposes in accordance with GAAP during such period (whether payable in
cash or other property or accrued as a liability), including the
capitalized portion of Capital Leases and that portion of Investments
made by such Person allocable to property, plant or equipment. Capital
Expenditures shall exclude proceeds of a casualty loss applied to the
repair or replacement of the property affected by the casualty loss.
"Casualty loss", as used herein, means, for any Person, (i) the loss,
damage, or destruction of any asset or property owned or used by such
Person, (ii) the condemnation, confiscation, or other taking, in whole or
in part, of any such asset or property, or (iii) the diminishment of the
use of any such asset or property so as to render impracticable or
unreasonable the use thereof for its intended purpose.
Cash Equivalents means either of the following, so long as the same
are maintained in accounts in which the Agent has a perfected security
interest: (i) securities issued, guarantied or insured by the United
States, or any of its agencies and having maturities of not more than one
year; (ii) certificates of deposit having maturities of not more than one
year issued by a United States national or state chartered commercial
bank of recognized standing whose combined capital and unimpaired surplus
is in excess of $200,000,000 and whose short-term commercial paper
rating, or that of its parent holding company, is at least "A-1" or the
equivalent by S&P and at least "Prime-1" or the equivalent by Moody's;
and (iii) commercial paper issued by any corporation organized under the
laws of any state of the United States and rated at least "A-1" or the
equivalent by S&P or "Prime-1" or the equivalent by Moody's.
Change of Control means the occurrence of any of the following
(provided, that a merger permitted pursuant to Section 7.4(i) shall not
constitute a "Change of Control" hereunder):
(a) the acquisition by a person, entity or group of beneficial
ownership of thirty-five percent (35%) or more of the combined
voting power of the then outstanding voting securities of the
Borrower;
(b) individuals who constitute the Board of Directors of the
Borrower (any such Board, an "Incumbent Board") cease for any
reason, during a period of two (2) consecutive years, to constitute
at least a majority of such Board, provided, that any new director
who is approved by a vote of at least two-thirds of the applicable
Incumbent Board shall be considered a member of such Incumbent Board
(other than an individual initially assuming office as a result of
either an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person, entity or group other than such Incumbent Board); and
(c) the approval by the stockholders of the Borrower of a
merger, consolidation or reorganization involving the Borrower,
unless (i) the stockholders of the Borrower immediately before such
merger, consolidation or reorganization own immediately thereafter
at least fifty-one percent (51%) of the combined voting power of the
outstanding voting securities of the surviving corporation in
substantially the same proportion as their ownership of securities
immediately before any such transaction; (ii) the individuals
constituting an Incumbent Board immediately prior to such merger,
consolidation or reorganization constitute at least a majority of
the Board of the applicable surviving corporation; and (iii) no
person, entity or group has beneficial ownership of thirty-five
percent (35%) or more of the combined voting power of the surviving
corporation's then outstanding voting securities.
Closing Date means the date on which the initial Borrowing is
advanced or the initial Letter of Credit is issued, whichever occurs
earlier.
Closing Document List has the meaning set forth in Section 5.1.
Code has the meaning set forth in Section 1.3.
Collateral means the Accounts, Inventory and certain other real and
personal property identified in the Collateral Documents as security for
the Obligations.
Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or
lessor of real property on which Collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory,
acknowledges the Liens of the Agent and, in the case of any such
agreement with a mortgagee or lessor, permits the Agent access to and use
of such real property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any Collateral stored or otherwise located thereon.
Collateral Documents means, collectively, the Security Agreement,
the Mortgages and all other contracts, instruments and other documents
pursuant to which Liens are now or hereafter granted to the Agent to
secure any or all of the Obligations.
Collection Account has the meaning set forth in Section 4.10.
Collection Banks has the meaning set forth in Section 4.10.
Collections means all cash, funds, checks, notes, instruments and
any other form of remittance tendered by account debtors in payment of
Accounts.
Commitment of a Lender means its commitment to make Revolving Loans
and to participate in Letters of Credit, up to the amount set forth below
its name on Annex I, as such amount may be reduced from time to time in
accordance with the terms of this Credit Agreement.
Consolidated Entity means the Borrower and those of its Subsidiaries
consolidated with it for purposes of financial reporting.
Consolidated Net Income means the consolidated net income of the
Consolidated Entity.
Consolidated Tangible Net Worth means the consolidated assets of the
Consolidated Entity minus the consolidated liabilities of the
Consolidated Entity.
Contingent Obligation means, with respect to any Person, any direct,
indirect, contingent or non-contingent guaranty or obligation of such
Person for the Indebtedness of another Person, except for endorsements in
the ordinary course of business.
Credit Documents means, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, each of the Collateral Documents
and all other documents, agreements and instruments now or hereafter
executed in connection herewith or therewith, in each case as modified,
amended, extended, restated or supplemented from time to time.
Credit Parties means, collectively, the Borrower and each other
party to any of the Credit Documents (other than the Lenders, the Agent
or the Issuing Bank).
Default means an event, condition or default which with the giving
of notice, the passage of time or both would be an Event of Default.
Defaulting Lender has the meaning set forth in Section 2.6.
Depositary Account Agreements has the meaning set forth in Section
4.11.
Disbursement Account means the operating account of the Borrower
maintained with the Disbursement Account Bank.
Disbursement Account Bank means Bankers Trust Company or any other
financial institution selected from time to time by the Agent and
reasonably acceptable to the Borrower.
Domestic Lending Office means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" on Annex
I, as such annex may be amended from time to time, which office shall in
any event be located in the United States.
EBITDA means, for any period, the Consolidated Net Income of the
Consolidated Entity (excluding extraordinary items) for such period, plus
(a) all Interest Expense, income tax expense, depreciation and
amortization (including amortization of any goodwill or other
intangibles) for such period; minus or plus (b) gains and losses
attributable to any fixed asset sales; plus or minus (c) any other non-
cash charges or gains which have been subtracted or added in calculating
Consolidated Net Income.
Eligible Inventory means the aggregate amount of Inventory deemed by
the Agent in the exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, Inventory shall be valued at the lower of cost
or market on a basis consistent with the Borrower's current and
historical accounting practice. Unless otherwise approved in writing by
the Agent, no Inventory shall be deemed Eligible Inventory if:
(a) it is not owned solely by the Borrower or the Borrower
does not have good, valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned by the Borrower or by
a third party that has executed and delivered a Collateral Access
Agreement and, in the case of Inventory located on property owned by
such a third party, it is segregated or otherwise separately
identifiable from goods of others, if any, stored on such property;
or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Agent, except with respect to Inventory stored
at sites described in clause (c) above, for Liens for unpaid rent or
normal and customary warehousing charges; or
(e) it consists of goods returned or rejected by the
Borrower's customers or goods in transit to third parties (other
than to warehouse sites covered by a Collateral Access Agreement);
or
(f) it is not first-quality finished goods, is obsolete or
slow moving, or does not otherwise conform to the representations
and warranties contained in the Credit Documents;
provided, that:
(i) Inventory shall not be deemed ineligible solely by reason
of clauses (b) and (c) above if such Inventory is being imported (or
has been imported) by Borrower and for which payment is to be
effected by presentment of an Existing LC or a Letter of Credit
issued pursuant to this Agreement, if (x) the Agent is named as
consignee on the applicable bill of lading or other similar document
of title (other than bills of lading or similar documents pertaining
to Inventory covered by Existing LCs), (y) such bill of lading or
document (other than bills of lading or similar documents pertaining
to Inventory covered by Existing LCs) has been delivered to the
Agent (or a Person designated by the Agent to act as its agent for
such purpose) and (z) the Inventory is covered by insurance
acceptable to the Agent; and
(ii) Inventory shall not be deemed ineligible solely by reason
of clause (c) above:
(x) during the period commencing on the Closing Date and ending
on May 8, 1997; and
(y) at any time thereafter, so long as at such time the
Borrower shall have delivered or caused to be delivered to the Agent
Collateral Access Agreements covering the premises on which
Inventory with an aggregate value (determined at the lower of cost
or market on a basis consistent with Borrower's current and
historical accounting practices) at least equal to seventy (70%) of
the aggregate such value of all Inventory at such time is located.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Section 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA Affiliate means any entity required to be aggregated with the
Borrower or any of its Subsidiaries under Sections 414 (b), (c), (m) or
(o) of the Internal Revenue Code.
Event of Default has the meaning set forth in Article 9.
Existing LC means any letter of credit set forth on that certain
Standby Letter of Credit No. S819459 in the original face amount of
$26,102,249.19 issued on the Closing Date by Bankers Trust Company to
BankAmerica Business Credit, Inc., as agent.
Expenses means all reasonable costs and expenses of the Agent
incurred in connection with the Credit Documents and the transactions
contemplated therein, including, without limitation, (i) the costs of
conducting record searches, examining collateral, opening bank accounts
and lockboxes, depositing checks, and receiving and transferring funds
(including charges for checks for which there are insufficient funds),
(ii) the reasonable fees and expenses of legal counsel and paralegals
(including the allocated cost of internal counsel and paralegals),
accountants, appraisers and other consultants, experts or advisors
retained by the Agent, (iii) expenses incurred in connection with the
initial assignments of or sales of participations in the Revolving Loans
(without duplication of the processing and recordation fee payable to the
Agent pursuant to Section 11.8(b)), (iv) the cost of title insurance
premiums, real estate survey costs, and fees and taxes in connection with
the filing of financing statements, and (v) the costs of preparing and
recording Collateral Documents, releases of Collateral, and waivers,
amendments, and terminations of any of the Credit Documents. Expenses
also means all reasonable costs and expenses (including the reasonable
fees and expenses of legal counsel and other professionals) paid or
incurred by the Agent and any Lender (i) during the continuance of an
Event of Default, (ii) in enforcing or defending its rights under or in
respect of this Credit Agreement, the other Credit Documents or any other
document or instrument now or hereafter executed and delivered in
connection herewith, (iii) collecting the Revolving Loans, (iv)
foreclosing or otherwise collecting upon the Collateral or any part
thereof and (v) in obtaining any legal, accounting or other advice in
connection with any of the foregoing.
Expiration Date means April 8, 2000.
FASB 98 Indebtedness means any obligation of the Borrower, as
lessee, in respect of any sale-leaseback transfer, in each case to the
extent that (i) such obligation is characterized on the balance sheet of
the Borrower as indebtedness in accordance with the requirements of
Statement of Financial Accounting Standards No. 98 of the Financial
Accounting Standards Board and (ii) such sale-leaseback transaction
occurred prior to the date hereof or is otherwise permitted hereunder.
Federal Funds Rate means, for any period, a fluctuating interest
rate per annum for each day during such period equal to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
Federal Reserve Board means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
Fees means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the L/C Facing Fee, the Issuing Bank Fees, the Collateral
Monitoring Fee, and the other fees provided for in that certain letter
dated March 27, 1997, between BTCC and the Borrower.
Financial Statements means the consolidated and consolidating
balance sheets, statements of operations, statements of cash flows and
statements of changes in shareholder's equity of the Consolidated Entity
for the period specified, prepared in accordance with GAAP and
consistently with prior practices.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
Governing Documents means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
Governmental Authority means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Highest Lawful Rate means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious
interest rate that at any time or from time to time may be contracted
for, taken, reserved, charged or received on such Obligations, under the
laws of the State of Illinois (or the law of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other provisions of
this Credit Agreement and the other Credit Documents), or under
applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under
Illinois (or such other jurisdiction's) law, in any case after taking
into account, to the extent permitted by applicable law, any and all
relevant payments or charges under this Credit Agreement and any other
Credit Documents executed in connection herewith, and any available
exemptions, exceptions and exclusions.
Indebtedness of a Person means, without duplication, (a)
indebtedness for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), whether on open account or evidenced by a note, bond,
debenture or similar instrument, (b) obligations under capital leases,
(c) reimbursement obligations for letters of credit, banker's acceptances
or other credit accommodations, (d) liabilities, as determined by the
Agent, under any Interest Rate Agreement, (e) Contingent Obligations, (f)
Indebtedness secured by any Lien on any property of that Person, even if
that Person has not assumed such Indebtedness, and (g) FASB 98
Indebtedness.
Insolvency Event means, with respect to any Person, the occurrence
of any of the following: (a) such Person shall be adjudicated insolvent
or bankrupt, or generally fail to pay, or admit in writing its inability
to pay, its debts as they become due, (b) the voluntary commencement of
any proceeding or the filing of any petition under any bankruptcy,
insolvency or similar law, (c) the seeking of dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, (d)
the filing of any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against it in any
bankruptcy, insolvency or similar proceeding, (e) such Person shall make
a general assignment for the benefit of its creditors, or shall consent
to, or acquiesce in the appointment of, a receiver, trustee, custodian or
liquidator for a substantial portion of its property, assets or business.
Insolvency Event shall also mean, with respect to any Person, the
occurrence of any of the following: an involuntary proceeding or
involuntary petition shall be commenced or filed against such Person
under any bankruptcy, insolvency or similar law seeking the dissolution
or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property,
assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of its property, assets or business, and such
proceedings or petitions shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded, within sixty (60) days after
commencement, filing, or levy, as the case may be, or any order for
relief shall be entered in any such proceeding.
Interest Expense means, for any period, the aggregate consolidated
expense of the Consolidated Entity for interest on Indebtedness, to the
extent paid in cash during such period, including, without limitation,
original issue discount, incurrence fees (to the extent included in
interest expense), the interest portion of any deferred payment
obligation and the interest component of any capital lease obligation or
any FASB 98 Indebtedness.
Interest Period means, for any LIBOR Rate Loan, the period
commencing on the date of such Borrowing and ending on the last day of
the period selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be one, two, three or six
months, in each case as the Borrower may, in an appropriate Notice of
Borrowing, Notice of Continuation or Notice of Conversion, select;
provided, that the Borrower may not select any Interest Period that ends
after the Expiration Date. Whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided, that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day.
Interest Rate Agreement means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option,
swap, and cap agreements.
Internal Revenue Code means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance
promulgated thereunder.
Inventory has the meaning set forth in the Security Agreement.
Investment means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of
stock or Indebtedness of, or for loans, advances, capital contributions
or transfers of property to, or acquisition of substantially all the
assets of, a Person, other than FASB 98 Indebtedness. In determining the
aggregate amount of Investments outstanding at any particular time, (i)
the amount of any Investment represented by a guaranty shall be taken at
not less than the principal amount of the obligations guaranteed and
outstanding; (ii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (iii) there shall not be deducted in respect
of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise; and (iv) there shall not be
deducted from the aggregate amount of Investments any decrease in the
market value thereof.
Issuing Bank means Bankers Trust Company or any Lender or other
financial institution that is acceptable to the Agent and the Borrower
which may at any time issue or be requested to issue a Letter of Credit
for the account of the Borrower.
Issuing Bank Fees has the meaning set forth in Section 4.3(b).
L/C Facing Fee has the meaning set forth in Section 4.3(a).
Lender Advances has the meaning set forth in Section 2.2.
Letter of Credit Fee has the meaning set forth in Section 4.3(a).
Letter of Credit Obligations means the sum of the aggregate undrawn
face amount of all Letters of Credit outstanding, plus the aggregate
amount of all drawings under Letters of Credit for which the Borrower has
not reimbursed the Issuing Bank, plus the aggregate amount of all
payments made by Lenders to the Issuing Bank for their participations in
Letters of Credit, for which the Borrower has not reimbursed the Lenders.
Letter of Credit Request has the meaning set forth in Section 3.3.
Letters of Credit means all letters of credit issued for the account
of the Borrower under Article 3 and all amendments, renewals, extensions
or replacements thereof.
LIBOR Lending Office means, with respect to any Lender, the office
of such Lender specified as its "LIBOR Lending Office" opposite its name
on Annex I, as such annex may be amended from time to time (or, if no
such office is specified, its Domestic Lending Office).
LIBOR Rate means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per
annum equal to the rate (rounded upward to the nearest whole multiple of
one-sixteenth (1/16) of one percent (1.00%) per annum, if such rate is
not such a whole multiple of one-sixteenth (1/16) of one percent (1.00%)
of the offered quotation, if any, to first class banks in the London
(U.K.) interbank market by Bankers Trust Company for United States dollar
deposits of amounts in immediately available funds comparable to the
principal amount of the LIBOR Rate Loan of BTCC for which the LIBOR Rate
is being determined with maturities comparable to the Interest Period for
which such LIBOR Rate will apply as of approximately 10:00 a.m. Chicago
time two (2) Business Days prior to the commencement of such Interest
Period.
LIBOR Rate Loan means a Revolving Loan that bears interest as
provided in Section 4.1(b) hereof.
Lien means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional
sale, retention of title, or other preferential arrangement having
substantially the same economic effect as any of the foregoing, whether
voluntary or imposed by law.
Line of Credit means the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrower for
Revolving Loans and Letters of Credit, in an amount up to $250,000,000,
as such amount may be reduced from time to time pursuant to the
respective terms and provisions hereof.
Loan Account has the meaning set forth in Section 4.8.
Majority Lenders means those Lenders holding in the aggregate more
than fifty percent (50%) of the total Commitments, or if the Commitments
are terminated, those Lenders owed more than fifty percent (50%) of the
Revolving Loans and Letter of Credit Obligations then outstanding.
Material Adverse Effect means a material adverse effect on (i) the
business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of any Credit Party,
(ii) the ability of any Credit Party to perform its obligations under the
Credit Documents to which it is a party, or on the ability of the Agent
or the Lenders to enforce the Obligations or realize upon the Collateral,
or (iii) the value of the Collateral, or the amount which the Agent or
the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral.
Material Contract means any contract or other arrangement to which
the Borrower or any of its Subsidiaries is a party (other than the Credit
Documents) for which breach, nonperformance, cancellation or failure to
renew could reasonably be expected to have a Material Adverse Effect.
Medium Term Note Indenture means the Indenture dated as of October
1, 1994 between the Borrower and Fleet National Bank, as successor
trustee thereunder.
Medium Term Notes means the Borrower's Medium Term Notes, Series A,
issued under the Medium Term Note Indenture.
Moody's means Moody's Investors Services, Inc., or any successor
thereto.
Multiemployer Plan means a "multiemployer plan" (as defined in
Section 4001(a) (3) of ERISA) to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate has contributed within the past six
years or with respect to which the Borrower or any of its Subsidiaries
could reasonably be expected to incur any liability.
Notice of Borrowing means an irrevocable and binding notice
delivered by the Borrower to the Agent either by telephone or by
facsimile transmission (and if by telephone, confirmed in writing), of
the Borrower's request for a Borrowing, which notice shall be
substantially in the form of Exhibit B.
Notice of Continuation has the meaning set forth in Section 4.13(a).
Notice of Conversion has the meaning set forth in Section 4.13(b).
Obligations means the unpaid principal and interest hereunder
(including interest accruing on or after the occurrence of an Insolvency
Event), reimbursement obligations under Letters of Credit, Fees, Expenses
and all other obligations and liabilities of the Borrower to the Agent,
the Issuing Bank or to the Lenders under this Credit Agreement, the
Revolving Notes, or any other Credit Document.
Permitted Discretion means the Agent's judgment exercised in good
faith and not in an irrational manner based upon its consideration of any
factor which the Agent believes in good faith could affect the value of
any Collateral, including any Inventory, or the amount which the Agent
and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such
factors which are already included in or tested by the definition of
Eligible Inventory, as well as any of the following: (i) the financial
and business climate of the Borrower's industry and general macroeconomic
conditions, (ii) changes in levels of backlog of firm purchase orders and
demand for, and pricing of, Inventory, (iii) changes in any concentration
of risk with respect to Inventory, and (iv) any other factors that change
the credit risk of lending to the Borrower on the security of the
Inventory.
Permitted Liens means the Liens referred to in clauses (a) through
(j) of Section 8.5.
Permitted Recourse Programs means recourse programs with respect to
private label credit cards currently maintained and hereafter established
by the Borrower in accordance with the usual and customary business
practices in effect from time to time in the retail industry generally.
Person means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency
or department thereof), and its successors, heirs and assigns.
Plan means any Benefit Plan, Multiemployer Plan, or Retiree Health
Plan, or any employee pension plan, fund, program or arrangement as
defined in Section 3(2) of ERISA, whether oral or written, maintained or
contributed to by the Borrower or any of its Subsidiaries, or with
respect to which any of them could reasonably be expected to incur
liability.
Preferred Stock means the Cumulative Convertible Preferred Stock of
the Borrower, par value $1.00 per Share.
Prime Lending Rate means the rate which Bankers Trust Company
announces as its prime lending rate, from time to time. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Bankers Trust Company and
each of the Lenders may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
Prime Rate Loan means a Revolving Loan that bears interest as
provided in Section 4.1(a) hereof.
Proportionate Share of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or,
if the Commitments are terminated, by dividing its then outstanding
Revolving Loans and Letter of Credit participations by the then
outstanding aggregate Revolving Loans and Letter of Credit Obligations.
Purchase Money Liens has the meaning set forth in Section 8.4.
Register has the meaning set forth in Section 11.8.
Regulation D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
Regulation G means Regulation G of the Federal Reserve Board, as in
effect from time to time.
Regulation Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
Reportable Event means any of the events described in Section 4043
of ERISA and the regulations thereunder other than those events for which
the 30-day notice period has been waived.
Requirement of Law means, with respect to any Person, (a) the
Governing Documents of such Person, (b) any material law, treaty, rule or
regulation or determination of an arbitrator, court or other Governmental
Authority binding on such Person, or (c) any material franchise, license,
lease, permit, certificate, authorization, qualification, easement, right
of way, right or approval binding on a Person or any of its property.
Retiree Health Plan means an "employee welfare benefit plan" within
the meaning of Section 3(1) of ERISA, and any other plan, program or
arrangement, whether oral or written, sponsored or maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate, that provides
health benefits to persons after termination of employment, other than as
required by Section 601 of ERISA.
Revolving Loans has the meaning set forth in Section 2.1.
Revolving Note means a promissory note of the Borrower payable to
the order of any Lender, substantially in the form of Exhibit C.
S&P means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
Security Agreement means the Security Agreement of even date
herewith executed in favor of the Agent by the Borrower.
Settlement Date has the meaning set forth in Section 2.4(a).
Subsidiary of a Person means a corporation or other entity in which
that Person directly or indirectly owns or controls the shares of stock
or other ownership interests having ordinary voting power to elect a
majority of the board of directors or appoint other managers of such
corporation or other entity.
Termination Event means (i) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of the Borrower,
any of its Subsidiaries or any ERISA Affiliate from a Benefit Plan during
a plan year in which it was a "substantial employer" (as defined in
Section 4001(a) (2) of ERISA); (iii) the providing of notice of intent to
terminate a Benefit Plan in a distress termination (as described in
Section 4041 (c) of ERISA); (iv) the institution by the Pension Benefit
Guaranty Corporation of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which could reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that may result in termination
of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the
partial or complete withdrawal, within the meaning of Sections 4203 and
4205 of ERISA, of the Borrower, any of its Subsidiaries or any ERISA
Affiliate from a Multiemployer Plan.
Type means a LIBOR Rate Loan or a Prime Rate Loan.
Unused Line Fee has the meaning set forth in Section 4.2.
1.2 Accounting Terms and Determinations.
Unless otherwise defined or specified herein, all accounting terms
used in this Credit Agreement shall be construed in accordance with GAAP,
applied on a basis consistent in all material respects with the Financial
Statements referred to in Section 6.9. All accounting determinations for
purposes of determining compliance with the financial covenants contained
in Article 8 shall be made in accordance with GAAP as in effect on the
Closing Date and applied on a basis consistent in all material respects
with the audited Financial Statements delivered to the Agent on or before
the Closing Date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records,
shall be maintained in accordance with GAAP. If GAAP shall change from
the basis used in preparing the audited Financial Statements delivered to
the Agent on or before the Closing Date, the certificates required to be
delivered pursuant to Section 7.1 demonstrating compliance with the
covenants contained herein shall include, at the election of the Borrower
or upon the request of the Majority Lenders, calculations setting forth
the adjustments necessary to demonstrate how the Borrower is in
compliance with the financial covenants based upon GAAP as in effect on
the Closing Date.
1.3 Other Terms; Headings.
Terms used herein and not otherwise defined in Article 1 that are
defined in the Uniform Commercial Code in effect in the State of Illinois
(the "Code") shall have the meanings given in the Code. Each of the words
"hereof," "herein," and "hereunder" refer to this Credit Agreement as a
whole. An Event of Default shall "continue" or be "continuing" until
such Event of Default has been waived in accordance with Section 11.11
hereof. References to Articles, Sections, Annexes, Schedules, and
Exhibits are internal references to this Credit Agreement, and to its
attachments, unless otherwise specified. The headings and the Table of
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Credit Agreement.
ARTICLE 2. REVOLVING LOANS.
2.1 Revolving Credit Commitments.
Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of the
Borrower set forth herein, on and after the Closing Date and to and
excluding the Expiration Date, each Lender severally agrees to make loans
and advances to the Borrower (each a "Revolving Loan") in an amount not
to exceed at any time its Proportionate Share of the lesser at such time
of the Line of Credit and the Borrowing Base minus, in each case, the
then outstanding Letter of Credit Obligations.
2.2 Borrowing of Revolving Loans.
Revolving Loans shall be made available to the Borrower directly by
the Lenders ("Lender Advances") or, in the circumstances described in
Section 2.2(b), from the Agent acting on behalf of the Lenders ("Agent
Advances").
(a) Lender Advances. Subject to the determination by the
Agent and the Lenders that the conditions for borrowing contained in
Section 5.2 are satisfied, upon receipt of a Notice of Borrowing
from the Borrower, received by the Agent before noon Chicago time on
a Business Day, Lender Advances of Revolving Loans may be made to
the extent of each Lender's Proportionate Share of the requested
Borrowing. Each Notice of Borrowing shall specify whether the
requested Borrowing is of Prime Rate Loans or LIBOR Rate Loans.
(b) Agent Advances. The Agent is authorized by the Lenders,
but is not obligated, to make Agent Advances upon a receipt of any
Notice of Borrowing received by the Agent before 3:00 P.M. Chicago
time on a Business Day. Agent Advances shall be subject to periodic
settlement with the Lenders under Section 2.4. Agent Advances may
be made only in the following circumstances:
(i) Normal Course Agent Advances. For administrative
convenience, the Agent may, but is not obligated, to make Agent
Advances up to the amount available for borrowing under Section
2.1 in reliance upon the actual or deemed representations of
the Borrower under Section 5.2 that the conditions for
borrowing are satisfied.
(ii) Other Agent Advances. When the conditions for
borrowing under Section 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of Section 2.1,
the Agent may, but is not obligated, to continue to make Agent
Advances for seven (7) Business Days or until sooner instructed
by the Majority Lenders to cease, in an aggregate amount at any
time not to exceed $5,000,000.
(c) Disbursement of Revolving Loans. The proceeds of
Revolving Loans shall be transmitted: (x) in the circumstances
described in Section 3.5, by the Agent directly to the Issuing Bank,
and (y) in all other circumstances, by the Agent or Lenders, as the
case may be.
(d) Notices of Borrowing. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if
by telephone, promptly confirmed in writing. The Borrower shall
specify in each Notice of Borrowing whether the conditions for the
requested Borrowing are satisfied. The Borrower may request one or
more Borrowings of Revolving Loans constituting Prime Rate Loans on
the same Business Day. Each Notice of Borrowing for LIBOR Rate
Loans shall be given not later than noon Chicago time on the third
Business Day prior to the proposed Borrowing. Each Notice of
Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Revolving Loans of the same Type and, if such
Borrowing is to consist of LIBOR Rate Loans, shall be in an
aggregate amount of not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof. The right of the Borrower to
choose LIBOR Rate Loans is subject to the provisions of Section
4.13. Once given, a Notice of Borrowing is irrevocable by and
binding on the Borrower. The Borrower shall provide to the Agent a
list, with specimen signatures, of officers authorized to request
Revolving Loans. The Agent is entitled to rely upon such list until
it is replaced by the Borrower.
2.3 Notice of Request for Lender Advances.
Subject to the last sentence of this Section, the Agent shall give
each Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that is received pursuant to Section 2.2(a) and is to
be satisfied by Lender Advances. No later than 3:00 P.M. Chicago time on
the date of receipt of such notice, each Lender shall make available for
the account of its Applicable Lending Office to the Agent at the Agent's
address for deposit into the Loan Disbursement Account, its Proportionate
Share of such Borrowing in immediately available funds. Unless the Agent
receives contrary written notice prior to any such Borrowing, it is
entitled to assume that each Lender will make available its Proportionate
Share of the Borrowing and in reliance upon that assumption, but without
any obligation to do so, may advance such Proportionate Share on behalf
of the Lender, without the necessity of giving daily notice to each
Lender of the receipt of a Notice of Borrowing.
2.4 Periodic Settlement of Agent Advances; Interest and Fees;
Statements.
(a) The Settlement Date; Allocation of Interest and Fees. The
amount of each Lender's Proportionate Share of Revolving Loans shall
be computed weekly (or more frequently in the Agent's discretion)
and shall be adjusted upward or downward based on all Loans
(including Agent Advances) and repayments received by the Agent as
of 5:00 P.M. Chicago time on the last Business Day of the period
specified by the Agent (such date, the "Settlement Date").
(b) Summary Statements; Settlements. The Agent shall deliver
to the Borrower and each of the Lenders promptly after the
Settlement Date a summary statement of the account of outstanding
Loans (including Agent Advances) for the period, the amount of
repayments received for the period, and the amount allocated to each
Lender of the interest and Unused Line Fee for the period. After
application of payments under Section 4.11, as reflected on the
summary statement: (i) the Agent shall transfer to each Lender its
allocated share of interest and Unused Line Fee, and its
Proportionate Share of repayments; and (ii) each Lender shall
transfer to the Agent, or the Agent shall transfer to each Lender,
such amounts as are necessary to insure that, after giving effect to
all such transfers, the amount of Loans made by each Lender shall be
equal to such Lender's Proportionate Share of the aggregate amount
of Loans outstanding as of such Settlement Date. If the summary
statement requires transfers to be made to the Agent by the Lenders
and is received by the Lenders prior to 12:00 noon Chicago time on
a Business Day, such transfers shall be made in immediately
available funds no later than 3:00 P.M. Chicago time that day; and,
if received after 12:00 noon Chicago time, then no later than 3:00
P.M. Chicago time on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and
without recourse to or warranty by the Agent.
(c) Distribution of Interest and Unused Line Fees. Interest
on the Revolving Loans (including Agent Advances) and the Unused
Line Fee shall be allocated by the Agent to each Lender (i) in the
case of interest, in accordance with the Revolving Loans actually
advanced by and repaid to such Lender and (ii) in the case of the
Unused Line Fee, in accordance with the Proportionate Share of such
Lender. Interest shall accrue from and including the date Revolving
Loans are advanced and to but excluding the date such Revolving
Loans are either repaid by the Borrower or, if later, actually
settled under this Section. Promptly after the end of each month,
the Agent shall distribute to each Lender its portion, allocated as
provided above, of the interest and Unused Line Fee which has
accrued during such month.
2.5 Sharing of Payments.
If any Lender shall obtain any payment (whether made voluntarily or
involuntarily, or through the exercise of any right of set-off, or
otherwise) on account of the Revolving Loans made by it or its
participation in the Letter of Credit Obligations in excess of its
Proportionate Share of payments on account of the Revolving Loans or
Letter of Credit Obligations obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in
the Revolving Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and
each such Lender shall repay to the purchasing Lender the purchase price
to the extent of such recovery, together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so
recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.5, to the
fullest extent permitted by law, may exercise all of its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.6 Defaulting Lenders.
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Revolving Loans (including Agent Advances) made
available by the Agent on such Lender's behalf, or who fails to pay
any other amounts owing by it to the Agent, is a "Defaulting
Lender". The Agent is entitled to recover from such Defaulting
Lender all such amounts owing by such Defaulting Lender on demand.
If the Defaulting Lender does not pay such amounts on the Agent's
demand, the Agent shall promptly notify the Borrower and the
Borrower shall pay such amounts within five (5) Business Days of its
receipt of such notice. In addition, the Defaulting Lender or the
Borrower shall pay to the Agent for its own account interest on such
amount for each day from the date it was made available by the Agent
to the Borrower to the date it is recovered by the Agent at a rate
per annum equal to (x) the overnight Federal Funds Rate, if paid by
the Defaulting Lender, or (y) the then applicable rate of interest
calculated under Section 4.1, if paid by the Borrower; plus, in the
case of the Defaulting Lender, the Expenses and losses, if any,
incurred as a result of the Defaulting Lender's failure to perform
its obligations. Nothing herein shall be deemed to relieve any
Lender of its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Lender
pursuant to applicable law as a result of any default by such Lender
hereunder, including, without limitation, the right of the Borrower
to seek specific performance or reimbursement from any Defaulting
Lender for any amounts paid by the Borrower under clause (y) above
on account of such Defaulting Lender's default.
(b) The failure of any Lender to fund its Proportionate Share
of a Revolving Loan shall not relieve any other Lender of its
obligation to fund its Proportionate Share of a Revolving Loan.
Conversely, no Lender shall be responsible for the failure of
another Lender to fund its Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrower to the Agent for
the Defaulting Lender's benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder. Amounts payable
to a Defaulting Lender shall instead be paid to or retained by the
Agent. The Agent may hold and, in its discretion, re-lend to the
Borrower the amount of all such payments received by it for the
account of such Lender. For purposes of voting or consenting to
matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to
be a "Lender" and such Lender's Commitment shall be deemed to be
zero (-0-). This section shall remain effective with respect to
such Lender until (x) the Obligations under this Credit Agreement
shall have been declared or shall have become immediately due and
payable or (y) the Majority Lenders, the Agent and the Borrower
shall have waived such Lender's default in writing. The operation
of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.
ARTICLE 3. LETTERS OF CREDIT.
3.1 Issuance of Letters of Credit.
Subject to the terms and conditions hereof and in reliance on the
representations and warranties of the Borrower set forth herein, the
Agent shall cause the Issuing Bank to issue Letters of Credit hereunder
at the request of the Borrower and for its account, as more specifically
described below. The Agent shall not be obligated to cause the Issuing
Bank to issue any Letter of Credit if:
(a) issuance of the requested Letter of Credit (i) would cause
the Letter of Credit Obligations then outstanding to exceed
$125,000,000 or (ii) would cause the sum of the Revolving Loans plus
the Letter of Credit Obligations then outstanding to exceed the
lesser of (x) the Line of Credit then in effect and (y) the
Borrowing Base then in effect; or
(b) issuance of the Letter of Credit is enjoined, restrained
or prohibited by any Governmental Authority, Requirement of Law or
any request or directive of any Governmental Authority (whether or
not having the force of law) or would impose upon the Agent or the
Issuing Bank any material restriction, reserve, capital requirement,
loss, cost or expense (for which the Agent or the Issuing Bank is
not otherwise compensated) not in effect or known as of the Closing
Date.
3.2 Terms of Letters of Credit.
The proposed amount, terms and conditions, and form of each Letter
of Credit (and of any drafts or acceptances thereunder) shall be subject
to approval by the Issuing Bank. The term of each standby Letter of
Credit shall not exceed 360 days, but may be subject to annual renewal.
The term of each documentary Letter of Credit shall not exceed 120 days
or, with the prior consent of the Agent, 180 days. No Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date.
3.3 Notice of Issuance.
A request for issuance of a Letter of Credit (a "Letter of Credit
Request") may be given in writing or electronically and, if requested by
the Agent, promptly confirmed in writing. A Letter of Credit Request
must be received by the Agent no later than 1:00 P.M. Chicago time at
least three (3) Business Days (or such shorter period as may be agreed to
by the Issuing Bank) in advance of the proposed date of issuance.
3.4 Lenders' Participation.
Immediately upon issuance or amendment of any Letter of Credit, each
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation in all rights and obligations under
such Letter of Credit (other than fees and other amounts owing to the
Issuing Bank) in accordance with such Lender's Proportionate Share.
3.5 Payments of Amounts Drawn Under Letters of Credit.
The Agent shall notify the Borrower of the receipt by the Agent of
notice from the Issuing Bank of a draft or other presentation for payment
or drawing under a Letter of Credit not later than 11:00 A.M. Chicago
time on the Business Day immediately prior to the date on which the
Issuing Bank intends to honor such drawing. Unless the procedures set
forth in Section 9.2(c) shall be applicable, the Borrower shall be deemed
to have concurrently given a Notice of Borrowing to the Agent to make a
Revolving Loan in the amount of and at the time of such drawing, the
proceeds of which shall be applied directly by the Agent to reimburse the
Issuing Bank for the amount of such drawing.
3.6 Payment by Lenders.
If a Revolving Loan is not made in an amount sufficient to reimburse
the Issuing Bank in full for the amount of any draw under a Letter of
Credit, the Agent shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective participation
therein. Each Lender shall make available to the Agent, for the account
of the Issuing Bank, the amount of its participation in immediately
available funds not later than 1:00 P.M. Chicago time on the next
Business Day after such Lender receives notice from the Agent of the
amount of such Lender's participation in such unreimbursed amount. If
any Lender fails to make available to the Agent the amount of such
Lender's participation, the Issuing Bank shall be entitled to recover
such amount on demand from such Lender together with interest at the
Federal Funds Rate for the first three Business Days and thereafter at
the Prime Lending Rate. For each Letter of Credit, the Agent shall
promptly distribute to each Lender which has funded the amount of its
participation its Proportionate Share of all payments subsequently
received by the Agent from the Borrower in reimbursement of honored
drawings.
3.7 Obligations Absolute.
The obligations of the Borrower to reimburse the Lenders under
Section 3.6 shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Credit Agreement under all
circumstances including, without limitation, upon the occurrence and
during the continuance of an Event of Default.
3.8 Agent's Execution of Applications and Other Issuing Bank
Documentation; Reliance on Credit Agreement by Issuing Bank.
The Agent shall be authorized to execute, deliver and perform on
behalf of the Lenders such letter of credit applications, shipping
indemnities, letter of credit modifications and consents and other
undertakings for the benefit of the Issuing Bank as may be reasonably
necessary or appropriate in connection with the issuance or modification
of Letters of Credit requested by the Borrower hereunder. The Lenders,
the Agent and the Borrower all expressly agree that the terms of this
Article 3 and various other provisions of this Credit Agreement
identifying the Issuing Bank are also intended to benefit the Issuing
Bank and the Issuing Bank shall be entitled to enforce the provisions
hereof which are for its benefit.
ARTICLE 4. COMPENSATION, REPAYMENT AND
REDUCTION OF COMMITMENTS.
4.1 Interest on Revolving Loans.
(a) Interest on the unpaid principal amount of Revolving Loans
which are Prime Rate Loans shall be payable monthly in arrears, on
the first Business Day of each month, at an interest rate per annum
equal to the Prime Lending Rate plus one percent (1.0%) calculated
on the net balances owing to the Agent and the Lenders at the close
of business each day during such month. The rate hereunder shall
change each day the Prime Lending Rate changes.
(b) Interest on Revolving Loans which are LIBOR Rate Loans
shall be payable on the last day of each Interest Period with
respect to such LIBOR Rate Loans, at the date of conversion of such
LIBOR Rate Loans (or a portion thereof) to a Prime Rate Loan and at
maturity of such LIBOR Rate Loans at an interest rate per annum
equal during the Interest Period for such LIBOR Rate Loans to the
LIBOR Rate for the Interest Period in effect for such LIBOR Rate
Loans plus two and three-quarters percent (2.75%). After maturity
of such LIBOR Rate Loans (whether by acceleration or otherwise),
interest shall be payable upon demand. The Agent upon determining
the LIBOR Rate for any Interest Period shall promptly notify the
Borrower and the Lenders by telephone (confirmed promptly in
writing) or in writing thereof. Each determination by the Agent of
an interest rate hereunder shall be conclusive and binding for all
purposes, absent demonstrable error.
(c) Notwithstanding the provisions of Sections 4.1(a) and (b),
the Borrower shall pay to each Lender, so long as and to the extent
such Lender shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Revolving Loan comprised of LIBOR Rate
Loans of such Lender, from the date of such LIBOR Rate Loan until
such principal amount is paid in full, at an interest rate per annum
equal at all times to the remainder obtained by subtracting (a) the
LIBOR Rate for the applicable Interest Period for such LIBOR Rate
Loan from (b) the rate obtained by dividing such LIBOR Rate by a
percentage equal to 1 minus the stated maximum rate (stated as a
decimal) applicable two (2) Business Days before the first day of
such Interest Period of all reserves, if any, required to be
maintained against "Eurocurrency liabilities" as specified in
Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR
Rate Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of
any Lender to United States residents) having a term equal to the
Interest Period applicable to such LIBOR Rate Loan. Such Lender
shall as soon as practicable provide notice to the Agent and the
Borrower of any such additional interest arising in connection with
such LIBOR Rate Loan, which notice shall be conclusive and binding,
absent demonstrable error.
4.2 Unused Line Fee.
The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable fee (the "Unused Line Fee") equal to three
eighths of one percent (0.375%) per annum of the unused portion of the
Line of Credit. The Unused Line Fee shall accrue daily from the Closing
Date until the Expiration Date, and shall be due and payable monthly in
arrears, on the first Business Day of each month and on the Expiration
Date.
4.3 Letter of Credit Fees.
(a) The Agent, for the ratable benefit of the Lenders, shall
be entitled to charge to the account of the Borrower on the first
Business Day of each month, a fee (each a "Letter of Credit Fee"),
in an amount equal to (i) in the case of standby Letters of Credit,
two and three-quarters percent (2.75%) per annum of the daily
weighted average undrawn amount of such Letters of Credit and (ii)
in the case of documentary Letters of Credit, one and one-quarter
percent (1.25%) per annum of the daily weighted average undrawn
amount of such Letters of Credit, in each case outstanding during
the immediately preceding month. In addition, the Agent, for its
own account, shall be entitled to charge to the account of the
Borrower on the date of issuance of any standby Letter of Credit, a
facing fee equal to one-half of one percent (0.5%) on the initial
face amount of each such standby Letter of Credit (the "L/C Facing
Fee").
(b) The Agent shall also be entitled to charge to the account
of the Borrower, as and when incurred by the Agent or any Lender,
the customary charges, fees, costs and expenses charged to the Agent
or any Lender for the Borrower's account by any Issuing Bank (the
"Issuing Bank Fees") in connection with the issuance, transfer,
drawing, amendment or negotiation of any Letters of Credit by the
Issuing Bank. Each determination by the Agent of Letter of Credit
Fees, L/C Facing Fees, Issuing Bank Fees and other fees, costs and
expenses charged under this Section shall be conclusive and binding
for all purposes, absent manifest error.
4.4 Interest and Letter of Credit Fees After Event of Default.
From the date of occurrence of an Event of Default until the earlier
of the date upon which (i) all Obligations shall have been paid and
satisfied in full or (ii) such Event of Default shall have been waived,
interest on the Revolving Loans and Letter of Credit Fees on Letter of
Credit Obligations shall each be payable on demand at a rate per annum
equal to, with respect to the Revolving Loans, the rate in effect under
Section 4.1, plus two percent (2%), and with respect to the Letter of
Credit Obligations, the rate at which Letter of Credit Fees are charged
pursuant to the first sentence of Section 4.3(a), plus two percent (2%).
4.5 Collateral Monitoring Fee.
The Borrower shall pay to the Agent, for its own account, a non-
refundable annual collateral monitoring fee (the "Collateral Monitoring
Fee") in the amount of $100,000. The Collateral Monitoring Fee shall be
fully earned and payable on the Closing Date and on each anniversary
thereof.
4.6 Expenses.
The Borrower shall reimburse the Expenses of the Agent, or any
Lender, as the case may be, promptly upon demand.
4.7 Mandatory Payment; Reductions of Commitments.
(a) Except during the period described in Section 2.2(b)(ii),
the aggregate outstanding principal amount of Revolving Loans plus
Letter of Credit Obligations at any time in excess of the lesser at
such time of (i) the Borrowing Base and (ii) the Line of Credit,
shall be immediately due and payable without the necessity of any
demand.
(b) On the Expiration Date, the Commitment of each Lender
shall automatically reduce to zero (-0-) and may not be reinstated.
(c) The Borrower may reduce or terminate the Line of Credit at
any time and from time to time in whole or in part; provided, that
each such reduction must be in an amount not less than $5,000,000
(and in increments of $1,000,000 in excess thereof). Once reduced,
no portion of the Line of Credit may be reinstated. If the Borrower
seeks to reduce the Line of Credit to an amount less than
$25,000,000, then the Line of Credit shall be reduced to zero (-0-).
4.8 Maintenance of Loan Account; Statements of Account.
The Agent shall maintain an account on its books in the name of the
Borrower (the "Loan Account") in which the Borrower will be charged with
all loans and advances made by the Lenders to the Borrower or for the
account of the Borrower, including the Revolving Loans, and all Letter of
Credit Obligations, the Fees, the Expenses and any other Obligations, as
and when such payments become due. The Loan Account will be credited
with all payments received by the Agent from the Borrower or for the
account of the Borrower, including all amounts received in the BT Account
from the Collection Banks. After the end of each month, the Agent shall
send the Borrower a monthly statement accounting for the charges, loans,
advances and other transactions occurring among and between the Agent,
the Lenders and the Borrower during that month, provided, that the
failure of the Agent to send such statement to the Borrower shall not
relieve the Borrower of any Obligations. Absent manifest error, each
monthly statement shall be an account stated and shall be final,
conclusive and binding on the Borrower, unless, within thirty (30) days
after receipt of any such statement, the Borrower shall deliver to the
Agent a written objection thereto specifying the error or errors, if any,
contained therein.
4.9 Payment Procedures.
Payments of principal, interest, Fees and Expenses shall be made not
later than 2:00 P.M. Chicago time on the day when due, in immediately
available United States dollars, to the offices of the Agent, at the
address set forth in Section 11.7, or as the Agent may otherwise direct
the Borrower. Any such payment received later than 2:00 P.M. Chicago
time shall be credited to the Borrower's Loan Account on the immediately
succeeding Business Day. The Borrower hereby authorizes the Agent to
charge the Loan Account with the amount of all payments to be made
hereunder and under the other Credit Documents, including all Fees and
Expenses, as and when such payments become due. The obligation of the
Borrower to the Lenders with respect to such payments shall be discharged
by making such payments to the Agent pursuant to this Section or by the
charging of the Loan Account by the Agent.
4.10 Collection of Accounts.
Until instructed otherwise by the Agent, the Borrower shall be
entitled to receive Collections directly from account debtors and other
obligors in accordance with its historical practices. The Borrower, the
Agent and financial institutions selected by the Borrower and acceptable
to the Agent (the "Collection Banks") shall enter into agreements in form
and substance satisfactory to the Agent (the "Depositary Account
Agreements", which among other things shall provide for the opening of an
account for the deposit of Collections (a "Collection Account") at a
Collection Bank. All Collections and other amounts received by the
Borrower from any account debtor, in addition to all other cash received
from any other Collateral, shall upon receipt be deposited into a
Collection Account. Termination of such arrangements shall also be
subject to approval by the Agent. Upon the terms and subject to the
conditions set forth in the Depositary Account Agreements, all available
amounts held in each Collection Account shall be wired each Business Day
into an account (the "BT Account") maintained by the Agent at Bankers
Trust Company. Amounts received in the BT Account from the Collection
Banks shall be credited to the Loan Account and distributed and applied
as set forth in Section 4.11.
4.11 Distribution and Application of Collections and other Amounts.
All Collections received by the Agent, and all other amounts
received by the Borrower from any account debtor and delivered to the
Agent, shall be credited to the Loan Account, unless an Event of Default
has occurred and is continuing, in which case such Collections and other
amounts shall be distributed and applied in the following order: first,
to the payment of any Fees, Expenses or other Obligations due and payable
to the Agent under any of the Credit Documents, including Agent Advances
and any other amounts advanced by the Agent on behalf of the Lenders;
second, to the payment of any Fees, Expenses or other Obligations due and
payable to the Issuing Bank under any of the Credit Documents; third, to
the ratable payment of any Fees, Expenses or other Obligations due and
payable to the Lenders under any of the Credit Documents other than those
Obligations specifically referred to in this Section; fourth, to the
ratable payment of interest due on the Revolving Loans; fifth, to the
ratable payment of principal outstanding on the Prime Rate Loans; and,
sixth, to the ratable payment of principal outstanding on the LIBOR Rate
Loans; provided that if any such application of Collections to the LIBOR
Rate Loans would result in the repayment of any LIBOR Rate Loan other
than on the last day of the Interest Period for such Loan, and so long as
at such time a Default or an Event of Default shall not have occurred and
be continuing, at the request of the Borrower, the Agent shall invest all
or any part of such Collections in an overnight interest bearing cash
collateral account maintained by the Agent for the benefit of the
Borrower with a financial institution selected by the Agent until such
time as the Agent is directed by the Borrower to apply such Collections
to the Revolving Loans as provided above.
4.12 Calculations.
All calculations of (i) interest hereunder and (ii) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be
made by the Agent, on the basis of a year of 360 days, or, if such
computation would cause the interest and fees chargeable hereunder to
exceed the Highest Lawful Rate, 365/366 days, in each case for the actual
number of days elapsed (including the first day but excluding the last
day) occurring in the period for which such interest or Fees are payable.
Each determination by the Agent of an interest rate, Fee or other payment
hereunder shall be conclusive and binding for all purposes, absent
manifest error, unless, within thirty (30) days after the Borrower's
receipt of notice of such determination, the Borrower shall deliver to
the Agent a written objection thereto, specifying the error or errors, if
any, contained therein.
4.13 Special Provisions Relating to LIBOR Rate Loans.
(a) Continuation. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrower may, subject to the provisions of
Section 4.13(c), elect to maintain such Borrowing or any portion
thereof as consisting of LIBOR Rate Loans by selecting a new
Interest Period for such Borrowing, which new Interest Period shall
commence on the last day of the immediately preceding Interest
Period. Each selection of a new Interest Period shall be made by
notice given not later than Noon Chicago time on the third Business
Day prior to the date of any such continuation relating to LIBOR
Rate Loans, by the Borrower to the Agent. Such notice by the
Borrower of a continuation (a "Notice of Continuation") shall be by
telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of Exhibit D, in
each case specifying (i) the date of such continuation, (ii) the
Type of Revolving Loans subject to such continuation, (iii) the
aggregate amount of Revolving Loans subject to such continuation and
(iv) the duration of the selected Interest Period. The Borrower may
elect to maintain more than one Borrowing consisting of LIBOR Rate
Loans by combining such Borrowings into one Borrowing and selecting
a new Interest Period pursuant to this Section 4.13(a). If the
Borrower shall fail to select a new Interest Period for any
Borrowing consisting of LIBOR Rate Loans in accordance with this
Section 4.13(a), such Revolving Loans will automatically, on the
last day of the then existing Interest Period therefor, convert into
Prime Rate Loans. The Agent shall give each Lender prompt notice by
telephone or facsimile transmission of each Notice of Continuation.
(b) Conversion. The Borrower may on any Business Day (so long
as no Default or Event of Default has occurred and is continuing),
upon notice (each such notice, a "Notice of Conversion") given to
the Agent, and subject to the provisions of Section 4.13(c), convert
the entire amount of or a portion of all Revolving Loans of one Type
comprising the same Borrowing into Revolving Loans of another Type;
provided, that any conversion of any LIBOR Rate Loans into Revolving
Loans of another Type shall be made on, and only on, the last day of
an Interest Period for such LIBOR Rate Loans and, upon conversion of
any Prime Rate Loans into Revolving Loans of another Type, the
Borrower shall pay accrued interest to the date of conversion on the
principal amount converted. Each such Notice of Conversion shall be
given not later than Noon Chicago time on the Business Day prior to
the date of any proposed conversion into Prime Rate Loans and on the
third Business Day prior to the date of any proposed conversion into
LIBOR Rate Loans. Subject to the restrictions specified above, each
Notice of Conversion shall be by telephone or facsimile
transmission, and if by telephone, promptly confirmed in writing,
substantially in the form of Exhibit E, in each case specifying (i)
the requested date of such conversion, (ii) the Type of Revolving
Loans to be converted (iii) the portion of such Type of Revolving
Loan to be converted, (iv) the Type of Revolving Loans such
Revolving Loans are to be converted into and (v) if such conversion
is into LIBOR Rate Loans, the duration of the Interest Period of
such Loan. Each conversion shall be in an aggregate amount for the
Revolving Loans of not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof. The Borrower may elect to convert
the entire amount of or a portion of all Revolving Loans of one Type
comprising more than one Borrowing into Revolving Loans of another
Type by combining such Borrowings into one Borrowing; provided, that
if the Borrowings so combined consist of LIBOR Rate Loans, such
Loans shall have Interest Periods ending on the same date.
(c) Certain Limitations on LIBOR Rate Loans. The right of the
Borrower to maintain, select, continue or convert LIBOR Rate Loans
shall be limited as follows:
(i) If the Agent is advised by Bankers Trust Company that
it is not offering United States dollar deposits (in the
applicable amounts) in the London interbank market, or the
Agent determines that adequate and fair means do not otherwise
exist for ascertaining the LIBOR Rate or LIBOR Rate Loans
comprising any requested Borrowing, continuation or conversion,
the right of the Borrower to select or maintain LIBOR Rate
Loans for such Borrowing or any subsequent Borrowing shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exists, and each Revolving Loan shall be made as a Prime
Rate Loan.
(ii) If the Majority Lenders shall, at least one Business
Day before the date of any requested Borrowing, continuation or
conversion, notify the Agent that the LIBOR Rate for Revolving
Loans comprising such Borrowing will not adequately reflect the
cost to such Lenders of making or funding their respective
Revolving Loans for such Borrowing, the right of the Borrower
to select LIBOR Rate Loans for such Borrowing shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exist, and each Revolving Loan comprising such Borrowing
and each other Borrowing requested during such period of
suspension shall be made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Revolving Loan as a LIBOR Rate Loan by such
Lender has become unlawful or impermissible by reason of
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether or
not having the force of law), then, and in any such event, such
Lender may give notice of that determination in writing, to the
Agent and the Borrower and the Agent shall promptly transmit
the notice to each other Lender. Until such Lender gives
notice otherwise, the right of the Borrower to select LIBOR
Rate Loans from that Lender shall be suspended and each
Revolving Loan made by that Lender, notwithstanding the Type of
Revolving Loan made by the other Lenders, shall be a Prime Rate
Loan and each LIBOR Rate outstanding from that Lender shall
automatically, on the last day of the existing Interest Period
therefor (or earlier, if so required under such law, rule,
regulation or order), convert to a Prime Rate Loan.
(iv) No Agent Advance shall be made as a LIBOR Rate Loan.
(v) No Revolving Loans may be made, continued or
converted as or to LIBOR Rate Loans at any time that a Default
or Event of Default shall have occurred and be continuing.
(vi) The Borrower may not select a LIBOR Rate Loan prior
to the date which is ninety (90) days after the Closing Date.
(d) Compensation.
(i) Each Notice of Continuation and Notice of Conversion
shall be irrevocable by and binding on the Borrower. In the
case of any Borrowing, continuation or conversion that the
related Notice of Borrowing, Notice of Continuation or Notice
of Conversion specifies is to be comprised of LIBOR Rate Loans,
the Borrower shall indemnify each Lender against any loss, cost
or expense incurred by such Person as a result of any failure
to fulfill, on or before the date for such Borrowing,
continuation or conversion specified in such Notice of
Borrowing, Notice of Continuation or Notice of Conversion, the
applicable conditions set forth in Article 5, including,
without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or re-employment of deposits or other funds acquired by such
Lender to fund the Revolving Loan to be made by such Lender as
part of such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion or
continuation of, any LIBOR Rate Loan is made other than on the
last day of the Interest Period for such Loan as a result of a
payment, prepayment, conversion or continuation of such Loan or
acceleration of the maturity of the Revolving Notes or for any
other reason, the Borrower shall, upon demand by any Lender
(with a copy of such demand to the Agent), pay to the Agent for
the account of such Lender any amounts required to compensate
such Lender for any additional losses, costs or expenses which
it may reasonably incur as a result of such payment, including,
without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or re-employment of deposits or other funds acquired by any
Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a Lender
under this Section 4.13(d) shall be made as though such Lender
elected to fund all LIBOR Rate Loans by purchasing United State
dollar deposits in its LIBOR Lending Office's interbank
eurodollar market.
4.14 Indemnification in Certain Events.
(a) Increased Costs. If after the Closing Date, either (i)
any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Bankers
Trust Company or any other banking or financial institution from
whom any of the Lenders borrows funds or obtains credit (a "Funding
Bank"), or (ii) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank
or other Governmental Authority proposed or promulgated after the
date of the Agreement or (iii) the Agent, a Funding Bank or any of
the Lenders determines that the adoption of any applicable law, rule
or regulation regarding capital adequacy or any change therein, or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof announced after
the date of this Credit Agreement has or would have the effect
described below, or the Agent, a Funding Bank or any of the Lenders
complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency announced after the date of this
Credit Agreement and in the case of any event set forth in this
clause (iii), such adoption, change or compliance has or would have
the direct or indirect effect of reducing the rate of return on any
of such Person's capital as a consequence of its obligations
hereunder to a level below that which such Person could have
achieved but for such adoption, change or compliance (taking into
consideration such Person's policies with respect to capital
adequacy) by an amount deemed by such Person to be material, and any
of the foregoing events described in clauses (i), (ii) or (iii)
increases the cost to the Agent, or any of the Lenders of (A)
funding or maintaining its Commitments or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of
purchasing or maintaining any participation therein, or reduces the
amount receivable in respect thereof by the Agent or any Lender,
then the Borrower shall upon demand by the Agent at any time within
one hundred eighty (180) days after the date on which an officer of
the Agent, such Funding Bank or such Lender, as the case may be,
responsible for overseeing this Credit Agreement knows or has reason
to know of its right to additional compensation under this Section
4.14(a), pay to the Agent, for the account of such Lender or, as
applicable, the Agent or a Funding Bank, additional amounts
sufficient to reimburse the Agent, such Funding Bank and such Lender
against such increase in cost or reduction in amount receivable;
provided, however, that if the Agent or any such Lender or Funding
Bank, as the case may be, fails to deliver such demand within such
180 day period, such entity shall only be entitled to additional
compensation for any such costs incurred from and after the date
that is one hundred eighty (180) days prior to the date the Borrower
receives such demand; and provided further, however, that before
making any such demand, the Agent and each Lender agree to use
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would
not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to the amount of
such increased cost, and setting forth in reasonable detail the
calculation thereof, shall be submitted to the Borrower by the
Agent, or the applicable Lender or Funding Bank, and shall be
conclusive absent demonstrable error.
(b) Each Lender will promptly notify the Borrower and the
Agent, and the Agent will promptly notify the Borrower, of any event
of which it has knowledge that would entitle such entity to
additional compensation under this Section 4.14. Neither the Agent
nor any Lender shall request any additional compensation under this
Section 4.14 unless it is generally making similar requests of other
borrowers similarly situated, and the Agent and each Lender agrees
to use a reasonable basis for calculating amounts allocable to its
commitment to lend or its Revolving Loans and Letter of Credit
Obligations hereunder.
ARTICLE 5. CONDITIONS PRECEDENT.
5.1 Conditions Precedent to Initial Revolving Loan and Letter of
Credit.
The obligation of each Lender to fund its Proportionate Share of the
initial Borrowing, or the obligation of the Agent to cause the issuance
by the Issuing Bank of the initial Letter of Credit, is subject to the
satisfaction or waiver of the following conditions precedent:
(a) Closing Document List. The Agent and the Lenders shall
have received each of the agreements, opinions, reports, approvals,
consents, certificates and other documents set forth on the closing
document list attached hereto as Schedule A (the "Closing Document
List").
(b) Material Adverse Change. (i) Since January 25, 1997, no
event shall have occurred which has had or could reasonably be
expected to have a Material Adverse Effect; or (ii) there shall not
have occurred a substantial impairment of the financial markets
generally that is reasonably likely to materially and adversely
affect the transactions contemplated hereby, in each case as
determined by the Agent and each Lender in their sole discretion.
(c) Fees and Expenses. All Fees and Expenses payable by the
Borrower hereunder on the Closing Date shall have been paid in full
(or provision shall have been made for payment thereof with proceeds
of the initial Borrowing).
(d) Borrowing Base; Unused Availability. After giving pro
forma effect to the funding of the initial Revolving Loans, the
issuance of the initial Letters of Credit and the payment of all
costs, fees and expenses incurred by or for the account of the
Borrower in connection with the execution and delivery of this
Credit Agreement and the other Credit Documents, there shall be
unused availability under the Borrowing Base of at least
$35,000,000.
(e) Vendor Terms. The Agent shall have completed such due
diligence as the Agent shall deem reasonably necessary or prudent
with respect to the credit terms and other financing arrangements
extended to the Borrower by its respective vendors, with results
reasonably satisfactory to the Agent.
5.2 Conditions Precedent to All Revolving Loans and Letters of
Credit.
The obligation of each Lender to fund its Proportionate Share of any
requested Revolving Loan or of the Issuing Bank to issue any requested
Letter of Credit is subject to the satisfaction of the conditions
precedent set forth below. Each Notice of Borrowing, each Letter of
Credit Request, and each issuance by the Borrower of a check drawn
against, or request for transfer from, the Disbursement Account shall
constitute a representation and warranty by the Borrower that such
conditions are satisfied.
(a) All representations and warranties contained in this
Credit Agreement and the other Credit Documents are true and correct
in all material respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request or issuance of a check drawn
against or request for transfer from the Disbursement Account, as if
then made, other than representations and warranties that relate
solely to a date earlier than the date of such Notice of Borrowing,
Letter of Credit Request or issuance of a check drawn against or
request for transfer from the Disbursement Account, in which case,
such representations and warranties were true and accurate in all
material respects on and as of such earlier date;
(b) No Default or Event of Default shall have occurred or
could reasonably be expected to result from the making of the
requested Revolving Loan or the issuance of the requested Letter of
Credit, which has not been waived pursuant to the terms hereof; and
(c) Since January 25, 1997, no event has occurred which has
had or could reasonably be expected to have a Material Adverse
Effect.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Credit
Agreement and to induce the Lenders to make the Revolving Loans and other
financial accommodations described herein, the Borrower hereby represents
and warrants to the Agent and the Lenders that the representations and
warranties contained in this Article 6 are true and correct. Such
representations and warranties, and all other representations and
warranties made by the Borrower in any other Credit Documents, shall
survive the execution and delivery of this Credit Agreement and such
other Credit Documents.
6.1 Organization and Qualification.
The Borrower and each of its Subsidiaries (i) are corporations duly
organized, validly existing and in good standing under the laws of the
respective states of their incorporation, (ii) have the power and
authority to own their respective properties and assets and to transact
their respective businesses in which they presently are, or propose to
be, engaged and (iii) are duly qualified and are authorized to do
business and are in good standing in each of the respective
jurisdictions where they presently are, or propose to be, engaged in
business. Schedule B, Part 6.1 lists all jurisdictions in which the
Borrower and each of its Subsidiaries are qualified to do business as
foreign corporations.
6.2 Authority.
The Borrower and each of its Subsidiaries have the requisite
corporate power and authority to execute, deliver and perform the
respective Credit Documents to which they are parties. All corporate
action necessary for the execution, delivery and performance of any of
the Credit Documents by the Borrower and each of its Subsidiaries has
been taken.
6.3 Enforceability.
This Credit Agreement and each of the other Credit Documents are the
legal, valid and binding obligations of the Borrower and each of its
Subsidiaries which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally, and (ii) general principles of equity.
6.4 No Conflict.
The execution, delivery and performance of each Credit Document by
the Borrower and each of its Subsidiaries which are parties thereto are
not in contravention of (i) the Governing Documents of such Persons, or
(ii) any Requirement of Law, or (iii) any material indenture, contract,
agreement or instrument or other commitment to which any or all of such
Persons are parties or by which any of such Persons or any of its
properties are bound, and will not, except as contemplated herein, result
in the imposition of any Liens upon any of the properties of any of such
Persons.
6.5 Consents and Filings.
No consent, authorization, permit or filing is required in
connection with the execution, delivery and performance of this Credit
Agreement or any Credit Document by the Borrower and each of its
Subsidiaries which are parties thereto, or in connection with the
continuing operations of such Persons, except (i) those that have been
obtained or made and (ii) filings necessary to create, perfect or retain
the perfection of Liens against the Collateral.
6.6 Government Regulation.
Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940, or any other
similar Requirement of Law that limits the respective abilities of such
Persons to incur indebtedness or consummate the transactions contemplated
in this Credit Agreement and the other Credit Documents.
6.7 Solvency.
The fair saleable value of the assets of the Borrower exceeds all
its probable liabilities, including those to be incurred pursuant to this
Credit Agreement and the other Credit Documents. The Borrower (i) does
not have unreasonably small capital in relation to the business in which
it is or proposes to be engaged and (ii) has not incurred and does not
believe that it will incur, after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay as
such debts become due.
6.8 Rights in Collateral; Priority of Liens.
All property constituting Collateral is owned or leased by the
Borrower, free and clear of any and all Liens in favor of third parties,
other than Permitted Liens. Upon the proper filing of the UCC financing
(and termination statements, if any) listed in the Closing Document List,
the security interests granted pursuant to the Credit Documents
constitute valid and enforceable first, prior (subject to Permitted
Liens) and perfected Liens on the Collateral, to the extent such Liens
can be perfected by the filing of such financing statements.
6.9 Financial Data.
The Borrower has provided to the Agent complete and accurate copies
of draft annual audited Financial Statements for the Consolidated Entity
for the fiscal year ended January 25, 1997 and unaudited Financial
Statements for the one-month fiscal period ended February 22, 1997. Such
Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved, except as otherwise
disclosed therein, and fairly present the respective consolidated
financial positions, results of operations and cash flows of the
Consolidated Entity for each of the periods covered. The Consolidated
Entity has no material Contingent Obligation, or liability for taxes or
long-term leases, which is not reflected in such Financial Statements or
the footnotes thereto, or is not otherwise disclosed on Schedule B, Part
6.9.
6.10 Locations of Offices, Records and Inventory.
The address of the principal place of business and chief executive
office of the Borrower is set forth on Schedule B, Part 6.10, as the same
may be amended after the Closing Date in accordance with Section 11.11.
The books and records of the Borrower, and all its chattel paper, if any,
and records of Accounts, are maintained exclusively at one or more of
such locations. There is no jurisdiction in which the Borrower has any
Collateral (except for vehicles and Inventory in transit) other than
those jurisdictions identified on Schedule B, Part 6.10, as the same may
be amended after the Closing Date in accordance with Section 11.11. A
complete list of the legal name and address of each warehouse, if any, at
which Inventory of the Borrower is stored is set forth on Schedule B,
Part 6.10, as the same may be amended after the Closing Date in
accordance with Section 11.11. None of the receipts received and to be
received by the Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to bearer or to the order of a named
Person or to a named Person and such named Person's assigns, in each case
other than (i) the Agent, (ii) to the extent permitted pursuant to the
terms hereof, the Borrower and (iii) in connection with any Existing LC.
6.11 Subsidiaries; Ownership of Stock.
As of the Closing Date, the Borrower has no direct or indirect
Subsidiaries.
6.12 No Judgments or Litigation.
Except as set forth on Schedule B, Part 6.12, no judgments, orders,
writs or decrees are outstanding against the Borrower or any of its
Subsidiaries, nor is there now pending or, to the best of the Borrower's
knowledge, threatened, any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against the Borrower or any
of its Subsidiaries that could reasonably be expected singly or in the
aggregate to have a Material Adverse Effect.
6.13 No Defaults.
Neither the Borrower nor any of its Subsidiaries is in default in
any material respect under any term of any material indenture, contract,
lease, agreement, instrument or commitment to which any of them is a
party or by which any of them is bound. The Borrower knows of no
material dispute regarding any such indenture, contract, lease,
agreement, instrument or other commitment.
6.14 Labor Matters.
Schedule B, Part 6.14 accurately sets forth all labor contracts to
which the Borrower or any of its Subsidiaries is a party as of the
Closing Date (including their dates of expiration). There are no
existing or, to the knowledge of the Borrower, threatened strikes,
lockouts or other disputes relating to any collective bargaining or
similar agreement to which the Borrower or any of its Subsidiaries is a
party.
6.15 Compliance with Law.
Neither the Borrower nor any of its Subsidiaries has violated or
failed to comply in any material respect with any Requirements of Law,
including without limitation ERISA and environmental laws.
6.16 ERISA.
None of the Borrower, any of its Subsidiaries or any ERISA Affiliate
maintains or contributes to any Plan other than those listed on Schedule
B, Part 6.16. Except to the extent that any of the following would not
result in a material liability: (i) each Plan has been and is maintained
and funded in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Code and (ii) the Borrower, each
Subsidiary of the Borrower and each ERISA Affiliate has fulfilled all
contribution obligations for each Plan (including obligations related to
the minimum funding standards of ERISA and the Internal Revenue Code).
No Termination Event has occurred and no other event has occurred that
may result in a Termination Event. To the knowledge of the Borrower,
none of the Borrower, any of its Subsidiaries, or any ERISA Affiliate, or
any fiduciary of any Plan has violated the terms of any agreement or any
Requirement of Law with respect to any Plan which will subject it to any
direct or indirect material liability. None of the Borrower, any of its
Subsidiaries or any ERISA Affiliate, is required to provide security to
any Plan under Section 401(a)(29) of the Internal Revenue Code.
6.17 Compliance with Environmental Laws.
Except as disclosed on Schedule B, Part 6.17, (i) the operations of
the Borrower and each of its Subsidiaries comply in all material respects
with all applicable material federal, state and local environmental
statutes, regulations, directions, ordinances, criteria and guidelines;
(ii) the Borrower has not received notice that any of the operations of
the Borrower or any of its Subsidiaries is the subject of any judicial or
administrative proceeding alleging a material violation of any material
federal, state or local environmental statute, regulation, direction,
ordinance, criteria or guideline; (iii) none of the operations of the
Borrower or any of its Subsidiaries is the subject of any federal or
state investigation evaluating whether the Borrower or any of its
Subsidiaries disposed of any hazardous or toxic waste, substance or
constituent or other substance at any site that may require remedial
action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous or
toxic waste, substance or constituent or other substance into the
environment; (iv) neither the Borrower nor any of its Subsidiaries has
filed any notice under any federal or state law indicating past or
present treatment, storage or disposal of a hazardous waste, substance or
constituent or reporting a spill or release of a hazardous or toxic
waste, substance or constituent or other substance into the environment;
and (v) neither the Borrower nor any of its Subsidiaries has any material
contingent liability not adequately reserved for of which the Borrower
has knowledge, or reasonably should have knowledge, in connection with
any release or potential release of any hazardous or toxic waste,
substance or constituent or other substance into the environment, nor has
the Borrower or any of its Subsidiaries received any notice, letter or
other indication of potential liability arising from the disposal of any
hazardous or toxic waste, substance or constituent or other substance
into the environment.
6.18 Intellectual Property.
The Borrower and each of its Subsidiaries possesses such assets,
licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to
conduct their respective present and proposed business activities.
6.19 Licenses and Permits.
The Borrower and each of its Subsidiaries has obtained and holds in
full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way
and other rights and approvals which are material to the operation of its
business as presently conducted.
6.20 Taxes and Tax Returns.
(a) Except as set forth on Schedule B, Part 6.20, the Borrower
and each Subsidiary of the Borrower has timely filed all income tax
returns it is required to file. The information filed is complete
and accurate in all material respects. All deductions taken in such
income tax returns are appropriate and in accordance with applicable
laws and regulations, except deductions that may have been
disallowed but are being challenged in good faith and for which
adequate reserves have been made in accordance with GAAP.
(b) All material taxes, assessments, fees and other
governmental charges for periods beginning prior to the date hereof,
have been timely paid and neither the Borrower nor any of its
Subsidiaries has any liability for taxes in excess of the amounts so
paid or reserves so established.
(c) Except as set forth in Schedule B, Part 6.20, no material
deficiencies for taxes have been claimed, proposed or assessed by
any taxing or other Governmental Authority against the Borrower or
any of its Subsidiary and no tax liens have been filed. Except as
set forth in Schedule B, Part 6.20, there are no pending or
threatened audits, investigations or claims for or relating to any
liability for taxes and there are no matters under discussion with
any Governmental Authority which could reasonably be expected to
result in a material additional liability for taxes. Either the
federal income tax returns of the Borrower have been audited by the
Internal Revenue Service and such audits have been closed (subject,
with respect to the 1993, 1994 and 1995 fiscal years of the
Borrower, to the execution of definitive agreements with the
Internal Revenue Service), or the period during which any
assessments may be made by the Internal Revenue Service has expired
without waiver or extension for all years up to and including the
fiscal year of the Consolidated Entity ended January 27, 1996.
Except as set forth in Schedule B, Part 6.20, no extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to the Borrower or
any of its Subsidiaries.
(d) Except as set forth on Schedule B, Part 6.20, neither the
Borrower nor any of its Subsidiaries has any obligation under any
written income tax sharing agreement or agreement regarding payments
in lieu of income taxes.
6.21 Material Contracts.
Schedule B, Part 6.21, contains a true, correct and complete list of
all the Material Contracts currently in effect on the Closing Date.
Except as described on Schedule B, Part 6.21, all of the Material
Contracts are in full force and effect and no material defaults currently
exist thereunder by the Borrower, or to the Borrower's knowledge, any
other party.
6.22 Accuracy and Completeness of Information.
All factual information furnished by or on behalf of the Borrower or
any of its Subsidiaries in writing to the Agent, any Lender, or the
Auditors expressly for purposes of or in connection with this Credit
Agreement or any Credit Documents or any transaction contemplated hereby
or thereby taken as a whole is or will be true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information taken as a whole not misleading at
such time.
6.23 No Change.
Since January 25, 1997, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS.
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder:
7.1 Financial Reporting.
The Borrower shall timely deliver to the Agent the following
information (which information the Agent shall promptly thereafter
deliver to each of the Lenders):
(a) Letter to Auditor. Not later than the earlier of (i) 15
days prior to the end of each fiscal year or (ii) prior to the date
the Auditors commence work on the preparation of the annual audited
Financial Statements, a copy of a letter from Borrower to its
Auditors, which letter shall notify such Auditors that (x) such
annual audited Financial Statement will be delivered by the Borrower
to the Agent (for subsequent distribution to the Lenders) hereunder,
(y) it is a primary intention of the Borrower, in engaging such
Auditor's services in connection with its audit of the Borrower's
financial statements for such fiscal year, to satisfy the financial
reporting requirements set forth herein, and (z) stating that Agent
and Lenders intend to rely thereon with respect to the transactions
which are the subject of this Agreement.
(b) Annual Financial Statements. As soon as available, but
not later than 90 days after each fiscal year end (or, in the case
of the Management Letter referred to in clause (iii) below, 180
days): (i) the annual audited consolidated, and unaudited
consolidating, Financial Statements of the Consolidated Entity; (ii)
a comparison in reasonable detail to the prior year annual audited
and unaudited Financial Statements; (iii) the Auditors' unqualified
opinion, "Management Letter" and statement indicating whether the
Auditors have obtained knowledge of the existence of any Default or
Event of Default during their audit, together with a letter
addressed to the Borrower (with a copy thereof to the Agent) from
the Auditors substantially in the form of Exhibit F; (iv) a
narrative discussion of the consolidated financial condition and
results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal year, prepared
by the chief financial officer of the Borrower; and (v) a compliance
certificate substantially in the form of Exhibit G with an attached
schedule of calculations demonstrating compliance with the financial
covenants set forth in Article 8.
(c) Monthly and Annual Projections. Not later than 45 days
after each fiscal year end, beginning with the fiscal year ended
January 31, 1998, monthly projections of the financial condition and
results of operations of the Consolidated Entity for the next
succeeding year, quarterly projections for the second succeeding
year, and annual projections for each succeeding fiscal year
thereafter, through and including the fiscal year in which the
Expiration Date will occur, in each case containing projected
consolidating balance sheets, statements of operations, statements
of cash flows and statements of changes in shareholders equity.
(d) Quarterly Financial Statements. As soon as available, but
not later than 45 days after each end of each of the first three
fiscal quarters, and 90 days after end of the last fiscal quarter:
(i) Financial Statements of the Consolidated Entity as of the fiscal
quarter then ended, and for the fiscal year to date; (ii) a
comparison in reasonable detail to the Financial Statements for the
corresponding periods of the prior fiscal year; (iii) the
certification of the chief executive officer or chief financial
officer of the Borrower that such Financial Statements have been
prepared in accordance with GAAP (subject to year-end adjustments);
(iv) a narrative discussion of the consolidated financial condition
and results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal quarter and
fiscal year to date, prepared by the chief financial officer of the
Borrower; and (v) a compliance certificate substantially in the form
of Exhibit G with an attached schedule of calculations demonstrating
compliance with the financial covenants set forth in Article 8.
(e) Monthly Financial Statements. As soon as available, but
not later than (i) 30 days after the end of each month, (other than
the last month in each fiscal quarter), (ii) 45 days after the end
of the last month in the first three fiscal quarters, and (iii) 90
days after end of the last month in the fourth fiscal quarter: (i)
a balance sheet for the Borrower as at the end of such month and for
the fiscal year to date and statements of operations and cash flows
for such month and for the fiscal year to date; (ii) a comparison to
the balance sheet, statement of operations and statement of cash
flows for the same periods in the prior year; (iii) a certification
by the chief executive officer or chief financial officer of the
Borrower that such balance sheet, statement of operations and
statement of cash flows have been prepared in accordance with GAAP
(subject to year-end adjustments); and (iv) a compliance certificate
substantially in the form of Exhibit G with an attached schedule of
calculations demonstrating compliance with the financial covenants
set forth in Article 8.
(f) Monthly Comparison to Prior Projections. As soon as
available, but not later than 30 days after the end of each of the
first eleven months, and 45 days after end of the last month, a
comparison of actual results of operations, cash flow and capital
expenditures for the Borrower for such month and for the period from
the beginning of the current fiscal year through the end of such
month with amounts previously projected for those periods (see
Section 7.1(c)) and with actual results for corresponding periods in
the previous fiscal year.
7.2 Collateral Reporting.
The Borrower shall timely deliver to the Agent the following
certificates and reports:
(a) Weekly and Monthly Borrowing Base Certificates. Weekly,
on the second Business Day of each week, monthly, within seven (7)
Business Days after the last Business Day of each month, and at any
other time requested by the Agent, a Borrowing Base Certificate,
which shall be: (i) substantially in the form of Exhibit A,
detailing the Eligible Inventory as of each Saturday of the
immediately preceding week (if a weekly Borrowing Base Certificate),
or as of the last Business Day of the immediately preceding month
(if a monthly Borrowing Base Certificate), or as of such other date
as the Agent may request; and (ii) prepared by or under the
supervision of the chief executive officer or chief financial
officer of the Borrower and certified by such officer subject only
to adjustment upon completion of the normal periodic audit of
physical inventory. Each Borrowing Base Certificate shall have
attached to it such additional schedules and other information as
the Agent may reasonably request.
(b) Appraisals. When requested by the Agent, a report of
Inventory, based upon a normal periodic physical count, which shall
describe the Borrower's Inventory by category and by item (in
reasonable detail) and report the then appraised value (at lower of
cost or market) of such Inventory.
(c) Further Assurances. When reasonably requested by the
Agent, any further information regarding the Collateral, business
affairs and financial condition of the Borrower or any of its
Subsidiaries.
7.3 Notification Requirements.
The Borrower shall timely give to the Agent and each of the Lenders
the following notices:
(a) Notice of Defaults. Promptly, and in any event within two
(2) Business Days after becoming aware of the occurrence of a
Default or Event of Default, a certificate of the chief executive
officer or chief financial officer of the Borrower specifying the
nature thereof and the proposed response of the Borrower thereto,
each in reasonable detail.
(b) Proceedings or Adverse Changes. Promptly, and in any
event within five (5) Business Days after the Borrower becomes aware
of (i) any material proceeding being instituted or threatened to be
instituted by or against the Borrower or any of its Subsidiaries in
any federal, state, local or foreign court or before any commission
or other regulatory body (federal, state, local or foreign), (ii)
any order, judgment or decree in excess of $1,000,000 being entered
against the Borrower or any of its Subsidiaries or any of their
respective properties or assets or (iii) any actual or prospective
change, development or event which has had or could reasonably be
expected to have a Material Adverse Effect, a written statement
describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect thereto
by the Borrower or any such Subsidiary.
(c) ERISA Notices. (i) Promptly, and in any event within ten
(10) Business Days after the Borrower, any of its Subsidiaries or
any ERISA Affiliate knows or has reason to know that a Termination
Event has occurred, a written statement of the chief financial
officer of the Borrower describing such Termination Event and any
action that is being taken with respect thereto by the Borrower, any
such Subsidiary or ERISA Affiliate, and any action taken or
threatened by the Internal Revenue Service, Department of Labor or
Pension Benefit Guaranty Corporation. The Borrower, such Subsidiary
and the ERISA Affiliate shall be deemed to know all facts known by
the administrator of any Benefit Plan of which it is the plan
sponsor; (ii) promptly, and in any event within three (3) Business
Days after the filing thereof with the Internal Revenue Service, a
copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by the Borrower, any of
its Subsidiaries or any ERISA Affiliate with respect to such
request; and (iii) promptly, and in any event within three (3)
Business Days after receipt by the Borrower, any of its Subsidiaries
or any ERISA Affiliate, of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice.
(d) Environmental Notices. Promptly, and in any event within
ten (10) Business Days after receipt by the Borrower or any of its
Subsidiaries of any notice, complaint or order alleging any actual
or prospective violation of any environmental Requirement of Law or
alleging responsibility for costs of a cleanup, together with a copy
of such notice, complaint, or order and a written statement
describing any action being taken with respect thereto by the
Borrower or any of its Subsidiaries.
(e) Material Contracts. Promptly, and in any event within ten
(10) Business Days after any Material Contract of the Borrower or
any of its Subsidiaries is terminated or amended or any new Material
Contract is entered into, a written statement describing such event,
with copies of amendments or new contracts, and an explanation of
any actions being taken with respect thereto.
(f) Collateral Matters. At least twenty (20) Business Days
prior written notice to the Agent of any change in the location of
any Collateral or in the location of the chief executive office or
place of business of the Borrower or any of its Subsidiaries from
the locations specified in Schedule B, Part 6.10. At least ten (10)
Business Days prior to any such change, the Borrower shall cause to
be executed and delivered to the Agent any financing statements,
Collateral Access Agreements or other documents required by the
Agent, all in form and substance satisfactory to the Agent.
7.4 Corporate Existence.
The Borrower shall, and shall cause each of its Subsidiaries to, (i)
maintain its corporate existence (except that the Borrower's Subsidiaries
may merge with each other and with the Borrower, provided, that the Agent
receives five (5) Business Days prior written notice thereof), (ii)
maintain in full force and effect all of its material licenses, bonds,
franchises, leases, trademarks and qualifications to do business, and all
patents, contracts and other rights which are material to the operation
of their respective businesses as presently conducted, (iii) continue in,
and limit their operations to, the same general lines of business as
presently conducted by them and (iv) in the case of the Borrower,
maintain all material terms and provisions of its corporate charter and
bylaws in the form in effect on the Closing Date.
7.5 Books and Records; Inspections.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, books and records pertaining to the Collateral
in such detail, form and scope as is consistent with good business
practice. The Borrower agrees that the Agent or its agents may enter
upon the premises of the Borrower or any of its Subsidiaries at any time
and from time to time, during normal business hours and upon reasonable
notice under the circumstances, and at any time at all upon the
occurrence and during the continuance of an Event of Default, for the
purposes of (i) inspecting and verifying the Collateral, (ii) inspecting
and/or copying (at the expense of the Borrower) any and all records
pertaining thereto, and (iii) discussing the affairs, finances and
business of the Borrower with any officers, employees and directors of
the Borrower or with the Auditors.
7.6 Insurance.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, public liability insurance, third party
property damage insurance and replacement value insurance on the
Collateral under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are at all times
satisfactory to the Agent in its commercially reasonable judgment. As of
the Closing Date, the deductibles in effect with respect to the
Borrower's insurance policies as disclosed to the Agent, are acceptable
to the Agent. All policies covering the Collateral are to name the Agent
as an additional insured and/or the loss payee in case of loss, and are
to contain such other provisions as the Agent may reasonably require to
fully protect the Agent's interest in the Collateral and to any payments
to be made under such policies.
7.7 Taxes.
The Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed
against the Borrower, any of its Subsidiaries or any of the Collateral
before any penalty or interest accrues thereon; provided, that, unless
such taxes have become a federal tax or ERISA Lien on any of the assets
of the Borrower or any of its Subsidiaries, no such tax need be paid if
the same is being contested, in good faith, by appropriate proceedings
promptly instituted and diligently conducted and if an adequate reserve
or other appropriate provision shall have been made therefor as required
in order to be in conformity with GAAP.
7.8 Compliance with Laws.
The Borrower agrees to comply, and to cause each of its Subsidiaries
to comply, in all material respects, with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of
its business or its assets generally, unless the Borrower contests any
such Requirements of Law in a reasonable manner and in good faith.
7.9 Use of Proceeds.
Proceeds of the initial Revolving Loan shall be used by the Borrower
to refinance certain existing Indebtedness of the Borrower and pay the
costs and expenses of the transactions contemplated by this Credit
Agreement which are due and payable on the Closing Date, including
without limitation the Fees and Expenses due on the Closing Date pursuant
to Article 4 hereof; and the proceeds of any subsequent Revolving Loans
made hereunder shall be used by the Borrower solely for ongoing working
capital requirements and other general corporate purposes. The Borrower
shall not use any portion of the proceeds of any Revolving Loans for the
purpose of purchasing or carrying any "margin stock" (as defined in
Regulation G) in any manner which violates the provisions of Regulation
G or X or of the terms and conditions of this Credit Agreement or any
other Credit Document.
7.10 Fiscal Year.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, its fiscal year as a year ending on the last
Saturday of each January.
7.11 Maintenance of Property.
The Borrower agrees to keep, and to cause each of its Subsidiaries
to keep, all property useful and necessary to their respective businesses
in good working order and condition (ordinary wear and tear excepted) in
accordance with their past operating practices and not to commit or
suffer any waste with respect to any of their properties.
7.12 ERISA Documents.
The Borrower will cause to be delivered to the Agent, upon the
Agent's request, each of the following: (i) a copy of each Plan (or,
where any such plan is not in writing, a complete description thereof)
(and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations
thereof and written descriptions thereof that have been distributed by
Borrower or any of its Subsidiaries to employees or former employees of
the Borrower or any of its Subsidiaries; (ii) the most recent
determination letter issued by the Internal Revenue Service with respect
to each Benefit Plan other than a Multiemployer Plan; (iii) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be
filed with any governmental agency for each Benefit Plan other than a
Multiemployer Plan; (iv) all actuarial reports prepared for the last
three plan years for each Benefit Plan other than a Multiemployer Plan;
(v) a listing of all Multiemployer Plans, with the aggregate amount of
the most recent annual contributions required to be made by the Borrower
or any ERISA Affiliate to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any information
that has been provided to the Borrower or any ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan; and (vii) the
aggregate amount of the most recent annual payments made to former
employees of the Borrower or any ERISA Affiliate under any Retiree Health
Plan.
7.13 Environmental and Other Matters.
(a) The Borrower and each of its Subsidiaries will conduct
their businesses so as to comply in all material respects with all
material environmental, land use, laws, regulations, directions,
ordinances, criteria and guidelines in all jurisdictions in which
any of them is or may at any time be doing business, except to the
extent that the Borrower or such Subsidiary is contesting, in good
faith by appropriate legal proceedings, any such law, regulation,
direction, ordinance, criteria, guideline, or interpretation thereof
or application thereof; provided, that the Borrower and each of its
Subsidiaries shall comply with the order of any court or other
Governmental Authority relating to such laws unless the Borrower or
such Subsidiary shall currently be prosecuting an appeal or
proceedings for review and shall have secured a stay of enforcement
or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review.
(b) If the Agent reasonably believes, or the Majority Lenders
reasonably believe, that the facts or circumstances evidence or
suggest that the Borrower or any of its Subsidiaries is in material
non-compliance with any environmental law and that such non-
compliance could reasonably be expected to have a Material Adverse
Effect, then at the written request of the Agent or the Majority
Lenders, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will
provide at its sole cost and expense an environmental site
assessment report concerning the site owned, operated or leased by
the Borrower or such Subsidiary in respect of which such material
non-compliance is believed to have occurred and be continuing, such
report to be prepared by an environmental consulting firm approved
by the Agent and the Majority Lenders, indicating the presence,
release or absence of hazardous materials on or from such site and
the potential cost of any removal, remedial or corrective action in
connection with any such hazardous materials on such site.
7.14 Further Assurances.
The Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time reasonably determine in the
exercise of its reasonable discretion to be necessary or desirable to
further carry out and consummate the transactions contemplated by the
Credit Documents, to cause the execution, delivery and performance of the
Credit Documents to be duly authorized and to perfect or protect the
Liens (and the priority status thereof) of the Agent on the Collateral.
ARTICLE 8. NEGATIVE COVENANTS.
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder, the Borrower shall comply
with, and, where required, shall cause each of its Subsidiaries to comply
with, the following covenants:
8.1 Minimum EBITDA to Interest Expense Ratio.
(a) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of January, 1998, for
the six-month period ending on such date, of not less than 1.85 to
1.00.
(b) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of April, 1998, for the
nine-month period ending on such date, of not less than 1.50 to
1.00.
(c) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of each month set forth
below for the twelve-month period ending on such date, of not less
than the ratio set forth opposite such date:
Date Minimum Ratio
July, 1998 1.35 to 1.00
October, 1998 1.60 to 1.00
January, 1999 1.70 to 1.00
April, 1999 1.70 to 1.00
July, 1999 1.70 to 1.00
October, 1999 1.70 to 1.00
January, 2000 2.00 to 1.00
April, 2000 2.00 to 1.00
8.1A Minimum Shareowner's Investment. The Borrower shall maintain
a shareowner's investment (exclusive of gains or losses resulting from
sales of fixed assets occurring after the Closing Date) of not less than
(i) $149,000,000 as of July 26, 1997 and (ii) $142,500,000 as of October
25, 1997.
8.2 Minimum Inventory to Trade Accounts Payable Ratio.
The Borrower shall have an Inventory to Trade Accounts Payable
Ratio, as determined as of the end of each fiscal quarter of the
Borrower, commencing with such fiscal quarter ending on July 26, 1997, of
not less than 2.00 to 1.00.
For purposes of this Section 8.2, "Inventory to Trade Accounts
Payable Ratio" means, as of the end of any fiscal quarter of the
Borrower, the ratio of (i) the average value (determined at the lower of
cost or market on a basis consistent with the Borrower's current and
historical accounting practices) of all Inventory, to (ii) the average
aggregate outstanding trade accounts payable of the Borrower, in each
case as determined as of the last day of each fiscal month during such
fiscal quarter.
8.3 Capital Expenditures.
The Borrower shall not make payments for Capital Expenditures in
excess of $18,000,000 per fiscal year. To the extent that all or any
portion of such amount is not used in any fiscal year, fifty percent
(50%) of such amount may be carried forward to the immediately following
fiscal year to be used for Capital Expenditures. The Borrower shall not
make any Capital Expenditures that are not directly related to the
business conducted on the Closing Date by the Borrower.
8.4 Additional Indebtedness.
Neither the Borrower nor any of its Subsidiaries shall directly or
indirectly incur, create, assume or suffer to exist any Indebtedness
other than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness in the ordinary course of business under
Interest Rate Agreements in form and substance satisfactory to the
Agent;
(c) Indebtedness of any Subsidiary of the Borrower to the
Borrower or any other Subsidiary of the Borrower;
(d) Indebtedness evidenced by the Medium Term Notes
outstanding on the Closing Date;
(e) FASB 98 Indebtedness;
(f) Indebtedness described on Schedule B, Part 8.4, and any
refinancing of such Indebtedness, so long as the aggregate principal
amount of the Indebtedness so refinanced shall not be increased and
the refinancing shall be on terms and conditions not more
restrictive in any material respect than the terms and conditions of
the Indebtedness to be refinanced;
(g) Indebtedness secured by purchase money Liens on equipment
acquired after the date of this Credit Agreement not to exceed
$1,000,000 in the aggregate outstanding at any one time ("Purchase
Money Liens") so long as (i) each Purchase Money Lien shall attach
only to the property to be acquired, (ii) a description shall have
been furnished to the Agent for any item of equipment for which the
purchase price is greater than $1,000,000, and (iii) the debt
incurred shall not exceed one hundred percent (100%) of the purchase
price of the item or items of equipment purchased; and
(h) other unsecured Indebtedness in an aggregate outstanding
amount not exceeding $5,000,000.
8.5 Liens.
Neither the Borrower nor any of its Subsidiaries shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any of
its property now owned or hereafter acquired except:
(a) Liens granted to the Agent for the benefit of the Agent
and the Lenders under the Credit Documents;
(b) Liens listed on Schedule B, Part 8.5;
(c) Purchase Money Liens;
(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes,
assessments or other governmental charges, and other similar Liens
arising by operation of law for amounts that are not yet due and
payable or that are being diligently contested in good faith by the
Borrower, so long as the Agent has been notified thereof and
adequate reserves are maintained by the Borrower for their payment;
(e) Attachment or judgment Liens not to exceed an aggregate of
$1,000,000, excluding amounts (i) bonded to the reasonable
satisfaction of the Agent or (ii) covered by insurance to the
reasonable satisfaction of the Agent;
(f) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations not to
exceed an aggregate of $10,000,000 (exclusive of the aggregate
outstanding face amount of any Letters of Credit and Existing LCs
issued for any such purpose);
(g) Deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business not to exceed an
aggregate of $1,000,000;
(h) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real
property, which, in the aggregate, in the Agent's reasonable
determination, are not substantial in amount and which do not
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries;
(I) Liens in favor of any Governmental Authority to secure
customs and revenue duties in connection with the importation of
Inventory; and
(j) Extensions and renewals of any of the foregoing so long as
such Liens apply to the same property previously subject thereto and
are on terms and conditions not more restrictive in any material
respect than the terms and conditions of the Liens extended or
renewed.
8.6 Contingent Obligations.
Except in connection with Permitted Recourse Programs in an
aggregate amount not to exceed $1,000,000, neither the Borrower nor any
of its Subsidiaries shall directly or indirectly incur, assume, or suffer
to exist any Contingent Obligation, excluding indemnities given in
connection with the sale of Inventory or other asset dispositions
permitted hereunder and Contingent Obligations for Indebtedness permitted
to be incurred under Section 8.4, and Investments permitted under Section
8.9.
8.7 Sale of Assets.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell, lease, assign, transfer or otherwise
dispose of any assets other than (i) the lease or sub-lease from time to
time to third parties for not less than fair market value of space in
retail store premises or excess undeveloped land owned or leased and
currently or previously occupied at such time by the Borrower in the
ordinary course of the Borrower's business, to the extent such space or
land, as the case may be, is not used or usable at such time by the
Borrower, as determined by the Borrower in the exercise of its reasonable
business judgment. Inventory in the ordinary course of business; (ii)
individual items of Collateral with a book value of less than $1,000,000
in the aggregate during any fiscal year, (iii) obsolete or worn out
property disposed of in the ordinary course of business; and (iv)
dispositions of assets not otherwise permitted under this Section 8.7,
provided, that, (a) such dispositions are for fair value, (b) the
aggregate consideration is paid in full in cash at the time of
disposition and is thereupon (i) reinvested in the business of the
Borrower or its Subsidiaries or (II) delivered to the Agent, in which
case such consideration will be applied to repay the Revolving Loans and
(c) the aggregate amount of all such dispositions does not exceed
$2,500,000 in the aggregate for any fiscal year.
8.8 Restricted Payments.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, (a) declare or pay any dividend (other than
dividends payable solely in capital stock of such Person) on, or make any
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of such
Person or any warrants, options or rights to purchase any such capital
stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether
in cash or property or in obligations of such Person or any of its
Subsidiaries; (b) make any optional payment or prepayment on or
redemption (including, without limitation, by making payments to a
sinking or analogous fund) or repurchase of any Indebtedness (other than
Indebtedness pursuant to this Credit Agreement); provided, that,
notwithstanding the foregoing, (i) so long as before and after giving
effect to each such payment an Event of Default shall not exist, Borrower
may make regularly scheduled dividend payments on the Preferred Stock and
(ii) any Subsidiary of the Borrower may (x) make payments on account of
Indebtedness owing to the Borrower or any Subsidiary of the Borrower and
(y) declare and pay dividends to the Borrower or any other Subsidiary of
the Borrower.
8.9 Investments.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make any Investment in any Person, whether in
cash, securities, or other property of any kind including, without
limitation, any Subsidiary or Affiliate of the Borrower, other than:
(a) Advances or loans made in the ordinary course of business
not to exceed $250,000 outstanding at any time to any one Person and
$500,000 in the aggregate outstanding at any one time;
(b) Loans, investments and advances between the Borrower and
its Subsidiaries in existence as of the date hereof and described on
Schedule B. Part 8.9;
(c) Cash Equivalents;
(d) Deposits with financial institutions, disclosed in
Schedule B, Part 8.9(A), and which are insured by the Federal
Deposit Insurance Corporation ("FDIC") or a similar federal
insurance program; provided, that the Borrower may, in the ordinary
course of its business, maintain in its disbursement accounts from
time to time amounts in excess of then applicable FDIC or other
program insurance limits;
(e) Deposits with financial institutions disclosed in Schedule
B, Part 8.9(b); and
(f) Such other Investments as the Agent may approve in writing
in the exercise of its sole discretion.
8.10 Affiliate Transactions.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into any transaction with (including,
without limitation, the purchase, sale or exchange of property or the
rendering of any service to) any Subsidiary or Affiliate of the Borrower,
except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business, as the case
may be, and upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than could be obtained in a comparable arm's-
length transaction with an unaffiliated Person, except for transactions
otherwise permitted under Sections 8.8 and 8.9;
8.11 Additional Bank Accounts.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, open, maintain or otherwise have any checking,
savings or other accounts at any bank or other financial institution, or
any other account where money is or may be deposited or maintained with
any Person, other than the Disbursement Account and the accounts set
forth on Schedule B, Part 8.9.
8.12 Excess Cash.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, maintain in the aggregate in all deposit
accounts of the Borrower and its Subsidiaries (other than the Collection
Account, the Disbursement Account and payroll accounts), total cash
balances and Investments as permitted by Sections 8.9(c), (d), (e) and
(f), in excess of $5,000,000 at any time during which any Revolving Loans
are outstanding hereunder.
8.13 Additional Negative Pledges.
Except as set forth in the Medium Term Note Indenture, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become
effective, directly or indirectly, (i) any prohibition or restriction
(including any agreement to provide equal and ratable security to any
other Person in the event a Lien is granted to or for the benefit of the
Agent and the Lenders) on the creation or existence of any Lien upon the
Collateral; or (ii) any contractual obligation which may restrict or
inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of
Default.
8.14 Additional Subsidiaries.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, form or acquire any new Subsidiaries.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 Events of Default.
The occurrence of any of the following events shall constitute an
event of default (each an "Event of Default") hereunder:
(a) Failure to Pay. The Borrower shall fail to pay any
Obligation (other than Expenses) when the same shall become payable
or shall fail to pay, within five (5) days after the same shall
become payable, any Expenses.
(b) Breach of Certain Covenants. The Borrower shall fail to
comply with any covenant contained in Article 7 (other than Sections
7.4, 7.7, 7.8, 7.11, 7.12 and 7.13) or Article 8.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed to be made by the Borrower in this Credit
Agreement or in any other Credit Document (and in any statement or
certificate given under this Credit Agreement or any other Credit
Document), shall be false or misleading in any material respect when
made or deemed to be made.
(d) Breach of Other Covenants. The Borrower shall fail to
comply with any covenant contained in this Credit Agreement or any
other Credit Document, other than as set forth in Section 9.1(b),
and such failure shall continue for fifteen (15) days after its
occurrence.
(e) Dissolution. The Borrower shall dissolve, wind up or
otherwise cease its business.
(f) Insolvency Event. Any Credit Party shall become the
subject of an Insolvency Event.
(g) Change of Control. A Change of Control shall occur.
(h) Cross Default. A default or event of default shall occur
(and continue beyond any applicable grace period) under any note,
agreement or instrument evidencing any other Indebtedness of the
Borrower or any Subsidiary of the Borrower, which default or event
of default permits the acceleration of its maturity, provided, that
the aggregate principal amount of all such Indebtedness for which
the default or event of default has occurred exceeds $5,000,000.
(i) Failure of Enforceability of Credit Documents; Security.
Any covenant, agreement or obligation of any Credit Party contained
in or evidenced by any of the Credit Documents shall cease to be
enforceable in accordance with their terms, or shall be determined
to be unenforceable, in accordance with its terms; any Credit Party
shall deny or disaffirm its obligations under any of the Credit
Documents or any Liens granted in connection therewith; or, any
Liens granted in any of the Collateral shall be determined to be
void, voidable, invalid or unperfected, are subordinated or not
given the priority contemplated by this Credit Agreement.
9.2 Acceleration, Termination of Commitments and Cash
Collateralization.
Upon the occurrence and during the continuance of any Event of
Default, without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Borrower:
(a) Acceleration. Upon the written request of the Majority
Lenders, and by delivery of written notice to the Borrower from the
Agent, all Obligations shall be immediately due and payable (except
with respect to any Event of Default set forth in Section 9.1(f), in
which case all Obligations shall automatically become immediately
due and payable without the necessity of any request of the Majority
Lenders or notice or other demand to the Borrower) without
presentment, demand, protest or any other action or obligation of
the Agent or any Lender.
(b) Termination of Commitments. Upon the written request of
the Majority Lenders, and by delivery of written notice to the
Borrower from the Agent, the Commitments shall be immediately
terminated and, at all times thereafter, all Revolving Loans made by
any Lender pursuant to this Credit Agreement shall be, at such
Lender's sole discretion, unless such Event of Default is waived in
accordance with Section 11.11, in which case the Commitments shall
be automatically reinstated.
(c) Cash Collateralization. On demand of the Agent or the
Majority Lenders, the Borrower shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 110% of the greatest amount
drawable thereunder. Such deposit shall be held by the Agent and
used to reimburse the Issuing Bank for the amount of each drawing
made under such Letters of Credit, as and when each such drawing is
made.
9.3 Rescission of Acceleration.
After acceleration of the maturity of the Obligations, if the
Borrower pays all accrued interest and all principal due (other than by
reason of the acceleration) and all Defaults and Events of Default are
waived in accordance with Section 11.11, the Majority Lenders may elect
in their sole discretion, to rescind the acceleration and return to the
Borrower any cash collateral deposited with the Agent pursuant to Section
9.2(c). (This Section is intended only to bind all of the Lenders to a
decision of the Majority Lenders and not to confer any right on the
Borrower, even if the described conditions for the Majority Lenders'
election may be met.)
9.4 Remedies.
Upon the occurrence and during the continuance of an Event of
Default, upon the written request and at the direction of the Majority
Lenders, the Agent may exercise any rights and remedies available to it
under applicable law (including under the Code) and under the Collateral
Documents. The foregoing rights and remedies are not intended to be
exhaustive and the full or partial exercise of any right or remedy shall
not preclude the full or partial exercise of any other right or remedy
available under this Credit Agreement, any other Credit Document, at
equity or at law.
9.5 Right of Setoff.
In addition to and not in limitation of all rights of offset that
any Lender may have under applicable law, upon the occurrence of any
Event of Default, and whether or not any Lender has made any demand or
the Obligations of any Credit Party have matured, each Lender shall have
the right to appropriate and apply to the payment of the Obligations of
such Credit Party all deposits and other obligations then or thereafter
owing by such Lender to such Credit Party. Each Lender exercising such
rights shall notify the Agent thereof and any amount received as a result
of the exercise of such rights shall be shared by the Lenders in
accordance with Section 2.5.
9.6 License of Use of Software and Other Intellectual Property.
Unless expressly prohibited by the licensor thereof, if any, the
Agent is hereby granted a license to use all computer software programs,
data bases, processes and materials used by the Borrower in connection
with its businesses or in connection with the Collateral. The Agent
agrees not to use any such license prior to the occurrence of an Event of
Default.
9.7 Application of Proceeds; Surplus; Deficiencies.
The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights against any Collateral (after deducting all of the
Agent's Expenses related thereto) shall be applied by the Agent to the
payment of the Obligations, whether due or to become due, in the order
set forth in Section 4.11. The Borrower shall remain liable to the Agent
and the Lenders for any deficiencies, and the Agent and the Lenders in
turn agree to remit to the Borrower or its successors or assigns, any
surplus resulting therefrom.
ARTICLE 10. THE AGENT.
10.1 Appointment of Agent.
(a) Each Lender hereby designates BTCC as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Revolving Note, by the acceptance of such
Revolving Note, shall be deemed irrevocably to authorize the Agent
to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and any other
instruments and agreements referred to herein and therein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Agent
by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent shall hold all Collateral
and all payments of principal, interest, Fees, (other than Fees that
are exclusively for the account of the Agent), charges and Expenses
received pursuant to this Credit Agreement or any other Credit
Document for the ratable benefit of the Lenders. The Agent may
perform any of its duties hereunder by or through its agents or
employees.
(b) Other than the Borrower's rights under Section 10.9, the
provisions of this Article 10 are for the benefit of the Agent and
the Lenders only and none of the Credit Parties or any other Persons
shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under
this Credit Agreement and the other Credit Documents, the Agent
shall act only for the Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Credit Party.
10.2 Nature of Duties of Agent.
The Agent has no duties or responsibilities except those expressly
set forth in the Credit Documents. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action
taken or omitted hereunder or in connection herewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Agent shall be mechanical and administrative in nature; the Agent shall
not have by reason of this Credit Agreement or any of the other Credit
Documents a fiduciary relationship in respect of any Lender or any
participant of any Lender; and nothing in this Credit Agreement or any
other Credit Document, expressed or implied, is intended to or shall be
so construed as to impose upon the Agent any obligations in respect of
this Credit Agreement or any other Credit Document, except as expressly
set forth herein or therein.
10.3 Lack of Reliance on Agent.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the
financial or other condition and affairs of each Credit Party in
connection with the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of each
Credit Party, and, except as expressly provided in this Credit
Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming
into its possession before the making of the Revolving Loans or at
any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Credit Agreement or any of the other Credit
Documents or the financial or other condition of any Credit Party.
The Agent shall not be required to make any inquiry concerning
either the performance or observance of any other terms, provisions
or conditions of this Credit Agreement or any of the other Credit
Documents, or the financial condition of any Credit Party, or the
existence or possible existence of any Default or Event of Default,
unless specifically requested to do so in writing by any Lender.
10.4 Certain Rights of the Agent.
The Agent shall have the right to request instructions from the
Majority Lenders by notice to each of the Lenders. If the Agent shall
request instructions from the Majority Lenders with respect to any act or
action (including the failure to act) in connection with this Credit
Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions
from the Majority Lenders, and the Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Majority Lenders. The Agent may
give any notice required under Article 9 hereof without the consent of
any of the Lenders unless otherwise directed by the Majority Lenders in
writing and will, at the direction of the Majority Lenders, give any such
notice required under Article 9.
10.5 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram,
order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or
made by the proper person. The Agent may consult with legal counsel
(including counsel for the Borrower with respect to matters concerning
the Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the advice of such counsel,
accountants or experts.
10.6 Indemnification of Agent.
To the extent the Agent is not reimbursed and indemnified by the
Borrower, each Lender will reimburse and indemnify the Agent, in
proportion to its respective Commitment, for and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties
hereunder, in any way relating to or arising out of this Credit
Agreement; provided, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
10.7 The Agent in its Individual Capacity.
With respect to its obligation to lend under this Credit Agreement,
the Revolving Loans made by it and the Revolving Notes issued to it and
its participation in Letters of Credit issued hereunder, the Agent shall
have the same rights and powers hereunder as any other Lender or holder
of a Revolving Note or participation interests and may exercise the same
as though it was not performing the duties specified herein; and the
terms "Lenders," "Majority Lenders," "holders of Revolving Notes," or any
similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory or other
business with the Borrower or any Affiliate of the Borrower as if it were
not performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this
Credit Agreement and otherwise without having to account for the same to
the Lenders.
10.8 Holders of Revolving Notes.
The Agent may deem and treat the payee of any Revolving Note as the
owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder
of any Revolving Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Revolving Note or of any Revolving
Note or Notes issued in exchange therefor.
10.9 Successor Agent.
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
Section 10.9) by giving written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Majority Lenders shall
have the right, upon five (5) days' notice and approval by the
Borrower (which approval shall not be unreasonably withheld or
delayed), to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority Lenders and accepted such
appointment, within thirty (30) days after the retiring Agent's
giving of notice of resignation, then, upon five (5) days' notice
and approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank or
a trust company or other financial institution which maintains an
office in the United States, or a commercial bank organized under
the laws of the United States of America or of any State thereof, or
any Affiliate of such bank or trust company or other financial
institution which is engaged in the banking business, having a
combined capital and surplus of at least $500,000,000.
(b) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as Agent under this
Credit Agreement and the other Credit Documents. After any retiring
Agent's resignation hereunder as Agent, the provisions of this
Article 10 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under or in connection
with this Credit Agreement.
10.10 Collateral Matters.
(a) Each Lender authorizes and directs the Agent to enter into
the Collateral Documents for the benefit of the Lenders. Each
Lender hereby agrees, and each holder of any Revolving Note by the
acceptance thereof will be deemed to agree, that, except as
otherwise set forth herein, any action taken by the Majority Lenders
in accordance with the provisions of this Credit Agreement or any of
the Credit Documents, and the exercise by the Majority Lenders of
the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. The Agent is hereby authorized on
behalf of all of the Lenders, without the necessity of any notice to
or further consent from any Lender, from time to time prior to an
Event of Default, to take any action with respect to any Collateral
or Collateral Documents which may be necessary to perfect and
maintain the perfection of the Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) with respect to which the sale or
other disposition thereof is expressly permitted hereunder (in which
case the Agent shall release such Lien upon the Borrower's request
therefor), (ii) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or
in respect of this Credit Agreement or the Credit Documents or the
transactions contemplated hereby or thereby and (iii) if approved,
authorized or ratified in writing by the Majority Lenders, unless
such release is required to be approved by all of the Lenders
pursuant to Section 11.11. Upon request by the Agent at any time,
the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this Section
10.10.
(c) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists
or is owned by the Borrower or is cared for, protected or insured or
that the Liens granted to the Agent in or pursuant to any of the
Collateral Documents have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all
or in any manner or under any duty of care, disclosure or fidelity
any of the rights, authorities and powers granted or available to
the Agent in this Section 10.10 or in any of the Collateral
Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent
may act in any manner it may deem appropriate, in its sole
discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or
willful misconduct. The Agent agrees to conduct or cause to be
conducted at least one audit of the Collateral during each year that
this Credit Agreement shall remain in effect.
10.11 Actions with Respect to Defaults.
In addition to the Agent's right to take actions on its own accord
as permitted under this Credit Agreement, the Agent shall take such
action with respect to a Default or Event of Default as shall be directed
by the Majority Lenders; provided, that until the Agent shall have
received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable and in the
best interests of the Lenders.
10.12 Delivery of Information.
The Agent shall not be required to deliver to any Lender originals
or copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrower, any Subsidiary of
the Borrower, the Majority Lenders, any Lender or any other Person under
or in connection with this Credit Agreement or any other Credit Document
except (i) as specifically provided in this Credit Agreement or any other
Credit Document and (ii) as specifically requested from time to time in
writing by any Lender with respect to a specific document, instrument,
notice or other written communication received by and in the possession
of the Agent at the time of receipt of such request and then only in
accordance with such specific request.
ARTICLE 11. MISCELLANEOUS.
11.1 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT
AGREEMENT AND THE REVOLVING NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
11.2 SUBMISSION TO JURISDICTION.
ALL DISPUTES AMONG THE BORROWER AND THE LENDERS (OR THE AGENT ACTING
ON THEIR BEHALF), WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN
CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF THE LENDERS, SHALL
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED
AGAINST THE BORROWER OR ITS RESPECTIVE PROPERTIES IN ANY LOCATION
REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
IN FAVOR OF THE AGENT. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON FORUM NON CONVENIENS.
11.3 SERVICE OF PROCESS.
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND,
AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES
AND APPOINTS CT CORPORATION SYSTEM, WITH AN OFFICE ON THE DATE HEREOF AT
208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604, AND SUCH OTHER PERSONS
AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS ISSUED BY ANY COURT IN ANY LEGAL ACTION OR OTHER PROCEEDING WITH
RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS PROVIDED HEREIN
EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF
ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE, BORROWER
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE AND EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE RIGHT OF
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION.
11.4 JURY TRIAL.
THE BORROWER, THE AGENT AND THE LENDERS EACH HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A BENCH
TRIAL.
11.5 LIMITATION OF LIABILITY.
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE
BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES
SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS
CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
11.6 Delays.
No delay or omission of the Agent or the Lenders to exercise any
right or remedy hereunder shall impair any such right or operate as a
waiver thereof.
11.7 Notices.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail,
return receipt requested, or by overnight delivery service, with all
charges prepaid, if to the Agent or any of the Lenders, then to BT
Commercial Corporation, 233 South Wacker Drive, Chicago, Illinois 60606,
Attention: Credit Department, if to the Borrower, then to Venture
Stores, Inc. at 2001 East Terra Lane, O'Fallon, Missouri 63366-0110,
Attention: Executive Vice President/Finance and Administration, or by
facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (312) 993-8096 and if to
the Borrower at (314) 281-7233. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is
refused and (iii) if sent by telex or facsimile transmission, when
receipt of such transmission is acknowledged.
11.8 Assignments and Participations.
(a) Borrower Assignment. The Borrower shall have no right to
assign this Credit Agreement, or any rights or obligations
hereunder, without the prior written consent of the Agent and the
Lenders.
(b) Lender Assignments. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents, with the consent of the Agent; and upon
execution and delivery to the Agent, for its acceptance and
recording in the Register, of an agreement in substantially the form
of Exhibit H (an "Assignment and Assumption Agreement"), together
with surrender of any Revolving Note or Revolving Notes subject to
such assignment and a processing and recordation fee of $2,500. No
such assignment shall be for less than $10,000,000 of the
Commitments unless it is to another Lender or is an assignment of
all of such Lender's rights and obligations under this Credit
Agreement. (This Section does not apply to branches and Affiliates
of a Lender, it being understood that a Lender may make, carry or
transfer Revolving Loans at or for the account of any of its branch
offices or Affiliates without consent of the Borrower, the Agent or
any other Lender).
(c) Agent's Register. The Agent shall maintain a register of
the names and addresses of the Lenders, their Commitments, and the
principal amount of their Revolving Loans (the "Register") at the
address specified for the Agent in Section 11.7. The Agent shall
also maintain a copy of each Assignment and Assumption Agreement
delivered to and accepted by it and modify the Register to give
effect to each Assignment and Assumption Agreement. Upon its
receipt of each Assignment and Assumption Agreement and surrender of
the affected Revolving Note or Revolving Notes, the Agent will give
prompt notice thereof to the Borrower and deliver to the Borrower a
copy of the Assignment and Assumption Agreement and the surrendered
Revolving Note or Revolving Notes. Within five Business Days after
its receipt of such notice, the Borrower shall execute and deliver
to the Agent a substitute Revolving Note or Revolving Notes to the
order of the assignee in the amount of the Commitment or Commitments
assumed by it and to the assignor in the amount of the Commitment or
Commitments retained by it, if any. Such substitute Revolving Note
or Revolving Notes shall re-evidence the Indebtedness outstanding
under the surrendered Revolving Note or Revolving Notes and shall be
dated as of the Closing Date. The Agent and the Borrower shall be
entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder. The Register shall be available
for inspection by the Borrower and the Lenders (or any of them) at
any reasonable time and from time to time upon reasonable notice to
the Agent.
(d) Lender Participations. Each Lender may sell
participations (without the consent of the Agent, the Borrower or
any other Lender) to one or more parties in or to all or a portion
of its rights and obligations under this Credit Agreement, the
Revolving Notes and the other Credit Documents. Notwithstanding a
Lender's sale of a participation interest, its obligations hereunder
shall remain unchanged. The Borrower, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender.
No participant shall have rights to approve any amendment or waiver
of this Credit Agreement or any of the other Credit Documents except
to the extent such amendment or waiver would (i) increase the
participant's obligation in respect of the Commitment of the Lender
from whom the participant purchased its participation interest; (ii)
reduce the principal of, or stated rate or amount of interest on,
the Revolving Loans subject to such participation, (iii) postpone
any maturity date fixed for final payment of principal of the
Revolving Loans subject to the participation interest, or (iv)
release any guarantor of the Obligations or all or a substantial
portion of the Collateral, other than when otherwise permitted
hereunder.
11.9 Confidentiality.
(a) The Agent and each Lender agrees that it will use its
reasonable best efforts not to disclose without the prior consent of
the Borrower any information with respect to the Borrower or any of
its Subsidiaries which is furnished pursuant to this Credit
Agreement and which is designated by the Borrower to the Lenders in
writing as confidential (the "Borrower Information"), provided,
that, each Lender may disclose any Borrower Information (i) to its
employees, auditors, or counsel, or to another Lender if the
disclosing Lender or such disclosing Lender's holding or parent
company in its sole discretion determines that any such party should
have access to such information, (ii) as has become generally
available to the public, (iii) as may be required or appropriate in
any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender,
(iv) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, (v) in order to
comply with any Requirement of Law, (vi) to any such prospective or
actual transferee or participant in connection with any contemplated
transfer or participation of any of the Revolving Notes or
Commitments or any interest therein by such Lender and (vii) in the
case of the Agent, information with respect to the Borrower's
availability hereunder, requested from time to time by vendors in
the ordinary course of the Borrower's business.
(b) In the event that the Agent or any Lender is requested or
becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Borrower Information, such
Person will:
(i) provide the Borrower with prompt written notice
so that the Borrower may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions
of this Section 11.9;
(ii) unless the Borrower waives compliance by such
Person with the provisions of this Section 11.9, make a timely
objection to the request or confirmation to provide such
Borrower Information on the basis that such Borrower
Information is confidential and subject to the agreements
contained in this Section 11.9; and
(iii) take action as is necessary to preserve such
confidentiality, such as seeking a protective order or other
appropriate remedy.
In the event that a protective order or other remedy is not obtained, or
the Borrower waives compliance with the provisions of this Section 11.9,
such party will furnish only that portion of the Borrower Information
which is legally required to be furnished and will exercise such party's
best efforts to obtain reliable assurance that confidential treatment
will be accorded to the Borrower Information.
11.10 Indemnification.
The Borrower hereby indemnifies and agrees to defend and hold
harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any
and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of (a) any litigation,
investigation, claim or proceeding which arises out of or is in any way
related to (i) this Credit Agreement or the transactions contemplated
hereby, (ii) the issuance of the Letters of Credit, (iii) the failure of
the Issuing Bank to honor a drawing under any Letter of Credit, as a
result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental
Authority, (iv) any actual or proposed use by the Borrower of the
proceeds of the Revolving Loans or (v) the Agent's or the Lenders'
entering into this Credit Agreement, the other Credit Documents or any
other agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection
with any of the foregoing and (b) any remedial or other action taken by
the Borrower or any of the Lenders in connection with compliance by the
Borrower or any of its Subsidiaries, or any of their respective
properties, with any federal, state or local environmental laws, acts,
rules, regulations, orders, directions, ordinances, criteria or
guidelines.
11.11 Amendments and Waivers.
No amendment or waiver of any provision of this Credit Agreement,
including any part of Schedule B, or any other Credit Document shall be
effective unless in writing and signed by the Borrower and Majority
Lenders (or by the Agent on behalf of the Majority Lenders), except that:
(a) the consent of all the Lenders is required to (i) increase
the Commitments, (ii) reduce the principal of, or interest on, the
Revolving Notes, any Letter of Credit reimbursement obligations or
any Fees hereunder (other than Fees that are exclusively for the
account of the Agent), (iii) postpone any date fixed for any payment
in respect of principal of, or interest on, the Revolving Notes, any
Letter of Credit reimbursement obligations or any Fees hereunder,
(iv) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Majority Lenders to
take any action hereunder, (v) amend or waive this Section 11.11(a),
or change the definition of Majority Lenders or (vi) except as
otherwise expressly provided in this Credit Agreement, and other
than in connection with the financing, refinancing, sale or other
disposition of any asset of the Borrower permitted under this Credit
Agreement, release any Liens in favor of the Lenders on any of the
Collateral; and
(b) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the
Agent under any Credit Document, in addition to the consent of the
Lenders otherwise required by this Section.
The consent of the Borrower shall not be required for any amendment,
modification or waiver of the provisions of Article 10 (other than
Section 10.9). The Borrower and the Lenders each hereby authorize the
Agent to modify this Credit Agreement by unilaterally amending or
supplementing Annex I to reflect assignments of the Commitments.
Notwithstanding the foregoing, the Borrower may amend Schedule B, Parts
6.1, 6.10, 6.11 and 6.14, without the consent of the Majority Lenders.
11.12 Counterparts and Effectiveness.
This Credit Agreement and any waiver or amendment hereto may be
executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Credit Agreement shall
become effective on the date on which all of the parties hereto shall
have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Agent pursuant to Section 11.7 or,
in the case of the Lenders, shall have given to the Agent written,
telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
11.13 Severability.
In case any provision in or obligation under this Credit Agreement
or the Revolving Notes or the other Credit Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
11.14 Maximum Rate.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrower, the Agent
and the Lenders hereby agree that all agreements among them under this
Credit Agreement and the other Credit Documents, whether now existing or
hereafter arising and whether written or oral, are expressly limited so
that in no contingency or event whatsoever shall the amount paid, or
agreed to be paid, to the Agent or any Lender for the use, forbearance,
or detention of the money loaned to the Borrower and evidenced hereby or
thereby or for the performance or payment of any covenant or obligation
contained herein or therein, exceed the Highest Lawful Rate. If due to
any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of
such provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest
Lawful Rate, and if from any such circumstance any Lender should ever
receive anything of value deemed interest by applicable law which would
exceed the Highest Lawful Rate, such excessive interest shall be applied
to the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding Obligations and not to the payment
of interest, or if such excessive interest exceeds the principal unpaid
balance then outstanding hereunder and such other then outstanding
Obligations, such excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of
the Borrower to the Agent or any Lender, to the extent permitted by
applicable law, shall be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness, until payment in full
thereof, so that the actual rate of interest on account of all such
Indebtedness does not exceed the Highest Lawful Rate throughout the
entire term of such Indebtedness. The terms and provisions of this
Section shall control over every other provision of this Credit
Agreement, the other Credit Documents, and all agreements among the
Borrower, the Agent and the Lenders.
11.15 Entire Agreement; Successors and Assigns.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Borrower, the Agent and the Lenders, supersede
any prior agreements among them, and shall bind and benefit each of such
Persons and their respective successors and permitted assigns.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed and delivered in Chicago, Illinois by their
proper and duly authorized officers as of the date first set forth above.
BORROWER:
VENTURE STORES, INC.
By: /s/ Russell E. Solt
Russell E. Solt
Executive Vice President/
Finance and Administration
AGENT:
BT COMMERCIAL CORPORATION, as Agent
By: /s/ Wayne D. Hillock
Wayne D. Hillock
Senior Vice President
LENDERS:
BT COMMERCIAL CORPORATION
By: /s/ Wayne D. Hillock
Wayne D. Hillock
Senior Vice President
ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF APRIL 8, 1997
LIST OF LENDERS; COMMITMENT AMOUNTS;
AND APPLICABLE LENDING OFFICES
1. BT COMMERCIAL CORPORATION
233 South Wacker Drive
Chicago, Illinois 60606
Commitment Amount: $250,000,000
Domestic Lending Office: 233 South Wacker Drive
Chicago, Illinois 60606
LIBOR Lending Office: 233 South Wacker Drive
Chicago, Illinois 60606
EXHIBIT 10.4
GENERAL SECURITY AGREEMENT
THIS GENERAL SECURITY AGREEMENT, dated as of April 8, 1997,
made by VENTURE STORES, INC., a Delaware corporation ("Grantor"),
in favor of BT COMMERCIAL CORPORATION, a Delaware corporation
("BTCC"), acting in its capacity as agent (in such capacity,
"Agent") for itself and each of the other "Lenders" (as such term
is defined in the Credit Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of
April 8, 1997, (such Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time to time,
being hereinafter referred to as the "Credit Agreement"), among
Grantor, Agent and Lenders, Lenders have severally agreed to make
certain loans and other extensions of credit to or for the account
of Grantor upon the terms and subject to the conditions set forth
therein; and
WHEREAS, Lenders have required, as a condition, among others,
to the making of any such loans or other extensions of credit, that
Grantor execute and deliver this Security Agreement to Agent for
its benefit and for the ratable benefit of Lenders;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined,
and the following terms shall have the following meanings (such
meanings being equally applicable to both the singular and plural
forms of the terms defined);
"Account Debtor" means the Person who is obligated on or under
an Account.
"Account" means any "account" as such term is defined in
section 9-106 of the UCC, now owned or hereafter acquired by
Grantor and shall include, without limitation, all present and
future rights of Grantor to payment for goods sold or leased or for
services rendered which are not evidenced by Instruments or Chattel
Paper, and whether or not they have been earned by performance.
"Chattel Paper" means any "chattel paper," as such term is
defined in section 9-105(1)(b) of the UCC, now owned or hereafter
acquired by Grantor.
"Collateral" has the meaning set forth in Section 2 of this
Security Agreement.
"Contracts" means all contracts, undertakings, or other
agreements (other than rights evidenced by Chattel Paper, Documents
or Instruments) in or under which Grantor may now or hereafter have
any right, title or interest.
"Documents" means any "documents," as such term is defined in
section 9-105(l)(f) of the UCC, now owned or hereafter acquired by
Grantor.
"Equipment" means any "equipment," as such term is defined in
section 9-109(2) of the UCC, now owned and hereafter acquired by
Grantor and, in any event, shall include, without limitation, all
machinery, equipment, furnishings, trade fixtures, vehicles,
computers, other electronic data-processing equipment and office
equipment now owned and hereafter acquired by Grantor and any and
all additions to and substitutions and replacements of any of the
foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or
affixed thereto.
"Excluded Property" means any interest in real estate,
improvements to real estate, or in any lease, sublease or license
of real property, other than each of the parcels of real property,
together with all improvements thereon, upon which Agent has been
granted a mortgage on the Closing Date, including all property
described in each such mortgage or any UCC financing statement
filed in connection therewith.
"General Intangibles" means any "general intangibles," as such
term is defined in section 9-106 of the UCC, now owned or hereafter
acquired by Grantor and, in any event, shall include, without
limitation, all right, title and interest which Grantor may now or
hereafter have in, under or to any Contracts, leasehold interests
in personal property, interests in partnerships and joint ventures,
tax refunds, deposit accounts (general or special) with and credits
and other claims against any financial institution, all customer
lists, trademarks, patents, rights in intellectual property,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether patented or
patentable or not) and technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records now
owned or hereafter acquired by Grantor, goodwill and rights of
indemnification.
"hereby," "herein," "hereof," "hereunder" and words of similar
import refer to this Security Agreement as a whole (including,
without limitation, all exhibits and schedules hereto) and not
merely to the specific section, paragraph or clause in which the
respective word appears.
"Instrument" means any "instrument," as such term is defined
in section 9-105(1)(i) of the UCC, now owned or hereafter acquired
by Grantor, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.
"Inventory" means any "inventory," as such term is defined in
section 9-109(4) of the UCC, now owned or hereafter acquired by
Grantor and, in any event, shall include, without limitation, all
inventory, merchandise, goods and other personal property now owned
or hereafter acquired by Grantor which are held for sale or lease
or are furnished or are to be furnished under a contract of service
or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in Grantor's business,
or the processing, packaging, delivery or shipping of the same, and
all finished goods.
"License" means any license as to which Agent has been granted
a security interest hereunder.
"Proceeds" means "proceeds," as such term is defined in
section 9-306(1) of the UCC and, in any event, shall include,
without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Grantor from time to
time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to
Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority, and (iii) any
and all other amounts from time to time paid or payable to Grantor
under or in connection with any of the Collateral.
"Security Agreement" means this General Security Agreement, as
it may be amended, restated, supplemented or otherwise modified
from time to time and shall refer to this Security Agreement as in
effect on the date such reference becomes operative.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois, provided, that
if, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's lien on or Agent's
security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State
of Illinois, the term "UCC" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such
provisions.
2. Grant of Security Interest. To secure the prompt and
complete payment, performance and observance when due (whether at
stated maturity, by acceleration or otherwise) of all of the
Obligations and to induce Agent and each of the Lenders to enter
into the Credit Agreement and to make the Revolving Loans and other
extensions of credit provided for therein in accordance with the
respective terms thereof, Grantor hereby grants to Agent for its
benefit and the ratable benefit of the Lenders a continuing
security interest in and to (and, if available, a right of setoff
against) all of the following property and interests in property of
Grantor, whether now owned or existing or hereafter acquired or
arising and wheresoever located (all of such property and interests
in property of Grantor being hereinafter, collectively, referred to
as the "Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Contracts;
(d) Documents;
(e) Equipment;
(f) General Intangibles;
(g) Investment Property;
(h) Instruments;
(I) Inventory;
(j) All monies and any and all other property and interests
in property of Grantor now or hereafter coming into the actual
possession, custody or control of any of the Lenders or any agent
or affiliate of any of the Lenders in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission,
collection or otherwise), and all rights and interests of Grantor
in respect of any and all (i) drafts, letters of credit, stocks,
bonds, and debt and equity securities, whether or not certificated,
and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same, (ii) interest rate and currency
exchange agreements, including, without limitation, cap, collar,
floor, forward and similar agreements and interest rate protection
agreements, (iii) cash and cash equivalents, (iv) proceeds of
loans, advances and other financial accommodations, including,
without limitation, Revolving Loans, advances and other financial
accommodations made or extended under the Credit Agreement and (v)
all other personal property and interests in personal property of
Grantor not specifically included in clauses (a) through (h) above;
and
(k) To the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions and additions to,
substitutions and replacements for, and rents, profits and products
of each of the foregoing.
Notwithstanding the foregoing, there shall be excluded from the
definition of the term "Collateral" all Excluded Property.
3. Limitations on Lender's Obligations. It is expressly
agreed by Grantor that, anything herein to the contrary
notwithstanding, Grantor shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder and Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such Contract or License. Neither
Agent nor any of the Lenders shall have any obligation or liability
under any Contract or License of Grantor by reason of or arising
out of this Security Agreement or the granting to Agent of a
security interest therein or the receipt by Agent or any of the
Lenders of any payment relating to any Contract or License pursuant
hereto, nor shall Agent or any of the Lenders be required or
obligated in any manner to perform or fulfill any of the respective
obligations of Grantor under or pursuant to any Contracts or
Licenses of Grantor, or to make any payment, or to make any inquiry
as to the nature or the sufficiency of any payment received by it
or the sufficiency of any performance by any party under any such
Contract or License, or to present or file any claim, or to take
any action to collect or enforce any performance or the payment of
any amounts which may have been assigned to Agent or any Lender or
to which Agent or any Lender may be entitled at any time or times.
4. Notice to Account Debtors. Upon the occurrence and during
the continuance of an Event of Default, Agent may, at any time or
times and without prior notice to Grantor, notify any or all
Account Debtors, parties to Contracts and obligors under
Instruments and Chattel Paper, that the Accounts and the right,
title and interest of Grantor in, to and under Contracts,
Instruments or Chattel Paper, as the case may be, have been
assigned to Agent and that payments thereon or in connection
therewith shall thereupon be made directly to Agent.
5. Verification of Accounts and Inventory. Agent shall have
the right, at any time or times hereafter, in Agent's name or in
the name of a nominee of Agent, to communicate with Account
Debtors, parties to Contracts and obligors under Instruments and
Chattel Paper of Grantor to verify with such Persons to Agent's
satisfaction the existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper, as the case may be. Agent
shall have the right, at any time or times hereafter, to make test
verifications of the Accounts of Grantor and physical verifications
of the Inventory of Grantor in any manner and through any medium
that it considers advisable, and Grantor agrees to furnish all such
assistance and information as Agent may reasonably require in
connection therewith.
6. Representations and Warranties. Grantor hereby represents
and warrants that:
(a) except for Permitted Liens, Grantor is the sole legal and
beneficial owner of each item of Collateral in which Grantor
purports to grant a security interest hereunder, having good and
marketable title thereto, free and clear of any and all Liens.
Except in connection with any Existing LC, no amount payable under
or in connection with any of the Accounts or Contracts of Grantor
are evidenced by Instruments which have not been endorsed and
previously delivered to Agent;
(b) no effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record
in any public office, except such as may have been filed by Grantor
in favor of Agent pursuant to this Security Agreement or such as
relate to Permitted Liens;
(c) this Security Agreement is effective to create a valid
and perfected continuing first priority Lien in favor of Agent for
the benefit of Agent and the ratable benefit of the Lenders on the
Collateral with respect to which a Lien may be perfected by filing
pursuant to the UCC, prior to all other Liens except Permitted
Liens, and is enforceable as such as against creditors of and
purchasers from Grantor (other than purchasers of Inventory in the
ordinary course of business);
(d) the principal place of business of Grantor, and the place
where the records of Grantor concerning Collateral are kept are
located at the address set forth on Schedule B, Part 6.10 of the
Credit Agreement, and Grantor will not change such principal place
of business or remove such records unless it has taken such action
as is necessary to cause the Lien of Agent in the Collateral to
continue to be perfected;
(e) with respect to Inventory scheduled, listed or otherwise
referred to in any weekly or monthly Borrowing Base Certificate,
Grantor represents and warrants that (i) except to the extent
permitted pursuant to clause (ii) of the proviso to the definition
of the term "Eligible Inventory" set forth in the Credit Agreement
(A) it is not stored with a bailee, warehouseman, consignee or
similar third party, and (B) it is located on the premises listed
on Schedule B, Part 6.10 to the Credit Agreement; and (ii) it is of
good and merchantable quality, free from any defects which would
affect the market value of such Inventory; and
(f) with respect to Equipment, Grantor warrants that (i) it
is owned by Grantor and is located on premises listed on Schedule
B, Part 6.10 to the Credit Agreement; (ii) it is not subject to any
Lien whatsoever except for Permitted Liens; and (iii) it is in good
repair and is currently used or usable in Grantor's business.
7. Covenants. Grantor covenants and agrees with Agent and
each of the Lenders that from and after the date of this Security
Agreement and until the Obligations are fully paid and satisfied:
(a) Further Documentation; Pledge of Instruments. At any
time and from time to time upon the written request of Agent, and
at the sole expense of Grantor, Grantor will promptly and duly
execute and deliver any and all such further instruments and
documents and take such further action as Agent may reasonably deem
necessary or desirable to obtain the full benefits of this Security
Agreement and of the rights and powers herein granted, including,
without limitation, using its best efforts to secure all consents
and approvals necessary or appropriate for the assignment to Agent
of any License or Contract held by Grantor or in which Grantor has
any rights not heretofore assigned, the filing of any financing or
continuation statements under the UCC with respect to the Liens
granted hereby, transferring Collateral to Agent's possession (if
a security interest in such Collateral can be perfected only by
possession) and using its best efforts to obtain waivers of Liens
from landlords and mortgagees. Grantor also authorizes Agent to
file any such financing or continuation statement without the
signature of Grantor to the extent permitted by applicable law.
Grantor further agrees that a carbon, photographic or other
reproduction of this Security Agreement or of a financing statement
is sufficient as a financing statement. If any Collateral shall be
or become evidenced by any Instrument, such Instrument shall be
immediately pledged to Agent hereunder, and shall be duly endorsed
in a manner satisfactory to Agent and delivered to Agent.
(b) Maintenance of Records. Grantor will, at all times
hereafter, keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including,
without limitation, records sufficient to permit the preparation of
all reports, schedules and other information required pursuant to
Sections 7.1 and 7.2 of the Credit Agreement. Grantor will mark
its books and records pertaining to Collateral to evidence this
Security Agreement and the security interests granted hereby. All
Chattel Paper will be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject
to the security interest of BT Commercial Corporation, as Agent."
Upon the occurrence and during the continuance of an Event of
Default, if requested by Agent, the security interest of Agent
shall be noted on the certificate of title of each vehicle. For
the further security of Agent and Lenders, Grantor agrees that
Agent shall have a special property interest in all of Grantor's
books and records pertaining to Collateral and, upon the occurrence
and during the continuance of any Default or Event or Default,
Grantor shall deliver and turn over any such books and records to
Agent or to its representatives at any time on demand of Agent.
(c) Indemnification. In any suit, proceeding or action
brought by Agent or any Lender relating to any Account, Chattel
Paper, Contract, General Intangible, Document or Instrument for any
sum owing thereunder, or to enforce any provision of any Account,
Chattel Paper, Contract, General Intangible, Document or
Instrument, Grantor will save, indemnify and keep Agent and each of
the Lenders harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment
or reduction of liability whatsoever of the obligor thereunder,
arising out of the unenforceability or non-conformity with any
applicable law of such Collateral or a breach by Grantor of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of,
such obligor or its successors from Grantor, and all such
obligations of Grantor shall be and remain enforceable against and
only against Grantor and shall not be enforceable against Agent or
any of the Lenders.
(d) Compliance with Laws, etc. Grantor will comply in all
material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of Grantor's
business.
(e) Payment of Obligations. Grantor will pay promptly when
due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without
limitation, claims for labor, materials and supplies), except as
permitted otherwise pursuant to the Credit Agreement.
(f) Compliance with Terms of Accounts; Account Covenants. In
all material respects, Grantor will perform and comply with all
obligations in respect of Accounts, Chattel Paper, Contracts and
Licenses and all other agreements to which it is a party or by
which it is bound.
(g) Safekeeping of Inventory; Inventory Covenants. Neither
Agent nor any of the Lenders shall be responsible for: (i) the
safekeeping of the Inventory; (ii) any loss or damage to the
Inventory; (iii) any diminution in the value of the Inventory; or
(iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Grantor and
Agent, and Grantor and the Lenders, all risk of loss, damage,
destruction or diminution in value of the Inventory shall be borne
by Grantor except in the case of Agent's or any Lender's own gross
negligence or willful misconduct. Except to the extent permitted
pursuant to clause (ii) of the proviso to the definition of the
term "Eligible Inventory" set forth in the Credit Agreement, no
Inventory shall be at any time or times hereafter stored with a
bailee, warehouseman, consignee or similar third party without
Agent's prior written consent. Grantor shall not sell any
Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Grantor to
repurchase such Inventory (except in the ordinary course and
pursuant to the reasonable requirements of Grantor's business and
in accordance with Grantor's usual and customary business practices
in effect on the Closing Date).
(h) Safekeeping of Equipment; Equipment Covenants. Grantor
agrees that neither Agent nor any of the Lenders shall be
responsible for: (i) the safekeeping of the Equipment; (ii) any
loss or damage to the Equipment; (iii) any diminution in the value
of the Equipment; or (iv) any act or default of any repairman,
bailee or any other Person with respect to the Equipment. As
between Grantor and Agent, and Grantor and the Lenders, all risk of
loss, damage, destruction or diminution in the value of the
Equipment shall be borne by Grantor, except in the case of Agent's
or any Lender's own gross negligence or willful misconduct.
Grantor will keep and maintain the Equipment in good operating
condition and Grantor will provide all maintenance and service and
all repairs necessary for such purpose.
(i) Limitation on Liens on Collateral. Grantor will not
create, permit or suffer to exist, and Grantor will defend the
Collateral against and take such other action as is necessary to
remove, any Lien on the Collateral, except Permitted Liens, and
will defend the right, title and interest of Agent in and to all of
Grantor's rights under the Chattel Paper, Contracts, Documents,
General Intangibles and Instruments and to the Inventory and in and
to the Proceeds thereof against the claims and demands of all
Persons whomsoever.
(j) Limitations on Modifications of Accounts. Grantor will
not, without Agent's prior written consent, grant any extension of
the time of payment of any of the Accounts, Chattel Paper or
Instruments, compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof, or allow any credit or discount
whatsoever thereon other than trade discounts and other
modifications granted in the ordinary course of business of Grantor
and in accordance with Grantor's usual and customary business
practice in effect on the Closing Date.
(k) Maintenance of Insurance. Grantor will maintain, with
respect to the Collateral of Grantor, insurance in accordance with
all of the requirements of Section 7.6 of the Credit Agreement.
(l) Limitations on Disposition. Grantor will not sell,
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so, except as otherwise expressly
permitted under the Credit Agreement.
(m) Further Identification of Collateral. Grantor will, if
so requested by Agent, furnish to Agent, as often as Agent
reasonably requests, statements and schedules further identifying
and describing the Collateral and such other reports in connection
with the Collateral as Agent may reasonably request, all in
reasonable detail.
(n) Notices. Grantor will advise Agent promptly, in
reasonable detail, (i) of any material Lien made or asserted
against any of the Collateral, (ii) of any material change in the
composition of the Collateral, and (iii) of the occurrence of any
other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the
Lien granted hereunder.
(o) Right of Inspection. Agent and each of the Lenders shall
at all times have full and free access during normal business hours
to all the books and records and correspondence of Grantor, and
Agent and each of the Lenders, or their respective representatives,
may examine the same, take extracts therefrom and make photocopies
thereof, and Grantor agrees to render to each of such Persons, at
Grantor's cost and expense, such clerical and other assistance as
may be reasonably requested with regard thereto. Agent and each of
the Lenders, and their respective representatives, shall also have
the right to enter into and upon any premises where any of the
Inventory is located for the purpose of inspecting the same,
observing its use or otherwise protecting Agent's interests
therein.
(p) Continuous Perfection. Grantor will not change its name,
identity, corporate structure or principal place of business in any
manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the
meaning of section 9-402(7) of the UCC (or any other then
applicable provision of the UCC) unless Grantor shall have given
Agent at least twenty (20) days' prior written notice thereof and
shall have taken all action (or made arrangements to take such
action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably
requested by Agent to amend such financing statement or
continuation statement so that it is not seriously misleading.
8. Agent's Appointment as Attorney-in-Fact. (a) Grantor
hereby irrevocably constitutes and appoints Agent, and any officer,
employee or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Grantor and in the name of
Grantor or in its own name, from time to time in Agent's
discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which the
Agent may deem necessary or desirable to accomplish the purposes of
this Security Agreement and, without limiting the generality of the
foregoing, hereby gives Agent, and any officer, employee or agent
thereof, the power and right, on behalf of Grantor, without notice
to or assent by Grantor to do the following:
(i) at any time (A) to endorse and collect any checks,
drafts, notes, acceptances or other Instruments for the payment of
moneys due under any Collateral, (B) to pay or discharge taxes and
Liens levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of this
Security Agreement and to pay all or any part of the premiums
therefor and the costs thereof; (C) to receive payment of and
receipt for any and all moneys, claims and other amounts due, and
to become due at any time, in respect or arising out of any
Collateral; and (D) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notice in
connection with Accounts and other Documents constituting or
relating to the Collateral;
(ii) upon the occurrence and during the continuation of
an Event of Default (A) to direct any Person liable for any payment
under any of the Collateral to make payment of any and all moneys
due, and to become due thereunder, directly to Agent or as Agent
shall direct; (B) to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by Agent for the purpose of collecting any and all such
moneys due under any Collateral whenever payable; (C) to commence
and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (D) to defend any suit, action or proceeding brought
against Grantor with respect to any Collateral; (E) to settle,
compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases
as Agent may deem appropriate; and (F) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though Agent were
the absolute owner thereof for all purposes, and to do, at Agent's
option and Grantor's expense, at any time, or from time to time,
all acts and things which Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Agent's Lien
thereon, in order to effect the intent of this Security Agreement,
all as fully and effectively as Grantor might do.
(b) Grantor hereby ratifies, to the extent permitted by law,
all that said attorneys shall lawfully do or cause to be done by
virtue hereof. The power of attorney granted pursuant to this
Section 8 is a power coupled with an interest and shall be
irrevocable until the Obligations are indefeasibly paid and
satisfied in full.
(c) The powers conferred on Agent hereunder are solely to
protect the respective interests of Agent and the Lenders in the
Collateral and shall not impose any duty upon it to exercise any
such powers. Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and
neither Agent nor any of its officers, directors, employees or
agents shall be responsible to Grantor for any act or failure to
act, except for their own gross negligence or willful misconduct.
(d) Grantor also authorizes Agent, and any officer, employee
or agent thereof, at any time and from time to time, (i) to
communicate in its own name with any Person which is a party to any
Contracts with regard to the assignment of the right, title and
interest of Grantor in and under such Contracts hereunder and other
matters relating thereto and (ii) to execute, in connection with
the sale provided for in Section 10(c) hereof, any endorsements,
assignments or other instruments of conveyance or transfer with
respect to the Collateral.
9. Performance by Agent of Grantor's Obligations. If Grantor
fails to perform or comply with any of its agreements contained
herein and Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable
expenses of Agent incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then
in effect in respect of any of the Revolving Loans, shall be
payable by Grantor to Agent on demand and shall constitute
Obligations secured hereby.
10. Remedies; Rights Upon Default. (a) Rights and Remedies
Generally. Upon the occurrence of an Event of Default, the Agent
shall have, in addition to any other rights and remedies contained
in this Security Agreement or in any of the other Credit Documents,
all of the rights and remedies of a secured party under the UCC or
other applicable laws, all of which rights and remedies shall be
cumulative, and none exclusive, to the extent permitted by law. In
addition to all such rights and remedies, the sale, lease or other
disposition of the Collateral, or any part thereof, by Agent after
an Event of Default may be for cash, credit or any combination
thereof, and Agent may purchase all or any part of the Collateral
at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set off the amount of
such purchase price against the Obligations then owing. All sales
of the Collateral may be adjourned from time to time with or
without notice. Agent may, in its sole discretion, cause the
Collateral to remain on the respective premises of Grantor, at
Grantor's expense, pending sale or other disposition of the
Collateral. Agent shall have the right to conduct such sales on
Grantor's premises, at Grantor's expense, or elsewhere, on such
occasion or occasions as Agent may see fit.
(b) Entry Upon Premises and Access to Information. Upon the
occurrence and during the continuance of an Event of Default, Agent
shall have the right to enter upon the premises of Grantor where
any Collateral is located (or is believed to be located) without
any obligation to pay rent to Grantor, or any other place or places
where the Collateral is believed to be located and kept, and render
the Collateral unusable or remove the Collateral therefrom to the
premises of Agent or any agent of Agent, for such time as Agent may
desire, in order effectively to collect or liquidate the
Collateral, and/or Agent may require Grantor to assemble the
Collateral and make it available to Agent at a place or places to
be designated by Agent. Upon the occurrence and during the
continuance of an Event of Default, Agent shall have the right to
obtain access to Grantor's data processing equipment, computer
hardware and software relating to the Collateral and to use all of
the foregoing and the information contained therein in any manner
Agent deems appropriate; and Agent shall have the right to notify
post office authorities to change the address for delivery of
Grantor's mail to an address designated by Lender and to receive,
open and deal with all mail addressed to Grantor.
(c) Sale or Other Disposition of Collateral by Lender. Any
notice required to be given by Agent of a sale, lease or other
disposition, or other intended action by Agent with respect to, any
Collateral of Grantor which is deposited in the United States
certified or registered mail, postage prepaid and duly addressed to
Grantor at the address specified in Section 13 below, five (5)
Business Days or more prior to such proposed action shall
constitute fair and reasonable notice to Grantor of any such
action, provided that Agent may give any shorter notice that is
commercially reasonable under the circumstances. The net proceeds
realized by Agent upon any such sale or other disposition, after
deduction for the expense of retaking, holding, preparing for sale,
selling or the like and the Expenses incurred by Agent in
connection therewith, shall be applied as provided in Section 4.11
of the Credit Agreement toward satisfaction of the Obligations.
Agent shall account to Grantor for any surplus realized upon any
such sale or other disposition, and Grantor shall remain liable for
any deficiency. The commencement of any action, legal or
equitable, or the rendering of any judgment or decree or any
deficiency shall not affect Agent's security interest in the
Collateral until the Obligations are fully paid and satisfied.
Grantor agrees that Agent has no obligation to preserve rights to
the Collateral against any other Persons.
(d) Waiver of Demand, etc. Grantor hereby waives presentment
and demand for payment of any of the Obligations, protest and
notice of dishonor or the occurrence of any default with respect to
any of the Obligations, and all other notices to which the Grantor
might otherwise be entitled, except as otherwise expressly provided
herein, in the Credit Agreement or in any of the other Credit
Documents. Grantor also waives the benefit of all valuation,
appraisal and exemption laws.
(e) Costs and Expenses. Grantor also agrees to pay all
Expenses incurred by the Agent and each of the Lenders in
connection with the enforcement of their respective rights and
remedies hereunder.
11. Limitation on Duty in Respect of Collateral. The Agent
and each of the Lenders shall use reasonable care with respect to
any Collateral in their possession or under their control. Except
as provided otherwise in the immediately preceding sentence,
neither the Agent nor any of the other Lenders shall have any duty
as to any Collateral in their possession or control or in the
possession or control of any agent or nominee of any of such
Persons or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. Upon
request of Grantor, Agent shall account for any moneys received by
it in respect of any foreclosing on or disposition of the
Collateral.
12. Reinstatement. This Security Agreement shall remain in
full force and effect and continue to be effective should any
petition be filed by or against Grantor for liquidation or
reorganization, should Grantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of the assets
of Grantor, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment, observance or performance
of the Obligations, or any part thereof is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored
or returned by any obligee of the Obligations, whether as a
"voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Obligations shall be reinstated and
deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
13. Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given
to or served upon any of the parties by any other party, or
whenever any of the parties desires to give or serve upon any other
communication with respect to this Security Agreement, each such
notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given (and deemed to
have been given) in the manner and to the respective addresses set
forth in Section 11.7 of the Credit Agreement. Failure or delay in
delivering copies of any such notice, demand, request, consent,
approval, declaration or other communication to any Persons
designated in this Security Agreement or any other Credit Document
to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
14. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
15. No Waiver; Cumulative Remedies. (a) Neither the Agent
nor any of the Lenders shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, approved
by the Majority Lenders (or by all Lenders where the approval of
each Lender is required under the Credit Agreement) and signed by
Agent, and then only to the extent therein set forth. A waiver by
Agent or any of the Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy
which Agent would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of
Agent or any of the Lenders, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of
any other right, power or privilege.
(b) The rights and remedies hereunder provided are cumulative
and may be exercised singly or concurrently, and are not exclusive
of any rights and remedies provided by law or any of the other
Credit Documents. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Agent and, where
applicable, by Grantor.
16. Successors and Assigns. This Security Agreement and all
obligations of Grantor hereunder shall be binding upon the
successors and assigns of Grantor and shall, together with the
rights and remedies of Agent and each of the Lenders hereunder,
inure to the benefit of Agent and the Lenders and their respective
successors and assigns.
17. Further Indemnification. Grantor agrees to pay, and to
save Agent and each of the Lenders harmless from and against, any
and all liabilities with respect to, or resulting from any delay in
paying, any and all excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions
contemplated by this Security Agreement.
18. Governing Law. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF
THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
19. Submission to Jurisdiction. ALL DISPUTES AMONG GRANTOR
AND THE LENDERS (OR the AGENT ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED
ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED,
HOWEVER, THAT THE AGENT, ON BEHALF OF THE LENDERS, SHALL HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED
AGAINST GRANTOR OR ITS RESPECTIVE PROPERTIES IN ANY LOCATION
REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE AGENT TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF AGENT. GRANTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH AGENT HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
20. Service of Process. GRANTOR HEREBY WAIVES PERSONAL
SERVICE OF ANY PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE
OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM, WITH AN OFFICE ON THE DATE HEREOF AT 208 SOUTH
LASALLE STREET, CHICAGO, ILLINOIS 60604, AND SUCH OTHER PERSONS AS
MAY HEREAFTER BE SELECTED BY GRANTOR WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF SERVICE
OF ALL PROCESS ISSUED BY ANY COURT IN ANY LEGAL ACTION OR OTHER
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER
CREDIT DOCUMENT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY GRANTOR
TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF
ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY CERTIFIED OR
REGISTERED MAIL TO GRANTOR AT ITS ADDRESS SET FORTH HEREIN EXCEPT
THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS.
IF ANY AGENT APPOINTED BY GRANTOR REFUSES TO ACCEPT SERVICE,
GRANTOR HEREBY AGREES THAT SERVICE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE GRANTOR AT ITS ADDRESS SET FORTH IN SECTION
11.1 OF THE CREDIT AGREEMENT SHALL CONSTITUTE SUFFICIENT NOTICE AND
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE
RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
21. Waiver of Jury Trial. GRANTOR, AGENT AND THE LENDERS
EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
22. Bond. Grantor hereby waives the posting of any bond
otherwise required to be posted by Agent or any of the Lenders in
connection with any judicial process or proceeding to obtain
possession of, replevy, attach, or levy upon collateral or any
other security for the obligations, to enforce or appeal any
judgment or other court order entered in favor of Agent or any of
the Lenders, or in favor of Grantor or to enforce by specific
performance, temporary restraining order or preliminary or
permanent injunction, this Security Agreement or any of the other
Credit Documents.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Grantor has caused this Security Agreement
to be executed and delivered by its duly authorized officer as of
the date first set forth above.
VENTURE STORES, INC.,
a Delaware corporation
By: /s/ Russell E. Solt
Russell E. Solt
Executive Vice President
Finance and Administration
ACCEPTED AND ACKNOWLEDGED,
as of April 8, 1997:
BT COMMERCIAL CORPORATION,
as Agent
By:/s/ Wayne D. Hillock
Name: Wayne D. Hillock
Title: Senior Vice President
EXHIBIT 10.10
VENTURE STORES, INC.
1997 STOCK OPTION PLAN
VENTURE STORES, INC.
1997 STOCK OPTION PLAN
Section 1. Establishment and Purpose . . . . . . . . . . . . 1
Section 2. Definitions . . . . . . . . . . . . . . . . . . . 1
Section 3. Administration. . . . . . . . . . . . . . . . . . 3
Section 4. Shares Reserved Under the Plan. . . . . . . . . . 3
Section 5. Participants. . . . . . . . . . . . . . . . . . . 3
Section 6. Types of Options. . . . . . . . . . . . . . . . . 4
Section 7. Award Date and Option Agreement . . . . . . . . . 4
Section 8. Incentive Stock Options . . . . . . . . . . . . . 4
Section 9. Nonqualified Stock Options. . . . . . . . . . . . 4
Section 10. Adjustment Provisions . . . . . . . . . . . . . . 5
Section 11. Change of Control . . . . . . . . . . . . . . . . 5
Section 12. Nontransferability. . . . . . . . . . . . . . . . 6
Section 13. Taxes . . . . . . . . . . . . . . . . . . . . . . 6
Section 14. No Right to Employment. . . . . . . . . . . . . . 7
Section 15. Duration, Amendment and Termination . . . . . . . 7
Section 16. Effect on Options of Termination of Employment. . 7
Section 17. Miscellaneous Provisions. . . . . . . . . . . . . .8
VENTURE STORES, INC.
1997 STOCK OPTION PLAN
Section 1. Establishment and Purpose.
Venture Stores, Inc. hereby establishes a long term
incentive plan to be named the Venture Stores, Inc. 1997 Stock
Option Plan, for certain Associates of the Company. The purpose
of this Plan is to provide for the grant of Options to certain
Associates of the Company, as the Administrator of the Plan
designates, and thus provide an incentive for continuation of the
efforts of Associates for the success of the Company and for
continuity of employment.
Section 2. Definitions.
Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) Act means the Securities Exchange Act of 1934, as
amended from time to time.
(b) Administrator means the Chief Executive Officer of the
Company.
(c) Associate means an employee of the Company, excluding
(i) any Reporting Person, and (ii) any other employee
of the Company at or above the level of Senior Vice
President who reports directly to the Administrator.
(d) Award Date means the date as of which an Option is
granted, unless another date is specified by the
Administrator at the time such Option is granted.
(e) Base Price means a price fixed by the Administrator at
which an Option may be exercised, which shall not be
less than 100% of the Fair Market Value of a share of
Stock on the Award Date of such Option.
(f) Board means the Board of Directors of the Company.
(g) Cause means (i) the knowing and continued failure by
the Participant substantially to perform his duties
with the Company (other than any such failure resulting
from his incapacity due to physical or mental illness)
for a period of 15 days after the Company delivers to
the Participant a demand for substantial performance,
which demand specifically identifies the manner in
which the Company believes that the Participant has not
substantially performed his duties; or (ii) the knowing
engagement by the Participant in misconduct which is
materially and demonstrably injurious to the Company;
provided, however, that no act or failure to act shall
be considered "knowing" unless done, or omitted to be
done, by the Participant not in good faith and without
reasonable belief that the act or omission was in (or
not opposed to) the best interest of the Company.
(h) Change of Control is defined in Section 11.
(i) Code means the Internal Revenue Code of 1986, as
amended and in effect from time to time.
(j) Company means Venture Stores, Inc., a Delaware
corporation, and any subsidiary corporation within the
meaning of subsections 424(f) and (g) of the Code, or
any successor provisions.
(k) Common Stock means the Common Stock, $1.00 par value
per share, of the Company.
(l) Disability means a physical and/or mental condition
that renders a Participant unable to perform the duties
of his position on a full-time basis for a period of
one hundred eighty (180) consecutive days. Disability
shall be deemed to exist when certified by a physician
selected by the Company or its insurers and acceptable
to the Participant or the Participant's legal
representative (such agreement as to acceptability not
to be withheld unreasonably). The Participant will
submit to such medical or psychiatric examinations and
tests as such physician deems necessary to make any
such Disability determination. For purposes of Section
16 hereof, Disability shall mean the date which is the
last date on which a Participant is considered to be an
employee of the Company following the Company's
determination that the Participant is suffering from a
Disability.
(m) Fair Market Value means, for any particular date, (i)
for any period during which the Common Stock shall be
listed for trading on a national securities exchange,
the closing price per share of Common Stock as reported
in the consolidated reporting system, (ii) for any
period during which the Common Stock shall not be
listed for trading on a national securities exchange,
but when prices for the Common Stock shall be reported
by the National Market System of the National
Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the last transaction price per share
as quoted by National Market System of NASDAQ, (iii)
for any period during which the Common Stock shall not
be listed for trading on a national securities exchange
or its price reported by the National Market System of
NASDAQ, but when prices for the Common Stock shall be
reported by NASDAQ, the closing bid price as reported
by the NASDAQ, or (iv) the market price per share of
Common Stock as determined by a nationally recognized
investment banking firm selected by the Board of
Directors in the event neither (i), (ii) or (iii) above
shall be applicable. If Market Price is to be
determined as of a day when the securities markets are
not open, the Market Price on that day shall be the
Market Price on the next preceding day when the markets
were open.
(n) Option means the right to purchase Stock at the Base
Price for a specified period of time. For purposes of
the Plan, an Option may be an incentive stock option
within the meaning of Section 422 of the Code, a
nonqualified stock option, or any other type of option
encompassed by the Code.
(o) Option Agreement means the written agreement evidencing
an Option granted under the Plan, which shall be
executed by the Company and the Participant.
(p) Participant means any Associate designated by the
Administrator to participate in the Plan.
(q) Reporting Person means a person subject to Section 16
of the Act.
(r) Retirement (including Normal and Early Retirement)
means termination of employment with eligibility for
normal or early retirement benefits under the terms of
the Venture Stores, Inc. Retirement Plan, as amended
and in effect at the time of such termination of
employment. Generally, the Retirement Plan provides
for benefits to be payable at age 65; reduced benefits
may also be payable upon early retirement (to those who
have attained age 55 and have at least five years of
regular service).
(s) Stock means authorized and unissued shares of Common
Stock or reacquired shares of Common Stock held in
treasury.
(t) Taxable Event means an event requiring Federal, state
or local tax to be withheld with respect to an Option
granted hereunder, including but not limited to the
exercise of Nonqualified Stock Options or the making by
a Participant of an election under Section 83(b) of the
Code.
(u) Vested or Vesting means, with respect to any Option,
that the Option shall be exercisable.
Section 3. Administration.
The Plan will be administered by the Administrator. The
determinations of the Administrator shall be made in accordance
with his judgment as to the best interests of the Company and its
shareowners and in accordance with the purpose of the Plan.
Determinations, interpretations, or other actions made or taken
by the Administrator pursuant to the provisions of the Plan shall
be final and binding and conclusive for all purposes and upon all
persons whomsoever.
Section 4. Shares Reserved Under the Plan.
There is hereby reserved for issuance under the Plan an
aggregate of 350,000 shares of Stock, which may be authorized but
unissued or treasury shares. Stock underlying outstanding Options
will be counted against the Plan maximum while such Options are
outstanding. Calculations of the number of shares remaining
available for issuance under the Plan shall be by those methods
permissible under applicable legal requirements which result in
the greatest number of shares remaining available for issuance.
Section 5. Participants.
Participants will consist of such Associates of the Company
as the Administrator in his sole discretion determines have an
impact on the success and future growth and profitability of the
Company. Designation of a Participant on any one occasion shall
not require the Administrator to designate such person to receive
an Option on any other occasion or to receive the same type or
amount of Options as granted to the Participant on any other
occasion or as granted to any other Participant on any occasion.
The Administrator shall consider such factors as he deems
pertinent in selecting Participants and in determining the type
and amount of their respective Options.
Section 6. Types of Options.
The following types Options may be granted under the Plan:
(a) Incentive Stock Options (as described below),
(b) Nonqualified Stock Options (as described below), and (c) any
other type of option encompassed by the Code. Except as
specifically limited herein, the Administrator shall have
complete discretion in determining the type and number of Options
to be granted to any Participant, and the terms and conditions
which attach to each Option, which terms and conditions need not
be uniform as between different Participants. All Options shall
be in writing. Notwithstanding any other provision of this Plan,
Options for not more than 50,000 shares of Stock may be granted
to any individual Participant under the Plan.
Section 7. Award Date and Option Agreement.
All Options granted under the Plan shall be granted as of an
Award Date. Promptly after each Award Date, the Company shall
notify the Participant of the grant of the Option, and shall hand
deliver or mail to the Participant an Option Agreement, duly
executed by and on behalf of the Company, with the request that
the Participant execute and return the Option Agreement within
thirty days after the date of mailing or delivery by the Company
of the Option Agreement to the Participant. The Option Agreement
shall set forth the terms of the Option, including without
limitation (to the extent applicable to the particular Option)
the amount and type of the Option, exercise period, term,
restrictions, vesting, and procedures to be followed to exercise
the Option. If the Participant shall fail to execute and return
the written Option Agreement within said thirty-day period, his
or her Option may be terminated in the discretion of the
Administrator, except that if the Participant dies within said
thirty-day period such Option Agreement shall be effective
notwithstanding the fact that it has not been signed prior to
death.
Section 8. Incentive Stock Options.
Incentive Stock Options shall consist of options to purchase
shares of Stock at purchase prices not less than 100% of the Fair
Market Value of the shares on the Award Date. Said purchase
price may be paid by check or, in the discretion of the
Administrator, by the delivery of shares of Common Stock then
owned by the Participant, provided such shares have been held by
such Participant for longer than six months. Incentive Stock
Options will be exercisable not earlier than six months and not
later than ten years after the Award Date. The aggregate Fair
Market Value (determined as of the Award Date) of the Stock with
respect to which an Incentive Stock Option is exercisable for the
first time during any calendar year (under all option plans of
the Company) shall not exceed $100,000.
Provisions relating to the effect of termination of
employment on Incentive Stock Options are set forth in Section 16
hereof and shall take precedence over and supersede anything
hereinabove in this Section 8 to the contrary.
Section 9. Nonqualified Stock Options.
Nonqualified Stock Options shall consist of nonqualified
options to purchase shares of Stock at purchase prices determined
by the Committee, provided, however, that such purchase price may
not be less than 100% of the Fair Market Value of the Stock on
the Award Date. The purchase price may be paid by check or, in
the discretion of the Administrator, by the delivery of shares of
Common Stock then owned by the Participant, provided such shares
have been held by such Participant for longer than six months.
Nonqualified Stock Options will be exercisable not earlier than
six months and not later than ten years after the Award Date.
The Administrator shall have the right to determine at the time
the Option is granted whether shares issued upon exercise of a
Nonqualified Stock Option shall be subject to restrictions, and
if so, the nature of the restrictions.
Provisions relating to the effect of termination of
employment on Nonqualified Stock Options are set forth in Section
16 hereof and shall take precedence over and supersede anything
hereinabove in this Section 9 to the contrary.
Section 10. Adjustment Provisions.
(a) If the Company shall at any time change the number
of issued shares of Common Stock without new consideration
to the Company (such as by stock dividends or stock splits),
the total number of shares reserved for issuance under this
Plan, the maximum number of shares available to a particular
Participant, and the number of shares covered by each
outstanding Option, shall be adjusted so that the aggregate
consideration payable to the Company, if any, and the value
of each such Option shall not be changed. Options may also
contain provisions for their continuation or for other
equitable adjustments after changes in the Common Stock
resulting from reorganization, sale, merger, consolidation,
issuance of stock rights or warrants, or similar occurrence.
(b) Notwithstanding any other provision of this Plan,
and without affecting the number of shares reserved or
available hereunder, the Board of Directors may authorize
the equitable adjustment of benefits in connection with any
merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem
appropriate.
Section 11. Change of Control.
Notwithstanding any other provision of this Plan, if the
terms of an agreement under which the Administrator has granted
an Option under this Plan shall so provide, upon a Change of
Control outstanding Options shall become immediately and fully
exercisable or payable according to the following terms:
(a) Any outstanding and unexercised Option shall
become immediately and fully exercisable, and shall remain
exercisable until it would otherwise expire by reason of
lapse of time.
(b) For purposes of this Plan, Change of Control shall
be deemed to have occurred if: (i) any "person", as such
term is used in Sections 13(d) and 14(d) of the Act, (other
than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the
shareowners of the Company in substantially the same
proportions as their ownership of Common Stock of the
Company), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this subsection) whose election by the
Board or nomination for election by the Company's
shareowners was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election
or nomination for election was previously so approved cease
for any reason to constitute at least a majority thereof;
(iii) the shareowners of the Company approve a merger or
consolidation of the Company with any other Company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or (iv) the
shareowners of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of
the Company's assets.
Section 12. Nontransferability.
Each Option granted under the Plan to a Participant shall
not be transferable otherwise than by will or the laws of descent
and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant. In the event of
the death of a Participant, exercise or payment shall be made
only:
(a) By or to the person(s) named as beneficiaries
pursuant to Section 17(a) hereof, or, if none, by or to the
executor or administrator of the estate of the deceased
Participant or the person or persons to whom the deceased
Participant's rights under the Option shall pass by will or
the laws of descent and distribution; and
(b) To the extent that the deceased Participant was
entitled thereto at the date of his death (including any
vesting of Options upon death pursuant to Section 16(b)
hereof).
Section 13. Taxes.
The Company shall be entitled to withhold the amount of any
tax attributable to any shares deliverable under the Plan after
giving the person entitled to receive such delivery notice as far
in advance of the Taxable Event as practicable, and the Company
may defer making delivery as to any Option, if any such tax is
payable, until indemnified to its satisfaction. The
Administrator, in his sole and absolute discretion, may permit a
person entitled to any such delivery, by notice to the Company
at the time the requirement for such delivery is first
established, to elect to have such withholding satisfied by a
reduction of the number of shares otherwise so deliverable (a
"Stock Withholding Election"), such reduction to be calculated
based on a closing market price on the date of such Taxable
Event.
Section 14. No Right to Employment.
A Participant's right, if any, to continue to serve the
Company as an officer, Associate, or otherwise, shall not be
enlarged or otherwise affected by his or her designation as a
Participant under the Plan.
Section 15. Duration, Amendment and Termination.
No Option shall be granted more than ten years after the
effective date of this Plan; provided, however, that the terms
and conditions applicable to any Option granted within such
period may be amended or modified by mutual agreement between the
Company and the Participant or such other person as may then have
an interest therein after the expiration of such ten-year period.
To the extent that any Options which may be granted within the
terms of the Plan would qualify under present or future laws for
tax treatment that is beneficial to a recipient, then any such
beneficial treatment shall be considered within the intent,
purpose and operational purview of the Plan and the discretion of
the Administrator, and to the extent that any such Options would
so qualify within the terms of the Plan, the Administrator shall
have full and complete authority to grant Options that so qualify
(including the authority to grant, simultaneously or otherwise,
Options which do not so qualify) and to prescribe the terms and
conditions (which need not be identical as among recipients) in
respect to the grant or exercise of any such Options under the
Plan. The Board of Directors may amend the Plan from time to
time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any
existing Option or change the terms and conditions thereof
without the Participant's consent.
Termination of the Plan shall not affect any Option
previously granted pursuant to the Plan; the terms, conditions
and restrictions applicable to such Options shall remain in
effect until such terms, conditions and restrictions shall have
lapsed, all in accordance with their terms as of the Award Date
or as modified in accordance with the terms of the Plan.
Section 16. Effect on Options of Termination of Employment.
The following Plan provisions relating to the effect on
Options of termination of employment are subject to the following
qualification(s): (i) in no case shall Options be exercisable
after the expiration date set forth in the Option Agreement with
respect to such Options, and (ii) leaves of absence granted by
the Company for military service, illness prior to Disability,
and transfers of employment within the Company shall not
constitute termination of employment.
(a) On Normal or Early Retirement:
(1) Incentive Stock Options become fully Vested
at the time of Retirement and remain
exercisable for three years following
Retirement. If the optionee dies during such
three-year period, the Options shall remain
exercisable for the longer of (i) the
remainder of the three-year period, or (ii)
one year following the death. (Note: Under
the Code as in effect at the date of adoption
of the Plan, Incentive Stock Options
exercised after three months after the date
of Retirement will be treated as Nonqualified
Stock Options.)
(2) Nonqualified Stock Options become fully
Vested at the time of Retirement and remain
exercisable for three years following
Retirement. If the optionee dies during such
three-year period, the Options shall remain
exercisable for the longer of (i) the
remainder of the three-year period, or (ii)
one year following the death.
(b) On Disability or death:
(1) Incentive Stock Options become fully Vested
at the time of Disability or death and remain
exercisable for one year following Disability
or death. If the optionee dies during such
one-year period following Disability, the
Options shall remain exercisable for one year
following the death. (Note: Under the Code
as in effect at the date of adoption of the
Plan, Incentive Stock Options exercised after
three months after the date of less than
total and permanent Disability will be
treated as Nonqualified Stock Options.)
(2) Nonqualified Stock Options become fully
Vested at the time of Disability or death and
remain exercisable for one year following
Disability or death. If the optionee dies
during such one-year period following
Disability, the Options shall remain
exercisable for one year following the death.
(c) On voluntary cessation of employment for any
reason other than Retirement, all unexercised
Options (but not Stock issued or issuable on
account of Options already exercised), shall be
forfeited, provided that the Administrator in his
sole discretion may cause the immediate Vesting of
all or a portion of the Options granted to the
Participant, and/or the continuation of the
exercise period of all or a portion of the Options
granted to the Participant, subject to such terms
and conditions as the Administrator may determine.
(d) On involuntary termination for Cause, all
unexercised Options (but not Stock issued or
issuable on account of Options already exercised),
shall be forfeited.
(e) On involuntary termination for any reason other
than Cause, all unexercised Options (but not Stock
issued or issuable on account of Options already
exercised), shall be forfeited, provided that the
Administrator in his sole discretion may cause the
immediate Vesting of all or a portion of the
Options granted to the Participant, and/or the
continuation of the exercise period of all or a
portion of the Options granted to the Participant,
subject to such terms and conditions as the
Administrator may determine.
Section 17. Miscellaneous Provisions.
(a) Naming of Beneficiaries. In connection with an
Option granted pursuant to the Plan, a Participant may name one
or more beneficiaries to receive the Participant's benefits, to
the extent permissible pursuant to the various provisions of the
Plan, in the event of the death of the Participant.
(b) Successors. All obligations of the Company under
the Plan with respect to Options issued hereunder shall be
binding on any successor to the Company.
(c) Governing Law. The Plan, and all agreements under
the Plan, shall be construed in accordance with, and governed by,
the internal laws of the State of Missouri, without reference to
applicable conflict of laws provisions.
(d) Effective Date. The effective date of this Plan
is March 6, 1997.
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") made and entered into and
effective as of the 30th day of August, 1995, (hereinafter called
"Effective Date") by and between VENTURE STORES, INC.,
hereinafter called "Venture" and James Ferstl, hereinafter called
"Executive".
WITNESSETH, That:
In consideration of the mutual promises and agreements
hereinafter set forth, it is agreed between Venture and Executive
as follows:
1. For the purpose of this Agreement:
(a) The term "Venture" shall include Venture Stores, Inc.
and any successor to the business conducted by Venture;
(b) The term "Contract Term" shall mean the period
commencing on the Effective Date and ending April 30, 1998 or
such other period as Venture and Executive shall agree from time
to time in writing;
(c) The term "Fiscal Year" shall mean the annual 52-53 week
fiscal accounting period of Venture, as adopted by Venture from
time to time; and
(d) The term "Cause" shall mean termination of Executive's
employment whether by Venture or by Executive's resignation in
lieu of termination and in either instance only if by reason of
misappropriation of funds or property of Venture, other
dishonesty of any kind against Venture, violation of any policy
of Venture, alcohol or substance abuse or conviction of a felony.
(e) The term "Total Disability" or "Totally Disabled" shall
mean the inability of the Executive to perform the normal duties
of the Executive's regular occupation.
2. (a) Venture agrees to employ Executive as Executive Vice
President - Product Development and Marketing of Venture and
Executive agrees to render personal services to Venture in such
position and/or to perform such other executive duties as may
from time to time be required of Executive by Venture, it being
agreed and understood that the personal services to be rendered
by Executive to Venture hereunder are of a special and unique
character. Such employment may be terminated by either party at
any time during the Contract Term.
(b) Venture agrees to pay Executive basic compensation for
such services during the Contract Term at the rate of not less
than $250,000.00 per annum, payable in equal semi-monthly
installments, subject to increases determined in accordance with
the annual performance appraisal process and further subject to
the terms of Paragraph 6 hereof.
(c) In computing the basic compensation payable hereunder
for any period covering less than a full Fiscal Year, the minimum
annual rate of basic compensation shall be prorated in the
proportion that the number of months (or fraction thereof)
contained in such period bears to twelve months.
(d) In the event that Executive is eligible to participate
in annual or other bonus programs sponsored by Venture, then
Executive shall be entitled to such bonuses, if any, which may be
payable under such bonus programs determined in accordance with
and subject to all of the terms and provisions of such bonus
programs. For fiscal 1995 and 1996, $25,000.00 of Executive's
annual incentive bonus will be guaranteed.
(e) Venture shall reimburse Executive for all items of
normal expense incurred by Executive as an employee of Venture.
It is recognized that Executive may have unusual and abnormal
expenses as such, and that Executive shall not be entitled to
reimbursement or to any additional compensation because of any
such unusual and abnormal expenses.
(f) The Executive Compensation Change Memorandum from time
to time in effect, as initialled on behalf of Venture and by
Executive, is hereby incorporated by reference herein and made a
part hereof. In addition, Venture has adopted certain employee
benefit plans and has established certain arrangements concerning
executive perquisites which may, from time to time, confer rights
and benefits on the Executive in accordance with their terms, and
Venture may, in the future, adopt additional employee benefit
plans and establish additional arrangements concerning executive
perquisites, and may in the future amend, modify or terminate any
of the aforesaid employee benefit plans and arrangements, all in
accordance with their terms and in accordance with applicable
law. In addition, Executive and Venture have agreed that
Executive shall be entitled to the fringe benefits and to the
benefit of other arrangements commensurate with Executive's title
and position as determined and provided from time to time by
Venture and as such fringe benefits and other arrangements may be
amended from time to time. Executive shall be entitled to
whatever rights and benefits may be conferred on Executive from
time to time in accordance with the terms of such plans and
arrangements, as they may be amended from time to time,
independent of this Agreement.
3. Executive agrees that, at all times while Executive is
employed by Venture, Executive will:
(a) faithfully and diligently serve Venture to the best
of Executive's ability;
(b) devote Executive's undivided time and attention, during
Venture's customary business hours, to the business of Venture,
to such extent as may be reasonably necessary for the proper
performance of the personal services to be rendered by Executive
hereunder, subject to Venture's vacation policy as in effect from
time to time; and
(c) maintain Executive's residence in the St. Louis,
Missouri metropolitan area within reasonable access to the
business activities of Venture therein or in such other city as
Venture shall designate, and so reside for the period of
employment.
4. (a) Executive will not accept any other full-time or
substantially full-time employment, whether as an Executive or as
a consultant or in any other capacity, and whether or not
compensated therefor, so long as Executive is employed by
Venture.
(b) At all times during the Contract Term, Executive will
not engage or be engaged in any competing business as hereinafter
defined. For purposes of this Paragraph 4, Executive shall be
deemed to "engage or be engaged in a competing business" if, in
any capacity, including, but not limited to, proprietor, partner,
member, trustee, officer, director, employee, agent or advisor,
Executive engages or participates, directly or indirectly, in the
operation, management or ownership of any department store
business or discount store business which (i) sells to the
general public or segments thereof, whether or not limited by
club memberships, organization affinity or otherwise; and (ii)
operates a store or stores within a seventy-five (75) mile radius
of any retail store that Venture is operating or has under
construction when the Executive ceases to be employed hereunder.
Indirect participation in the operation or management of any such
business shall not include the ownership of capital stock or
other securities of a corporation, which stock or other
securities are part of a class of stock or other securities
listed on any stock exchange or traded in the over the counter
market, if the amount of such investment represents less than 2
1/2% of the market value of such stock or other securities of
such corporation.
(c) If Executive violates the terms of this Paragraph 4 or
if Venture believes that Executive intends to violate such terms,
then, in addition to all other rights and remedies which Venture
may have under the terms hereof and pursuant to all applicable
law, Venture shall have the right to seek and obtain injunctive
and other such equitable relief to prevent Executive's violation
of the terms of this Paragraph 4.
5. In the event that Executive becomes Totally Disabled and
remains continuously so Totally Disabled for a period of one
hundred eighty (180) days, Executive's employment, at Venture's
option, may be terminated by notice in writing to that effect
given during the continuance of such Total Disability, such
termination to take effect the later of (a) the last day of the
month during which such notice is given or (b) the last day of
such one hundred eighty (180) day period, it being understood
that Executive's compensation shall cease upon such termination
and the Executive's benefits shall be administered pursuant to
Venture's policies and the provisions of the respective benefit
plans.
6. In the event that Executive shall cease to be employed
hereunder for any reason other than pursuant to Paragraph 5,
then:
(a) Executive's basic compensation shall continue for the
Contract Term but only so long as Executive is not in breach of
this Agreement and only if the termination of employment (i) was
not for Cause and (ii) was not by voluntary resignation by
Executive (such a voluntary resignation shall not include a
resignation in lieu of termination by Venture for reasons other
than Cause);
(b) Executive's basic compensation shall be reduced by any
income earned by Executive for services rendered after Executive
ceases to be employed by Venture (Executive will advise Venture
of such income and refund to Venture the gross amount of any
overpayment of basic compensation); and
(c) Executive or, in the discretion of Venture, Executive's
legal representative(s), shall be entitled to such portion of any
bonus provided for in any bonus program referred to in Paragraph
2(d) as shall be payable under the terms of such bonus program.
7. Executive will hold in strictest confidence any and all of
Venture's confidential information, including but not limited to:
information and documents concerning suppliers' pricing and other
terms for doing business with Venture; supplier and customer
lists created by or on behalf of Venture; marketing methods and
plans, including special seasonal plans; financial information,
including results, forecasts and projections; systems,
procedures, practices and any other information written in
manuals, memoranda or other documents for internal use by Venture
but not published by Venture for public use. This covenant and
agreement of Executive shall survive this Agreement and continue
in force and effect after the expiration of the term hereof,
whether by termination or otherwise.
8. Venture and Executive hereby agree that should any court of
competent jurisdiction determine that any provision of this
Agreement shall, but for the provisions of this Paragraph 8, be
illegal or void as against public policy, for any reason, then
such provision shall automatically be amended to the extent (but
only to the extent) necessary to make it sufficiently narrow in
scope, time, geographic area or otherwise that such court shall
determine it not to be illegal or void as against public policy.
If any such provision cannot be amended to the extent provided in
the preceding sentence, then such provision shall be severed from
this Agreement. In either event, all other remaining terms and
provisions shall remain in full force and effect.
9. Venture and Executive shall each be entitled to pursue all
legal and equitable rights and remedies to secure performance of
the obligations and duties of the other under this Agreement, and
enforcement of one or more of such rights and remedies shall in
no way preclude Venture or Executive from pursuing, at the same
time or subsequently, any and all other rights and remedies
available to each of them. If Venture enforces its rights in the
event of Executive breaching the provisions of Paragraphs 4, 6
and/or 7 of this Agreement, then in addition to any damages or
other compensation to which Venture may be entitled, Venture will
be entitled to be reimbursed by Executive for its court costs and
reasonable attorneys' fees, whether or not suit is filed or
judgement is rendered.
10. This Agreement and any letter agreement regarding
severance benefits in the event of a change in control which the
parties may have executed contain the entire understanding and
agreement between the parties regarding the subject matter
contained in each of them. They supersede all other agreements
and understandings between the parties with respect to such
subject matter and may be modified only by an Executive
Compensation Change Memorandum initialed on behalf of Venture and
by Executive or by a writing signed by Executive and executed on
behalf of Venture. This Agreement shall inure to the benefit of,
and shall be binding upon, Venture, its successors and assigns
and upon Executive and Executive's heirs, successors and assigns.
Executive agrees that this Agreement may be assigned by Venture
to a subsidiary of Venture; such assignment, however, shall not
relieve Venture of any of its obligations hereunder except to the
extent that such obligations are actually discharged by such
subsidiary.
11. Any questions or other matter arising under this
Agreement, whether of validity, interpretation, performance or
otherwise, shall be determined in accordance with and governed by
the laws of the State of Missouri without regard to its conflicts
of law principles. In the event any disputes arise from this
Agreement, venue shall be proper and all suits shall be filed and
adjudicated in the State courts in St. Charles County, Missouri
or the Federal Courts in St. Louis, Missouri.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto in two counterparts, each of which shall be deemed
an original, and shall be effective as of the Effective Date.
VENTURE STORES, INC.
By/s/ Robert N. Wildrick
Robert N. Wildrick
/s/ James Ferstl
James Ferstl
2722/10n
EXHIBIT 10.17(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") made and entered
into and effective as of the 4th day of December, 1995,
(hereinafter called "Effective Date") by and between VENTURE
STORES, INC., hereinafter called "Venture" and Russell E. Solt,
hereinafter called "Executive".
WITNESSETH, That:
In consideration of the mutual promises and agreements
hereinafter set forth, it is agreed between Venture and Executive
as follows:
1. For the purpose of this Agreement:
(a) The term "Venture" shall include Venture Stores, Inc.
and any successor to the business conducted by Venture;
(b) The term "Contract Term" shall mean the period
commencing on the Effective Date and ending April 30, 1997 or
such other period as Venture and Executive shall agree from time
to time in writing;
(c) The term "Fiscal Year" shall mean the annual 52-53 week
fiscal accounting period of Venture, as adopted by Venture from
time to time; and
(d) The term "Cause" shall mean termination of Executive's
employment whether by Venture or by Executive's resignation in
lieu of termination and in either instance only if by reason of
misappropriation of funds or property of Venture, other
dishonesty of any kind against Venture, violation of any policy
of Venture, alcohol or substance abuse or conviction of a felony.
(e) The term "Total Disability" or "Totally Disabled" shall
mean the inability of the Executive to perform the normal duties
of the Executive's regular occupation.
2. (a) Venture agrees to employ Executive as Executive Vice
President - Finance, Legal and Real Estate and Executive agrees
to render personal services to Venture in such position and/or to
perform such other executive duties as may from time to time be
required of Executive by Venture, it being agreed and understood
that the personal services to be rendered by Executive to Venture
hereunder are of a special and unique character. Such employment
may be terminated by either party at any time during the Contract
Term.
(b) Venture agrees to pay Executive basic compensation for
such services during the Contract Term at the rate of not less
than $250,000.00 per annum, payable in equal semi-monthly
installments, subject to increases determined in accordance with
the annual performance appraisal process and further subject to
the terms of Paragraph 6 hereof.
(c) In computing the basic compensation payable hereunder
for any period covering less than a full Fiscal Year, the minimum
annual rate of basic compensation shall be prorated in the
proportion that the number of months (or fraction thereof)
contained in such period bears to twelve months.
(d) In the event that Executive is eligible to participate
in annual or other bonus programs sponsored by Venture, then
Executive shall be entitled to such bonuses, if any, which may be
payable under such bonus programs determined in accordance with
and subject to all of the terms and provisions of such bonus
programs.
(e) Venture shall reimburse Executive for all items of
normal expense incurred by Executive as an employee of Venture.
It is recognized that Executive may have unusual and abnormal
expenses as such, and that Executive shall not be entitled to
reimbursement or to any additional compensation because of any
such unusual and abnormal expenses.
(f) The Executive Compensation Change Memorandum from time
to time in effect, as initialled on behalf of Venture and by
Executive, is hereby incorporated by reference herein and made a
part hereof. In addition, Venture has adopted certain employee
benefit plans and has established certain arrangements concerning
executive perquisites which may, from time to time, confer rights
and benefits on the Executive in accordance with their terms, and
Venture may, in the future, adopt additional employee benefit
plans and establish additional arrangements concerning executive
perquisites, and may in the future amend, modify or terminate any
of the aforesaid employee benefit plans and arrangements, all in
accordance with their terms and in accordance with applicable
law. In addition, Executive and Venture have agreed that
Executive shall be entitled to the fringe benefits and to the
benefit of other arrangements commensurate with Executive's title
and position as determined and provided from time to time by
Venture and as such fringe benefits and other arrangements may be
amended from time to time. Executive shall be entitled to
whatever rights and benefits may be conferred on Executive from
time to time in accordance with the terms of such plans and
arrangements, as they may be amended from time to time,
independent of this Agreement.
3. Executive agrees that, at all times while Executive is
employed by Venture, Executive will:
(a) faithfully and diligently serve Venture to the best of
Executive's ability;
(b) devote Executive's undivided time and attention, during
Venture's customary business hours, to the business of Venture,
to such extent as may be reasonably necessary for the proper
performance of the personal services to be rendered by Executive
hereunder, subject to Venture's vacation policy as in effect from
time to time; and
(c) maintain Executive's residence in the St. Louis,
Missouri metropolitan area within reasonable access to the
business activities of Venture therein or in such other city as
Venture shall designate, and so reside for the period of
employment.
4. (a) Executive will not accept any other full-time or
substantially full-time employment, whether as an Executive or as
a consultant or in any other capacity, and whether or not
compensated therefor, so long as Executive is employed by
Venture.
(b) At all times during the Contract Term, Executive will
not engage or be engaged in any competing business as hereinafter
defined. For purposes of this Paragraph 4, Executive shall be
deemed to "engage or be engaged in a competing business" if, in
any capacity, including, but not limited to, proprietor, partner,
member, trustee, officer, director, employee, agent or advisor,
Executive engages or participates, directly or indirectly, in the
operation, management or ownership of any department store
business or discount store business which (i) sells to the
general public or segments thereof, whether or not limited by
club memberships, organization affinity or otherwise; and (ii)
operates a store or stores within a seventy-five (75) mile radius
of any retail store that Venture is operating or has under
construction when the Executive ceases to be employed hereunder.
Indirect participation in the operation or management of any such
business shall not include the ownership of capital stock or
other securities of a corporation, which stock or other
securities are part of a class of stock or other securities
listed on any stock exchange or traded in the over the counter
market, if the amount of such investment represents less than 2
1/2% of the market value of such stock or other securities of
such corporation.
(c) If Executive violates the terms of this Paragraph 4 or
if Venture believes that Executive intends to violate such terms,
then, in addition to all other rights and remedies which Venture
may have under the terms hereof and pursuant to all applicable
law, Venture shall have the right to seek and obtain injunctive
and other such equitable relief to prevent Executive's violation
of the terms of this Paragraph 4.
5. In the event that Executive becomes Totally Disabled and
remains continuously so Totally Disabled for a period of one
hundred eighty (180) days, Executive's employment, at Venture's
option, may be terminated by notice in writing to that effect
given during the continuance of such Total Disability, such
termination to take effect the later of (a) the last day of the
month during which such notice is given or (b) the last day of
such one hundred eighty (180) day period, it being understood
that Executive's compensation shall cease upon such termination
and the Executive's benefits shall be administered pursuant to
Venture's policies and the provisions of the respective benefit
plans.
6. In the event that Executive shall cease to be employed
hereunder for any reason other than pursuant to Paragraph 5,
then:
(a) Executive's basic compensation shall continue for the
Contract Term but only so long as Executive is not in breach of
this Agreement and only if the termination of employment (i) was
not for Cause and (ii) was not by voluntary resignation by
Executive (such a voluntary resignation shall not include a
resignation in lieu of termination by Venture for reasons other
than Cause);
(b) Executive's basic compensation shall be reduced by any
income earned by Executive for services rendered after Executive
ceases to be employed by Venture (Executive will advise Venture
of such income and refund to Venture the gross amount of any
overpayment of basic compensation); and
(c) Executive or, in the discretion of Venture, Executive's
legal representative(s), shall be entitled to such portion of any
bonus provided for in any bonus program referred to in Paragraph
2(d) as shall be payable under the terms of such bonus program.
7. Executive will hold in strictest confidence any and all of
Venture's confidential information, including but not limited to:
information and documents concerning suppliers' pricing and other
terms for doing business with Venture; supplier and customer
lists created by or on behalf of Venture; marketing methods and
plans, including special seasonal plans; financial information,
including results, forecasts and projections; systems,
procedures, practices and any other information written in
manuals, memoranda or other documents for internal use by Venture
but not published by Venture for public use. This covenant and
agreement of Executive shall survive this Agreement and continue
in force and effect after the expiration of the term hereof,
whether by termination or otherwise.
8. Venture and Executive hereby agree that should any court of
competent jurisdiction determine that any provision of this
Agreement shall, but for the provisions of this Paragraph 8, be
illegal or void as against public policy, for any reason, then
such provision shall automatically be amended to the extent (but
only to the extent) necessary to make it sufficiently narrow in
scope, time, geographic area or otherwise that such court shall
determine it not to be illegal or void as against public policy.
If any such provision cannot be amended to the extent provided in
the preceding sentence, then such provision shall be severed from
this Agreement. In either event, all other remaining terms and
provisions shall remain in full force and effect.
9. Venture and Executive shall each be entitled to pursue all
legal and equitable rights and remedies to secure performance of
the obligations and duties of the other under this Agreement, and
enforcement of one or more of such rights and remedies shall in
no way preclude Venture or Executive from pursuing, at the same
time or subsequently, any and all other rights and remedies
available to each of them. If Venture enforces its rights in the
event of Executive breaching the provisions of Paragraphs 4, 6
and/or 7 of this Agreement, then in addition to any damages or
other compensation to which Venture may be entitled, Venture will
be entitled to be reimbursed by Executive for its court costs and
reasonable attorneys' fees, whether or not suit is filed or
judgement is rendered.
10. This Agreement and any letter agreement regarding severance
benefits in the event of a change in control which the parties
may have executed contain the entire understanding and agreement
between the parties regarding the subject matter contained in
each of them. They supersede all other agreements and
understandings between the parties with respect to such subject
matter and may be modified only by an Executive Compensation
Change Memorandum initialed on behalf of Venture and by Executive
or by a writing signed by Executive and executed on behalf of
Venture. This Agreement shall inure to the benefit of, and shall
be binding upon, Venture, its successors and assigns and upon
Executive and Executive's heirs, successors and assigns.
Executive agrees that this Agreement may be assigned by Venture
to a subsidiary of Venture; such assignment, however, shall not
relieve Venture of any of its obligations hereunder except to the
extent that such obligations are actually discharged by such
subsidiary.
11. Any questions or other matter arising under this Agreement,
whether of validity, interpretation, performance or otherwise,
shall be determined in accordance with and governed by the laws
of the State of Missouri without regard to its conflicts of law
principles. In the event any disputes arise from this Agreement,
venue shall be proper and all suits shall be filed and
adjudicated in the State courts in St. Charles County, Missouri
or the Federal Courts in St. Louis, Missouri.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto in two counterparts, each of which shall be deemed
an original, and shall be effective as of the Effective Date.
VENTURE STORES, INC.
By/s/ Robert N. Wildrick
Robert N. Wildrick
President & CEO
/s/ Russell E. Solt
Russell E. Solt
2722/10
EXHIBIT 10.17(b)
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made
and entered into effective as of July 1, 1996 by and between
VENTURE STORES, INC. ("Venture") and RUSSELL E. SOLT
("Executive").
WITNESSETH, that:
WHEREAS, the parties entered into a written agreement
entitled "Employment Agreement" effective as of the 4th day of
December, 1995; and
WHEREAS, the parties desire to extend the term of such
Employment Agreement, as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual promises and agreements hereinafter set forth, it is
agreed between Venture and Executive as follows:
1. From and after the effective date of this Amendment,
the term "Contract Term" shall mean the period commencing on the
Effective Date of the Employment Agreement (as defined therein)
and ending April 30, 1998 or such other period as Venture and
Executive shall agree from time to time in writing.
2. Except as specifically modified by this Amendment, all
of the provisions of the Employment Agreement remain in full
force and effect as set forth in the Employment Agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the
parties hereto in three counterparts, each of which shall be
deemed an original, and shall be effective as of the date first
above written.
VENTURE STORES, INC.
By:/s/ Robert N. Wildrick
Robert N. Wildrick
Chairman, President and
Chief Executive Officer
/s/ Russell E. Solt
Russell E. Solt
EXHIBIT 10.18(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") made and entered into and
effective as of the 30th day of May, 1995, (hereinafter called
"Effective Date") by and between VENTURE STORES, INC.,
hereinafter called "Venture" and Peter Mihaltian, hereinafter
called "Executive".
WITNESSETH, That:
In consideration of the mutual promises and agreements
hereinafter set forth, it is agreed between Venture and Executive
as follows:
1. For the purpose of this Agreement:
(a) The term "Venture" shall include Venture Stores, Inc.
and any successor to the business conducted by Venture;
(b) The term "Contract Term" shall mean the period
commencing on the Effective Date and ending April 30, 1997 or
such other period as Venture and Executive shall agree from time
to time in writing;
(c) The term "Fiscal Year" shall mean the annual 52-53 week
fiscal accounting period of Venture, as adopted by Venture from
time to time; and
(d) The term "Cause" shall mean termination of Executive's
employment whether by Venture or by Executive's resignation in
lieu of termination and in either instance only if by reason of
misappropriation of funds or property of Venture, other
dishonesty of any kind against Venture, violation of any policy
of Venture, alcohol or substance abuse or conviction of a felony.
(e) The term "Total Disability" or "Totally Disabled" shall
mean the inability of the Executive to perform the normal duties
of the Executive's regular occupation.
2. (a) Venture agrees to employ Executive as Executive Vice
President - Information Technology and Operations of Venture and
Executive agrees to render personal services to Venture in such
position and/or to perform such other executive duties as may
from time to time be required of Executive by Venture, it being
agreed and understood that the personal services to be rendered
by Executive to Venture hereunder are of a special and unique
character. Such employment may be terminated by either party at
any time during the Contract Term.
(b) Venture agrees to pay Executive basic compensation for
such services during the Contract Term at the rate of not less
than $225,000.00 per annum, payable in equal semi-monthly
installments, subject to increases determined in accordance with
the annual performance appraisal process and further subject to
the terms of Paragraph 6 hereof.
(c) In computing the basic compensation payable hereunder
for any period covering less than a full Fiscal Year, the minimum
annual rate of basic compensation shall be prorated in the
proportion that the number of months (or fraction thereof)
contained in such period bears to twelve months.
(d) In the event that Executive is eligible to participate
in annual or other bonus programs sponsored by Venture, then
Executive shall be entitled to such bonuses, if any, which may be
payable under such bonus programs determined in accordance with
and subject to all of the terms and provisions of such bonus
programs. For fiscal 1995, $25,000.00 of Executive's annual
incentive bonus will be guaranteed.
(e) Venture shall reimburse Executive for all items of
normal expense incurred by Executive as an employee of Venture.
It is recognized that Executive may have unusual and abnormal
expenses as such, and that Executive shall not be entitled to
reimbursement or to any additional compensation because of any
such unusual and abnormal expenses.
(f) The Executive Compensation Change Memorandum from time
to time in effect, as initialled on behalf of Venture and by
Executive, is hereby incorporated by reference herein and made a
part hereof. In addition, Venture has adopted certain employee
benefit plans and has established certain arrangements concerning
executive perquisites which may, from time to time, confer rights
and benefits on the Executive in accordance with their terms, and
Venture may, in the future, adopt additional employee benefit
plans and establish additional arrangements concerning executive
perquisites, and may in the future amend, modify or terminate any
of the aforesaid employee benefit plans and arrangements, all in
accordance with their terms and in accordance with applicable
law. In addition, Executive and Venture have agreed that
Executive shall be entitled to the fringe benefits and to the
benefit of other arrangements commensurate with Executive's title
and position as determined and provided from time to time by
Venture and as such fringe benefits and other arrangements may be
amended from time to time. Executive shall be entitled to
whatever rights and benefits may be conferred on Executive from
time to time in accordance with the terms of such plans and
arrangements, as they may be amended from time to time,
independent of this Agreement.
3. Executive agrees that, at all times while Executive is
employed by Venture, Executive will:
(a) faithfully and diligently serve Venture to the best of
Executive's ability;
(b) devote Executive's undivided time and attention, during
Venture's customary business hours, to the business of Venture,
to such extent as may be reasonably necessary for the proper
performance of the personal services to be rendered by Executive
hereunder, subject to Venture's vacation policy as in effect from
time to time; and
(c) maintain Executive's residence in the St. Louis,
Missouri metropolitan area within reasonable access to the
business activities of Venture therein or in such other city as
Venture shall designate, and so reside for the period of
employment.
4. (a) Executive will not accept any other full-time or
substantially full-time employment, whether as an Executive or as
a consultant or in any other capacity, and whether or not
compensated therefor, so long as Executive is employed by
Venture.
(b) At all times during the Contract Term, Executive will
not engage or be engaged in any competing business as hereinafter
defined. For purposes of this Paragraph 4, Executive shall be
deemed to "engage or be engaged in a competing business" if, in
any capacity, including, but not limited to, proprietor, partner,
member, trustee, officer, director, employee, agent or advisor,
Executive engages or participates, directly or indirectly, in the
operation, management or ownership of any department store
business or discount store business which (i) sells to the
general public or segments thereof, whether or not limited by
club memberships, organization affinity or otherwise; and (ii)
operates a store or stores within a seventy-five (75) mile radius
of any retail store that Venture is operating or has under
construction when the Executive ceases to be employed hereunder.
Indirect participation in the operation or management of any such
business shall not include the ownership of capital stock or
other securities of a corporation, which stock or other
securities are part of a class of stock or other securities
listed on any stock exchange or traded in the over the counter
market, if the amount of such investment represents less than 2
1/2% of the market value of such stock or other securities of
such corporation.
(c) If Executive violates the terms of this Paragraph 4 or
if Venture believes that Executive intends to violate such terms,
then, in addition to all other rights and remedies which Venture
may have under the terms hereof and pursuant to all applicable
law, Venture shall have the right to seek and obtain injunctive
and other such equitable relief to prevent Executive's violation
of the terms of this Paragraph 4.
5. In the event that Executive becomes Totally Disabled and
remains continuously so Totally Disabled for a period of one
hundred eighty (180) days, Executive's employment, at Venture's
option, may be terminated by notice in writing to that effect
given during the continuance of such Total Disability, such
termination to take effect the later of (a) the last day of the
month during which such notice is given or (b) the last day of
such one hundred eighty (180) day period, it being understood
that Executive's compensation shall cease upon such termination
and the Executive's benefits shall be administered pursuant to
Venture's policies and the provisions of the respective benefit
plans.
6. In the event that Executive shall cease to be employed
hereunder for any reason other than pursuant to Paragraph 5,
then:
(a) Executive's basic compensation shall continue for the
Contract Term but only so long as Executive is not in breach of
this Agreement and only if the termination of employment (i) was
not for Cause and (ii) was not by voluntary resignation by
Executive (such a voluntary resignation shall not include a
resignation in lieu of termination by Venture for reasons other
than Cause);
(b) Executive's basic compensation shall be reduced by any
income earned by Executive for services rendered after Executive
ceases to be employed by Venture (Executive will advise Venture
of such income and refund to Venture the gross amount of any
overpayment of basic compensation); and
(c) Executive or, in the discretion of Venture, Executive's
legal representative(s), shall be entitled to such portion of any
bonus provided for in any bonus program referred to in Paragraph
2(d) as shall be payable under the terms of such bonus program.
7. Executive will hold in strictest confidence any and all of
Venture's confidential information, including but not limited to:
information and documents concerning suppliers' pricing and other
terms for doing business with Venture; supplier and customer
lists created by or on behalf of Venture; marketing methods and
plans, including special seasonal plans; financial information,
including results, forecasts and projections; systems,
procedures, practices and any other information written in
manuals, memoranda or other documents for internal use by Venture
but not published by Venture for public use. This covenant and
agreement of Executive shall survive this Agreement and continue
in force and effect after the expiration of the term hereof,
whether by termination or otherwise.
8. Venture and Executive hereby agree that should any court of
competent jurisdiction determine that any provision of this
Agreement shall, but for the provisions of this Paragraph 8, be
illegal or void as against public policy, for any reason, then
such provision shall automatically be amended to the extent (but
only to the extent) necessary to make it sufficiently narrow in
scope, time, geographic area or otherwise that such court shall
determine it not to be illegal or void as against public policy.
If any such provision cannot be amended to the extent provided in
the preceding sentence, then such provision shall be severed from
this Agreement. In either event, all other remaining terms and
provisions shall remain in full force and effect.
9. Venture and Executive shall each be entitled to pursue all
legal and equitable rights and remedies to secure performance of
the obligations and duties of the other under this Agreement, and
enforcement of one or more of such rights and remedies shall in
no way preclude Venture or Executive from pursuing, at the same
time or subsequently, any and all other rights and remedies
available to each of them. If Venture enforces its rights in the
event of Executive breaching the provisions of Paragraphs 4, 6
and/or 7 of this Agreement, then in addition to any damages or
other compensation to which Venture may be entitled, Venture will
be entitled to be reimbursed by Executive for its court costs and
reasonable attorneys' fees, whether or not suit is filed or
judgement is rendered.
10. This Agreement and any letter agreement regarding severance
benefits in the event of a change in control which the parties
may have executed contain the entire understanding and agreement
between the parties regarding the subject matter contained in
each of them. They supersede all other agreements and
understandings between the parties with respect to such subject
matter and may be modified only by an Executive Compensation
Change Memorandum initialed on behalf of Venture and by Executive
or by a writing signed by Executive and executed on behalf of
Venture. This Agreement shall inure to the benefit of, and shall
be binding upon, Venture, its successors and assigns and upon
Executive and Executive's heirs, successors and assigns.
Executive agrees that this Agreement may be assigned by Venture
to a subsidiary of Venture; such assignment, however, shall not
relieve Venture of any of its obligations hereunder except to the
extent that such obligations are actually discharged by such
subsidiary.
11. Any questions or other matter arising under this Agreement,
whether of validity, interpretation, performance or otherwise,
shall be determined in accordance with and governed by the laws
of the State of Missouri without regard to its conflicts of law
principles. In the event any disputes arise from this Agreement,
venue shall be proper and all suits shall be filed and
adjudicated in the State courts in St. Charles County, Missouri
or the Federal Courts in St. Louis, Missouri.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto in two counterparts, each of which shall be deemed
an original, and shall be effective as of the Effective Date.
VENTURE STORES, INC.
By/s/ Robert N. Wildrick
Robert N. Wildrick
/s/ Peter Mihaltian
Peter Mihaltian
2722/10n
EXHIBIT 10.18(b)
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made
and entered into effective as of July 1, 1996 by and between
VENTURE STORES, INC. ("Venture") and PETER MIHALTIAN
("Executive").
WITNESSETH, that:
WHEREAS, the parties entered into a written agreement
entitled "Employment Agreement" effective as of the 30th day of
May, 1995; and
WHEREAS, the parties desire to extend the term of such
Employment Agreement, as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises and agreements hereinafter set forth, it
is agreed between Venture and Executive as follows:
1. From and after the effective date of this Amendment,
the term "Contract Term" shall mean the period commencing on the
Effective Date of the Employment Agreement (as defined therein)
and ending April 30, 1998 or such other period as Venture and
Executive shall agree from time to time in writing.
2. Except as specifically modified by this Amendment, all
of the provisions of the Employment Agreement remain in full
force and effect as set forth in the Employment Agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the
parties hereto in three counterparts, each of which shall be
deemed an original, and shall be effective as of the date first
above written.
VENTURE STORES, INC.
By:/s/ Robert N. Wildrick
Robert N. Wildrick
Chairman, President and
Chief Executive Officer
/s/ Peter Mihaltian
Peter Mihaltian
EXHIBIT 10.19(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") made and entered
into and effective as of the 1st day of May, 1994, (hereinafter
called "Effective Date") by and between VENTURE STORES, INC.,
hereinafter called "Venture" and EUGENE CALDWELL, hereinafter
called "Executive".
WITNESSETH, That:
In consideration of the mutual promises and agreements
hereinafter set forth, it is agreed between Venture and Executive
as follows:
1. For the purpose of this Agreement:
(a) The term "Venture" shall include Venture Stores, Inc.
and any successor to the business conducted by Venture;
(b) The term "Contract Term" shall mean the period
commencing on the Effective Date and ending April 30, 1996 or
such other period as Venture and Executive shall agree from time
to time in writing;
(c) The term "Fiscal Year" shall mean the annual 52-53 week
fiscal accounting period of Venture, as adopted by Venture from
time to time; and
(d) The term "Cause" shall mean termination of Executive's
employment whether by Venture or by Executive's resignation in
lieu of termination and in either instance only if by reason of
misappropriation of funds or property of Venture, other
dishonesty of any kind against Venture, violation of any policy
of Venture, alcohol or substance abuse or conviction of a felony.
(e) The term "Total Disability" or "Totally Disabled" shall
mean the inability of the Executive to perform the normal duties
of the Executive's regular occupation.
2. (a) Venture agrees to employ Executive as Senior Vice
President - Chief Financial Officer of Venture and Executive
agrees to render personal services to Venture in such position
and/or to perform such other executive duties as may from time to
time be required of Executive by Venture, it being agreed and
understood that the personal services to be rendered by Executive
to Venture hereunder are of a special and unique character. Such
employment may be terminated by either party at any time during
the Contract Term.
(b) Venture agrees to pay Executive basic compensation for
such services during the Contract Term at the rate of not less
than $170,000.00 per annum, payable in equal semi-monthly
installments, subject to increases determined in accordance with
the annual performance appraisal process and further subject to
the terms of Paragraph 6 hereof.
(c) In computing the basic compensation payable hereunder
for any period covering less than a full Fiscal Year, the minimum
annual rate of basic compensation shall be prorated in the
proportion that the number of months (or fraction thereof)
contained in such period bears to twelve months.
(d) In the event that Executive is eligible to participate
in annual or other bonus programs sponsored by Venture, then
Executive shall be entitled to such bonuses, if any, which may be
payable under such bonus programs determined in accordance with
and subject to all of the terms and provisions of such bonus
programs.
(e) Venture shall reimburse Executive for all items of
normal expense incurred by Executive as an employee of Venture.
It is recognized that Executive may have unusual and abnormal
expenses as such, and that Executive shall not be entitled to
reimbursement or to any additional compensation because of any
such unusual and abnormal expenses.
(f) The Executive Compensation Change Memorandum from time
to time in effect, as initialled on behalf of Venture and by
Executive, is hereby incorporated by reference herein and made a
part hereof. In addition, Venture has adopted certain employee
benefit plans and has established certain arrangements concerning
executive perquisites which may, from time to time, confer rights
and benefits on the Executive in accordance with their terms, and
Venture may, in the future, adopt additional employee benefit
plans and establish additional arrangements concerning executive
perquisites, and may in the future amend, modify or terminate any
of the aforesaid employee benefit plans and arrangements, all in
accordance with their terms and in accordance with applicable
law. In addition, Executive and Venture have agreed that
Executive shall be entitled to the fringe benefits and to the
benefit of other arrangements commensurate with Executive's title
and position as determined and provided from time to time by
Venture and as such fringe benefits and other arrangements may be
amended from time to time. Executive shall be entitled to
whatever rights and benefits may be conferred on Executive from
time to time in accordance with the terms of such plans and
arrangements, as they may be amended from time to time,
independent of this Employment Agreement.
3. Executive agrees that, at all times while Executive is
employed by Venture, Executive will:
(a) faithfully and diligently serve Venture to the best of
Executive's ability;
(b) devote Executive's undivided time and attention, during
Venture's customary business hours, to the business of Venture,
to such extent as may be reasonably necessary for the proper
performance of the personal services to be rendered by Executive
hereunder, subject to Venture's vacation policy as in effect from
time to time; and
(c) maintain Executive's residence in the St. Louis,
Missouri metropolitan area within reasonable access to the
business activities of Venture therein or in such other city as
Venture shall designate, and so reside for the period of
employment.
4. (a) Executive will not accept any other full-time or
substantially full-time employment, whether as an Executive or as
a consultant or in any other capacity, and whether or not
compensated therefor, so long as Executive is employed by
Venture.
(b) At all times during the Contract Term, Executive will
not engage or be engaged in any competing business as hereinafter
defined. For purposes of this Paragraph 4, Executive shall be
deemed to "engage or be engaged in a competing business" if, in
any capacity, including, but not limited to, proprietor, partner,
member, trustee, officer, director, employee, agent or advisor,
Executive engages or participates, directly or indirectly, in the
operation, management or ownership of any department store
business or discount store business which (i) sells to the
general public or segments thereof, whether or not limited by
club memberships, organization affinity or otherwise; and (ii)
operates a store or stores within a seventy-five (75) mile radius
of any retail store that Venture is operating or has under
construction when the Executive ceases to be employed hereunder.
Indirect participation in the operation or management of any such
business shall not include the ownership of capital stock or
other securities of a corporation, which stock or other
securities are part of a class of stock or other securities
listed on any stock exchange or traded in the over the counter
market, if the amount of such investment represents less than 2
1/2% of the market value of such stock or other securities of
such corporation.
(c) If Executive violates the terms of this Paragraph 4 or
if Venture believes that Executive intends to violate such terms,
then, in addition to all other rights and remedies which Venture
may have under the terms hereof and pursuant to all applicable
law, Venture shall have the right to seek and obtain injunctive
and other such equitable relief to prevent Executive's violation
of the terms of this Paragraph 4 hereof.
5. In the event that Executive becomes Totally Disabled and
remains continuously so Totally Disabled for a period of one
hundred eighty (180) days, Executive's employment, at Venture's
option, may be terminated by notice in writing to that effect
given during the continuance of such Total Disability, such
termination to take effect the later of (a) the last day of the
month during which such notice is given or (b) the last day of
such one hundred eighty (180) day period, it being understood
that Executive's compensation shall cease upon such termination
and the Executive's benefits shall be administered pursuant to
Venture's policies and the provisions of the respective benefit
plans.
6. In the event that Executive shall cease to be employed
hereunder for any reason other than pursuant to Paragraph 5,
then:
(a) Executive's basic compensation shall continue for the
Contract Term but only so long as Executive is not in breach of
this Agreement and only if the termination of employment (i) was
not for Cause and (ii) was not by voluntary resignation by
Executive (such a voluntary resignation shall not include a
resignation in lieu of termination by Venture for reasons other
than Cause);
(b) Executive's basic compensation shall be reduced by any
income earned by Executive for services rendered after Executive
ceases to be employed by Venture (Executive will advise Venture
of such income and refund to Venture the gross amount of any
overpayment of basic compensation); and
(c) Executive or, in the discretion of Venture, Executive's
legal representative(s), shall be entitled to such portion of any
bonus provided for in any bonus program referred to in Paragraph
2(d) as shall be payable under the terms of such bonus program.
7. Executive will hold in strictest confidence any and all of
Venture's confidential information, including but not limited to:
information and documents concerning suppliers' pricing and other
terms for doing business with Venture; supplier and customer
lists created by or on behalf of Venture; marketing methods and
plans, including special seasonal plans; financial information,
including results, forecasts and projections; systems,
procedures, practices and any other information written in
manuals, memoranda or other documents for internal use by Venture
but not published by Venture for public use. This covenant and
agreement of Executive shall survive this Agreement and continue
in force and effect after the expiration of the term hereof,
whether by limitation or otherwise.
8. Venture and Executive hereby agree that should any court of
competent jurisdiction determine that any provision of this Employment
Agreement shall, but for the provisions of this Paragraph 8, be
illegal or void as against public policy, for any reason, then
such provision shall automatically be amended to the extent (but
only to the extent) necessary to make it sufficiently narrow in
scope, time, geographic area or otherwise that such court shall
determine it not to be illegal or void as against public policy.
If any such provision cannot be amended to the extent provided in
the preceding sentence, then such provision shall be severed from
this Agreement. In either event, all other remaining terms and
provisions shall remain in full force and effect.
9. Venture and Executive shall each be entitled to pursue all
legal and equitable rights and remedies to secure performance of
the obligations and duties of the other under this Employment Agreement,
and enforcement of one or more of such rights and remedies shall in
no way preclude Venture or Executive from pursuing, at the same
time or subsequently, any and all other rights and remedies
available to each of them. If Venture enforces its rights in the
event of Executive breaching the provisions of Paragraphs 4, 6
and/or 7 of this Agreement, then in addition to any damages or
other compensation to which Venture may be entitled, Venture will
be entitled to be reimbursed by Executive for its court costs and
reasonable attorneys' fees, whether or not suit is filed or
judgement is rendered.
10. This Agreement and any letter agreement regarding severance
benefits in the event of a change in control which the parties
may have executed contain the entire understanding and agreement
between the parties regarding the subject matter contained in
each of them. They supersede all other agreements and
understandings between the parties with respect to such subject
matter and may be modified only by an Executive Compensation
Change Memorandum initialed on behalf of Venture and by Executive
or by a writing signed by Executive and executed on behalf of
Venture. This Employment Agreement shall inure to the benefit
of, and shall be binding upon, Venture, its successors and
assigns and upon Executive and Executive's heirs, successors and
assigns. Executive agrees that this agreement may be assigned by
Venture to a subsidiary of Venture; such assignment, however,
shall not relieve Venture of any of its obligations hereunder
except to the extent that such obligations are actually
discharged by such subsidiary.
11. Any questions or other matter arising under this Agreement,
whether of validity, interpretation, performance or otherwise,
shall be determined in accordance with and governed by the laws
of the State of Missouri without regard to its conflicts of law
principles. In the event any disputes arise from this Agreement,
venue shall be proper and all suits shall be filed and
adjudicated in the State courts in St. Charles County, Missouri
or the Federal Courts in St. Louis, Missouri.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto in two counterparts, each of which shall be deemed
an original, and shall be effective as of the Effective Date.
VENTURE STORES, INC.
By/s/ Julian Seeherman
Julian Seeherman
/s/ Eugene Caldwell
Eugene Caldwell
2783/10
EXHIBIT 10.19(b)
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made
and entered into effective as of May 1, 1995 by and between
VENTURE STORES, INC. ("Venture") and EUGENE CALDWELL
("Executive").
WITNESSETH, that:
WHEREAS, the parties entered into a written agreement
entitled "Employment Agreement" effective as of the 1st day of
May, 1994; and
WHEREAS, the parties desire to extend the term of such
Employment Agreement, as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises and agreements hereinafter set forth, it
is agreed between Venture and Executive as follows:
1. From and after the effective date of this Amendment,
the term "Contract Term" shall mean the period commencing on the
Effective Date of the Employment Agreement (as defined therein)
and ending April 30, 1997 or such other period as Venture and
Executive shall agree from time to time in writing.
2. Except as specifically modified by this Amendment, all
of the provisions of the Employment Agreement remain in full
force and effect as set forth in the Employment Agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the
parties hereto in three counterparts, each of which shall be
deemed an original, and shall be effective as of the date first
above written.
VENTURE STORES, INC.
By:/s/ Robert N. Wildrick
Robert N. Wildrick
President and Chief Executive
Officer
/s/ Eugene Caldwell
Eugene Caldwell
EXHIBIT 10.19(c)
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (" Second
Amendment") is made and entered into effective as of July 1, 1996
by and between VENTURE STORES, INC. ("Venture") and EUGENE
CALDWELL ("Executive").
WITNESSETH, that:
WHEREAS, the parties entered into a written agreement
entitled "Employment Agreement" effective as of the 1st day of
May, 1994, as amended by an Amendment to Employment Agreement
effective as of May 1, 1995; and
WHEREAS, the parties desire to extend the term of such
Employment Agreement, as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises and agreements hereinafter set forth, it
is agreed between Venture and Executive as follows:
1. From and after the effective date of this Second
Amendment, the term "Contract Term" shall mean the period
commencing on the Effective Date of the Employment Agreement (as
defined therein) and ending April 30, 1998 or such other period
as Venture and Executive shall agree from time to time in
writing.
2. Except as specifically modified by this Second
Amendment, all of the provisions of the Employment Agreement, as
previously amended, remain in full force and effect as set forth
in the Employment Agreement.
IN WITNESS WHEREOF, this Second Amendment has been executed
by the parties hereto in three counterparts, each of which shall
be deemed an original, and shall be effective as of the date
first above written.
VENTURE STORES, INC.
By:/s/ Robert N. Wildrick
Robert N. Wildrick
Chairman, President and
Chief Executive Officer
/s/ Eugene Caldwell
Eugene Caldwell
EXHIBIT 10.21
PERSONAL AND CONFIDENTIAL
July 12, 1995
Mr. James Ferstl
1212 East Cole Ave.
Fresno, California 93720
Dear Jim,
Venture Stores, Inc. (the "Company") considers it essential
to the best interests of its shareowners to foster the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareowners.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in
the event your employment with the Company is terminated under
the circumstances described below subsequent to a "change in con-
trol of the Company" (as defined in Section 2).
1. Term of Agreement. This Agreement shall commence on
the date hereof, and shall continue in effect through April 30,
1996, provided, however, that commencing on the following May 1,
and each May 1 thereafter, the term of this Agreement shall auto-
matically be extended for one (1) additional year unless, not
later than the immediately preceding March 1, the Company shall
have given notice that it does not wish to extend this Agreement;
provided, further that this Agreement shall automatically
terminate if, before a change in control or a potential change of
control of the Company, you cease to be employed as an executive
vice president of the Company; and provided, further, that if a
change in control or a potential change of control of the
Company, as defined in Section 2, shall have occurred during the
original or extended term of this Agreement, this Agreement shall
continue in effect for a period of not less than thirty-six (36)
months beyond the end of the month in which such change in con-
trol or potential change of control occurred.
2. Change in Control; Potential Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred on the earliest to
occur of any of the following:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareowners of the Company in
substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two (2) consecutive years,
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in clause (a), (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's share-
owners was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(c) the shareowners of the Company approve a merger or
consolidation of the Company with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareowners of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or
a series of transactions) all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consum-
mation of which would result in the occurrence of a change
in control of the Company;
(b) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a change in control of
the Company;
(c) any person, other than a trustee or other fidu-
ciary holding securities under an employee benefit plan of
the Company (or a Company owned, directly or indirectly, by
the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company), who
is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding
securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by
such person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control
of the Company, you will remain in the employ of the Company
until the earliest of (a) a date which is 180 days from the
occurrence of such potential change in control of the Company,
(b) the termination by you of your employment by reason of
Disability as defined in Subsection 3(ii), or (c) the date on
which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control.
(i) General. If any of the events described in Sec-
tion 2 constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in Sec-
tion 4(iii) upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a)
because of your death or Disability, (b) by the Company for
Cause, or (c) by you other than for Good Reason. In the event
your employment with the Company is terminated for any reason and
subsequently a change in control of the Company should have
occurred, you shall not be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six consecutive months, and within 30 days after written
notice of termination is given you shall not have returned to the
full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination (a) upon the will-
ful and continued failure by you to substantially perform your
duties with the Company (other than any such failure resulting
from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good
Reason (as defined in Subsection 3(iv)), after a written demand
for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or fail-
ure to act, on your part shall be deemed "willful" unless done,
or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolu-
tion duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Subsection and specify-
ing the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, (1) during the 180-day period following
a change in control of the Company, a good faith determination by
you that as a result of such change in control you are not able
to discharge your duties effectively or (2) without your express
written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case
of paragraphs (a), (b), (e), (f), (g) or (h), such circumstances
are fully corrected (effective retroactive to and including the
date on which such circumstance first occurred) prior to the Date
of Termination (as defined in Section 3(vi)) specified in the
Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Company that you held immediately
prior to the change in control of the Company, or a signi-
ficant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from
those in effect immediately prior to such change in control;
(b) a reduction by the Company in your annual base
salary, bonus opportunity or benefits as in effect on the
date hereof or as the same may be increased from time to
time except for across-the-board salary, bonus opportunity
or benefit reductions similarly affecting all management
personnel of the Company and all management personnel of any
person whose actions result in a change in control of the
Company and of any person affiliated with the Company or
such person;
(c) the relocation of the Company's offices at which
you are principally employed immediately prior to the date
of the change in control of the Company (your "base
location") to a location more than 35 miles from such
location, or the Company's requiring you to be based
anywhere other than the Company's offices at your base
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the date of
the change of control of the Company;
(d) the failure by the Company to pay to you any
portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any
deferred compensation program of the Company within seven
(7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, as existed at the time of the change in
control of the Company except any such failure resulting
from an across-the-board reduction in all material
compensation or benefit plans similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(f) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's life insurance, medical,
dental, accident or disability plans in which you were
participating at the time of the change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such
benefits to you or the failure by the Company to provide you
with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company
excepting any such failure resulting from an across-the-
board reduction in all such benefits similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(g) the failure of the Company to obtain a satis-
factory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
or
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination (as
defined in Section 3(v)) and, if applicable, the require-
ments of Subsection (iii) hereof, which purported termina-
tion shall not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsec-
tion shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circum-
stance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 6. "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination"
shall mean (a) if your employment is terminated for Disability,
30 days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such 30-day period), and (b) if your employment is
terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than 30 days from the date such Notice of
Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the
date such Notice of Termination is given); provided, however,
that if within 15 days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined
without regard to this proviso), the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of com-
petent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termina-
tion shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. Not-
withstanding the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were par-
ticipating when the notice giving rise to the dispute was given,
and you shall not be required to render personal services to the
Company during the pendency of any such dispute, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement and shall
not be reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, you shall be
entitled to the following benefits during a period of disability,
or upon termination of your employment, as the case may be, pro-
vided that such period or termination occurs during the term of
this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Sec-
tion 3(ii) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termina-
tion is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such pay-
ments are due, and the Company shall have no further obligations
to you under this Agreement.
(iii) If your employment by the Company should be
terminated by the Company other than for Cause or Disability or
if you should terminate your employment for Good Reason, you
shall be entitled to the benefits provided below:
(a) the Company shall pay to you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation
plan of the Company, at the time such payments are due;
provided, however, that no accrued but unpaid vacation pay
shall be payable after the Date of Termination;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you, at the time specified in
Subsection (iv), a lump sum severance payment (together with
the payments provided in paragraphs, (d) and (f) below, the
aggregate of all such payments being referred to as the
"Severance Payments") equal to
(i) 300% of the greater of (A) your annual base
salary in effect on the Date of Termination
or (B) your annual base salary in effect
immediately prior to the change in control of
the Company, plus, in either case
(ii) 300% of your target bonus with respect to the
year in which the change in control occurs;
(c) [Reserved]
(d) if you have attained age 50 but have not attained
age 55 on the Date of Termination, then for purposes of
determining benefits under Sections 3.2(c) of the Company's
Supplementary Retirement Plan, you shall be deemed to be
entitled to the benefits under Section 3.2(c) of that plan
if, during the five-year period following the occurrence of
a change in control of the Company, the Company terminates
your employment other than for Cause or you terminate your
employment for Good Reason (it being expressly agreed that
rights under this Section 4(iii)(d) of this Agreement shall
survive for the five year period following the occurrence of
a change of control of the Company);
(e) the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding
to the extent attributable to the application of Section
4999 of the Code, to any payment or benefit provided here-
under); and
(f) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with
life and health insurance benefits substantially similar to
those which you were receiving immediately prior to the
Notice of Termination. Notwithstanding the foregoing, the
Company shall not provide any benefit otherwise receivable
by you pursuant to this paragraph (f) if an equivalent bene-
fit is actually received by you during the thirty-six (36)
month period following your termination, and any such bene-
fit actually received by you shall be reported to the
Company.
(iv) The payments provided for in Subsection (iii)(b)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amount of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you,
payable on the fifth day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
(v) Except as provided in Subsection (iii) (f) hereof,
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit pro-
vided for in this Section 4 be reduced by any compensation earned
by you as the result of employment by another employer, by re-
tirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vi) Notwithstanding the provisions of this Agreement,
if
(a) any payments or benefits received or to be
received by you, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control of the Company or any person affiliated with the
Company or such person, constitute "parachute payments"
(such payments or benefits being hereinafter referred to as
the "Parachute Payments") within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"), and
(b) the aggregate present value of the Parachute
Payments reduced by any excise tax imposed under section
4999 of the Code (or any similar tax that may hereafter be
imposed) (the "Excise Tax") would be less than three times
your "base amount," as defined in section 280G(b)(3) of the
Code,
then, in lieu of that portion of the Parachute Payments to which
you would otherwise be entitled under Section 4(iii)(b) of this
Agreement, the Company shall pay to you an amount under Section
4(iii)(b) of this Agreement, such that the aggregate present
value of the Parachute Payments is equal to 2.99 times your base
amount.
For this purpose, your base amount, the present value
of the Parachute Payments, the amount of the Excise Tax and all
other appropriate matters shall be determined by the Company's
independent auditors in accordance with the principles of section
280G of the Code and based upon the advice of tax counsel
selected by such auditors.
5. Coordination With Employment Agreement. The terms of
this Agreement shall be coordinated with and applied in conjunc-
tion with the terms of your employment agreement with the
Company. In general, it is the intent of the parties that, in
the event of the termination of your employment following a
change in control of the Company, the terms of this Agreement
shall supersede and substitute for the provisions of your employ-
ment agreement relating to any items of current compensation
during the term of this Agreement. The benefits provided by this
Agreement shall not, however, be construed to supersede or sub-
stitute for (a) the provisions of your employment agreement re-
lating to any items of current compensation after the expiration
of this Agreement if you are then still an employee of the
Company or (b) except as otherwise provided herein, any post-
contract term benefits provided for in your employment agreement.
Without limiting the foregoing, the Severance Payment shall be
construed to be a payment in addition to (i) any payment or
benefit intended to be a retirement payment, a retirement benefit
or a retirement perquisite provided for in your employment
agreement, (ii) any payment or benefit payable to you from and
under the terms of the Company's retirement plans, including any
supplementary retirement plan sponsored by the Company or its
subsidiaries and applicable to you and profit sharing or savings
plans and (iii) payments under deferred compensation plans of the
Company or its subsidiaries.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled here-
under if you terminate your employment for Good Reason following
a change in control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as here-
inbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(ii) This Agreement will inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, de-
visees and legatees. If you should die while any amount would
still be payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when de-
livered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the
address set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention
of the Board with a copy to the Secretary of the Company, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or pro-
vision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or im-
plied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this Agree-
ment. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Missouri without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sec-
tions. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law. The obligations of the Company under Section 4 shall sur-
vive the expiration of the term of this Agreement.
9. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or en-
forceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in sev-
eral counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
St. Louis, Missouri, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; pro-
vided, however, that you shall be entitled to seek specific per-
formance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representa-
tive of any party hereto with respect to the subject matter con-
tained herein.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter, which will then constitute our agreement on
this subject.
Sincerely,
VENTURE STORES, INC.
By /s/Robert N. Wildrick
Robert N. Wildrick
Agreed to, and effective as of July 12, 1995.
/s/ James Ferstl
James Ferstl
EXHIBIT 10.22
PERSONAL AND CONFIDENTIAL
November 18, 1995
Russell E. Solt
Executive Vice-President
Finance, Legal and Real Estate
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Mo. 63366-0110
Dear Russ,
Venture Stores, Inc. (the "Company") considers it essential
to the best interests of its shareowners to foster the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareowners.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in
the event your employment with the Company is terminated under
the circumstances described below subsequent to a "change in con-
trol of the Company" (as defined in Section 2).
1. Term of Agreement. This Agreement shall commence on
the date hereof, and shall continue in effect through April 30,
1997, provided, however, that commencing on the following May 1,
and each May 1 thereafter, the term of this Agreement shall auto-
matically be extended for one (1) additional year unless, not
later than the immediately preceding March 1, the Company shall
have given notice that it does not wish to extend this Agreement;
and provided, further, that if a change in control or a potential
change of control of the Company, as defined in Section 2, shall
have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period
of not less than thirty-six (36) months beyond the end of the
month in which such change in control or potential change of
control occurred.
2. Change in Control; Potential Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred on the earliest to
occur of any of the following:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareowners of the Company in
substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause
(a), (c) or (d) of this Section) whose election by the Board
or nomination for election by the Company's shareowners was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to
constitute at least a majority thereof;
(c) the shareowners of the Company approve a merger or
consolidation of the Company with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareowners of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or
a series of transactions) all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consum-
mation of which would result in the occurrence of a change
in control of the Company;
(b) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a change in control of
the Company;
(c) any person, other than a trustee or other fidu-
ciary holding securities under an employee benefit plan of
the Company (or a Company owned, directly or indirectly, by
the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company), who
is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding
securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by
such person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control
of the Company, you will remain in the employ of the Company
until the earliest of (a) a date which is 180 days from the
occurrence of such potential change in control of the Company,
(b) the termination by you of your employment by reason of
Disability as defined in Subsection 3(ii), or (c) the date on
which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control.
(i) General. If any of the events described in Sec-
tion 2 constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in Sec-
tion 4(iii) upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a)
because of your death or Disability, (b) by the Company for
Cause, or (c) by you other than for Good Reason. In the event
your employment with the Company is terminated for any reason and
subsequently a change in control of the Company should have
occurred, you shall not be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six consecutive months, and within 30 days after written
notice of termination is given you shall not have returned to the
full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination (a) upon the will-
ful and continued failure by you to substantially perform your
duties with the Company (other than any such failure resulting
from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good
Reason (as defined in Subsection 3(iv)), after a written demand
for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or fail-
ure to act, on your part shall be deemed "willful" unless done,
or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolu-
tion duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Subsection and specify-
ing the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without your express written consent,
the occurrence after a change in control of the Company of any of
the following circumstances unless, in the case of paragraphs
(a), (b), (e), (f), (g) or (h), such circumstances are fully
corrected (effective retroactive to and including the date on
which such circumstance first occurred) prior to the Date of
Termination (as defined in Section 3(vi)) specified in the Notice
of Termination (as defined in Section 3(v)) given in respect
thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Company that you held immediately
prior to the change in control of the Company, or a signi-
ficant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from
those in effect immediately prior to such change in control;
(b) a reduction by the Company in your annual base
salary, bonus opportunity or benefits as in effect on the
date hereof or as the same may be increased from time to
time except for across-the-board salary, bonus opportunity
or benefit reductions similarly affecting all management
personnel of the Company and all management personnel of any
person whose actions result in a change in control of the
Company and of any person affiliated with the Company or
such person;
(c) the relocation of the Company's offices at which
you are principally employed immediately prior to the date
of the change in control of the Company (your "base
location") to a location more than 35 miles from such
location, or the Company's requiring you to be based
anywhere other than the Company's offices at your base
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the date of
the change of control of the Company;
(d) the failure by the Company to pay to you any
portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any
deferred compensation program of the Company within seven
(7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, as existed at the time of the change in
control of the Company except any such failure resulting
from an across-the-board reduction in all material
compensation or benefit plans similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(f) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's life insurance, medical,
dental, accident or disability plans in which you were
participating at the time of the change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such
benefits to you or the failure by the Company to provide you
with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company
excepting any such failure resulting from an across-the-
board reduction in all such benefits similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(g) the failure of the Company to obtain a satis-
factory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
or
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination (as
defined in Section 3(v)) and, if applicable, the require-
ments of Subsection (iii) hereof, which purported termina-
tion shall not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsec-
tion shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circum-
stance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 7. "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination"
shall mean (a) if your employment is terminated for Disability,
30 days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such 30-day period), and (b) if your employment is
terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than 30 days from the date such Notice of
Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the
date such Notice of Termination is given); provided, however,
that if within 15 days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined
without regard to this proviso), the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of com-
petent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termina-
tion shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. Not-
withstanding the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were par-
ticipating when the notice giving rise to the dispute was given,
and you shall not be required to render personal services to the
Company during the pendency of any such dispute, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement and shall
not be reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, you shall be
entitled to the following benefits during a period of disability,
or upon termination of your employment, as the case may be, pro-
vided that such period or termination occurs during the term of
this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Sec-
tion 3(ii) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termina-
tion is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such pay-
ments are due, and the Company shall have no further obligations
to you under this Agreement.
(iii) If your employment by the Company should be
terminated by the Company other than for Cause or Disability or
if you should terminate your employment for Good Reason, you
shall be entitled to the benefits provided below:
(a) the Company shall pay to you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation
plan of the Company, at the time such payments are due;
provided, however, that no accrued but unpaid vacation pay
shall be payable after the Date of Termination;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you, at the time specified in
Subsection (iv), a lump sum severance payment (together with
the payments provided in paragraphs, (d) and (f) below, the
aggregate of all such payments being referred to as the
"Severance Payments") equal to
(i) 300% of the greater of (A) your annual base
salary in effect on the Date of Termination
or (B) your annual base salary in effect
immediately prior to the change in control of
the Company, plus, in either case
(ii) 300% of your target bonus with respect to the
year in which the change in control occurs;
(c) [reserved]
(d) if you have attained age 50 but have not attained
age 55 on the Date of Termination, then for purposes of
determining benefits under Sections 3.2(c) of the Company's
Supplementary Retirement Plan, you shall be deemed to be
entitled to the benefits under Section 3.2(c) of that plan
if, during the five-year period following the occurrence of
a change in control of the Company, the Company terminates
your employment other than for Cause or you terminate your
employment for Good Reason (it being expressly agreed that
rights under this Section 4(iii)(d) of this Agreement shall
survive for the five year period following the occurrence of
a change of control of the Company);
(e) the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding
to the extent attributable to the application of Section
4999 of the Code, to any payment or benefit provided here-
under); and
(f) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with
life and health insurance benefits substantially similar to
those which you were receiving immediately prior to the
Notice of Termination. Notwithstanding the foregoing, the
Company shall not provide any benefit otherwise receivable
by you pursuant to this paragraph (f) if an equivalent bene-
fit is actually received by you during the thirty-six (36)
month period following your termination, and any such bene-
fit actually received by you shall be reported to the
Company.
(iv) The payments provided for in Subsection (iii)(b)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amount of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you,
payable on the fifth day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
(v) Except as provided in Subsection (iii) (f) hereof,
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit pro-
vided for in this Section 4 be reduced by any compensation earned
by you as the result of employment by another employer, by re-
tirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vi) Notwithstanding the provisions of this Agreement,
if
(a) any payments or benefits received or to be
received by you, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control of the Company or any person affiliated with the
Company or such person, constitute "parachute payments"
(such payments or benefits being hereinafter referred to as
the "Parachute Payments") within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"), and
(b) the aggregate present value of the Parachute
Payments reduced by any excise tax imposed under section
4999 of the Code (or any similar tax that may hereafter be
imposed) (the "Excise Tax") would be less than three times
your "base amount," as defined in section 280G(b)(3) of the
Code,
then, in lieu of that portion of the Parachute Payments to which
you would otherwise be entitled under Section 4(iii)(b) of this
Agreement, the Company shall pay to you an amount under Section
4(iii)(b) of this Agreement, such that the aggregate present
value of the Parachute Payments is equal to 2.99 times your base
amount.
For this purpose, your base amount, the present value
of the Parachute Payments, the amount of the Excise Tax and all
other appropriate matters shall be determined by the Company's
independent auditors in accordance with the principles of section
280G of the Code and based upon the advice of tax counsel
selected by such auditors.
5. Coordination With Employment Agreement. The terms of
this Agreement shall be coordinated with and applied in conjunc-
tion with the terms of your employment agreement with the
Company. In general, it is the intent of the parties that, in
the event of the termination of your employment following a
change in control of the Company, the terms of this Agreement
shall supersede and substitute for the provisions of your employ-
ment agreement relating to any items of current compensation
during the term of this Agreement. The benefits provided by this
Agreement shall not, however, be construed to supersede or sub-
stitute for (a) the provisions of your employment agreement re-
lating to any items of current compensation after the expiration
of this Agreement if you are then still an employee of the
Company or (b) except as otherwise provided herein, any post-
contract term benefits provided for in your employment agreement.
Without limiting the foregoing, the Severance Payment shall be
construed to be a payment in addition to (i) any payment or
benefit intended to be a retirement payment, a retirement benefit
or a retirement perquisite provided for in your employment
agreement, (ii) any payment or benefit payable to you from and
under the terms of the Company's retirement plans, including any
supplementary retirement plan sponsored by the Company or its
subsidiaries and applicable to you and profit sharing or savings
plans and (iii) payments under deferred compensation plans of the
Company or its subsidiaries.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled here-
under if you terminate your employment for Good Reason following
a change in control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as here-
inbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(ii) This Agreement will inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, de-
visees and legatees. If you should die while any amount would
still be payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when de-
livered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the
address set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention
of the Board with a copy to the Secretary of the Company, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or pro-
vision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or im-
plied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this Agree-
ment. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Missouri without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sec-
tions. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law. The obligations of the Company under Section 4 shall sur-
vive the expiration of the term of this Agreement.
9. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or en-
forceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in sev-
eral counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
St. Louis, Missouri, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; pro-
vided, however, that you shall be entitled to seek specific per-
formance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representa-
tive of any party hereto with respect to the subject matter con-
tained herein.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter, which will then constitute our agreement on
this subject.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
Sincerely,
VENTURE STORES, INC.
By /s/Robert N. Wildrick
Robert N. Wildrick
Agreed to, and effective as of November 18, 1995.
/s/ Russell E. Solt
Russell E. Solt
EXHIBIT 10.23
PERSONAL AND CONFIDENTIAL
May 16, 1995
Mr. Peter Mihaltian
3428 Wynington Drive
Charlotte, NC 28226
Dear Peter,
Venture Stores, Inc. (the "Company") considers it essential
to the best interests of its shareowners to foster the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareowners.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in
the event your employment with the Company is terminated under
the circumstances described below subsequent to a "change in con-
trol of the Company" (as defined in Section 2).
1. Term of Agreement. This Agreement shall commence on
the date hereof, and shall continue in effect through April 30,
1991, provided, however, that commencing on the following May 1,
and each May 1 thereafter, the term of this Agreement shall auto-
matically be extended for one (1) additional year unless, not
later than the immediately preceding March 1, the Company shall
have given notice that it does not wish to extend this Agreement;
provided, further that this Agreement shall automatically
terminate if, before a change in control or a potential change of
control of the Company, you cease to be employed as a senior
vice president of the Company; and provided, further, that if a
change in control or a potential change of control of the
Company, as defined in Section 2, shall have occurred during the
original or extended term of this Agreement, this Agreement shall
continue in effect for a period of not less than thirty-six (36)
months beyond the end of the month in which such change in con-
trol or potential change of control occurred.
2. Change in Control; Potential Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred on the earliest to
occur of any of the following:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareowners of the Company in
substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two (2) consecutive years,
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in clause (a), (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's share-
owners was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(c) the shareowners of the Company approve a merger or
consolidation of the Company with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareowners of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or
a series of transactions) all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consum-
mation of which would result in the occurrence of a change
in control of the Company;
(b) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a change in control of
the Company;
(c) any person, other than a trustee or other fidu-
ciary holding securities under an employee benefit plan of
the Company (or a Company owned, directly or indirectly, by
the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company), who
is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding
securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by
such person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control
of the Company, you will remain in the employ of the Company
until the earliest of (a) a date which is 180 days from the
occurrence of such potential change in control of the Company,
(b) the termination by you of your employment by reason of
Disability as defined in Subsection 3(ii), or (c) the date on
which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control.
(i) General. If any of the events described in Sec-
tion 2 constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in Sec-
tion 4(iii) upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a)
because of your death or Disability, (b) by the Company for
Cause, or (c) by you other than for Good Reason. In the event
your employment with the Company is terminated for any reason and
subsequently a change in control of the Company should have
occurred, you shall not be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six consecutive months, and within 30 days after written
notice of termination is given you shall not have returned to the
full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination (a) upon the will-
ful and continued failure by you to substantially perform your
duties with the Company (other than any such failure resulting
from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good
Reason (as defined in Subsection 3(iv)), after a written demand
for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or fail-
ure to act, on your part shall be deemed "willful" unless done,
or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolu-
tion duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Subsection and specify-
ing the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, (1) during the 180-day period following
a change in control of the Company, a good faith determination by
you that as a result of such change in control you are not able
to discharge your duties effectively or (2) without your express
written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case
of paragraphs (a), (b), (e), (f), (g) or (h), such circumstances
are fully corrected (effective retroactive to and including the
date on which such circumstance first occurred) prior to the Date
of Termination (as defined in Section 3(vi)) specified in the
Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Company that you held immediately
prior to the change in control of the Company, or a signi-
ficant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from
those in effect immediately prior to such change in control;
(b) a reduction by the Company in your annual base
salary, bonus opportunity or benefits as in effect on the
date hereof or as the same may be increased from time to
time except for across-the-board salary, bonus opportunity
or benefit reductions similarly affecting all management
personnel of the Company and all management personnel of any
person whose actions result in a change in control of the
Company and of any person affiliated with the Company or
such person;
(c) the relocation of the Company's offices at which
you are principally employed immediately prior to the date
of the change in control of the Company (your "base
location") to a location more than 35 miles from such
location, or the Company's requiring you to be based
anywhere other than the Company's offices at your base
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the date of
the change of control of the Company;
(d) the failure by the Company to pay to you any
portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any
deferred compensation program of the Company within seven
(7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, as existed at the time of the change in
control of the Company except any such failure resulting
from an across-the-board reduction in all material
compensation or benefit plans similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(f) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's life insurance, medical,
dental, accident or disability plans in which you were
participating at the time of the change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such
benefits to you or the failure by the Company to provide you
with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company
excepting any such failure resulting from an across-the-
board reduction in all such benefits similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(g) the failure of the Company to obtain a satis-
factory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
or
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination (as
defined in Section 3(v)) and, if applicable, the require-
ments of Subsection (iii) hereof, which purported termina-
tion shall not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsec-
tion shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circum-
stance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 6. "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination"
shall mean (a) if your employment is terminated for Disability,
30 days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such 30-day period), and (b) if your employment is
terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than 30 days from the date such Notice of
Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the
date such Notice of Termination is given); provided, however,
that if within 15 days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined
without regard to this proviso), the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of com-
petent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termina-
tion shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. Not-
withstanding the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were par-
ticipating when the notice giving rise to the dispute was given,
and you shall not be required to render personal services to the
Company during the pendency of any such dispute, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement and shall
not be reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, you shall be
entitled to the following benefits during a period of disability,
or upon termination of your employment, as the case may be, pro-
vided that such period or termination occurs during the term of
this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Sec-
tion 3(ii) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termina-
tion is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such pay-
ments are due, and the Company shall have no further obligations
to you under this Agreement.
(iii) If your employment by the Company should be
terminated by the Company other than for Cause or Disability or
if you should terminate your employment for Good Reason, you
shall be entitled to the benefits provided below:
(a) the Company shall pay to you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation
plan of the Company, at the time such payments are due;
provided, however, that no accrued but unpaid vacation pay
shall be payable after the Date of Termination;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you, at the time specified in
Subsection (iv), a lump sum severance payment (together with
the payments provided in paragraphs, (d) and (f) below, the
aggregate of all such payments being referred to as the
"Severance Payments") equal to
(i) 300% of the greater of (A) your annual base
salary in effect on the Date of Termination
or (B) your annual base salary in effect
immediately prior to the change in control of
the Company, plus, in either case
(ii) 300% of your target bonus with respect to the
year in which the change in control occurs;
(c) [Reserved]
(d) if you have attained age 50 but have not attained
age 55 on the Date of Termination, then for purposes of
determining benefits under Sections 3.2(c) of the Company's
Supplementary Retirement Plan, you shall be deemed to be
entitled to the benefits under Section 3.2(c) of that plan
if, during the five-year period following the occurrence of
a change in control of the Company, the Company terminates
your employment other than for Cause or you terminate your
employment for Good Reason (it being expressly agreed that
rights under this Section 4(iii)(d) of this Agreement shall
survive for the five year period following the occurrence of
a change of control of the Company);
(e) the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding
to the extent attributable to the application of Section
4999 of the Code, to any payment or benefit provided here-
under); and
(f) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with
life and health insurance benefits substantially similar to
those which you were receiving immediately prior to the
Notice of Termination. Notwithstanding the foregoing, the
Company shall not provide any benefit otherwise receivable
by you pursuant to this paragraph (f) if an equivalent bene-
fit is actually received by you during the thirty-six (36)
month period following your termination, and any such bene-
fit actually received by you shall be reported to the
Company.
(iv) The payments provided for in Subsection (iii)(b)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amount of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you,
payable on the fifth day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
(v) Except as provided in Subsection (iii) (f) hereof,
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit pro-
vided for in this Section 4 be reduced by any compensation earned
by you as the result of employment by another employer, by re-
tirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vi) Notwithstanding the provisions of this Agreement,
if
(a) any payments or benefits received or to be
received by you, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control of the Company or any person affiliated with the
Company or such person, constitute "parachute payments"
(such payments or benefits being hereinafter referred to as
the "Parachute Payments") within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"), and
(b) the aggregate present value of the Parachute
Payments reduced by any excise tax imposed under section
4999 of the Code (or any similar tax that may hereafter be
imposed) (the "Excise Tax") would be less than three times
your "base amount," as defined in section 280G(b)(3) of the
Code,
then, in lieu of that portion of the Parachute Payments to which
you would otherwise be entitled under Section 4(iii)(b) of this
Agreement, the Company shall pay to you an amount under Section
4(iii)(b) of this Agreement, such that the aggregate present
value of the Parachute Payments is equal to 2.99 times your base
amount.
For this purpose, your base amount, the present value
of the Parachute Payments, the amount of the Excise Tax and all
other appropriate matters shall be determined by the Company's
independent auditors in accordance with the principles of section
280G of the Code and based upon the advice of tax counsel
selected by such auditors.
5. Coordination With Employment Agreement. The terms of
this Agreement shall be coordinated with and applied in conjunc-
tion with the terms of your employment agreement with the
Company. In general, it is the intent of the parties that, in
the event of the termination of your employment following a
change in control of the Company, the terms of this Agreement
shall supersede and substitute for the provisions of your employ-
ment agreement relating to any items of current compensation
during the term of this Agreement. The benefits provided by this
Agreement shall not, however, be construed to supersede or sub-
stitute for (a) the provisions of your employment agreement re-
lating to any items of current compensation after the expiration
of this Agreement if you are then still an employee of the
Company or (b) except as otherwise provided herein, any post-
contract term benefits provided for in your employment agreement.
Without limiting the foregoing, the Severance Payment shall be
construed to be a payment in addition to (i) any payment or
benefit intended to be a retirement payment, a retirement benefit
or a retirement perquisite provided for in your employment
agreement, (ii) any payment or benefit payable to you from and
under the terms of the Company's retirement plans, including any
supplementary retirement plan sponsored by the Company or its
subsidiaries and applicable to you and profit sharing or savings
plans and (iii) payments under deferred compensation plans of the
Company or its subsidiaries.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled here-
under if you terminate your employment for Good Reason following
a change in control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as here-
inbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(ii) This Agreement will inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, de-
visees and legatees. If you should die while any amount would
still be payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when de-
livered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the
address set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention
of the Board with a copy to the Secretary of the Company, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or pro-
vision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or im-
plied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this Agree-
ment. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Missouri without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sec-
tions. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law. The obligations of the Company under Section 4 shall sur-
vive the expiration of the term of this Agreement.
9. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or en-
forceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in sev-
eral counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
St. Louis, Missouri, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; pro-
vided, however, that you shall be entitled to seek specific per-
formance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representa-
tive of any party hereto with respect to the subject matter con-
tained herein.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter, which will then constitute our agreement on
this subject.
Sincerely,
VENTURE STORES, INC.
By /s/Robert N. Wildrick
Robert N. Wildrick
Agreed to, and effective as of May 30, 1995.
/s/ Peter Mihaltian
Peter Mihaltian
EXHIBIT 10.24
PERSONAL AND CONFIDENTIAL
August 10, 1995
Mr. Eugene Caldwell
Senior Vice President -
Chief Financial Officer
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Mo. 63366-0110
Dear Gene,
Venture Stores, Inc. (the "Company") considers it essential
to the best interests of its shareowners to foster the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control of the Company may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareowners.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement (the "Agreement") in
the event your employment with the Company is terminated under
the circumstances described below subsequent to a "change in con-
trol of the Company" (as defined in Section 2).
1. Term of Agreement. This Agreement shall commence on
the date hereof, and shall continue in effect through April 30,
1996, provided, however, that commencing on the following May 1,
and each May 1 thereafter, the term of this Agreement shall auto-
matically be extended for one (1) additional year unless, not
later than the immediately preceding March 1, the Company shall
have given notice that it does not wish to extend this Agreement;
provided, further that this Agreement shall automatically
terminate if, before a change in control or a potential change of
control of the Company, you cease to be employed as an senior
vice president of the Company; and provided, further, that if a
change in control or a potential change of control of the
Company, as defined in Section 2, shall have occurred during the
original or extended term of this Agreement, this Agreement shall
continue in effect for a period of not less than thirty-six (36)
months beyond the end of the month in which such change in con-
trol or potential change of control occurred.
2. Change in Control; Potential Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred on the earliest to
occur of any of the following:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareowners of the Company in
substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two (2) consecutive years,
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in clause (a), (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's share-
owners was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at
the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason
to constitute at least a majority thereof;
(c) the shareowners of the Company approve a merger or
consolidation of the Company with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareowners of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or
a series of transactions) all or substantially all of the
Company's assets.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if:
(a) the Company enters in an agreement, the consum-
mation of which would result in the occurrence of a change
in control of the Company;
(b) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a change in control of
the Company;
(c) any person, other than a trustee or other fidu-
ciary holding securities under an employee benefit plan of
the Company (or a Company owned, directly or indirectly, by
the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company), who
is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding
securities, increases his beneficial ownership of such
securities by 5% or more over the percentage so owned by
such person on the date hereof; or
(d) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control
of the Company, you will remain in the employ of the Company
until the earliest of (a) a date which is 180 days from the
occurrence of such potential change in control of the Company,
(b) the termination by you of your employment by reason of
Disability as defined in Subsection 3(ii), or (c) the date on
which you first become entitled under this Agreement to receive
the benefits provided in Section 4(iii) below.
3. Termination Following Change in Control.
(i) General. If any of the events described in Sec-
tion 2 constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in Sec-
tion 4(iii) upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (a)
because of your death or Disability, (b) by the Company for
Cause, or (c) by you other than for Good Reason. In the event
your employment with the Company is terminated for any reason and
subsequently a change in control of the Company should have
occurred, you shall not be entitled to any benefits hereunder.
(ii) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six consecutive months, and within 30 days after written
notice of termination is given you shall not have returned to the
full-time performance of your duties, your employment may be
terminated for "Disability."
(iii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination (a) upon the will-
ful and continued failure by you to substantially perform your
duties with the Company (other than any such failure resulting
from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice
of Termination (as defined in Subsection 3(v)) by you for Good
Reason (as defined in Subsection 3(iv)), after a written demand
for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or (b) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or fail-
ure to act, on your part shall be deemed "willful" unless done,
or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolu-
tion duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Subsection and specify-
ing the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, (1) during the 180-day period following
a change in control of the Company, a good faith determination by
you that as a result of such change in control you are not able
to discharge your duties effectively or (2) without your express
written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case
of paragraphs (a), (b), (e), (f), (g) or (h), such circumstances
are fully corrected (effective retroactive to and including the
date on which such circumstance first occurred) prior to the Date
of Termination (as defined in Section 3(vi)) specified in the
Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent
with the position in the Company that you held immediately
prior to the change in control of the Company, or a signi-
ficant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from
those in effect immediately prior to such change in control;
(b) a reduction by the Company in your annual base
salary, bonus opportunity or benefits as in effect on the
date hereof or as the same may be increased from time to
time except for across-the-board salary, bonus opportunity
or benefit reductions similarly affecting all management
personnel of the Company and all management personnel of any
person whose actions result in a change in control of the
Company and of any person affiliated with the Company or
such person;
(c) the relocation of the Company's offices at which
you are principally employed immediately prior to the date
of the change in control of the Company (your "base
location") to a location more than 35 miles from such
location, or the Company's requiring you to be based
anywhere other than the Company's offices at your base
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the date of
the change of control of the Company;
(d) the failure by the Company to pay to you any
portion of your current compensation or to pay to you any
portion of an installment of deferred compensation under any
deferred compensation program of the Company within seven
(7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, as existed at the time of the change in
control of the Company except any such failure resulting
from an across-the-board reduction in all material
compensation or benefit plans similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(f) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's life insurance, medical,
dental, accident or disability plans in which you were
participating at the time of the change in control of the
Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such
benefits to you or the failure by the Company to provide you
with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company
excepting any such failure resulting from an across-the-
board reduction in all such benefits similarly affecting all
management personnel of the Company and all management
personnel of any person whose actions result in a change in
control of the Company and of any person affiliated with the
Company or such person;
(g) the failure of the Company to obtain a satis-
factory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof;
or
(h) any purported termination of your employment that
is not effected pursuant to a Notice of Termination (as
defined in Section 3(v)) and, if applicable, the require-
ments of Subsection (iii) hereof, which purported termina-
tion shall not be effective for purposes of this Agreement.
Your right to terminate your employment pursuant to this Subsec-
tion shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circum-
stance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 6. "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination"
shall mean (a) if your employment is terminated for Disability,
30 days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your
duties during such 30-day period), and (b) if your employment is
terminated pursuant to Subsection (iii) or (iv) hereof or for any
other reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than 30 days from the date such Notice of
Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the
date such Notice of Termination is given); provided, however,
that if within 15 days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined
without regard to this proviso), the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be
the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of com-
petent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termina-
tion shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues
the resolution of such dispute with reasonable diligence. Not-
withstanding the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were par-
ticipating when the notice giving rise to the dispute was given,
and you shall not be required to render personal services to the
Company during the pendency of any such dispute, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement and shall
not be reduced by any compensation earned by you as the result of
employment by another employer.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, you shall be
entitled to the following benefits during a period of disability,
or upon termination of your employment, as the case may be, pro-
vided that such period or termination occurs during the term of
this Agreement:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Sec-
tion 3(ii) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termina-
tion is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such pay-
ments are due, and the Company shall have no further obligations
to you under this Agreement.
(iii) If your employment by the Company should be
terminated by the Company other than for Cause or Disability or
if you should terminate your employment for Good Reason, you
shall be entitled to the benefits provided below:
(a) the Company shall pay to you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, no later than the fifth
day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation
plan of the Company, at the time such payments are due;
provided, however, that no accrued but unpaid vacation pay
shall be payable after the Date of Termination;
(b) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you, at the time specified in
Subsection (iv), a lump sum severance payment (together with
the payments provided in paragraphs, (d) and (f) below, the
aggregate of all such payments being referred to as the
"Severance Payments") equal to
(i) 300% of the greater of (A) your annual base
salary in effect on the Date of Termination
or (B) your annual base salary in effect
immediately prior to the change in control of
the Company, plus, in either case
(ii) 300% of your target bonus with respect to the
year in which the change in control occurs;
(c) [reserved]
(d) if you have attained age 50 but have not attained
age 55 on the Date of Termination, then for purposes of
determining benefits under Sections 3.2(c) of the Company's
Supplementary Retirement Plan, you shall be deemed to be
entitled to the benefits under Section 3.2(c) of that plan
if, during the five-year period following the occurrence of
a change in control of the Company, the Company terminates
your employment other than for Cause or you terminate your
employment for Good Reason (it being expressly agreed that
rights under this Section 4(iii)(d) of this Agreement shall
survive for the five year period following the occurrence of
a change of control of the Company);
(e) the Company shall pay to you all legal fees and
expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding
to the extent attributable to the application of Section
4999 of the Code, to any payment or benefit provided here-
under); and
(f) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with
life and health insurance benefits substantially similar to
those which you were receiving immediately prior to the
Notice of Termination. Notwithstanding the foregoing, the
Company shall not provide any benefit otherwise receivable
by you pursuant to this paragraph (f) if an equivalent bene-
fit is actually received by you during the thirty-six (36)
month period following your termination, and any such bene-
fit actually received by you shall be reported to the
Company.
(iv) The payments provided for in Subsection (iii)(b)
shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amount of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you,
payable on the fifth day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
(v) Except as provided in Subsection (iii) (f) hereof,
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit pro-
vided for in this Section 4 be reduced by any compensation earned
by you as the result of employment by another employer, by re-
tirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vi) Notwithstanding the provisions of this Agreement,
if
(a) any payments or benefits received or to be
received by you, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control of the Company or any person affiliated with the
Company or such person, constitute "parachute payments"
(such payments or benefits being hereinafter referred to as
the "Parachute Payments") within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"), and
(b) the aggregate present value of the Parachute
Payments reduced by any excise tax imposed under section
4999 of the Code (or any similar tax that may hereafter be
imposed) (the "Excise Tax") would be less than three times
your "base amount," as defined in section 280G(b)(3) of the
Code,
then, in lieu of that portion of the Parachute Payments to which
you would otherwise be entitled under Section 4(iii)(b) of this
Agreement, the Company shall pay to you an amount under Section
4(iii)(b) of this Agreement, such that the aggregate present
value of the Parachute Payments is equal to 2.99 times your base
amount.
For this purpose, your base amount, the present value
of the Parachute Payments, the amount of the Excise Tax and all
other appropriate matters shall be determined by the Company's
independent auditors in accordance with the principles of section
280G of the Code and based upon the advice of tax counsel
selected by such auditors.
5. Coordination With Employment Agreement. The terms of
this Agreement shall be coordinated with and applied in conjunc-
tion with the terms of your employment agreement with the
Company. In general, it is the intent of the parties that, in
the event of the termination of your employment following a
change in control of the Company, the terms of this Agreement
shall supersede and substitute for the provisions of your employ-
ment agreement relating to any items of current compensation
during the term of this Agreement. The benefits provided by this
Agreement shall not, however, be construed to supersede or sub-
stitute for (a) the provisions of your employment agreement re-
lating to any items of current compensation after the expiration
of this Agreement if you are then still an employee of the
Company or (b) except as otherwise provided herein, any post-
contract term benefits provided for in your employment agreement.
Without limiting the foregoing, the Severance Payment shall be
construed to be a payment in addition to (i) any payment or
benefit intended to be a retirement payment, a retirement benefit
or a retirement perquisite provided for in your employment
agreement, (ii) any payment or benefit payable to you from and
under the terms of the Company's retirement plans, including any
supplementary retirement plan sponsored by the Company or its
subsidiaries and applicable to you and profit sharing or savings
plans and (iii) payments under deferred compensation plans of the
Company or its subsidiaries.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled here-
under if you terminate your employment for Good Reason following
a change in control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as here-
inbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(ii) This Agreement will inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, de-
visees and legatees. If you should die while any amount would
still be payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when de-
livered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed to the
address set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention
of the Board with a copy to the Secretary of the Company, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or pro-
vision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or im-
plied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this Agree-
ment. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of
Missouri without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sec-
tions. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local
law. The obligations of the Company under Section 4 shall sur-
vive the expiration of the term of this Agreement.
9. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or en-
forceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in sev-
eral counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
St. Louis, Missouri, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; pro-
vided, however, that you shall be entitled to seek specific per-
formance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representa-
tive of any party hereto with respect to the subject matter con-
tained herein.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter, which will then constitute our agreement on
this subject.
Sincerely,
VENTURE STORES, INC.
By /s/Robert N. Wildrick
Robert N. Wildrick
President and CEO
Agreed to, and effective as of August 10, 1995.
/s/ Eugene Caldwell
Eugene Caldwell
EXHIBIT 10.26
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of the 31st day of January, 1996,
between Venture Stores, Inc., a Delaware corporation (the
"Company"), and James H. Ferstl (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors and officers the most capable individuals
available; and
WHEREAS, Indemnitee is a director or officer of the Company;
and
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors and officers of public companies in today's
environment; and
WHEREAS, basic protection against undue risk of personal
liability of directors and officers is being provided through
insurance coverage providing reasonable protection at reasonable
cost, and Indemnitee is relying on the availability of such
coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly more
difficult to obtain such insurance on terms providing reasonable
protection at reasonable cost; and
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors and officers to
the fullest extent now or hereafter authorized or permitted by
law and authorize the Company to enter into agreements providing
for such indemnification and advancement of expenses; and
WHEREAS, in recognition of the fact that the Indemnitee
agrees to serve as a director or officer of the Company, in part
in reliance on the aforesaid Bylaws, and of the fact of
Indemnitee's need for substantial protection against personal
liability in order to enhance Indemnitee's service to the Company
in an effective manner, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by
such Bylaws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of such Bylaws or
any change in the composition of the Company's Board of Directors
or acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of
Indemnitee and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) now or hereafter
authorized or permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors'
and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to serve or continue to serve the Company
directly or, at its request, another enterprise, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Approved Law Firm shall mean any law firm (i)
located in Wilmington, Delaware, (ii) having 10 or
more attorneys and (iii) related "av" by
Martindale-Hubbell Law Directory; provided,
however, that such law firm shall not, for a five-
year period prior to the Indemnifiable Event, have
been engaged by the Company, an Acquiring Person
or the Indemnitee.
(b) Board of Directors shall mean the Board of
Directors of the Company.
(c) Change in Control shall be deemed to have occurred
if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended [the "Act"]) (the
"Acquiring Person"), other than the Company, a
trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company
representing 20% or more of the total voting power
represented by the Company's then outstanding
Voting Securities, or (ii) during any period of
two consecutive years, individuals who at the
beginning of such period constitute the Board of
Directors of the Company and any new director
(other than a director designated by a person who
has entered into an agreement with the Company to
effect a transaction described in clause (i),
(iii), or (iv) of this subsection (c)) whose
election by the Board of Directors or nomination
for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously
so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the
Company with any other corporation, other than (A)
a merger or consolidation which would result in
the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into Voting Securities of the surviving
entity) at least 80% of the total voting power
represented by the Voting Securities of the
Company or such surviving entity outstanding
immediately after such merger or consolidation, or
(B) a merger or consolidation affected to
implement a recapitalization of the Company (or
similar transaction) in which no "person" (as
hereinabove defined) acquires more than 20% of the
voting power of the Voting Securities of the
Company then outstanding, or (iv) the stockholders
of the Company approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one
transaction or a series of transactions) all or
substantially all the Company's assets.
(d) Claim shall mean any threatened, pending or
completed action, suit or proceeding, or any
inquiry or investigation, whether instituted by
the Company or any other party, that Indemnitee in
good faith believes might lead to the institution
of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or
other.
(e) Expenses shall include attorneys' fees and all
other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or participating in
(including on appeal), or preparing to defend, be
a witness in or participate in any Claim relating
to any Indemnifiable Event, together with
interest, computed at the Company's average cost
of funds for short-term borrowings, accrued from
the date of payment of such expense to the date
Indemnitee received reimbursement therefor.
(f) Indemnifiable Event shall mean any event or
occurrence related to the fact that Indemnitee is
or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer,
employee, trustee, agent or fiduciary of another
corporation of any type or kind, domestic or
foreign, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by
reason of anything done or not done by Indemnitee
in any such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee
serving (i) another corporation, partnership,
joint venture or trust of which 20% or more of the
voting power or residual economic interest is
held, directly or indirectly, by the Company, or
(ii) any employee benefit plan of the Company or
any entity referred to in clause (i), in any
capacity shall be deemed to be doing so at the
request of the Company.
(g) Potential Change in Control shall be deemed to
have occurred if (i) the Company enters into an
agreement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any
person (including the Company) publicly announces
an intention to take or to consider taking actions
which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or
other fiduciary holding securities under an
employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of
the Company representing 9.5% or more of the
combined voting power of the Company's then
outstanding Voting Securities, increases his
beneficial ownership of such securities by five
percentage points or more over the percentage so
owned by such person; or (iv) the Board of
Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change
in Control has occurred.
(h) Reviewing Party shall be (i) the Board of
Directors acting by a majority vote of a quorum
consisting of directors who are not parties to the
particular Claim with respect to which Indemnitee
is seeking indemnification, or (ii) if such a
quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs,
(A) an Approved Law Firm or (B) the stockholders.
(i) Voting Securities shall mean any securities of the
Company which vote generally in the election of
directors.
2. Basic Indemnification Arrangement. If the Indemnitee
was, is or becomes at any time a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Claim by reason of (or arising in part
out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent now or hereafter authorized or
permitted by law as soon as practicable but in any event no later
than 30 days after written demand is presented to the Company,
against any and all Expenses, judgments, fines (including excise
taxes assessed against an Indemnitee with respect to an employee
benefit plan), penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall
advance (within two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance"). Notwithstanding
anything in this Agreement to the contrary, prior to a Change in
Control Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated
by Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.
3. Payment. Notwithstanding the provisions of Section 2,
the obligations of the Company under Section 2 (which shall in no
event be deemed to preclude any right to indemnification to which
the Indemnitee may be entitled under Section 145(c) of the
General Corporation Law of the State of Delaware (the "DGCL"))
shall be subject to the condition that the Reviewing Party shall
have authorized such indemnification in the specific case (in a
written opinion in any case in which the special, independent
counsel referred to in Section 4 hereof is involved or in an
appropriate resolution in any case in which the stockholders are
involved) by having determined that the Indemnitee is permitted
to be indemnified under the applicable standard of conduct set
forth in Section 145 of the DGCL. The Company shall promptly
call a meeting of the Board of Directors with respect to a Claim
and agrees to use its best efforts to facilitate a prompt
determination by the Reviewing Party with respect to the Claim.
Indemnitee shall be afforded the opportunity to make submissions
to the Reviewing Party with respect to the Claim. The obligation
of the Company to make an Expense Advance pursuant to Section 2
shall be subject to the condition that, if, when and to the
extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees and undertakes to the full extent required by
paragraph (e) of Section 145 of the DGCL to reimburse the
Company) for all such amounts theretofore paid, provided,
however, that if Indemnitee has commenced legal proceedings in a
court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would
not be permitted to be indemnified under applicable law shall not
be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would
not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of Missouri or Delaware
having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor,
and the company hereby consents to service of process and to
appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
4. Change in Control. If there is a Change in Control of
the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control) then
(i) all determinations by the Company pursuant to the first
sentence of Section 3 hereof and Section 145 of the DGCL shall be
made pursuant to subparagraph (d)(1) or (d)(2) of Section 145 and
(ii) with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events (including, but not limited to, any opinion
to be rendered pursuant to subparagraph (d)(2) of Section 145 of
the DGCL), the Company (including the Board of Directors) shall
seek legal advice from (and only from) special, independent
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company (or any subsidiary
of the Company) or an Acquiring Person (or any affiliate or
associate of such Acquiring Person) or Indemnitee within the last
five years (other than in connection with such matters). Unless
Indemnitee has theretofore selected counsel pursuant to this
Section 4 and such counsel has been approved by the Company, any
Approved Law Firm selected by Indemnitee shall be deemed to be
approved by the Company. Such counsel, among other things, shall
render its written opinion to the Company, the Board of Directors
and Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to indemnify fully such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto. As used in
this Agreement, the terms "affiliate" and "associate" shall have
the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Act and in effect on
the date of this Agreement.
5. Establishment of Trust. In the event of a Potential
Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and from
time to time upon written request of Indemnitee shall fund such
trust in an amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable Event, and any
and all judgments, fines, penalties and settlement amounts of any
and all Claims relating to an Indemnifiable Event from time to
time actually paid or claimed, reasonably anticipated or proposed
to be paid. The amount or amounts to be deposited in the trust
pursuant to the foregoing funding obligation shall be determined
by the Reviewing Party, in any case in which the special,
independent counsel referred to above is involved. The terms of
the trust shall provide that upon a Change in Control (i) the
trust shall not be revoked or the principal thereof invaded,
without the written consent of the Indemnitee, (ii) the trustee
shall advance, within two business days of a request by the
Indemnitee, any and all Expenses to the Indemnitee (and the
Indemnitee hereby agrees to reimburse the trust under the
circumstances under which the Indemnitee would be required to
reimburse the Company under Section 3 hereof), (iii) the trust
shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee shall
promptly pay to Indemnitee all amounts for which Indemnitee shall
be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in such trust shall
revert to the Company upon a final determination by the Reviewing
Party or a court of competent jurisdiction, as the case may be,
that Indemnitee has been fully indemnified under the terms of
this Agreement. The trustee shall be an institutional trustee
with a highly regarded, national reputation chosen by Indemnitee.
Nothing in this Section 5 shall relieve the Company of any of its
obligations under this Agreement.
6. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee,
shall (within two business days of such request) advance such
expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses
by the Company under this Agreement or any other agreement or
Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors'
and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance
expense payment or insurance recovery, as the case may be.
7. Partial Indemnity, Etc. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified, to
the extent permitted by law, against all Expenses incurred in
connection with such Indemnifiable Event.
8. Burden of Proof. In connection with any determination
by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.
9. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, whether
civil or criminal, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption
that Indemnitee did not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
10. Nonexclusivity, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Bylaws or the DGCL or otherwise. To the
extent that a change in the DGCL (whether by statute or judicial
decision) permits greater indemnification by agreement than would
be afforded currently under the Company's Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by
such change.
11. Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing directors'
and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for any director
or officer of the Company.
12. Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or on behalf
of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company or any
affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-
year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action
such shorter period shall govern.
13. Amendments, Etc. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be effective unless in writing
and no written waiver shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar)
nor shall such waiver constitute a continuing wavier.
14. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
15. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
16. Specific Performance. The parties recognize that if
any provision of this Agreement is violated by the Company,
Indemnitee may be without an adequate remedy at law.
Accordingly, in the event of any such violation, the Indemnitee
shall be entitled, if Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to
enforce specific performance, to enjoin such violation, or to
obtain any relief or any combination of the foregoing as
Indemnitee may elect to pursue.
17. Binding Effect, Etc. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, including any
direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or
assets of the Company, assigns, spouses, heirs, executors, and
personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other
enterprise at the Company's request.
18. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the fullest
extent permitted by law.
19. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts
of law.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the date first above written.
VENTURE STORES, INC.
By:/s/ Robert N. Wildrick
Robert N. Wildrick
Chairman of the Board, President
and Chief Executive Officer
/s/ James H. Ferstl
James H. Ferstl
EXHIBIT 10.27
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of the 4th day of December, 1995,
between Venture Stores, Inc., a Delaware corporation (the
"Company"), and Russell E. Solt (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors and officers the most capable individuals
available; and
WHEREAS, Indemnitee is a director or officer of the Company;
and
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors and officers of public companies in today's
environment; and
WHEREAS, basic protection against undue risk of personal
liability of directors and officers is being provided through
insurance coverage providing reasonable protection at reasonable
cost, and Indemnitee is relying on the availability of such
coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly more
difficult to obtain such insurance on terms providing reasonable
protection at reasonable cost; and
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors and officers to
the fullest extent now or hereafter authorized or permitted by
law and authorize the Company to enter into agreements providing
for such indemnification and advancement of expenses; and
WHEREAS, in recognition of the fact that the Indemnitee
agrees to serve as a director or officer of the Company, in part
in reliance on the aforesaid Bylaws, and of the fact of
Indemnitee's need for substantial protection against personal
liability in order to enhance Indemnitee's service to the Company
in an effective manner, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by
such Bylaws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of such Bylaws or
any change in the composition of the Company's Board of Directors
or acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of
Indemnitee and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) now or hereafter
authorized or permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors'
and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to serve or continue to serve the Company
directly or, at its request, another enterprise, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Approved Law Firm shall mean any law firm (i)
located in Wilmington, Delaware, (ii) having 10 or
more attorneys and (iii) related "av" by
Martindale-Hubbell Law Directory; provided,
however, that such law firm shall not, for a five-
year period prior to the Indemnifiable Event, have
been engaged by the Company, an Acquiring Person
or the Indemnitee.
(b) Board of Directors shall mean the Board of
Directors of the Company.
(c) Change in Control shall be deemed to have occurred
if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended [the "Act"]) (the
"Acquiring Person"), other than the Company, a
trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company
representing 20% or more of the total voting power
represented by the Company's then outstanding
Voting Securities, or (ii) during any period of
two consecutive years, individuals who at the
beginning of such period constitute the Board of
Directors of the Company and any new director
(other than a director designated by a person who
has entered into an agreement with the Company to
effect a transaction described in clause (i),
(iii), or (iv) of this subsection (c)) whose
election by the Board of Directors or nomination
for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously
so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the
Company with any other corporation, other than (A)
a merger or consolidation which would result in
the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into Voting Securities of the surviving
entity) at least 80% of the total voting power
represented by the Voting Securities of the
Company or such surviving entity outstanding
immediately after such merger or consolidation, or
(B) a merger or consolidation affected to
implement a recapitalization of the Company (or
similar transaction) in which no "person" (as
hereinabove defined) acquires more than 20% of the
voting power of the Voting Securities of the
Company then outstanding, or (iv) the stockholders
of the Company approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one
transaction or a series of transactions) all or
substantially all the Company's assets.
(d) Claim shall mean any threatened, pending or
completed action, suit or proceeding, or any
inquiry or investigation, whether instituted by
the Company or any other party, that Indemnitee in
good faith believes might lead to the institution
of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or
other.
(e) Expenses shall include attorneys' fees and all
other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or participating in
(including on appeal), or preparing to defend, be
a witness in or participate in any Claim relating
to any Indemnifiable Event, together with
interest, computed at the Company's average cost
of funds for short-term borrowings, accrued from
the date of payment of such expense to the date
Indemnitee received reimbursement therefor.
(f) Indemnifiable Event shall mean any event or
occurrence related to the fact that Indemnitee is
or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer,
employee, trustee, agent or fiduciary of another
corporation of any type or kind, domestic or
foreign, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by
reason of anything done or not done by Indemnitee
in any such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee
serving (i) another corporation, partnership,
joint venture or trust of which 20% or more of the
voting power or residual economic interest is
held, directly or indirectly, by the Company, or
(ii) any employee benefit plan of the Company or
any entity referred to in clause (i), in any
capacity shall be deemed to be doing so at the
request of the Company.
(g) Potential Change in Control shall be deemed to
have occurred if (i) the Company enters into an
agreement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any
person (including the Company) publicly announces
an intention to take or to consider taking actions
which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or
other fiduciary holding securities under an
employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of
the Company representing 9.5% or more of the
combined voting power of the Company's then
outstanding Voting Securities, increases his
beneficial ownership of such securities by five
percentage points or more over the percentage so
owned by such person; or (iv) the Board of
Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change
in Control has occurred.
(h) Reviewing Party shall be (i) the Board of
Directors acting by a majority vote of a quorum
consisting of directors who are not parties to the
particular Claim with respect to which Indemnitee
is seeking indemnification, or (ii) if such a
quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs,
(A) an Approved Law Firm or (B) the stockholders.
(i) Voting Securities shall mean any securities of the
Company which vote generally in the election of
directors.
2. Basic Indemnification Arrangement. If the Indemnitee
was, is or becomes at any time a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Claim by reason of (or arising in part
out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent now or hereafter authorized or
permitted by law as soon as practicable but in any event no later
than 30 days after written demand is presented to the Company,
against any and all Expenses, judgments, fines (including excise
taxes assessed against an Indemnitee with respect to an employee
benefit plan), penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall
advance (within two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance"). Notwithstanding
anything in this Agreement to the contrary, prior to a Change in
Control Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated
by Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.
3. Payment. Notwithstanding the provisions of Section 2,
the obligations of the Company under Section 2 (which shall in no
event be deemed to preclude any right to indemnification to which
the Indemnitee may be entitled under Section 145(c) of the
General Corporation Law of the State of Delaware (the "DGCL"))
shall be subject to the condition that the Reviewing Party shall
have authorized such indemnification in the specific case (in a
written opinion in any case in which the special, independent
counsel referred to in Section 4 hereof is involved or in an
appropriate resolution in any case in which the stockholders are
involved) by having determined that the Indemnitee is permitted
to be indemnified under the applicable standard of conduct set
forth in Section 145 of the DGCL. The Company shall promptly
call a meeting of the Board of Directors with respect to a Claim
and agrees to use its best efforts to facilitate a prompt
determination by the Reviewing Party with respect to the Claim.
Indemnitee shall be afforded the opportunity to make submissions
to the Reviewing Party with respect to the Claim. The obligation
of the Company to make an Expense Advance pursuant to Section 2
shall be subject to the condition that, if, when and to the
extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees and undertakes to the full extent required by
paragraph (e) of Section 145 of the DGCL to reimburse the
Company) for all such amounts theretofore paid, provided,
however, that if Indemnitee has commenced legal proceedings in a
court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would
not be permitted to be indemnified under applicable law shall not
be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would
not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of Missouri or Delaware
having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor,
and the company hereby consents to service of process and to
appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
4. Change in Control. If there is a Change in Control of
the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control) then
(i) all determinations by the Company pursuant to the first
sentence of Section 3 hereof and Section 145 of the DGCL shall be
made pursuant to subparagraph (d)(1) or (d)(2) of Section 145 and
(ii) with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events (including, but not limited to, any opinion
to be rendered pursuant to subparagraph (d)(2) of Section 145 of
the DGCL), the Company (including the Board of Directors) shall
seek legal advice from (and only from) special, independent
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company (or any subsidiary
of the Company) or an Acquiring Person (or any affiliate or
associate of such Acquiring Person) or Indemnitee within the last
five years (other than in connection with such matters). Unless
Indemnitee has theretofore selected counsel pursuant to this
Section 4 and such counsel has been approved by the Company, any
Approved Law Firm selected by Indemnitee shall be deemed to be
approved by the Company. Such counsel, among other things, shall
render its written opinion to the Company, the Board of Directors
and Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to indemnify fully such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto. As used in
this Agreement, the terms "affiliate" and "associate" shall have
the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Act and in effect on
the date of this Agreement.
5. Establishment of Trust. In the event of a Potential
Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and from
time to time upon written request of Indemnitee shall fund such
trust in an amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable Event, and any
and all judgments, fines, penalties and settlement amounts of any
and all Claims relating to an Indemnifiable Event from time to
time actually paid or claimed, reasonably anticipated or proposed
to be paid. The amount or amounts to be deposited in the trust
pursuant to the foregoing funding obligation shall be determined
by the Reviewing Party, in any case in which the special,
independent counsel referred to above is involved. The terms of
the trust shall provide that upon a Change in Control (i) the
trust shall not be revoked or the principal thereof invaded,
without the written consent of the Indemnitee, (ii) the trustee
shall advance, within two business days of a request by the
Indemnitee, any and all Expenses to the Indemnitee (and the
Indemnitee hereby agrees to reimburse the trust under the
circumstances under which the Indemnitee would be required to
reimburse the Company under Section 3 hereof), (iii) the trust
shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee shall
promptly pay to Indemnitee all amounts for which Indemnitee shall
be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in such trust shall
revert to the Company upon a final determination by the Reviewing
Party or a court of competent jurisdiction, as the case may be,
that Indemnitee has been fully indemnified under the terms of
this Agreement. The trustee shall be an institutional trustee
with a highly regarded, national reputation chosen by Indemnitee.
Nothing in this Section 5 shall relieve the Company of any of its
obligations under this Agreement.
6. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee,
shall (within two business days of such request) advance such
expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses
by the Company under this Agreement or any other agreement or
Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors'
and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance
expense payment or insurance recovery, as the case may be.
7. Partial Indemnity, Etc. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified, to
the extent permitted by law, against all Expenses incurred in
connection with such Indemnifiable Event.
8. Burden of Proof. In connection with any determination
by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.
9. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, whether
civil or criminal, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption
that Indemnitee did not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
10. Nonexclusivity, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Bylaws or the DGCL or otherwise. To the
extent that a change in the DGCL (whether by statute or judicial
decision) permits greater indemnification by agreement than would
be afforded currently under the Company's Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by
such change.
11. Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing directors'
and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for any director
or officer of the Company.
12. Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or on behalf
of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company or any
affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-
year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action
such shorter period shall govern.
13. Amendments, Etc. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be effective unless in writing
and no written waiver shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar)
nor shall such waiver constitute a continuing wavier.
14. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
15. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
16. Specific Performance. The parties recognize that if
any provision of this Agreement is violated by the Company,
Indemnitee may be without an adequate remedy at law.
Accordingly, in the event of any such violation, the Indemnitee
shall be entitled, if Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to
enforce specific performance, to enjoin such violation, or to
obtain any relief or any combination of the foregoing as
Indemnitee may elect to pursue.
17. Binding Effect, Etc. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, including any
direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or
assets of the Company, assigns, spouses, heirs, executors, and
personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other
enterprise at the Company's request.
18. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the fullest
extent permitted by law.
19. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts
of law.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the date first above written.
VENTURE STORES, INC.
By:/s/Robert N. Wildrick
Robert N. Wildrick
Chairman of the Board, President
and Chief Executive Officer
/s/ Russell E. Solt
Russell E. Solt
EXHIBIT 10.28
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of the 21st day of April, 1994,
between Venture Stores, Inc., a Delaware corporation (the
"Company"), and Eugene Caldwell (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors and officers the most capable individuals
available; and
WHEREAS, Indemnitee is a director or officer of the Company;
and
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors and officers of public companies in today's
environment; and
WHEREAS, basic protection against undue risk of personal
liability of directors and officers is being provided through
insurance coverage providing reasonable protection at reasonable
cost, and Indemnitee is relying on the availability of such
coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly more
difficult to obtain such insurance on terms providing reasonable
protection at reasonable cost; and
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors and officers to
the fullest extent now or hereafter authorized or permitted by
law and authorize the Company to enter into agreements providing
for such indemnification and advancement of expenses; and
WHEREAS, in recognition of the fact that the Indemnitee
agrees to serve as a director or officer of the Company, in part
in reliance on the aforesaid Bylaws, and of the fact of
Indemnitee's need for substantial protection against personal
liability in order to enhance Indemnitee's service to the Company
in an effective manner, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by
such Bylaws will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of such Bylaws or
any change in the composition of the Company's Board of Directors
or acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of
Indemnitee and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) now or hereafter
authorized or permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors'
and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's agreement to serve or continue to serve the Company
directly or, at its request, another enterprise, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Approved Law Firm shall mean any law firm (i)
located in Wilmington, Delaware, (ii) having 10 or
more attorneys and (iii) related "av" by
Martindale-Hubbell Law Directory; provided,
however, that such law firm shall not, for a five-
year period prior to the Indemnifiable Event, have
been engaged by the Company, an Acquiring Person
or the Indemnitee.
(b) Board of Directors shall mean the Board of
Directors of the Company.
(c) Change in Control shall be deemed to have occurred
if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended [the "Act"]) (the
"Acquiring Person"), other than the Company, a
trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company
representing 20% or more of the total voting power
represented by the Company's then outstanding
Voting Securities, or (ii) during any period of
two consecutive years, individuals who at the
beginning of such period constitute the Board of
Directors of the Company and any new director
whose election by the Board of Directors or
nomination for election by the Company's
stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in
office who either were directors at the beginning
of the period or whose election or nomination for
election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii)
the stockholders of the Company approve a merger
or consolidation of the Company with any other
corporation, other than (A) a merger or
consolidation which would result in the Voting
Securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
Voting Securities of the surviving entity) at
least 80% of the total voting power represented by
the Voting Securities of the Company or such
surviving entity outstanding immediately after
such merger or consolidation, or (iv) the
stockholders of the Company approve a plan of
complete liquidation of the Company or an
agreement for the sale or disposition by the
Company of (in one transaction or a series of
transactions) all or substantially all the
Company's assets.
(d) Claim shall mean any threatened, pending or
completed action, suit or proceeding, or any
inquiry or investigation, whether instituted by
the Company or any other party, that Indemnitee in
good faith believes might lead to the institution
of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or
other.
(e) Expenses shall include attorneys' fees and all
other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or participating in
(including on appeal), or preparing to defend, be
a witness in or participate in any Claim relating
to any Indemnifiable Event, together with
interest, computed at the Company's average cost
of funds for short-term borrowings, accrued from
the date of payment of such expense to the date
Indemnitee received reimbursement therefor.
(f) Indemnifiable Event shall mean any event or
occurrence related to the fact that Indemnitee is
or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer,
employee, trustee, agent or fiduciary of another
corporation of any type or kind, domestic or
foreign, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by
reason of anything done or not done by Indemnitee
in any such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee
serving (i) another corporation, partnership,
joint venture or trust of which 20% or more of the
voting power or residual economic interest is
held, directly or indirectly, by the Company, or
(ii) any employee benefit plan of the Company or
any entity referred to in clause (i), in any
capacity shall be deemed to be doing so at the
request of the Company.
(g) Potential Change in Control shall be deemed to
have occurred if (i) the Company enters into an
agreement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any
person (including the Company) publicly announces
an intention to take or to consider taking actions
which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or
other fiduciary holding securities under an
employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of
the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of
the Company representing 9.5% or more of the
combined voting power of the Company's then
outstanding Voting Securities, increases his
beneficial ownership of such securities by five
percentage points or more over the percentage so
owned by such person; or (iv) the Board of
Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change
in Control has occurred.
(h) Reviewing Party shall be (i) the Board of
Directors acting by a majority vote of a quorum
consisting of directors who are not parties to the
particular Claim with respect to which Indemnitee
is seeking indemnification, or (ii) if such a
quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs,
(A) an Approved Law Firm or (B) the stockholders.
(i) Voting Securities shall mean any securities of the
Company which vote generally in the election of
directors.
2. Basic Indemnification Arrangement. If the Indemnitee
was, is or becomes at any time a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Claim by reason of (or arising in part
out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent now or hereafter authorized or
permitted by law as soon as practicable but in any event no later
than 30 days after written demand is presented to the Company,
against any and all Expenses, judgments, fines (including excise
taxes assessed against an Indemnitee with respect to an employee
benefit plan), penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of
such Claim. If so requested by Indemnitee, the Company shall
advance (within two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance"). Notwithstanding
anything in this Agreement to the contrary, prior to a Change in
Control Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated
by Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.
3. Payment. Notwithstanding the provisions of Section 2,
the obligations of the Company under Section 2 (which shall in no
event be deemed to preclude any right to indemnification to which
the Indemnitee may be entitled under Section 145(c) of the
General Corporation Law of the State of Delaware (the "DGCL"))
shall be subject to the condition that the Reviewing Party shall
have authorized such indemnification in the specific case (in a
written opinion in any case in which the special, independent
counsel referred to in Section 4 hereof is involved or in an
appropriate resolution in any case in which the stockholders are
involved) by having determined that the Indemnitee is permitted
to be indemnified under the applicable standard of conduct set
forth in Section 145 of the DGCL. The Company shall promptly
call a meeting of the Board of Directors with respect to a Claim
and agrees to use its best efforts to facilitate a prompt
determination by the Reviewing Party with respect to the Claim.
Indemnitee shall be afforded the opportunity to make submissions
to the Reviewing Party with respect to the Claim. Indemnitee
shall be afforded the opportunity to make submissions to the
Reviewing Party with respect to the Claim. The obligation of the
Company to make an Expense Advance pursuant to Section 2 shall be
subject to the condition that, if, when and to the extent that
the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee (who hereby
agrees and undertakes to the full extent required by paragraph
(e) of Section 145 of the DGCL to reimburse the Company) for all
such amounts theretofore paid, provided, however, that if
Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination
made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). If
there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would
not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of Missouri or Delaware
having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor,
and the company hereby consents to service of process and to
appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
4. Change in Control. If there is a Change in Control of
the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control) then
(i) all determinations by the Company pursuant to the first
sentence of Section 3 hereof and Section 145 of the DGCL shall be
made pursuant to subparagraph (d)(1) or (d)(2) of Section 145 and
(ii) with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events (including, but not limited to, any opinion
to be rendered pursuant to subparagraph (d)(2) of Section 145 of
the DGCL), the Company (including the Board of Directors) shall
seek legal advice from (and only from) special, independent
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company (or any subsidiary
of the Company) or an Acquiring Person (or any affiliate or
associate of such Acquiring Person) or Indemnitee within the last
five years (other than in connection with such matters). Unless
Indemnitee has theretofore selected counsel pursuant to this
Section 4 and such counsel has been approved by the Company, any
Approved Law Firm selected by Indemnitee shall be deemed to be
approved by the Company. Such counsel, among other things, shall
render its written opinion to the Company, the Board of Directors
and Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to indemnify fully such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto. As used in
this Agreement, the terms "affiliate" and "associate" shall have
the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Act and in effect on
the date of this Agreement.
5. Establishment of Trust. In the event of a Potential
Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and from
time to time upon written request of Indemnitee shall fund such
trust in an amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be
incurred in connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable Event, and any
and all judgments, fines, penalties and settlement amounts of any
and all Claims relating to an Indemnifiable Event from time to
time actually paid or claimed, reasonably anticipated or proposed
to be paid. The amount or amounts to be deposited in the trust
pursuant to the foregoing funding obligation shall be determined
by the Reviewing Party, in any case in which the special,
independent counsel referred to above is involved. The terms of
the trust shall provide that upon a Change in Control (i) the
trust shall not be revoked or the principal thereof invaded,
without the written consent of the Indemnitee, (ii) the trustee
shall advance, within two business days of a request by the
Indemnitee, any and all Expenses to the Indemnitee (and the
Indemnitee hereby agrees to reimburse the trust under the
circumstances under which the Indemnitee would be required to
reimburse the Company under Section 3 hereof), (iii) the trust
shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee shall
promptly pay to Indemnitee all amounts for which Indemnitee shall
be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in such trust shall
revert to the Company upon a final determination by the Reviewing
Party or a court of competent jurisdiction, as the case may be,
that Indemnitee has been fully indemnified under the terms of
this Agreement. The trustee shall be an institutional trustee
with a highly regarded, national reputation chosen by Indemnitee.
Nothing in this Section 5 shall relieve the Company of any of its
obligations under this Agreement.
6. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee,
shall (within two business days of such request) advance such
expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses
by the Company under this Agreement or any other agreement or
Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors'
and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance
expense payment or insurance recovery, as the case may be.
7. Partial Indemnity, Etc. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in defense of any
or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified, to
the extent permitted by law, against all Expenses incurred in
connection with such Indemnifiable Event.
8. Burden of Proof. In connection with any determination
by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.
9. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, whether
civil or criminal, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption
that Indemnitee did not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
10. Nonexclusivity, Etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Bylaws or the DGCL or otherwise. To the
extent that a change in the DGCL (whether by statute or judicial
decision) permits greater indemnification by agreement than would
be afforded currently under the Company's Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by
such change.
11. Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing directors'
and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage available for any director
or officer of the Company.
12. Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or on behalf
of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company or any
affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-
year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action
such shorter period shall govern.
13. Amendments, Etc. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be effective unless in writing
and no written waiver shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar)
nor shall such waiver constitute a continuing wavier.
14. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
15. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder.
16. Specific Performance. The parties recognize that if
any provision of this Agreement is violated by the Company,
Indemnitee may be without an adequate remedy at law.
Accordingly, in the event of any such violation, the Indemnitee
shall be entitled, if Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to
enforce specific performance, to enjoin such violation, or to
obtain any relief or any combination of the foregoing as
Indemnitee may elect to pursue.
17. Binding Effect, Etc. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, including any
direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or
assets of the Company, assigns, spouses, heirs, executors, and
personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other
enterprise at the Company's request.
18. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the fullest
extent permitted by law.
19. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts
of law.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement this 21st day of April, 1994.
VENTURE STORES, INC.
Dated June 10, 1994 By:/s/ Julian Seeherman
Dated June 10, 1994 /s/ Eugene Caldwell
Eugene Caldwell
Venture Stores, Inc.
Computation of Earnings (Loss) Per Share
(thousands, except per share data) EXHIBIT 11
Fiscal Year Ended
January 25, January 27, January 28,
1997 1996 1995
Net earnings (loss) $ (58,478) $ (19,855) $ 28,713
Less Preferred dividend (2,500) (2,500) (2,500)
Net earnings (loss) available to
common $ (60,978) $ (22,355) $ 26,213
Average outstanding shares 18,025 17,308 17,181
Earnings (loss) per common share $ (3.38) $ (1.29) $ 1.53
PRIMARY:
Net earnings (loss) $ (58,478) $ (19,855) $ 28,713
Less Preferred dividend (2,500) (2,500) (2,500)
Net earnings (loss) available to
common $ (60,978) $ (22,355) $ 26,213
Average outstanding shares 18,025 17,308 17,181
Net effect of dilutive stock
options - based on the treasury
method - 25 51
Average shares for primary
earnings per share 18,025 17,333 17,232
Primary earnings (loss) per common
share $ (3.38) $ (1.29) $ 1.52
FULLY DILUTED:
Net earnings (loss) $ (58,478) $ (19,855) $ 28,713
Less Preferred dividend (2,500) (2,500) (2,500)
Net earnings (loss) available
to common $ (60,978) $ (22,355) $ 26,213
Average outstanding shares 18,025 17,308 17,181
Net effect of dilutive stock
options - based on the treasury
method - 25 51
Average shares due to conversion
of preferred stock - - -
Average shares for fully diluted
earnings per share 18,025 17,333 17,232
Fully diluted earnings (loss) per
common share $ (3.38) $ (1.29) $ 1.52
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion summarizes the significant factors
affecting the Company's operating results for the fiscal years
ended January 25, 1997 ("1996"), January 27, 1996 ("1995"), and
January 28, 1995 ("1994"), and the Company's liquidity and
capital resources as of January 25, 1997, January 27, 1996, and
January 28, 1995. This discussion and analysis should be read in
conjunction with the financial statements and notes to the
financial statements included in this annual report.
Results of Operations
Net Earnings
1996 Compared to 1995
Net loss was $58.5 million in 1996, compared with $19.9
million in 1995. Both years were negatively impacted by
nonrecurring charges as discussed below, which are included in
cost of merchandise sold and in selling, general, administrative
and other expenses. During 1996, the Company recorded
nonrecurring pre-tax charges of approximately $50.0 million, or
$1.72 per share. These charges consisted of $38.3 million for
additional markdowns and $4.5 million for advertising and other
costs incurred to allow the Company to liquidate excess inventory
and adjust merchandise assortments for the implementation of
phase three of the repositioning (discussed below), $6.1 million
associated with three stores that the Company has determined will
not reopen, $.6 million for severance costs for the elimination
of 67 positions at year-end 1996 as a corporate overhead
reduction initiative and approximately $.5 million related to
other costs. Of the total nonrecurring charges in 1996, $38.3
million is included in cost of merchandise sold and $11.7 million
is included in selling, general, administrative and other
expenses.
During 1995, the Company announced plans to transform
Venture from a discount general merchandise chain to a
value-oriented family store, the "Repositioning". The
Repositioning is designed to improve gross margin. Phase one of
the Repositioning, which was completed in early March of 1996,
resulted in the reconfiguration of the store interiors and the
expansion of various merchandise assortments in order for the
Company to become a more dominant retailer in the home, family
apparel and leisure merchandise categories. The reconfiguration
provides for destination shops showcasing category-dominant lines
with additional floor space, distinctive fixtures, graphics and
displays. In this process, the Company downsized or exited
several categories of historically low-margin businesses to make
room for new or expanded businesses such as the Petite Shop, Big
& Tall Shop, Women's Sizes, Sports Shop and Home Shop areas.
The Company continued to adjust its family value store
concept and merchandise mix in 1996 with phase two of the
Repositioning, which was completed in October 1996. Phase two
included expanding the gift department, further expansion of new
fixturing in domestics, introduction of a bath and body shop,
expansion of the luggage department, debut of a women's
coordinates fashion line and introduction of convenience
automotive accessories. Phase three of the Repositioning, which
is being rolled out in 1997, includes opening or expanding 14
more departments, including live plants, convenience hardware,
and golf and fishing equipment, expansion of opening price point
items and the intensification of the everyday low pricing
strategy. The success of the Repositioning is dependent upon
numerous factors including customer acceptance of the
merchandising strategy and adequate sources of capital. The
Company intends to continue to evaluate its merchandise
assortments throughout 1997.
During 1995, the Company recorded nonrecurring pre-tax
charges of $45.7 million, or $1.65 per share. These charges
consisted of $3.6 million to complete the image builder program
(discussed below) in the first quarter, $6.9 million related to
the reduction in the workforce during 1995 and the first quarter
of 1996, $8.6 million in connection with the closing of three
unprofitable stores in August of 1995, $4.1 million of severance
and other costs for the closing of ten additional
under-performing stores in the early part of 1996, $2.0 million
for costs associated with cancelled 1996 store openings, $1.6
million related to financing activities, $2.5 million for other
actions taken by management and $16.4 million (net of the $4.1
million nonrecurring LIFO credit discussed below) in connection
with phase one of the Repositioning. Of the total nonrecurring
charges in 1995, $7.0 million is included in cost of merchandise
sold and $38.7 million is included in selling, general,
administrative and other expenses.
1995 net earnings also included a $3.8 million pre-tax
benefit, or $0.14 per share, on the curtailment of the Company's
defined benefit pension plan and a pre-tax benefit of $4.0
million, or $0.14 per share, related to real estate transactions,
primarily the reversal of recorded reserves on a closed store due
to the property being subleased.
1995 Compared to 1994
Net loss was $19.9 million in 1995 as compared with net
earnings of $28.7 million in 1994. Net earnings in 1995 were
negatively affected by the $45.7 million of nonrecurring charges
discussed above. Net earnings in 1994 were negatively affected
by two nonrecurring items. The first item was a $2.6 million
pre-tax charge ($0.09 per share) for the cost of asbestos
abatement in one store. The second item was recorded in the
fourth quarter of 1994, when the Company began the roll out of
the image builder program, designed to materially broaden the
assortments of certain key merchandise categories within
housewares and domestics, while de-emphasizing and reducing
merchandise assortments in less productive categories, including
automotive and hardware. The implementation of this program
required higher-than-normal markdowns in the de-emphasized areas
and significant expenditures to refixture stores for the newly
expanded categories. In connection with the roll out of the
image builder program, the Company recorded a $3.0 million
pre-tax charge, or $0.11 per share, in the fourth quarter of
1994.
The nonrecurring charges in 1996, 1995 and 1994 complicate
comparisons of the Company's financial results for these years.
To facilitate such comparisons, certain financial information is
reported in this discussion both including and excluding these
items.
Net Earnings as a Percent of Net Sales
The following table sets forth certain components of net
earnings expressed as a percentage of net sales for 1996, 1995
and 1994:
Percentage of Net Sales
1996 1995 1994
Net sales 100.0% 100.0% 100.0%
Cost of merchandise sold (before
LIFO and nonrecurring charges) 75.6 76.6 75.7
FIFO gross margin
(before nonrecurring charges) 24.4 23.4 24.3
LIFO (before nonrecurring charges) 0.2 (0.3) (0.1)
Selling, general, administrative and
other expenses (excluding
nonrecurring charges) 25.3 22.1 21.3
Nonrecurring charges 3.3 2.4 .3
Operating income (loss) (4.4) (0.8) 2.8
Net interest expense 1.9 .8 .5
Net earnings (loss) before
income taxes (6.3) (1.6) 2.3
Income taxes (2.4) (0.6) 0.9
Net earnings (loss) (3.9)% (1.0)% 1.4%
Net Sales
The Company's net sales in 1996 were $1,485.8 million, down
23.0% from $1,928.8 million in 1995. Comparable store sales
declined 20.2% in 1996. Comparable store sales were negatively
impacted by the elimination or reduction of historically low-
margin product lines, including certain categories of hardware,
automotive, and sporting goods, in connection with the Company's
margin-based Repositioning strategy. Other factors contributing
to the decline in comparable store sales were the disruption
caused in February and March by the remodeling done as part of
phase one of the Repositioning, the surplus of merchandise at
higher price points for which sales were not as strong as
merchandise at lower price points, the transition time for
customers to familiarize themselves with the new store layout,
disruptions in merchandise shipments from certain vendors in the
fourth quarter, and competitive store openings in some of the
Company's markets. Total sales were also negatively impacted by
the closing of six stores on March 30, 1996, and the conversion
of four stores to temporary chain-wide clearance centers. During
1996, the Company reopened all four clearance centers and three
of the closed stores as family value stores. The Company's plans
reflect a continuing comparable store sales decline through at
least the first half of 1997.
Net sales during 1995 were $1,928.8 million, a decrease of
4.4% from 1994 net sales of $2,017.3 million. Comparable store
sales declined 9.4% in 1995, partially as a result of the
phasing-out of certain merchandise categories in the second half
of the year in anticipation of the Company's Repositioning. The
Company opted to keep its stores open during the remodeling stage
of the transition, which began December 26, 1995 and was
completed in early March, 1996. Total sales in 1995 were also
negatively impacted by the closing of three stores in August of
1995 (two in Illinois and one in Oklahoma), a generally weak and
promotional retail environment, the Company's discontinuation of
the Famous-Barr credit card, and competitive store openings in
some of the Company's markets.
Gross Margin
FIFO gross margin for 1996 was $323.8 million in 1996,
compared with $440.2 million in 1995, a decrease of $116.4
million. FIFO gross margin included nonrecurring charges of
$38.3 million incurred in the fourth quarter of 1996 for
clearance markdowns to liquidate excess inventories and balance
inventories allowing for new merchandise programs to be added at
an accelerated rate and for one-time markdowns for an expansion
of the Company's price reduction initiatives, moving more
merchandise to everyday low prices as part of phase three of the
Repositioning. FIFO gross margin in 1995 included nonrecurring
charges of $11.2 million for clearance markdowns taken on the
categories phased-out in connection with phase one of the
Repositioning. Excluding these nonrecurring charges in 1996 and
1995, FIFO gross margin declined $89.3 million in 1996, from
$451.4 million in 1995 to $362.1 million in 1996. The primary
reason for the decline in gross margin in dollars is the effect
of reduced sales. Excluding nonrecurring charges, FIFO gross
margin as a percent of sales increased to 24.4% in 1996 from
23.4% in 1995. The increase in FIFO gross margin as a percent of
sales is primarily attributable to the exiting or downsizing of
historically low-margin product lines and expansion of
merchandise assortments in home, family apparel, and leisure
categories as part of the Repositioning, a focus on higher
initial markup opportunities throughout the store, and reduced
permanent markdowns in 1996. These increases in FIFO gross
margin were partially offset by higher promotional markdowns and
higher shortage.
FIFO gross margin was $440.2 million in 1995, compared with
$488.7 million in 1994, a decrease of $48.5 million. Excluding
nonrecurring charges, FIFO gross margin as a percent of sales was
23.4% in 1995 as compared to 24.3% in 1994. The decline was due
to the reduction in sales of higher-margin softline items as a
percentage of total sales, the highly promotional environment,
and competitive pricing.
LIFO
The cost of merchandise sold included a LIFO charge of $3.4
million ($0.12 per share) in 1996, a LIFO credit(benefit) of $9.6
million ($0.35 per share) in 1995 and a LIFO credit of $2.9
million ($0.10 per share) in 1994. The 1996 LIFO charge is
predominately a result of overall lower inventory levels at year-
end 1996 than year-end 1995. In addition, several categories
that contain a significant portion of the Company's inventory,
such as drugs and toiletries, experienced relatively higher price
inflation in 1996. The 1995 LIFO credit included a $4.1 million
credit related to the reduction or elimination of certain
merchandise categories, such as automotive and hardware, in
connection with the Repositioning. The remaining LIFO credit in
1995 of $5.5 million, or $0.20 per share, resulted primarily from
an overall increase in retail mark-up at year-end 1995 over
year-end 1994. This occurred as the categories that were
eliminated as part of the Repositioning had lower retail mark-ups
than the categories that were expanded, such as men's and women's
apparel. The impact of inflation was nominal in 1995. The LIFO
credit in 1994 resulted primarily from the increase in inventory
in 1994 over 1993 due to the opening of nine stores during the
year.
Selling, General, Administrative and Other Expenses
Selling, general, administrative and other expenses were
$387.2 million, $465.4 million and $434.6 million in 1996, 1995
and 1994, respectively. Excluding the nonrecurring charges
discussed above, selling, general, administrative and other
expenses were $375.5 million, $426.7 million and $431.0 million
in 1996, 1995 and 1994, respectively, or 25.3%, 22.1% and 21.3%
of sales. As a percent of sales, selling, general, administrative
and other expenses increased in 1996, primarily due to the
decline in sales. Selling, general, administrative and other
expenses decreased in 1996 compared to 1995 largely due to a
number of expense reduction and cost control initiatives. Payroll
decreased $60.9 million in 1996 compared with 1995 as a result of
the reduction of the workforce by approximately 950 positions
during the second quarter of 1995, the elimination of 390 sales
support positions in connection with streamlining the Company's
store organization in the first quarter of 1996 and the decrease
in the number of stores from year-end 1995 to year-end 1996.
Other factors contributing to the decrease in selling, general,
administrative and other expenses were a decrease in retirement
expense as a result of the suspension of additional benefit
accruals under the retirement plan as of January 1, 1996,
reduction of recorded reserves on a closed store and a decrease
in credit card fees paid due to the decline in sales. These
decreases in selling, general, administrative and other expenses
were partially offset by an increase in advertising expense
during 1996, primarily for the costs associated with the
Repositioning and the highly promotional environment, and an
increase in stock-based compensation expense as the result of a
new restricted stock program for key executives implemented
during 1996. Selling, general, administrative and other expenses
for 1995 included one-time pre-tax benefits of $4.0 million
related to real estate transactions and $3.8 million on the
curtailment of the Company's defined benefit pension plan.
The increase in selling, general, administrative and other
expenses as a percentage of sales in 1995 is due to lower sales,
higher advertising expense as a result of the highly promotional
environment and higher depreciation and property tax expenses due
to an increase in the number of stores.
Net Interest Expense
Net interest expense increased $11.4 million in 1996 to
$27.6 million, compared with $16.2 million in 1995. Of this
increase, $4.9 million is due to the financing obligation
resulting from the sale/leaseback transactions in the fourth
quarter of 1995 and the first quarter of 1996, and $4.9 million
is due to higher short-term borrowings in 1996. The remaining
increase in net interest expense is primarily from a decrease in
interest income.
Net interest expense increased $6.3 million in 1995 to $16.2
million, compared with $9.9 million in 1994. Over half of the
increase is due to 1995 reflecting a full year of interest on
certain medium term notes, which were issued in late 1994. The
remaining increase in net interest expense is primarily due to
higher short-term borrowings in 1995 that resulted partially from
the decline in sales.
Provision for Income Taxes
The income tax benefit was $35.8 million in 1996 compared
with $11.9 million in 1995 and an income tax provision of $18.4
million in 1994. The income tax benefit in 1996 and 1995
resulted from the net operating loss. The effective income tax
rates were 38.0%, 37.4% and 39.0% in 1996, 1995 and 1994,
respectively. Other taxes that are not affected by the Company's
operating loss caused a reduction in the effective tax rate in
1996 and 1995.
Inflation Impact
Inflation did not materially affect sales growth and
operating earnings. The Company believes that, as a result of
valuing inventory on a LIFO basis, the current cost of
merchandise is reflected in operating results.
Liquidity and Capital Resources
Operating Activities
Cash flow from operations improved by $49.0 million in 1996
and decreased $150.0 million in 1995. Cash used by operations,
consisting of net income adjusted for non-cash expense items and
changes in working capital, was $32.6 million in 1996 and $81.6
million in 1995, compared with cash provided by operations of
$68.4 million in 1994. Detailed information on the Company's
cash flows is presented in the Statement of Cash Flows in the
Financial Statements. The increase in cash flow from operations
in 1996 is due to an increase in cash provided by working
capital, offset by the net operating loss and a reduction in
deferred taxes. The decrease in cash provided from operations in
1995 was due primarily to the net operating loss, a decrease in
accounts payable and income taxes payable and an increase in
other current assets, offset partially by an increase in accrued
expenses.
The $28.8 million decrease in inventories between 1995 and
1996 is primarily attributable to the aggressive markdown and
clearance of discontinued and excess inventory in the fourth
quarter of 1996 and, to a lesser extent, two fewer stores at
year-end 1996. The $8.7 million decrease in accounts payable in
1996 resulted from reduced inventory levels and a general
tightening of credit terms. The decrease in accrued expenses in
1996 over 1995 is largely due to a $14.2 million reduction in
accrued liabilities resulting from the payment of construction in
process costs related principally to remodeling and refixturing
for the Repositioning. A decrease in payroll, benefit and
insurance accruals resulting from the reduced workforce and the
suspension of benefit accruals under the retirement plan and
profit sharing plan also contributed to the decrease in accrued
expenses in 1996.
The decrease in non-current deferred income taxes in 1996
resulted primarily from the creation of a net operating loss
carryforward during 1996 and the conclusion of an IRS examination
that resulted in significant capital recovery adjustments. With
the completion of this IRS examination, all years through 1995
are reviewed and tentatively settled. These decreases in non-
current deferred taxes were partially offset by an increase in
the deferred tax liability from the sale/leaseback of 16 store
properties in 1995 and 1996. For book purposes, the
sale/leaseback transactions were recorded under the financing
method with no gain or loss recognized. The properties continue
to be reported as assets on the books of the Company. As future
book depreciation is recorded on the sale/leaseback assets, the
related deferred income tax liability will be reduced.
The decrease in accounts payable and corresponding increase
in short-term debt in 1995 reflected the Company's greater
reliance on short-term debt to fund working capital as a result
of reduced sales and earnings. The Company's voluntary
shortening of payment terms to take advantage of additional trade
discounts, as well as a general tightening of credit terms,
contributed to the $96.0 million decrease in accounts payable in
1995. As a result of the net operating loss in 1995, the Company
had an income tax receivable of $13.7 million in 1995, compared
with income taxes payable of $11.1 million in 1994. The $7.0
million increase in other current assets was primarily due to the
$13.7 million income tax receivable, offset by a $4.4 million
decrease in receivables primarily from the refund of a cash bond
upon favorable dismissal of a lawsuit against the Company. The
increase in accrued expenses in 1995 over 1994 is largely due to
$7.6 million of reserves remaining at January 27, 1996, related
to store closings. The accrual of nonrecurring costs in
connection with the expense reductions and the Repositioning also
contributed to the increase in accrued expenses in 1995.
The Company has taken several actions aimed at improving its
profitability. As discussed above, the Company cut benefit costs
by suspending additional benefit accruals under its retirement
plan and streamlined its sales organization in early 1996,
eliminating 390 sales support positions. At year-end 1996, the
Company reduced its workforce by 67 corporate positions as an
overhead reduction initiative. The Company plans to open or
expand 14 more departments in spring of 1997 as part of phase
three of the Repositioning. In addition, during the fourth
quarter of 1996, the Company opened nine Venture Dollar stores in
existing trade areas to test-market the new concept. The Venture
Dollar stores carry convenience-oriented, low-priced items and
are approximately 7,000 to 10,000 square feet in size.
Investing Activities
The following table summarizes capital expenditures by type
for each of the last three years:
(millions) 1996 1995 1994
New stores $ 3 $13 $65
Remodeling and refixturing 1 33 8
Distribution facilities 1 2 2
Equipment and other 14 13 8
Total capital expenditures $19 $61 $83
The decline in capital expenditures for new stores in 1996
and 1995 is due to the reduced number of new store openings. One
new store was opened in 1996, which was a conversion of an
existing building, compared with five new stores opened in 1995
and nine new stores in 1994. The increase in remodeling and
refixturing expenditures in 1995 is primarily the result of $25.5
million of capital expenditures to make the physical changes
necessary for phase one of the Company's Repositioning.
The Company does not anticipate opening any new family value
stores in 1997. The capital expenditure budget totals
approximately $18.0 million for 1997 and is expected to be used
primarily to remodel existing stores and for the ordinary repair
and replacement of store and distribution center assets.
Investing activities in 1996 includes proceeds of $6.2
million for the sale of assets, primarily excess real estate.
Financing Activities
On June 28, 1996, the Company terminated its Credit
Agreement with The First National Bank of Chicago, as agent, and
a syndicate of banks and entered into an agreement with
BankAmerica Business Credit, Inc., as agent, and a syndicate of
financial institutions for a secured revolving credit facility
(the "Credit Facility") consisting of revolving credit loans and
letters of credit of up to $225 million in the aggregate, with a
sublimit of $125 million for letters of credit. The Credit
Facility was for a term of three years through June 27, 1999, and
was secured by the inventory, equipment and substantially all
other assets of the Company, excluding leased or mortgaged real
estate and certain personal property under leases.
The Credit Facility required the Company to meet certain
quarterly covenants, including a fixed charge coverage ratio.
Under the terms of the Credit Facility, the Company was
prohibited from paying dividends on its common stock. Interest
on the borrowings was payable based on multiple rate options.
Additionally, the Company was required to pay certain unused line
fees and letter of credit fees.
As of January 25, 1997, the Company had outstanding
borrowings of $106.0 million and letters of credit of $33.3
million, leaving $12.9 million unused under this facility.
Subsequent to year-end 1996, the Company terminated the
Credit Facility with BankAmerica Business Credit and entered into
an agreement with BT Commercial Corporation for a secured
revolving credit facility (the "Revolving Credit Facility")
consisting of revolving credit loans and letters of credit of up
to $250 million in the aggregate, with a sublimit of $125 million
for letters of credit. The Revolving Credit Facility is for a
term of three years, and is secured by the inventory, equipment
and substantially all other assets of the Company, excluding
leased or mortgaged real estate and certain personal property
under leases. The Revolving Credit Facility requires the Company
to meet certain quarterly financial covenants, including minimum
interest coverage and accounts payable to inventory ratios.
Under the terms of the Revolving Credit Facility, the Company is
prohibited from paying dividends on its common stock. Interest
on the borrowings is payable based on multiple rate options.
Additionally, the Company is required to pay certain unused line
fees and letter of credit fees. As a result of the termination
of its previous Credit Facility, the Company will record an
extraordinary charge of approximately $3.5 million, before taxes,
in the first quarter of 1997. The charge is primarily for the
write-off of unamortized deferred financing costs and the
prepayment penalties.
The ratio of total debt (including the present value of
operating leases) to total capital was 73% at year-end 1996,
compared with 66% at year-end 1995, as detailed below:
(millions) 1996 1995
Debt:
Short-term borrowings $106 $115
Current and long-term debt 183 172
Present value of operating lease payments 256 262
Total debt $545 $549
Capitalization:
Shareowners' investment 182 241
Total debt 545 549
Deferred gain, income taxes and ITC 23 39
Total capitalization $750 $829
Total debt divided by total capitalization 73% 66%
Of the $125.7 million of cash flows provided by financing
activities in 1995 (see Statement of Cash Flows), $115.0 million
is from the increase in outstanding short-term borrowings. The
Company relied on short-term debt to provide additional working
capital in 1995 because of the reduced net sales and net earnings
and the reduction in the accounts payable balance.
Cash flows from financing activities in 1995 includes
proceeds of $25.0 million from the sale/leaseback of ten store
properties. Cash flows from financing activities in 1996 includes
proceeds of $15.0 million from the sale/leaseback of six store
properties. The proceeds from the sale/leaseback transactions
were used to meet working capital and capital expenditure needs
associated with the Company's Repositioning and for other
corporate purposes. The sale/leasebacks were accounted for as
financing transactions in accordance with Statement of Financial
Accounting Standards No. 98, "Accounting for Leases," because of
the below-market rents. The obligation from the sale/leaseback
transactions is included in long-term debt and current maturities
of long-term debt.
The increase in long-term debt in 1996 over 1995 is due
primarily to the $15.0 million obligation from the 1996
sale/leaseback, net of other regularly-scheduled maturities of
long-term debt and capital leases.
Proceeds from the issuance of $56.0 million of medium-term
debt securities accounted for most of the Company's cash flow
from financing activities in 1994. The medium term notes have
interest rates ranging from 8.77% to 9.32%. During the fourth
quarter of 1996,(i) Standard & Poor's lowered the ratings of the
medium term notes and 6.75% revenue bonds due March 1, 2009 from
B to B- and lowered the ratings of the Company's preferred stock
from B- to CCC+ and (ii) Moody's Investor Services lowered the
ratings of the medium term notes from B1 to B3 and lowered the
ratings on the Company's preferred stock from b2 to caa. Debt
ratings by various rating agencies reflect the agencies' opinions
of the ability of the issuers to repay debt obligations
punctually. Lower ratings generally result in higher future
borrowing costs. At the end of 1996, the Company had $94.0
million available to be issued under the 1994 shelf registration
statement filed with the Securities and Exchange Commission.
The net book value of property collateralized under
long-term debt and capital lease arrangements has increased from
$113.9 million at year-end 1995 to $138.9 million at the end of
1996. The increase is attributable to the net book value of the
property included in the sale/leaseback transaction during 1996,
which was accounted for as a financing as previously discussed.
At year-end 1996, the Company had five stores, one distribution
center, one photo studio and one undeveloped new store site
unencumbered. However, these properties were mortgaged under the
Revolving Credit Facility entered into subsequent to year-end
1996.
Dividends on common shares were $3.7 million and $10.0
million in 1995 and 1994, respectively. On March 3, 1995, the
Company announced a change in its dividend policy, reducing the
quarterly dividend on its common stock from $.145 to $.07 for the
second quarter of 1995. The Company later announced the
elimination of the common stock dividend, commencing with the
third quarter of 1995. The Company is prohibited from paying a
dividend on its common stock during the remaining term of the
Revolving Credit Facility. The Company paid dividends of $2.5
million in 1996, 1995 and 1994 on its cumulative convertible
preferred stock.
On March 2, 1995, the Company's Board of Directors
authorized the repurchase of up to 500,000 shares of the
Company's common stock and 300,000 depository shares representing
its cumulative convertible preferred stock in the open market or
through privately negotiated transactions. No shares were
repurchased during 1995 or 1996, and the Company does not
currently anticipate any repurchases in 1997.
With the elimination of the common stock dividend, moderate
planned capital expenditures in 1997, and ongoing cost control
efforts, the Company believes that working capital and capital
expenditure requirements for 1997 will be funded through a
combination of cash flows from operations and borrowings under
its existing Revolving Credit Facility. Although the Company
believes its liquidity is sufficient to meet its current and
anticipated needs for 1997, if providers of the goods and
services to the Company materially tighten credit terms, vendors
stop shipping goods, the Company's sales are significantly below
plan, customers do not accept the Repositioning strategy, or
other unanticipated material negative events occur, the Company
may need to consider alternative sources of funding.
Forward Looking Statements
Certain matters discussed above, such as the Company's
expectations with respect to 1997 sales, the amounts of future
capital expenditures, and the sources and adequacy of funds for
future working capital and capital expenditure requirements,
constitute "forward looking" statements and as such are based on
assumptions and estimates. Actual results may differ materially
from those in the forward looking statements. Factors that could
cause actual results to differ materially from the forward
looking statements include, but are not limited to: (i) economic
and weather conditions in the regions in which the Company's
stores are located and their effect on the buying patterns of the
Company's customers, (ii) consumer spending and debt levels,
(iii) the level of support provided by the Company's numerous
providers of goods and services, (iv) inventory imbalances caused
by fluctuations in consumer demand, (v) competition, including
specifically price competition, (vi) cost and availability of
capital and (vii) the success of the Company's Repositioning
strategy.
STATEMENT OF EARNINGS
(dollars in thousands, except per share)
FISCAL YEAR ENDED
January 25, January 27, January 28,
1997 1996 1995
Net sales $1,485,759 $1,928,808 $2,017,283
Cost and expenses:
Cost of merchandise sold 1,165,325 1,478,946 1,525,691
Selling, general, administrative
and other expenses 387,173 465,377 434,598
Net interest expense:
Interest expense 28,724 18,394 11,309
Interest income (1,148) (2,168) (1,395)
Net interest expense 27,576 16,226 9,914
Earnings (loss) before income
taxes (94,315) (31,741) 47,080
Provision (benefit) for
income taxes (35,837) (11,886) 18,367
NET EARNINGS (LOSS) (58,478) (19,855) 28,713
Dividends on preferred stock 2,500 2,500 2,500
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREOWNERS $ (60,978) $ (22,355) $ 26,213
NET EARNINGS (LOSS)
PER COMMON SHARE $ (3.38) $ (1.29) $ 1.53
AVERAGE COMMON SHARES
OUTSTANDING (IN THOUSANDS) 18,025 17,308 17,181
See Accompanying Notes to the Financial Statements.
BALANCE SHEET
(dollars in thousands, except par value)
January 25, January 27,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 10,178 $ 57,465
Accounts receivable, net 14,013 14,290
Merchandise inventories 274,393 303,200
Other current assets 19,354 21,409
Total current assets 317,938 396,364
Property and equipment, at cost:
Land 56,254 63,380
Buildings and improvements 253,718 260,559
Furniture, fixtures and equipment 201,916 186,824
Property under capital leases 21,000 21,000
532,888 531,763
Accumulated depreciation and amortization (168,977) (145,212)
Net property and equipment 363,911 386,551
Other assets, net 5,811 5,228
Total assets $ 687,660 $ 788,143
LIABILITIES AND SHAREOWNERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 4,371 $ 3,905
Short-term debt 105,979 115,000
Accounts payable 124,118 132,806
Accrued expenses 65,282 84,036
Total current liabilities 299,750 335,747
Long-term debt 179,059 168,529
Other liabilities 3,838 3,915
Deferred income taxes 4,012 18,440
Deferred investment tax credits - 56
Deferred gain on sale/leaseback 19,070 20,507
Shareowners' investment:
Common stock, par value $1.00; 50,000,000 shares
authorized, 18,286,224 and 17,345,557
outstanding for 1996 and 1995, respectively 18,286 17,346
Preferred stock, par value $1.00; 2,500,000 shares
authorized, 76,930 outstanding for 1996 and 1995 77 77
Contributed capital 95,388 90,345
Retained earnings 72,203 133,181
Deferred Compensation (4,023) -
Total shareowners' investment 181,931 240,949
Total liabilities and shareowners' investment $ 687,660 $ 788,143
See Accompanying Notes to Financial Statements
<TABLE>
STATEMENT OF SHAREOWNERS' INVESTMENT
(dollars in thousands, except per share)
<CAPTION>
TOTAL
COMMON STOCK PREFERRED STOCK CONTRIBUTED RETAINED DEFERRED SHAREOWNERS'
SHARES DOLLARS SHARES DOLLARS CAPITAL EARNINGS COMPENSATION INVESTMENT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 29, 1994 17,083,347 $ 17,083 76,930 $ 77 $ 87,174 $143,021 - $247,355
Net earnings - - - - - 28,713 - 28,713
Contribution to
profit sharing
plan 41,594 42 - - 874 - - 916
Dividends:
Common stock
($0.58 per share) - - - - - (9,982) - (9,982)
Preferred stock
($32.50 per share) - - - - - (2,500) - (2,500)
Exercise of
stock options 67,695 68 - - 524 - - 592
Distribution of
spin-off
incentives 52,429 52 - - 933 - - 985
Other 12,467 13 - - 247 - - 260
BALANCE AT
JANUARY 28, 1995 17,257,532 $ 17,258 76,930 $ 77 $ 89,752 $159,252 - $266,339
Net loss - - - - - (19,855) - (19,855)
Dividends:
Common stock
($0.215 per share) - - - - - (3,716) - (3,716)
Preferred stock
($32.50 per share) - - - - - (2,500) - (2,500)
Exercise of
stock options 9,438 9 - - 82 - - 91
Other 78,587 79 - - 511 - - 590
BALANCE AT
JANUARY 27, 1996 17,345,557 $ 17,346 76,930 $ 77 $ 90,345 $133,181 - $240,949
Net loss - - - - - (58,478) - (58,478)
Contribution to
profit sharing
plan 199,985 200 - - 760 - - 960
Dividends:
Preferred stock
($32.50 per share) - - - - - (2,500) - (2,500)
Restricted Stock
granted to
employees (net of
forfeitures) 755,014 755 - - 4,239 - $ (5,446) (452)
Earned Compensation - - - - - - 1,423 1,423
Other (14,332) (15) - - 44 - - 29
BALANCE AT
JANUARY 25, 1997 18,286,224 $ 18,286 76,930 $ 77 $ 95,388 $ 72,203 $ (4,023) $181,931
</TABLE>
<TABLE>
Outstanding common shares are net of shares held in treasury. Treasury share activity for the last three
years is summarized below:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance, beginning of year - - 30,134
Shares acquired 34,115 - -
Shares distributed:
Spin-off incentives - - (30,134)
BALANCE, END OF YEAR 34,115 - -
</TABLE>
See accompanying Notes to Financial Statements
STATEMENT OF CASH FLOWS
(dollars in thousands, except per share) FISCAL YEAR ENDED
January 25, January 27, January 28,
1997 1996 1995
OPERATING ACTIVITIES:
Net earnings (loss) $ (58,478) $ (19,855) $ 28,713
Expenses not requiring the
outlay of cash:
Depreciation and amortization 32,512 31,165 27,771
Deferred income tax and ITC (14,484) (1,006) 4,741
Other 2,099 5,593 845
Working capital and other 5,801 (97,467) 6,328
(32,550) (81,570) 68,398
INVESTING ACTIVITIES:
Capital expenditures (18,797) (61,300) (83,332)
Proceeds from sale of assets 6,229 - -
Other 776 1,254 473
(11,792) (60,046) (82,859)
FINANCING ACTIVITIES (see note below):
Short-term borrowings (payments) (9,021) 115,000 -
Proceeds from sale/leaseback 15,000 25,000 -
Additions to long-term debt - - 56,000
Repayments of long-term debt (4,004) (8,347) (3,438)
Financing costs (2,314) (411) (824)
Dividends (2,500) (6,216) (12,482)
Proceeds from stock options
and spin-off incentives - 681 1,837
Other (106) - -
(2,945) 125,707 41,093
Change in cash and cash equivalents (47,287) (15,909) 26,632
Cash and cash equivalents,
beginning of year 57,465 73,374 46,742
Cash and cash equivalents,
end of year $ 10,178 $ 57,465 $ 73,374
WORKING CAPITAL AND OTHER CHANGES:
Accounts receivable, net $ 277 $ (2,987) $ (2,912)
Merchandise inventories 28,807 8,827 (28,905)
Other current assets 2,055 (6,988) 1,412
Accounts payable (8,687) (96,017) 33,389
Accrued expenses (16,531) 11,139 9,750
Income taxes payable - (11,057) (5,133)
Total working capital change 5,921 (97,083) 7,601
Other (120) (384) (1,273)
Total working capital and other $ 5,801 $ (97,467) $ 6,328
Cash paid (received) during the year:
Interest $ 27,667 $ 18,803 $ 11,450
Income taxes (26,322) 9,248 17,047
Non-cash financing activities during 1996 and 1994 included contributions by the
Company of its common stock to the Venture Profit Sharing Plan, which
represented the 1995 and 1993 Company contributions, respectively. The 1995
contribution consisted of 199,985 shares of common stock with an average market
price of $4.80 per share. The 1993 contribution consisted of 41,594 shares of
common stock with an average market price of $22.02 per share. During 1996, the
Company granted 862,514 shares of restricted stock with a weighted average fair
value of $7 per share. $1,423 was charged to expense in 1996 related to
restricted stock.
See Accompanying Notes to the Financial Statements.
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share)
1. Description of Business and Summary of Significant Accounting
Policies
Description of Business Venture Stores, Inc. (the
"Company"), was incorporated in Delaware in 1969 as a wholly
owned name-holding subsidiary of The May Department Stores
Company ("May"). The Venture discount retail store business
operated as a division of May from its inception in 1970. In the
fall of 1989, in anticipation of its divestiture of the Venture
discount retail store business, May transferred the assets and
liabilities of the business to the Company. On October 11, 1989,
May announced its intent to distribute the Company's outstanding
shares of common stock to May's common shareowners (the
"spin-off"). May completed the spin-off of the Company on
November 3, 1990.
The Company operates family value stores focusing on quality
home, family and leisure merchandise located in nine Midwestern
and Southwestern states.
Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Fiscal Year The Company's fiscal year ends on the last
Saturday in January. Fiscal years 1996, 1995 and 1994 ended on
January 25, 1997, January 27, 1996, and January 28, 1995,
respectively. Each of these fiscal years included 52 weeks.
References to years relate to fiscal years rather than calendar
years.
Cash and Cash Equivalents The Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents. The carrying amount
of cash and cash equivalents approximates its fair value at
January 25, 1997, and January 27, 1996, because of the short
maturity of these instruments.
Merchandise Inventories Merchandise inventories are valued
at the lower of cost or market as determined primarily by the
retail inventory method and are stated on the LIFO (last-in,
first-out) cost basis. The accumulated LIFO reserves were
$20,207 and $16,855 as of January 25, 1997, and January 27, 1996,
respectively.
Property and Equipment Property and equipment are recorded
at cost and include expenditures for new facilities and
expenditures that substantially increase the useful lives of
existing facilities.
Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets. Property under capital
leases and leasehold improvements are depreciated over the
shorter of their economic lives or the related lease terms.
Interest expense related to the construction of property and
equipment is capitalized so that net interest expense will
properly reflect that portion related to current operations. The
capitalized interest is included as part of the cost of the
related asset and is amortized over its estimated useful life.
Capitalized interest costs were $143, $1,020 and $1,790 in 1996,
1995 and 1994, respectively.
Deferred Gain on Sale/Leaseback The gain on sale/leaseback
resulted from the Company's selling and subsequently leasing back
29 of its stores and two distribution center facilities in 1990
and is being amortized on a straight-line basis over the life of
the lease.
Net Sales Net sales include sales of merchandise, services
and certain leased departments. Sales are net of returns and
exclude sales tax. Leased department sales were $1,364, $2,810
and $3,969 in 1996, 1995 and 1994, respectively.
Cost and Expenses Selling, general, administrative and
other expenses include, among other items, buying, store
occupancy and warehousing costs.
Preopening Expenses Expenses associated with the opening of
new stores are expensed during the year they are incurred.
Advertising Advertising costs are expensed at the time the
advertising takes place.
Income Taxes Income taxes are accounted for using the
liability method prescribed by Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." The
liability method accounts for deferred income taxes by applying
statutory tax rates in effect at the date of the balance sheet to
differences between the book and tax basis of assets and
liabilities. Adjustments to deferred taxes resulting from
statutory rate changes flow through the tax provision in the year
of the change. Investment Tax Credits (ITC) had been deferred
and were amortized over the depreciable life of the property.
Stock-Based Compensation The Company measures compensation
expense for its stock-based employee compensation plans using the
intrinsic value method prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." This method measures
compensation cost as the excess, if any, of the stock's market
value at the time of grant over the amount the employee is
required to pay.
Net Earnings (Loss)per Common Share Net earnings (loss) per
common share are computed by dividing net earnings (loss), after
deducting preferred dividend requirements, by the weighted
average number of common shares outstanding. There was no
material effect on net earnings (loss) per common share due to
common stock equivalents during the years presented.
Reclassifications Certain reclassifications have been made
to the prior years' financial statements to conform to the
current year presentation.
2. Repositioning Program and Other Nonrecurring Items
During 1995, the Company announced plans to transform
Venture from a discount general merchandise chain to a
value-oriented family store, the "Repositioning". The
Repositioning is designed to improve gross margin. Phase one of
the Repositioning, which was completed in early March of 1996,
resulted in the reconfiguration of the store interiors and the
expansion of various merchandise assortments in order for the
Company to become a more dominant retailer in the home, family
apparel and leisure merchandise categories. The reconfiguration
provides for destination shops showcasing category-dominant lines
with additional floor space, distinctive fixtures, graphics, and
displays. In this process, the Company downsized or eliminated
certain merchandise categories with historically lower than
average margins and replaced this with merchandise categories
with higher initial mark-ups.
The Company continued to adjust its family value store
concept and merchandise mix in 1996 with phase two of the
Repositioning, which was completed in October 1996. Phase two
included expanding the gift department, further expansion of new
fixturing in domestics, introduction of a bath and body shop,
expansion of the luggage department, debut of a women's
coordinates fashion line, and introduction of convenience
automotive accessories. Phase three of the Repositioning, which
is being rolled out in 1997, includes opening or expanding 14
more departments, expansion of opening price point items and the
intensification of the everyday low pricing strategy. The
Company intends to continue to evaluate its merchandise
assortments throughout 1997.
The success of the Company's Repositioning and its effect on
future operations is dependent upon numerous factors including
customer acceptance of the new store format and merchandising
strategy, the level of support provided by the Company's numerous
providers of goods and services, cost and availability of
capital, and competition, including specifically price
competition.
The Company's 1996, 1995 and 1994 net earnings were
adversely affected by nonrecurring charges, which are included in
cost of goods sold and in selling, general, administrative and
other expenses.
1996 net earnings included nonrecurring pre-tax charges of
$50,040, or $1.72 per share. Included in these charges, which
were recorded in the fourth quarter, is approximately $42,820 for
additional markdowns, advertising and other costs incurred to
liquidate excess inventory and adjust merchandise assortments for
the implementation of phase three of the Repositioning.
Nonrecurring charges in 1996 also included approximately $6,100
associated with three stores that the Company has determined will
not reopen, $615 for severance costs for the elimination of 67
positions at year-end 1996 as a corporate overhead reduction
initiative, and approximately $505 related to other costs.
1995 net earnings included nonrecurring pre-tax charges of
$45,692, or $1.65 per share. The total cost of phase one of the
Repositioning was approximately $42,400, of which approximately
$26,000 consisted of property and equipment that was capitalized
and approximately $16,400 of nonrecurring expense which is
included in the Company's results of operations for the fiscal
year ended January 27, 1996.
The first quarter of 1995 also included $3,600 of
nonrecurring charges to complete the image builder program, which
began in the fourth quarter of 1994. This program was designed
to materially broaden the assortments of certain key merchandise
categories within housewares and domestics, while de-emphasizing
and reducing merchandise assortments in less productive
categories, including automotive and hardware.
In addition to refocusing its merchandising strategy, during
1995 the Company took other actions to improve profitability.
First, the Company reduced its workforce by approximately 950
positions in the second quarter of 1995. In the first quarter of
1996, the Company announced an additional realignment of its
store organization, which included the elimination of 390
positions. Included in the nonrecurring charges in 1995 is
approximately $6,900 related to the reduction in the workforce
during 1995 and the first quarter of 1996. Second, the Company
closed three unprofitable stores. As a result of these store
closings, the Company recorded reserves of approximately $8,600,
which is included in nonrecurring charges in 1995. Third, prior
to year end 1995, the Company announced it would close ten stores
in various markets in the first quarter of 1996. Of these ten
stores, seven were reopened during 1996. Nonrecurring charges in
1995 included approximately $4,100 related to the closing of
these locations. Nonrecurring charges in 1995 also included
approximately $2,000 for costs associated with cancelled 1996
store openings, $1,600 related to financing activities and $2,500
for other actions taken by management during the year.
During 1995, the Company recorded pre-tax benefits of
$4,000, or $0.14 per share, related to real estate transactions,
primarily the reversal of recorded reserves on a closed store due
to the property being subleased, and $3,800, or $0.14 per share,
on the curtailment of the Company's defined benefit pension plan
as discussed in Note 11. These gains are included in selling,
general, administrative and other expenses.
1994 net earnings included a $2,586 pre-tax charge, or $0.09
per share, related to the cost of asbestos abatement in one store
and a $3,000 pre-tax charge, or $0.11 per share, related to the
image builder program.
3. Environmental Costs
In October 1989, the Company recorded a pre-tax charge of
$7,700 for spin-off related environmental testing and cleanup
costs associated with property that was subject to sale/leaseback
or mortgage financing.
The reserves for environmental costs were $2,774 at January
25, 1997, and $3,042 at January 27, 1996, including $2,374 and
$2,342, respectively, classified as other long-term liabilities
on the balance sheet.
4. Relationship with May
Until the end of January 1995, the Company had an agreement
with May's Famous-Barr department store company whereby
Famous-Barr credit cards were accepted as third-party credit
cards at the Company's stores. This agreement was subject to a
prescribed reduction in the Company's use of the Famous-Barr
credit card on a store-by-store basis that began in October 1993.
Total sales on Famous-Barr credit cards were $48,384 for 1994, and
were 7.5% of total third-party credit sales for that year. The
related accounts receivable were owned and serviced by
Famous-Barr, and the Company had no exposure for uncollected
accounts.
5. Taxes
The provision (benefit) for income taxes for the last three
years were:
1996 1995 1994
Current:
Federal $(25,031) $ (9,812) $ 10,287
State and local 27 (2,153) 1,909
Taxes currently payable (receivable) (25,004) (11,965) 12,196
Deferred:
Federal (8,438) 275 5,570
State and local (2,339) 58 1,057
Deferred taxes (10,777) 333 6,627
Amortization of ITC (56) (254) (456)
Total provision (benefit)
for income taxes $(35,837) $(11,886) $ 18,367
The differences between the statutory federal income tax
rates and the effective income tax rates for the last three years
were:
1996 1995 1994
Statutory federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal tax benefit 3.3 4.3 4.1
Other, net (0.4) (2.7) 0.9
Deferred ITC amortization .1 0.8 (1.0)
Effective income tax rate 38.0% 37.4% 39.0%
The provisions for deferred income taxes consisted of:
1996 1995 1994
Spin-off incentives and
environmental costs $ 105 $ 513 $ 390
Accrued liabilities 4,693 (5,992) (949)
Inventory (1,254) 1,491 2,098
Gain on sale/leaseback 603 582 754
Depreciation 2,927 3,452 5,815
NOL carryforward (12,348) - -
AMT credit carryforward (3,257) - -
Other, net (2,246) 287 (1,481)
Total $(10,777) $ 333 $ 6,627
Deferred tax assets were:
January 25, January 27,
1997 1996
Current $ 11,007 $ 12,882
Noncurrent 35,481 19,580
Deferred tax assets $ 46,488 $ 32,462
Deferred tax liabilities were:
January 25, January 27,
1997 1996
Current $ 15,969 $ 14,390
Noncurrent 39,493 38,020
Deferred tax liabilities $ 55,462 $ 52,410
The significant deferred tax assets were:
January 25, January 27,
1997 1996
Merchandise inventories $ 1,391 $ 1,639
Property and equipment 4,775 1,637
Accrued liabilities 12,746 16,150
Deferred gain on sale/leaseback 8,007 8,722
NOL carryforward 12,348 -
AMT credit carryforward 3,257 -
Other 3,964 4,314
Deferred tax assets $ 46,488 $ 32,462
The significant deferred tax liabilities were:
January 25, January 27,
1997 1996
Merchandise inventories $ 12,153 $ 13,443
Property and equipment 38,409 35,959
Accrued liabilities 3,366 80
Other 1,534 2,928
Deferred tax liabilities $ 55,462 $ 52,410
Taxes other than income taxes consisted of:
1996 1995 1994
Payroll $ 14,444 $ 19,673 $ 19,003
Real estate and personal property 23,753 21,889 19,134
Total $ 38,197 $ 41,562 $ 38,137
As of January 25, 1997, the Company had a net operating loss
carryforward of $31,660 which expires in the year 2012 and an
alternative minimum tax credit carryforward of $3,257 which is
available to reduce federal regular income taxes over an
indefinite period.
In connection with the spin-off, the Company and May entered
into a Tax Sharing Agreement to provide for the payment of taxes
and for the entitlement to tax refunds for periods ending on and
prior to the spin-off date, and to provide for various related
matters. The Company and May each agreed to indemnify the other
party in specified circumstances, including the possible
occurrence of certain events after the spin-off that might make
the spin-off a taxable transaction.
6. Accrued Expenses
The major components of accrued expenses were:
January 25, January 27,
1997 1996
Real estate and
personal property taxes $ 19,489 $ 19,399
Insurance reserves 12,974 16,018
Closed store reserves 6,518 7,619
Construction in progress 4,869 19,041
Payroll and benefits 6,009 8,413
Reserve for environmental costs 400 700
Current deferred income taxes 4,962 1,508
Other 10,061 11,338
Total $ 65,282 $ 84,036
7. Notes Payable
On June 28, 1996, the Company terminated its Credit
Agreement with The First National Bank of Chicago, as agent, and
a syndicate of banks and entered into an agreement with
BankAmerica Business Credit, Inc., as agent, and a syndicate of
financial institutions for a secured revolving credit facility
(the "Credit Facility") consisting of revolving credit loans and
letters of credit of up to $225,000 in the aggregate, with a
sublimit of $125,000 for letters of credit. The Credit Facility
was for a term of three years through June 27, 1999, and was
secured by the inventory, equipment and substantially all other
assets of the Company, excluding leased or mortgaged real estate
and certain personal property under leases.
The Credit Facility required the Company to meet certain
quarterly covenants, including a fixed charge coverage ratio.
Under the terms of the Credit Facility, the Company was
prohibited from paying dividends on its common stock. Interest
on the borrowings was payable based on multiple rate options.
Additionally, the Company was required to pay certain unused line
fees and letter of credit fees.
Subsequent to year-end 1996, the Company terminated the
Credit Facility with BankAmerica Business Credit and entered into
an agreement with BT Commercial Corporation for a secured
revolving credit facility (the "Revolving Credit Facility")
consisting of revolving credit loans and letters of credit of up
to $250,000 in the aggregate, with a sublimit of $125,000 for
letters of credit. The Revolving Credit Facility is for a term
of three years, and is secured by the inventory, equipment and
substantially all other assets of the Company, excluding leased
or mortgaged real estate and certain personal property under
leases. The Revolving Credit Facility requires the Company to
meet certain quarterly financial covenants, including minimum
interest coverage and accounts payable to inventory ratios.
Under the terms of the Revolving Credit Facility, the Company is
prohibited from paying dividends on its common stock. Interest
on the borrowings is payable based on multiple rate options.
Additionally, the Company is required to pay certain unused line
fees and letter of credit fees. As a result of the termination
of its previous Credit Facility, the Company will record an
extraordinary charge of approximately $3,500, before taxes, in
the first quarter of 1997. The charge is primarily for the
write-off of unamortized deferred financing costs and the
prepayment penalties.
During 1995, the Company entered into a Revolving Letter of
Credit Agreement, which expired February 28, 1996, in the amount
of $25,000.
Short term borrowings for the last three years were:
1996 1995 1994
Short-term borrowings at year-end $105,979 $115,000 -
Weighted average interest rate on
short-term borrowings at year-end 7.82% 6.79% -
Outstanding letters of credit $ 33,318 $ 56,712 $ 44,200
Average short-term borrowings $115,176 $ 71,305 $ 37,612
Average interest rate
on average balance 7.34% 7.02% 5.47%
Maximum balance outstanding $195,431 $137,169 $ 88,200
Unused credit facilities were $12,910 and $28,288 at January
25, 1997, and January 27, 1996, respectively.
8. Long-Term Debt
Long-term debt and capital lease obligations were:
January 25, January 27,
1997 1996
10.19% to 11.87%
mortgage notes due 2000 $ 65,822 $ 67,053
8.77% to 9.32% medium
term notes due 1998-2004 56,000 56,000
Industrial revenue bonds due 2006* 9,400 9,400
6.75% revenue bonds due 2009 4,910 4,910
Obligations from sale/leaseback
transactions 39,734 24,999
Capital lease obligations 7,564 10,072
183,430 172,434
Less current maturities (4,371) (3,905)
Total long-term debt $ 179,059 $ 168,529
* This is a variable-rate instrument with interest payable
monthly. The interest rate is adjusted weekly; it was 3.45% and
3.15% per annum as of January 25, 1997, and January 27, 1996,
respectively.
During 1994, the Company filed a shelf registration
statement with the Securities and Exchange Commission with
respect to the offering from time to time of up to $150,000 of
the Company's medium term notes or other debt or equity
securities.
During 1995, the Company entered into a sale/leaseback
transaction for $25,000 involving ten store properties. During
1996, the Company entered into a sale/leaseback transaction for
$15,000 involving six store properties. Both of these
transactions were accounted for as financings in accordance with
Statement of Financial Standards No. 98, "Accounting for Leases,"
and the related obligations are included in long-term debt and
current maturities of long-term debt. The obligations are being
amortized over the lease terms.
The total annual maturities of long-term debt and capital
leases are $4,371, $8,388, $18,420, $62,589 and $1,260 for 1997-
2001, respectively.
The net book value of property and equipment collateralized
under long-term debt, including the sale/leaseback transactions
and capital lease agreements, was $138,882 and $113,920 as of
January 25, 1997, and January 27, 1996, respectively. Pursuant
to an amendment to the mortgage notes, the Company prepaid $5,000
in November of 1995 and granted security interests in two
additional stores. In return for this prepayment and additional
security, all financial covenants have been eliminated under the
mortgage notes.
The fair value of the Company's long-term debt and capital
leases, based on quoted market prices when available or
discounted cash flows, using current interest rates for similar
debt, is estimated to be approximately $148,300 and $151,100 at
January 25, 1997, and January 27, 1996, respectively. The
increase in the spread between the fair value and carrying amount
of long-term debt in 1996 compared with 1995 is due to lower
quoted prices on the medium term notes and higher interest rates.
9. Lease Obligations
The Company leased 92 of its family value stores and two of
its distribution centers as of January 25, 1997. The leases
usually contain renewal options and provide for payment by the
Company of real estate taxes and other expenses and, in certain
instances, increased rentals based on a percentage of sales.
Rental expense for operating leases consisted of:
1996 1995 1994
Minimum rentals $ 36,122 $ 37,592 $ 33,851
Contingent rentals based on
defined sales volume - 566 514
Real property rentals 36,122 38,158 34,365
Equipment rentals 2,516 2,240 1,969
Total $ 38,638 $ 40,398 $ 36,334
Sublease revenues from operating leases were $4,998, $6,576
and $4,601 in 1996, 1995 and 1994, respectively, and are not
deducted from the minimum rentals above. Rental revenues,
including sublease revenues, were $8,308, $11,133, and $7,950 in
1996, 1995 and 1994, respectively, and are included as a
reduction of selling, general, administrative and other expenses
in the statement of earnings.
Future minimum lease payments under noncancelable leases
(operating leases are net of sublease revenues) as of January 25,
1997, are as follows:
Capital Operating
Leases Leases
1997 $ 3,214 $ 33,958
1998 3,214 34,307
1999 3,214 33,787
2000 962 32,080
2001 511 30,845
Thereafter 1,213 273,692
Total minimum lease payments $ 12,328 $ 438,669
Less:
Imputed interest component 4,764
Present value of net minimum lease
payments including current maturities
of capital leases of $2,705 $ 7,564
The present value of future required payments under
operating leases at January 25, 1997, was $255,553.
The components of property under capital leases were:
January 25, January 27,
1997 1996
Cost $ 21,000 $ 21,000
Accumulated amortization (13,525) (11,540)
Net book value $ 7,475 $ 9,460
On January 25, 1996 the Company sold ten store properties.
Simultaneously, the Company entered into a 25-year below market
lease of these properties with the new owner. On January 29,
1996, the Company completed the sale/leaseback of six additional
store properties. The proceeds of $25,000 in 1995 and $15,000 in
1996 from the sale/leaseback transactions provided additional
cash to meet needs for the Company's Repositioning and for other
corporate purposes. Future minimum lease payments and minimum
sublease revenues as of January 25, 1997 under the sale/leaseback
transactions completed in 1996 and 1995 are as follows:
Lease Sublease
Payments Revenues
1997 $ 5,100 $ 90
1998 5,100 $ 91
1999 5,100 $ 91
2000 5,100 $ 91
2001 5,100 $ 91
Thereafter 96,900 $ 950
Total minimum lease payments $ 122,400 $ 1,404
Less:
Imputed interest component 82,666
Present value of minimum lease
payments including current
maturities of obligation from
sale/leaseback of $298 $ 39,734
10. Common and Preferred Stock
As of January 25, 1997, 50,000,000 shares of $1 par value
common stock were authorized, with 18,320,339 issued and
18,286,224 outstanding. There were 50,000,000 shares authorized,
with 17,345,557 issued and outstanding as of January 27, 1996.
There were 34,115 and 0 shares held in treasury as of January 25,
1997, and January 27, 1996, respectively.
During May 1992, the Company completed a public offering of
769,300 Depositary Shares, each representing one-tenth of a share
of Cumulative Convertible Preferred Stock. The offering was
priced at $50 per Depositary Share, with an annual dividend rate
of $3.25 per Depositary Share. The Cumulative Convertible
Preferred Stock is convertible at the option of the holder into
the common stock of the Company at an initial conversion price of
$38 per common share.
The Company has 2,500,000 shares of $1 par value preferred
stock authorized, with 76,930 Cumulative Convertible shares
issued and outstanding as of January 25, 1997, and January 27,
1996.
11. Retirement and Profit Sharing
Effective January 1, 1990, the Company adopted the Venture
Stores, Inc., Retirement Plan ("Venture Retirement Plan") and the
Venture Stores, Inc., Supplementary Retirement Plan ("Venture
Supplementary Plan"). The Venture Retirement Plan is a defined
benefit pension plan that covers substantially all associates of
the Company who are at least 21 years of age, have completed one
year of employment and are paid for 1,000 or more hours in a
year. The Venture Retirement Plan is noncontributory and
benefits are based upon years of credited service, amount of pay
and covered compensation. Effective January 1, 1996, the Venture
Retirement Plan was amended to suspend benefit accruals. Under
the amendment, service continues to be credited for purposes of
determining eligibility to participate and vested status. In the
fourth quarter of 1995, the Company recorded a $3,827 gain,
included in selling, general, administrative and other expenses,
related to the curtailment of the Venture Retirement Plan. The
Venture Supplementary Plan is a noncontributory and unfunded plan
that covers associates whose compensation in any year equaled or
exceeded twice the Social Security wage base in that year. Both
plans operate on a calendar year. Pension expense for both plans
is based on information provided by an outside actuarial firm,
which uses assumptions to estimate the total benefits ultimately
payable to associates and then allocates this cost to service
periods.
The Venture Retirement Plan is funded with at least the
minimum but no more than the maximum funding that is required
under ERISA (Employee Retirement Income Security Act of 1974).
The following tables summarize the funded status of the
plans, components of pension expense and actuarial assumptions as
of December 31 of each year.
Funded Status of the Venture Retirement Plan:
1996 1995 1994
Actuarial Present Value of
Benefit Obligations:
Vested benefit obligation $(15,016) $(19,764) $(12,925)
Nonvested benefit obligation (959) (1,444) (4,251)
Accumulated benefit
obligation (ABO) (15,975) (21,208) (17,176)
Estimated effect of future
salary increases 0 0 (4,844)
Projected benefit obligation (PBO) (15,975) (21,208) (22,020)
Plan assets at fair value (primarily
equity and fixed-income securities) 19,653 21,461 19,666
Excess of plan assets over PBO 3,678 253 (2,354)
Unrecognized net (gain) loss (1,669) 0 1,363
Unrecognized prior service cost 0 0 (256)
Prepaid(accrued) pension cost $ 2,009 $ 253 $ (1,247)
Status of the Venture Supplementary Plan:
1996 1995 1994
Actuarial Present Value of
Benefit Obligations:
Vested benefit obligation $ (1,322) $ (1,423) $ (634)
Nonvested benefit obligation (155) (530) (26)
Accumulated benefit
obligation (ABO) (1,477) (1,953) (660)
Estimated effect of future
salary increases (443) (1,516) (564)
Projected benefit obligation (PBO) (1,920) (3,469) (1,224)
Plan assets at fair value 0 0 0
Excess of PBO over plan assets (1,920) (3,469) (1,224)
Unrecognized net (gain) loss (1,278) 328 (861)
Unrecognized prior service cost 999 1,070 260
Unrecognized obligation 193 241 290
Accrued pension cost $ (2,006) $ (1,830) $ (1,535)
Components of Pension Expense:
1996 1995 1994
Service cost $ 388 $ 2,519 $ 2,857
Interest on PBO 1,544 1,805 1,746
Actual return on assets (2,446) (4,874) 374
Net amortization and deferral 899 3,404 (1,750)
Total $ 385 $ 2,854 $ 3,227
Actuarial Assumptions:
1996 1995 1994
Discount rate 7.50% 7.00% 8.00%
Expected return on plan assets 8.00% 8.00% 8.00%
Salary increase 5.00% 5.00% 5.00%
Effective January 1, 1990, the Company adopted the Venture
Stores, Inc., Profit Sharing Plan ("Venture Profit Sharing
Plan"). The plan operates on a calendar year. Associates
eligible for the Venture Retirement Plan are also eligible to
participate in the Venture Profit Sharing Plan. The employer
matching rate is variable and discretionary. Effective January
1, 1996, the Company matches 0% to 100% of each associate's
contributions up to 5% of pay. Prior to January 1, 1996, the
Company matched 25% to 75% of each associate's contribution up to
5% of pay. Prior to January 1, 1996, the Company matched 25% to
75 % of each associate's contribution up to 5% of pay. The
matching rate was 0%, 25% and 25% in 1996, 1995 and 1994,
respectively. The Company's matching contributions charged to
expense were $1,151 and $1,003 in 1995 and 1994, respectively.
As of January 25, 1997, and January 27, 1996, there were no
significant postretirement benefits other than pensions.
12. Stock-Based Compensation Plans
The Company has a stock option plan (the "Stock Option
Plan") that authorizes the granting of options to purchase common
stock to management associates of the Company. The Stock Option
Plan provides for the granting of options to purchase not more
than 800,000 shares of common stock. The options are granted at
the market price on the date of grant, have a maximum term of 10
years, may be exercised in installments only after stated
intervals of time and are conditioned upon continued active
employment with the Company, except for periods following
retirement, disability or death. Beginning in June 1993, the
Company stopped granting any additional options under this plan.
The Company also established a plan (the "Stock Appreciation
Rights Plan") under which stock appreciation rights can be
granted in connection with options granted under the Stock Option
Plan. The aggregate number of shares of common stock as to which
rights may be exercised shall not exceed 270,000 shares. The
rights may be exercised only upon surrender of the related
options. There were no rights outstanding as of January 25,
1997, nor January 27, 1996.
In May 1993, the shareowners approved a long-term
performance plan (the "1992 LTPP") under which awards may be
granted to associates of the Company. In May 1996, the
shareowners approved an amendment to the 1992 LTPP to allow for
implementation of a restricted stock program for key executives.
Under the 1992 LTPP, incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock and
performance awards may be granted. A maximum of 1.5 million
shares of common stock may be issued under the 1992 LTPP, as
amended. Options granted under the plan will be granted at the
market price on the date of grant, have a maximum term of 10
years, may be exercised in installments after stated intervals of
time and are conditioned upon continued active employment with
the Company, except for periods following retirement, disability
or death. Restricted stock grants may be issued at a purchase
price less than market price on the date of grant, or as a bonus,
and may be subject to restrictions, conditions, terms and/or
performance goals such as return on net assets, earnings per
share, share price change, return on equity, free cash flow per
share and operating earnings. The market price in excess of the
purchase price of restricted stock is charged to income ratably
over the period during which the restrictions lapse. The Company
granted 862,514 shares, 70,000 shares and 15,000 shares of
restricted stock under the 1992 LTPP in 1996, 1995 and 1994,
respectively, and cancelled 107,500, 3,333 and 3,333 shares in
1996, 1995 and 1994, respectively. The weighted average fair
value of restricted stock granted was $7, $8 and $20, in 1996,
1995 and 1994, respectively.
The Company accounts for these stock-based compensation
plans under APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost has been
recognized for its stock option plans. The compensation cost
that has been charged against income for restricted stock was
$1,423, $106 and $62 for 1996, 1995 and 1994, respectively.
Had compensation cost for the Company's stock-based
compensation plans been determined based on the fair value at the
grant dates for awards under these plans consistent with the
method of FASB Statement No. 123, "Accounting for Stock-Based
Compensation", the Company's net earnings and net earnings per
common share would approximate the pro forma amounts indicated
below:
1996 1995
Net Earnings (Loss) As Reported $ (58,478) $ (19,855)
Pro Forma $ (58,782) $ (20,332)
Net Earnings (Loss) As Reported $ (3.38) $ (1.29)
Per Common Share Pro Forma $ (3.40) $ (1.32)
Because the Statement 123 method of accounting has not been
applied to options granted prior to January 29, 1995, the
resulting pro forma compensation cost may not be representative
of that to be expected in future years.
The following table sets forth the share option activity for
the last three years. The options expire between five and 10
years from the date of grant.
(shares in thousands) 1996 1995 1994
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at
beginning of year 900 $13 573 $19 493 $12
Granted 47 $ 7 608 $ 7 214 $22
Exercised - - (9) $ 8 (68) $ 9
Forfeited (247) $13 (87) $19 (40) $22
Expired (124) $21 (185) $13 (26) $20
Outstanding at
end of year 576 $10 900 $13 573 $19
Exercisable at
end of year 205 $15 145 $24 230 $15
Weighted average
fair value of
options granted $ 4 $ 4
The options outstanding at January 25, 1997 have exercise
prices between $3 and $31, with a weighted average remaining
contractual life of 7 years.
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model with the
following assumptions used for grants in 1996 and 1995: weighted
average risk-free interest rate of 6.2 and 6.3 percent for 1996
and 1995, respectively; expected dividend yield of 0 percent;
expected life of 4 years for options with a contractual term of
5 years, and 6 years for options with a contractual term of 10
years; expected volatility of 60 percent.
13. Shareowner Rights Plan
On September 25, 1990, the Company adopted a Shareowner
Rights Plan ("Rights Plan"). One Right is attached to each
outstanding share of the Company's common stock. The Rights
become exercisable only under certain circumstances involving a
substantial purchase or tender offer for the Company's common
stock by a person or group. The Rights will expire at the close
of business on September 25, 2000, unless previously redeemed by
the Company.
When exercisable, each Right entitles the owner to purchase
from the Company one one-hundredth of a share of Junior
Participating Preferred Stock, par value $1.00 per share ("Rights
Plan Preferred Stock"), for $60.00, subject to adjustment to
prevent dilution. Because of the nature of the Rights Plan
Preferred Stock's dividend, liquidation and voting rights, the
value of one one-hundredth of a share should approximate the
value of one share of common stock.
If the required conditions related to substantial purchase
or tender offer for the Company's common stock are met, each
holder of a Right (other than an "Acquiring Person" or an
"Adverse Person") will have the right to receive, upon exercise
at the then-current exercise price, common stock of the Company
or acquiring company having a value equal to two times the
exercise price of the Right.
Until a Right is exercised, the holder, as such, will have
no rights as a shareowner of the Company. The Rights have
certain anti-takeover effects, because the Rights will cause
substantial dilution to a person or group that acquires a
substantial interest in the Company without the prior approval of
the Board of Directors.
14. Pending Litigation
The Company is a party to a number of legal proceedings
arising in the ordinary course of business. While the outcome of
these legal proceedings cannot be predicted with certainty,
management does not expect these matters to have a material
adverse effect on the Company's financial position or results of
operations.
15. Long-Lived Assets
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No.121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This standard requires
that long-lived assets, certain intangibles and goodwill related
to those assets to be held and used, be reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. This standard also
requires that long-lived assets and certain identifiable
intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. The Company
adopted this Statement in fiscal 1996 and determined that no
impairment loss needs to be recognized.
16. Quarterly Results (unaudited)
Summarized below are the quarterly results for the last two
years.
Net (Loss)
Earnings
Cost of Net Earnings Available to
Net Merchandise Earnings (Loss) Common
Sales Sold (Loss) per share Shareowners
1996
First $ 351,240 $ 260,336 $ 1,737 $ 0.06 $ 1,112
Second 329,423 246,218 (3,810) (0.24) (4,435)
Third 330,233 246,506 (9,203) (0.54) (9,828)
Fourth 474,863 412,265 (47,202) (2.62)(1) (47,827)
Year $1,485,759 $1,165,325 $(58,478) $(3.38) $(60,978)
1995
First $ 440,916 $ 332,047 $ (3,192) $(0.22) $ (3,817)
Second 456,830 348,629 (17,341) (1.04) (17,966)
Third 444,612 345,460 (12,580) (0.76) (13,205)
Fourth 586,450 452,810 13,258 0.73(2) 12,633
Year $1,928,808 $1,478,946 $(19,855) $(1.29) $(22,355)
(1) Fully diluted and primary loss common share in the fourth
quarter of 1996 were $2.62.
(2) Fully diluted and primary earnings per common share in the
fourth quarter of 1995 were $0.72 and $0.73, respectively.
The estimated full-year LIFO provision is adjusted
periodically based on changes in estimates of certain variables.
Therefore, the provisions that are reported each quarter may not
necessarily be representative of the actual full-year provision.
The following table shows what the pro-forma per share impact of
the LIFO charge (credit) would have been had the final variables
been known at the beginning of the year.
1996 1995(1)
Pro As Pro As
Quarter Forma Reported Forma Reported
First $ 0.03 $ 0.02 $(0.04) $ 0.02
Second 0.03 (0.02) (0.05) 0.01
Third 0.03 0.02 (0.05) 0.02
Fourth 0.03 0.10 (0.06) (0.25)
Total $ 0.12 $ 0.12 $(0.20) $(0.20)
(1) Excludes $0.15 per share LIFO credit in the fourth quarter of
1995 related to the reduction of certain LIFO inventories in
connection with the Repositioning.
Report of Independent Public Accountants
To Venture Stores, Inc.:
We have audited the accompanying balance sheet of Venture
Stores, Inc. (a Delaware corporation), as of January 25, 1997,
and January 27, 1996, and the related statements of earnings,
shareowners' investment and cash flows for each of the three
fiscal years in the period ended January 25, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Venture Stores, Inc., as of January 25, 1997, and January 27,
1996, and the results of its operations and its cash flows for
each of the three fiscal years in the period ended January 25,
1997, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
St. Louis, Missouri
March 27, 1997
FIVE-YEAR SUMMARY
1996 1995 1994 1993 1992
Income Statement Data: (in millions)
Net sales $ 1,486 $ 1,929 $ 2,017 $ 1,863 $ 1,718
Gross margin (FIFO) 324 440 489 472 458
LIFO 3.4 (9.6) (2.9) 0.5 (1.7)
Selling, general, administrative
and other expenses 387 465 435 391 373
Nonrecurring charges (1) 50.0 45.7 5.6 - -
Operating income (loss) (67) (16) 57 80 87
Net interest expense 28 16 10 8 8
Pre-tax earnings (loss)(2) (44) 14 53 72 80
Net earnings (loss) (3) (58) (20) 29 44 49
Per Share Data:
Earnings (loss) per common share before
extraordinary item and cumulative
effect of accounting change (3.38) (1.29) 1.53 2.43 2.82
Extraordinary item and cumulative
effect of accounting change
per common share - - - 0.61 (0.13)
Earnings (loss) per common share (3.38) (1.29) 1.53 3.04 2.69
Dividends per common share - 0.215 0.580 0.575 0.555
Balance Sheet Data: (in millions)
Working capital(4) 18 61 95 75 93
Total assets 688 788 779 669 595
Long-term debt 179 169 153 100 92
Shareowners' investment 182 241 266 247 202
Debt to Total Capital (including
present value of operating leases) 73% 66% 58% 55% 58%
Selected Statistical Information:
(dollars in millions, except sales per square foot)
Total sales increase (decrease) (23.0)% (4.4)% 8.3% 8.4% 12.7%
Comparable store sales
increase (decrease) (20.2)% (9.4)% 0.0% 0.4% 3.8%
Sales per square foot $ 133 $ 168 $ 188 $ 191 $ 189
Total retail square footage
(in millions) 11.2 11.5 10.7 9.8 9.1
Capital expenditures $ 19 $ 61 $ 83 $ 97 $ 79
Depreciation and amortization 33 31 28 23 19
Rent 39 40 36 35 34
Present value of operating leases 256 262 261 250 240
Average shares outstanding
(in thousands) 18,025 17,308 17,181 17,020 16,856
Stores open at year-end 113 115 113 104 93
(1) Nonrecurring charges: Store closings, expense reduction and repositioning
programs ($50.0 million) in 1996; Store closings, expense reduction and
repositioning programs ($45.7 million) in 1995; Asbestos ($2.6 million) and
remerchandising program ($3.0 million) in 1994.
(2) Before nonrecurring charges of $50.0 million in 1996, $45.7 million in 1995
and $5.6 million in 1994.
(3) Before cumulative effect of accounting change in 1993 ($10.3 million) and
extraordinary item in 1992 ($2.2 million after-tax charge).
(4) Working capital is defined as current assets less current liabilities.
BOARD OF DIRECTORS
Robert N. Wildrick
Chairman, President and Chief Executive Officer
of Venture Stores, Inc.
Background: Chairman of Venture Stores, 1996-Present; President
and CEO, 1995-Present; Corporate Executive Vice President for
Merchandising and Sales Promotion and Chief Merchandising Officer
of Belk Stores Services, Inc. ("Belk"), 1991-1995; Other Belk
positions: Corporate Senior Vice President, 1982-1991; Vice
President, General Manager Corporate Buying Office, 1980-
1982; Corporate Vice President and General Merchandise Manager,
1977-1980; Group Vice President Merchandise Sales and Promotion,
1974-1977; Various management positions at Sanger-Harris
Department Stores, 1970-1974; Various management positions at
Bamberger Department Stores, 1968-1970.
James H. Ferstl
Executive Vice President, Chief Merchandising Officer
of Venture Stores, Inc.
Background: Executive Vice President and Chief Merchandising
Officer for Venture Stores, 1996-Present; Executive Vice
President of Product Development and Marketing, 1995-1996;
Corporate Vice President and General Merchandise Manager of
Gottschalks Department Stores, Inc., 1987-1995; Senior Vice
President/General Manager of Platt Music Corporation,
1984-1987; Executive Vice President of Broadway Southwest
Department Stores, 1981-1984; Regional Vice President of
Sanger-Harris Department Stores, 1965-1981.
Robert L. Berra (1,2)
Retired
Background: Senior Vice President-Administration of
Monsanto Company, 1980-1989; Vice President-Personnel, 1974-
1980; Corporate Vice President-Personnel and Public Relations at
Foremost McKesson, Inc., 1970-1974; Adjunct faculty member,
Washington University and University of Illinois.
Kimberly A. Delsing (1,2)
President and Chief Executive Officer
of The Delsing Group
(Concept and brand development for the skincare, beauty and
fashion industry)
Background: President and CEO of The Delsing Group, 1997-Present;
President and CEO of H20 Plus, 1996-1997; Chairman of Unilever
Prestige Personal Products, 1994-1996; President and CEO of
Elizabeth Arden, 1994-1996; President and CEO of Calvin Klein
Cosmetics, 1990-1994; Executive Vice President of Calvin Klein
Cosmetics, 1986-1990; Vice President of Sales at Calvin Klein
Cosmetics, 1983-1986; Field Sales Manager of Warner Cosmetics,
1979-1983.
Timothy F. Finley (1,3)
Chairman and Chief Executive Officer
of Jos. A. Bank Clothiers, Inc.
Background: Chairman and CEO of Jos. A. Bank Clothiers,
1990-Present; Chairman of the Finley
Group, 1985-Present; President of Fred's, Inc., 1989-1990;
Executive Vice President of Cannon Mills Company, 1981-1985;
Partner with Deloitte, Haskin & Sells, 1979-1981.
H. Edwin Trusheim (1,3)
Retired
Background: Chairman of General American Life Insurance
Company, 1992-1995; Chairman and CEO, 1988-1992; Chairman,
President and CEO, 1986-1988; President and CEO, 1981-1986;
President, 1979-1981.
Lawrence J. Young (2,3)
Chairman, President and Chief Executive Officer
of Angelica Corporation
(Textile linen supplier and uniform manufacturer and marketer)
Background: Chairman, President and CEO of Angelica, 1990-
present; President and CEO, 1989-1990; President and Chief
Operating Officer, 1988-1989; Executive Vice President, 1984-
1988; President, Angelica Uniform Group, 1980-1988; Corporate
Controller, 1972-1985.
Standing Board Committees
(1) Compensation & Development Committee
(2) Nominating Committee
(3) Audit Committee
SHAREOWNER INFORMATION
Management Directory
Robert N. Wildrick*
Chairman, President and
Chief Executive Officer
Executive
Vice Presidents
James H. Ferstl*
Chief Merchandising Officer
Russell E. Solt*
Finance and Administration
Senior Vice Presidents
R. Neal Black
Product Development and
Hardlines Merchandise Management
Eugene Caldwell*
Chief Financial Officer
Cliff J. Campeau
Marketing
Jerry L. DeBoer
General Merchandise Manager-
Ladies Apparel, Accessories,
Cosmetics and Shoes
Robert B. Hensley
Human Resources, Asset Protection,
Distribution, and Administrative Services
Donald W. Mielke
Director of Stores
Edwin R. Uchtman, Jr.
General Merchandise Manager-
Mens, Boys, Childrens, Toys,
Sporting Goods, Juvenile and Luggage
Vice Presidents
James G. Baker, Jr.
Merchandise Financial Planning
Joe M. Carter
New Business Development
Ken A. Corwin
Stores
Daniel T. Dasinger
Distribution and Transportation
Gary M. Deutsch
Treasury and Finance
Jerome T. Pramik
General Merchandise Manager-
Domestics, Home Decor,
Electronics, Books, Music and
Lifestyle Furniture
Kent A. Swank
Facilities Management and
Real Estate
Mike J. Williams
Recruitment, Associate Development
and Benefits
*Executive Officers
Shareowner Information
Corporate Office
Venture Stores, Inc.
2001 E. Terra Lane
O'Fallon, MO 63366-0110
Annual Meeting Date
Friday, June 20, 1997, 9:30 a.m.
The Stouffer Renaissance Hotel,
9801 Natural Bridge Road,
St. Louis, MO 63134
Shareowner Inquiries
Communications concerning
shareowner records, including
loss of stock certificates,
should be directed to our
transfer agent and registrar:
The Bank of New York
Shareholder Relations Dept. - 11E
P.O. Box 11258
Church Street Station
New York, NY 10286
(800) 524-4458
Send certificates for transfer
and address changes to:
Bank of New York
Receive and Deliver Dept. - 11W
P.O. Box 11002
Church Street Station
New York, NY 10286
Internet Address:
http://stkxfer.bankofny.com
Common Stock
Shares of Venture Stores, Inc.,
common stock are listed and
traded on the New York Stock
Exchange (trading symbol VEN).
The stock is quoted as "VentSt"
in the daily newspapers.
Preferred Stock
Depositary shares of Venture
Stores, Inc., cumulative convertible
preferred stock are listed and
traded on the New York Stock
Exchange (trading symbol VEN-PR).
The stock is quoted as "VentSt-pf"
in the daily newspapers.
Financial Reports
Copies of the Company's Annual
Report, Form 10-K annual report
and Form 10-Q quarterly reports to
the Securities and Exchange
Commission are available free of
charge to shareowners upon request.
Contact: Venture Stores, Inc.
Investor Relations
Mail Station 260
2001 E. Terra Lane
O'Fallon, MO 63366-0110
(314) 281-6801
Investor Information
Security analysts, investment
professionals and shareowners
should direct their financial
inquiries to:
Venture Stores, Inc.
Investor Relations
Mail Station 260
2001 E. Terra Lane
O'Fallon, MO 63366-0110
(314) 281-6801
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this
Form 10-K for the year ended January 25, 1997, into the Company's
previously filed Registration Statements on Form S-3 (No. 33-
83350) and on Form S-8 (No. 33-37624, No. 33-43916, No. 33-55910,
No. 33-92500, and No. 333-04735).
/s/ Arthur Andersen LLP
St. Louis, Missouri,
April 24, 1997
EXHIBIT 24
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Robert N. Wildrick,
Russell E. Solt and Eugene Caldwell, and each of them, with full
power to act without the others, his true and lawful attorneys-
in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign the annual report of Venture Stores,
Inc. on Form 10-K for the fiscal year ended January 25, 1997, and
any and all amendments thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, authority
to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by
virtue hereof.
In witness whereof, the undersigned have executed this power of
attorney as of the 24th day of April, 1997.
/s/ Robert L. Berra /s/ Kimberly A. Delsing
Robert L. Berra Kimberly A. Delsing
/s/ Timothy F. Finley /s/ H. Edwin Trusheim
Timothy F.Finley H. Edwin Trusheim
/s/ Lawrence J. Young
Lawrence J. Young
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet as of January 25, 1997 and the Statement of Earnings for the 52 weeks
ended January 25, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000864968
<NAME> VENTURE STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-25-1997
<PERIOD-END> JAN-25-1997
<CASH> 10,178
<SECURITIES> 0
<RECEIVABLES> 14,013
<ALLOWANCES> 0
<INVENTORY> 274,393
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<PP&E> 532,888
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<TOTAL-ASSETS> 687,660
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<BONDS> 179,059
0
77
<COMMON> 18,286
<OTHER-SE> 163,568
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<SALES> 1,485,759
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<INCOME-PRETAX> (94,315)
<INCOME-TAX> (35,837)
<INCOME-CONTINUING> (58,478)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,478)
<EPS-PRIMARY> (3.38)
<EPS-DILUTED> (3.38)
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