EXHIBIT 10.82
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$375,000,000.00
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
April 30, 1997,
as amended and restated as of
October [ ], 1997,
among
Brylane, L.P.,
The Lenders Listed Herein,
▇▇▇▇▇▇ Guaranty Trust Company of New York,
as Administrative Agent,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation,
as Documentation Agent
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[CS&M Ref No. 1385-309]
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
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SECTION 1.01. Definitions....................................................... 2
SECTION 1.02. Accounting Terms and Determinations............................... 27
SECTION 1.03. Types of Borrowings............................................... 28
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend............................................... 28
SECTION 2.02. Method of Borrowing............................................... 29
SECTION 2.03. Notes............................................................. 31
SECTION 2.04. Interest Rate Elections........................................... 31
SECTION 2.05. Interest Rates.................................................... 33
SECTION 2.06. Commitment Fees................................................... 35
SECTION 2.07. Termination or Reduction of Commitments........................... 36
SECTION 2.08. Mandatory Repayments and Prepayments.............................. 37
SECTION 2.09. Optional Prepayments.............................................. 40
SECTION 2.10. General Provisions as to Payments................................. 40
SECTION 2.11. Funding Losses.................................................... 41
SECTION 2.12. Computation of Interest and Fees.................................. 41
SECTION 2.13. Letters of Credit................................................. 42
SECTION 2.14. Swingline Loans................................................... 47
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness..................................................... 48
SECTION 3.02. Each Credit Event................................................. 50
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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SECTION 4.01. Existence and Power............................................... 51
SECTION 4.02. Corporate and Governmental Authorization; No Contravention........ 51
SECTION 4.03. Binding Effect.................................................... 52
SECTION 4.04. Financial Information; Title to Properties........................ 52
SECTION 4.05. Litigation........................................................ 53
SECTION 4.06. Compliance with ERISA............................................. 53
SECTION 4.07. Taxes............................................................. 53
SECTION 4.08. Parent Corporation................................................ 53
SECTION 4.09. Subsidiaries...................................................... 54
SECTION 4.10. Not an Investment Company......................................... 54
SECTION 4.11. Compliance with Laws.............................................. 54
SECTION 4.12. Agreements........................................................ 54
SECTION 4.13. Federal Reserve Regulation........................................ 55
SECTION 4.14. Disclosure........................................................ 55
SECTION 4.15. Governmental Approvals............................................ 55
SECTION 4.16. Security Interests................................................ 55
SECTION 4.17. Employment and Management Agreements.............................. 56
SECTION 4.18. Capitalization.................................................... 56
SECTION 4.19. Environmental Matters............................................. 56
ARTICLE V
COVENANTS
SECTION 5.01. Information....................................................... 57
SECTION 5.02. Payment of Obligations............................................ 60
SECTION 5.03. Maintenance of Property; Insurance; Casualty and Condemnation..... 60
SECTION 5.04. Conduct of Business and Maintenance of Existence.................. 61
SECTION 5.05. Compliance with Laws.............................................. 62
SECTION 5.06. Inspection of Property, Books and Records......................... 62
SECTION 5.07. Fiscal Year....................................................... 63
SECTION 5.08. Further Assurances................................................ 63
SECTION 5.09. Subsidiaries; Partnerships........................................ 63
SECTION 5.10. Amendment of Certain Documents.................................... 64
SECTION 5.11. Debt; Preferred Stock; Rate Protection Agreements................. 64
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Page
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SECTION 5.12. Restricted Payments............................................... 66
SECTION 5.13. Mergers, Consolidations, Acquisitions and Sales of Assets......... 68
SECTION 5.14. Transactions with Affiliates...................................... 69
SECTION 5.15. Sale and Lease-Back Transactions.................................. 70
SECTION 5.16. Investments....................................................... 70
SECTION 5.17. Negative Pledge................................................... 71
SECTION 5.18. Use of Proceeds and Letters of Credit............................. 72
SECTION 5.19. Grants of Negative Pledges or Dividend Restrictions............... 72
SECTION 5.20. Changes in Accounting............................................. 73
SECTION 5.21. Fixed Charge Coverage Ratio....................................... 73
SECTION 5.22. Minimum Adjusted Net Worth........................................ 73
SECTION 5.23. Debt Coverage Ratio............................................... 74
SECTION 5.24. Capital Expenditures.............................................. 74
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default................................................. 75
SECTION 6.02. Notice of Default................................................. 78
ARTICLE VII
THE AGENT, SECURITY AGENT AND ISSUING BANKS
SECTION 7.01. Appointment and Authorization..................................... 78
SECTION 7.02. Agent and Affiliates.............................................. 78
SECTION 7.03. Action by Agent................................................... 78
SECTION 7.04. Consultation with Experts......................................... 79
SECTION 7.05. Liability of Agent................................................ 79
SECTION 7.06. Indemnification................................................... 79
SECTION 7.07. Credit Decision................................................... 79
SECTION 7.08. Successor Agent................................................... 80
SECTION 7.09. Agents Fees....................................................... 80
SECTION 7.10. Sub-Agents........................................................ 80
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Page
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SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.......... 81
SECTION 8.02. Illegality........................................................ 81
SECTION 8.03. Increased Cost and Reduced Return................................. 82
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed Rate Loans......... 83
SECTION 8.05. Replacement of Lenders............................................ 84
SECTION 8.06. Taxes............................................................. 85
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices........................................................... 87
SECTION 9.02. No Waivers........................................................ 87
SECTION 9.03. Expenses; Documentary Taxes; Indemnification...................... 87
SECTION 9.04. Sharing of Set-Offs............................................... 88
SECTION 9.05. Amendments and Waivers............................................ 89
SECTION 9.06. Successors and Assigns............................................ 90
SECTION 9.07. Collateral........................................................ 91
SECTION 9.08. Waiver of Trial by Jury........................................... 91
SECTION 9.09. New York Law...................................................... 92
SECTION 9.10. Counterparts; Integration......................................... 92
SECTION 9.11. Limitation on Recourse............................................ 92
SECTION 9.12. Interest Rate Limitation.......................................... 92
SECTION 9.13. Effect of Amendment and Restatement............................... 92
Exhibit A - Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Guarantee Agreement
Exhibit D - Forms of Opinions of Borrower's Counsel
Exhibit E - Form of Issuing Bank Agreement
Exhibit F - Form of Assignment and Acceptance
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Page
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Schedule 1 - Commitments
Schedule 2 - Mortgaged Properties
Schedule 4.08 - Subsidiaries
Schedule 4.16 - Employment and Management Agreements
Schedule 5.14 - Certain Fees
Schedule 5.17 - Certain Liens
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AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of April 30, 1997, as amended and
restated as of October [ ], 1997, among BRYLANE, L.P., the
LENDERS listed on the signature pages hereof, ▇▇▇▇▇▇ GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent, and ▇▇▇▇▇▇▇
▇▇▇▇▇ CAPITAL CORPORATION, as Documentation Agent.
Preliminary Statement
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Reference is made to the Existing Credit Agreement (such term , and
all other capitalized terms in this preliminary statement, being used as
hereinafter defined). The Borrower has requested the Lenders to amend and
restate the Existing Credit Agreement in the form hereof and, subject to the
terms and conditions of this Agreement, to extend credit to the Borrower, in the
aggregate principal amount of up to $375,000,000, in the form of (i) Term Loans
to be made by the Lenders on the Amendment Effective Date in an aggregate
principal amount not in excess of $175,000,000, (ii) Revolving Loans to be made
by the Lenders from time to time during the Revolving Loan Availability Period
in an aggregate principal amount at any time outstanding not in excess of
$200,000,000 (subject to certain limitations specified herein), (iii) Swingline
Loans to be made by the Swingline Lender from time to time during the Revolving
Loan Availability Period in an aggregate principal amount not in excess of
$15,000,000 and (iv) Letters of Credit to be issued by the Issuing Banks from
time to time during the Revolving Loan Availability Period in an aggregate
amount at any time outstanding not in excess of $75,000,000 (subject to certain
limitations specified herein); provided that the sum of Revolving Loans,
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Swingline Loans and Letters of Credit shall not exceed $200,000,000. The
proceeds of the Term Loans shall be used by the Borrower to refinance Debt
outstanding under the Existing Credit Agreement on the Amendment Effective Date
and to make payments to the Parent Corporation to finance the repurchase of up
to 2,500,000 shares of common stock of the Parent Corporation. The proceeds of
the Revolving Loans and the Swingline Loans shall be used by the Borrower for
general corporate purposes, including to finance the working capital
requirements of the Borrower. Letters of Credit shall be issued only for
general corporate purposes in the ordinary course of business of the Borrower.
Accordingly, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
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the following meanings:
"Acquisition" means the purchase by the Borrower of substantially all
the assets (excluding cash and certain accounts receivable) of ▇▇▇▇▇▇▇▇'▇, Inc.
and its subsidiary, CDM Corp., pursuant to the Asset Purchase Agreements.
"Adjusted EBITDA" means, for any period, the sum of (a) Consolidated
Net Income for such period, excluding extraordinary or nonrecurring gains or
losses, plus (b) depreciation, amortization (including amortization of deferred
financing costs and of the initial write-up of inventories resulting from the
acquisition of a business, including the Acquisition) and interest expense
deducted in determining such Consolidated Net Income, plus (c) income taxes
deducted in determining such Consolidated Net Income.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(b).
"Administrative Questionnaire" means, with respect to each Lender, the
administrative questionnaire in the form submitted to such Lender by the Agent
and submitted to the Agent (with a copy to the Borrower) duly completed by such
Lender.
"Affiliate" means any Person (other than a Subsidiary) directly or
indirectly controlling, controlled by or under common control with the Borrower.
As used in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement and the other Loan
Documents, any Person that directly or indirectly owns 10% or more of the
regularly voting common equity securities of the Parent Corporation, together
with its affiliates, shall be deemed to be an Affiliate of the Borrower.
"Agent" means ▇▇▇▇▇▇ Guaranty Trust Company of New York in its
capacity as administrative agent for the Lenders hereunder, and its successors
in such capacity.
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"Amendment Effective Date" means the date on which the amendment and
restatement of the Existing Credit Agreement provided for herein becomes
effective in accordance with Section 3.01.
"Applicable Lending Office" means, with respect to any Lender, (i) in
the case of its Domestic Loans, its Domestic Lending Office and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Percentage" of any Lender means the percentage of the
aggregate Revolving Commitments represented by such Lender's Revolving
Commitment.
"Asset Purchase Agreements" means, collectively, (i) the Asset
Purchase Agreement, dated as of October 18, 1996, among The TJX Companies, Inc.,
▇▇▇▇▇▇▇▇'▇, Inc. and the Borrower, and (ii) the Asset Purchase Agreement, dated
as of October 18, 1996, between CDM Corp. and the Borrower.
"Asset Sale Prepayment Event" means any sale, assignment, transfer or
other disposition of, or casualty to or condemnation of, any assets or
properties of the Borrower or any Subsidiary, other than (a) sales of inventory
and used or surplus equipment in the ordinary course of business, (b) sales of
credit card receivables pursuant to the Credit Card Agreement and (c) any other
event that would constitute an "Asset Sale Prepayment Event" if the Borrower
intends to reinvest the Net Cash Proceeds therefrom in capital assets within six
months after receipt of such Net Cash Proceeds (any such event described in this
clause (c) being referred to as a "Reinvestment Event"); provided that (i) if
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the Net Cash Proceeds from any Reinvestment Event, plus the Net Cash Proceeds
from any previous Reinvestment Event that have not yet been reinvested in
capital assets, exceed $15,000,000, then an "Asset Sale Prepayment Event" shall
be deemed to have occurred with Net Cash Proceeds equal to such excess, and (ii)
if the Net Cash Proceeds from any Reinvestment Event have not been fully
reinvested in capital assets by the date that is six months after the receipt of
such Net Cash Proceeds, an "Asset Sale Prepayment Event" shall be deemed to have
occurred on such date with Net Cash Proceeds equal to the Net Cash Proceeds from
such Reinvestment Event (excluding any excess portion thereof referred to in
clause (i) above) minus the reinvested portion; provided further that, if a
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Reinvestment Event constitutes a casualty or condemnation, then (A) clause (i)
above shall not apply to Net Cash Proceeds therefrom consisting of insurance
proceeds or condemnation awards and (B) the six-month period referred to in
clause (ii) above shall be extended for such period of time as the Borrower is
actively and diligently engaged in the repair or replacement of the affected
asset or property.
"Assignee" has the meaning set forth in Section 10.06(c).
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"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means at any time a loan outstanding hereunder which
bears interest at such time at a rate based on the Base Rate pursuant to a
Notice of Borrowing or Notice of Interest Rate Election (or in the case of the
Borrower's failure to timely provide such a notice) or pursuant to Article VIII.
"Base Rate Margin" means, with respect to any Base Rate Loan
outstanding on any day:
(A) 0.00%, if such day falls within a Level I Pricing Period or a
Level II Pricing Period;
(B) 0.125%, if such day falls within a Level III Pricing Period;
(C) 0.25%, if such day falls within a Level IV Pricing Period; or
(D) 0.50%, if such day falls within a Level V Pricing Period.
"Borrower" means Brylane, L.P., a Delaware limited partnership, and
its successors.
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" means, at any time, an amount equal to the sum of (a)
70% of the excess of (i) the book value of the Borrower's inventory as of such
date, minus (ii) the book value of any such inventory that is classified for
purposes of the Borrower's financial statements as slow-moving or obsolete
inventory, plus (b) 50% of the excess of (i) the book value (net of accumulated
depreciation) of the Borrower's property, plant and equipment as of such date
minus (ii) the aggregate outstanding principal amount of Capital Financing Debt
as of such date. The Borrowing Base at any time shall be determined by
reference to the most recent Borrowing Base Certificate delivered to the Agent,
absent any error in such Borrowing Base Certificate.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B hereto, duly completed and executed by the chief financial officer,
chief accounting officer or treasurer of the Borrower.
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"Capital Expenditures" means, with respect to any period, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its Consolidated Subsidiaries for such period, as the same are (or
would be) set forth, in accordance with generally accepted accounting
principles, in a consolidated statement of cash flow of the Borrower for such
period, and (b) any other additions to assets or expenditures of the Borrower
and its Consolidated Subsidiaries during such period financed with Capital
Financing Debt, whether or not such other additions to assets or expenditures
are (or would be) set forth in such statement of cash flow (but without
duplication of amounts described in clause (a) above); provided that Permitted
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Acquisitions shall not constitute "Capital Expenditures" for purposes of this
Agreement.
"Capital Financing Debt" means (a) Debt (including obligations under
capital leases) incurred to finance the acquisition, construction, improvement
or lease of property, plant or equipment or other capital assets; provided that
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such Debt is incurred at the time of or within 90 days after such acquisition or
lease, or during or within 90 days after the substantial completion of such
construction or improvement; and (b) any Debt incurred to refinance Debt
described in clause (a) above, provided that the principal amount of such
refinancing Debt does not exceed the principal amount of Debt being refinanced.
"Cash Available for Principal Payments" means, for any period,
Consolidated Net Income for such period, plus, without duplication, (a)
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depreciation, amortization (including amortization of the initial write-up of
inventories resulting from the acquisition of a business, including pursuant to
the Acquisition) and other noncash items deducted in determining such
Consolidated Net Income, (b) the amount, if any, by which Net Working Investment
decreased during such period and (c) the amount, if any, of cash received by the
Borrower and its Subsidiaries during such period (net of any expenses
attributable thereto not deducted in determining such Consolidated Net Income)
pursuant to transactions not in the ordinary course of business, to the extent
receipt of such cash is (x) not included in income in determining such
Consolidated Net Income but to be included in income in a later period or
periods and (y) not attributable to a Prepayment Event or Reinvestment Event,
minus, without duplication, (i) the amount of any noncash items included in
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income in determining such Consolidated Net Income, (ii) the amount, if any, by
which Net Working Investment increased during such period, (iii) the amount of
Capital Expenditures made during such period (but excluding Capital Expenditures
to the extent financed with Capital Financing Debt or financed with Net Cash
Proceeds from a Reinvestment Event), (iv) to the extent not deducted in
determining such Consolidated Net Income, the amount, if any, paid by the
Borrower during such period as cash consideration for Permitted Acquisitions
(provided that no deduction shall be permitted pursuant to this clause (iv)
after the aggregate cumulative amount of cash consideration for Permitted
Acquisitions equals $50,000,000), (v) the amount, if any, of
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items included in income in determining such Consolidated Net Income
representing cash received and included in calculating "Cash Available for
Principal Payments" in a previous period pursuant to clause (c) above, (vi) the
amount, if any, by which deferred compensation decreased during such period,
(vii) to the extent not deducted in determining such Consolidated Net Income,
the amount of Tax Advances and Tax Distributions paid in cash during such period
in compliance with Section 5.12, and (viii) in the case of the fiscal year
ending on the Saturday closest to and January 31, 1998, to the extent not
deducted in determining such Consolidated Net Income for such fiscal year, the
aggregate amount, if any, paid by the Borrower during such fiscal year in cash
in respect of post-closing purchase price adjustments and tax adjustments
pursuant to the Asset Purchase Agreements; provided that, for purposes of the
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foregoing, Consolidated Net Income shall be determined without regard to any
gains, losses, taxes or expenses resulting from or incurred in connection with a
Prepayment Event or Reinvestment Event.
A "Change of Control" shall be deemed to have occurred if (i) any
partnership interest in the Borrower shall be owned by any Person other than the
Parent Corporation and the Parent Corporation's wholly owned subsidiaries, (ii)
any person or group (within the meaning of Rule 13d-5 of the Securities and
Exchange Commission as in effect on the date hereof) other than a Person or
Persons in the Initial Control Group shall become the beneficial owner (within
the meaning of Rule 13d-3 of such Commission as in effect on the date hereof) of
voting securities (including any options, rights or warrants to purchase, and
any securities convertible into or exchangeable for, voting securities) of the
Parent Corporation representing 20% or more of the voting power represented by
all outstanding securities of the Parent Corporation, or (iii) less than a
majority of the seats (other than vacant seats) on the board of directors of the
Parent Corporation shall at any time be occupied by persons who were (x)
nominated by a Person or Persons in the Initial Control Group, or (y) appointed
by directors so nominated, or (c) at any time a "Change of Control", as defined
in the Subordinated Debt Documents, shall occur.
"Class" has the meaning set forth in Section 1.03.
"Commitment" means, with respect to each Lender, its Term Commitment
or Revolving Loan Commitment or all such Commitments, as the context may
require.
"Consolidated Adjusted Net Worth" means at any date (a) the partners'
capital of the Borrower as of such date, adjusted to eliminate (i) the effects
on Consolidated Net Income of the amortization of the initial write-up of
inventories resulting from the Acquisition or any other acquisition of a
business on or after the Effective Date, and (ii) any accounting adjustments
resulting from the Conversion, minus (b) the amount, if any, of Tax Advances and
Management Notes outstanding on such date, to the extent
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such outstanding Tax Advances and Management Notes are included in determining
the amount referred to in clause (a) above.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Conversion" means the reorganization of the ownership of the Borrower
pursuant to which the Borrower became a wholly owned subsidiary of the Parent
Corporation.
"Convertible Subordinated Debt" means Debt of the Borrower and the
Parent Corporation in the aggregate principal amount of $20,000,000 in respect
of convertible subordinated notes issued as part of the consideration for the
Acquisition, maturing approximately 9-1/2 years after the Effective Date and
convertible into shares of common stock of the Parent Corporation.
"Credit Card Agreements" means (a) the Credit Card Processing
Agreement in effect on the Effective Date between the Borrower and World
Financial Network National Bank, as amended and in effect from time to time, (b)
the Accounts Receivable Purchase Agreement in effect on the Effective Date
between the Borrower and Alliance Data Systems Corporation, as amended and in
effect from time to time, and (c) any successor, replacement or additional
agreement providing for similar services and transactions.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all obligations of
such Person as an account party in respect of letters of credit and bankers'
acceptances, (vi) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (vii) all Debt
of others Guaranteed by such Person. The amount of any Debt described in clause
(vi) above shall be deemed to be limited to the fair market value of the assets
on which a Lien has been granted to secure such Debt unless such Debt has been
assumed or Guaranteed by such Person. The amount of any Debt described in
clause (vii) above shall be limited to
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the maximum amount payable under the applicable Guarantee of such Person if such
Guarantee contains limitations on the amount payable thereunder.
"Debt Coverage Ratio" means, at any date, the ratio of (i) the
consolidated Debt of the Borrower and its Consolidated Subsidiaries (excluding
(a) Letter of Credit Exposure and the amount of any other outstanding letters of
credit, except to the extent such Letter of Credit Exposure and other
outstanding letters of credit represent unreimbursed drawings thereunder;
provided that amounts excluded under this clause (a) shall not exceed
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$75,000,000, and (b) contingent liabilities to repurchase accounts receivable
pursuant to the Credit Card Agreements, to the extent such contingent
liabilities constitute Debt), determined on a consolidated basis as of such
date, divided by (ii) Adjusted EBITDA for the most recent period of four
consecutive fiscal quarters of the Borrower ended on or prior to such date;
provided that if the Acquisition or a Permitted Acquisition has occurred during
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the period since the commencement of the period of four consecutive fiscal
quarters for which such Adjusted EBITDA has been determined and on or prior to
such date of determination, then such Adjusted EBITDA shall be determined on a
pro forma basis (i.e., based on the assumption that the Acquisition or such
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Permitted Acquisition, as the case may be, occurred on the first day of such
period of four consecutive fiscal quarters) in accordance with generally
accepted accounting principles.
"Debt Prepayment Event" means the incurrence by the Borrower or any
Subsidiary after the Effective Date of any Debt referred to in clause (iv) of
Section 5.11(a).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Descriptive Materials" means the Materials prepared by ▇.▇. ▇▇▇▇▇▇
Securities Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation and the Borrower in
connection with the Financing Transactions.
"Documentation Agent" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation in its
capacity as documentation agent for the Lenders hereunder.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Lender, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may
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hereafter designate as its Domestic Lending Office by notice to the Borrower and
the Agent.
"Effective Date" means the date that the Existing Credit Agreement
became effective in accordance with its terms.
"Environmental and Safety Laws" means any and all applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, approvals, concessions, grants, franchises,
licenses, agreements with Governmental Authorities or other governmental
restrictions or requirements binding upon the Borrower or any of its
Subsidiaries, as applicable, relating to the environment, or to employee health
or safety as it pertains to the use or handling of or exposure to noxious odors
or toxic, caustic or radioactive substances, materials or wastes (including,
without limitation, petroleum or petroleum products, polychlorinated biphenyls
(PCBs), asbestos or asbestos containing materials) or to the preservation or
reclamation of natural resources as a result of the actual or threatened
emission, discharge or release of pollutants or contaminants into the
environment including, without limitation, ambient air, surface water,
groundwater, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
such pollutants, contaminants, toxic, caustic or hazardous substances, materials
or wastes or the clean-up or other remediation thereof, including the Hazardous
Materials Transportation Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, the Clean Air Act of 1970, as amended, the Toxic
Substances Control Act of 1976, the Occupational Safety and Health Act of 1970,
as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the
Safe Drinking Water Act of 1974, as amended, and any similar or implementing
state law, and all amendments or regulations promulgated hereunder.
"Equity Prepayment Event" means the issuance of additional partnership
interests or equity securities, or receipt of additional capital contributions,
by the Borrower or the Parent Corporation, or any other equity investment in the
Borrower or the Parent Corporation, in each case after the Effective Date;
provided that (a) the foregoing shall not constitute "Equity Prepayment Events"
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to the extent attributable to equity investments by members of management of the
Borrower (either made directly in the Borrower or indirectly by any partner in
or stockholder of the Borrower from funds obtained, directly or indirectly, from
such members of management) unless either (i) the aggregate Net Cash Proceeds
therefrom exceed $2,500,000 during any fiscal year of the Borrower or (ii) after
giving effect thereto the aggregate cumulative amount of Net Cash
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Proceeds therefrom since December 9, 1996, exceeds the sum of $1,000,000 plus
the aggregate cumulative amount of Restricted Payments made since December 9,
1996, pursuant to clause (e) of Section 5.12, in which case the foregoing shall
constitute "Equity Prepayment Events" to the extent of any such excess referred
to in clause (i) or (ii) above; (b) the foregoing shall not constitute an
"Equity Prepayment Event" to the extent attributable to the issuance by VP
Holding Corporation of preferred stock on or about December 9, 1996, and the
investment of the proceeds thereof, directly or indirectly, in the Borrower; and
(c) the foregoing shall not constitute an "Equity Prepayment Event" to the
extent attributable to the issuance and sale of common stock by the Parent
Corporation to a participant in a Parent Corporation Stock Plan pursuant to the
terms thereof.
"Equity Prepayment Percentage" means, with respect to the Net Cash
Proceeds of any Equity Prepayment Event, (i) 100%, if the Debt Coverage Ratio at
the time of receipt of such Net Cash Proceeds (but calculated prior to giving
effect to the receipt and application thereof) is greater than or equal to
4.0:1, (ii) 75%, if such Debt Coverage Ratio is greater than or equal to 3.0:1
but less than 4.0:1, (iii) 50%, if such Debt Coverage Ratio is greater than or
equal to 2.0:1 but less than 3.0:1 or (iv) 0.0% if such Debt Coverage Ratio is
less than 2.0:1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Euro-
Dollar Lending Office) or such other office, branch or affiliate of such Lender
as it may hereafter designate as its Euro-Dollar Lending Office by notice to the
Borrower and the Agent.
"Euro-Dollar Loan" means at any time a loan outstanding hereunder
which bears interest at such time at a rate based on the Adjusted London
Interbank Offered Rate pursuant to a Notice of Borrowing or Notice of Interest
Rate Election.
-11-
"Euro-Dollar Margin" means, with respect to any Euro-Dollar Loan
outstanding on any day:
(A) 0.75%, if such day falls within a Level I Pricing Period;
(B) 0.875%, if such day falls within a Level II Pricing Period;
(C) 1.125%, if such day falls within a Level III Pricing Period;
(D) 1.25%, if such day falls within a Level IV Pricing Period; or
(E) 1.50%, if such day falls within a Level V Pricing Period.
"Euro-Dollar Reference Banks" means the principal London offices of
Midland Bank PLC, NationsBank of North Carolina, N.A. and ▇▇▇▇▇▇ Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Cash Flow" means, for any period, the excess, if any, of Cash
Available for Principal Payments for such period over the sum of (a) principal
payments made during such period in respect of Term Loans, but excluding (i) any
such principal payments made pursuant to subsection (e) or (f) of Section 2.08
or clause (iv) of Section 5.11(a) plus (b) principal payments made during such
period in respect of Capital Financing Debt (other than pursuant to a
refinancing) and any Debt incurred in reliance upon clause (iv) of Section
5.11(a).
"Existing Credit Agreement" means the Credit Agreement dated as of
April 30, 1997, among the Borrower, certain lenders, ▇▇▇▇▇▇ Guaranty Trust
Company of New York, as administrative agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital
Corporation, as documentation agent, as amended and in effect immediately prior
to the Amendment Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of l%) 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 on such day, as
published by the Federal Reserve Bank
-12-
of New York on the Domestic Business Day next succeeding such day, provided that
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(i) if such day is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if no such rate is so published on such next succeeding Domestic Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
▇▇▇▇▇▇ Guaranty Trust Company of New York on such day on such transactions as
determined by the Agent.
"Finance Corp." means Brylane Capital Corp., a Delaware corporation,
and its successors.
"Financing Transactions" means the transactions contemplated by the
Loan Documents, including the borrowing of the Loans and the grant of security
interests under the Security Documents.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
the sum of (i) Adjusted EBITDA for such period plus (ii) rental expense deducted
in determining Consolidated Net Income for such period divided by (b) the sum of
rental expense and interest expense (excluding any portion of interest expense
representing amortization of financing costs paid in a previous period) deducted
in determining Consolidated Net Income for such period.
"FS&Co." means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., a California general partnership.
"Governmental Authority" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
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collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
-13-
"Guarantee Agreement" means the Guarantee Agreement among the Parent
Corporation, the Subsidiaries and the Agent, substantially in the form of
Exhibit C hereto, as amended from time to time.
"Incremental Capital Expenditures" means any Capital Expenditures made
in reliance upon the proviso to Section 5.24.
"Initial Control Group" means (i) FS&Co. and its affiliates and (ii)
The Limited and its subsidiaries; provided that the Borrower and its
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Subsidiaries shall not be considered to be affiliates of FS&Co. or subsidiaries
of The Limited for purposes of identifying the "Initial Control Group".
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing or Notice of Interest Rate Election; provided that:
---------
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) if any Interest Period includes a date on which a payment of
principal of the Loans of the applicable Class is required to be made under
subsection (a), (b) or (c) of Section 2.08 but does not end on such date,
then (i) the principal amount (if any) of each Euro-Dollar Loan required to
be repaid on such date shall have an Interest Period ending on such date
and (ii) the remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above;
(2) with respect to each Base Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the next Quarterly Payment Date that
occurs thereafter; provided that:
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-14-
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b)(i) below) which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a payment of
principal of the Loans of the applicable Class is required to be made under
subsection (a), (b) or (c) of Section 2.08 but does not end on such date,
then (i) the principal amount (if any) of each Base Rate Loan required to
be repaid on such date shall have an Interest Period ending on such date
and (ii) the remainder (if any) of each such Base Rate Loan shall have an
interest Period determined as set forth above; and
(3) with respect to each Swingline Loan, the period commencing on the
date of such Loan and ending such number of days thereafter (but not exceeding
14 days) as the Borrower may elect in accordance with Section 2.04; provided
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that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"Issuing Banks" means (i) Corestates Bank and (ii) any other Lender
that shall enter into an Issuing Bank Agreement as provided in Section 2.13(m),
in each case in their capacities as the issuers of Letters of Credit, and their
respective successors in such capacity.
"Issuing Bank Agreement" has the meaning set forth in Section 2.13.
"Lender" means each bank or other financial institution listed on the
signature pages hereof, each Assignee which becomes a Lender pursuant to Section
9.06(c), and their respective successors. References herein to a Lender or
Lenders may include the Issuing Bank or the Swingline Lender or both as the
context requires.
-15-
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.13. Each letter of credit outstanding under the Existing Credit
Agreement immediately prior to the Amendment Effective Date shall continue to
constitute a Letter of Credit as though issued hereunder on the Amendment
Effective Date.
"Letter of Credit Disbursement" means a payment or disbursement made
by an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" means at any time the sum of (i) the
aggregate undrawn amount of all outstanding Letters of Credit plus (ii) the
aggregate amount of all Letter of Credit Disbursements not yet reimbursed by the
Borrower as provided in Section 2.13. The Letter of Credit Exposure of any
Lender at any time shall mean its Applicable Percentage of the aggregate Letter
of Credit Exposure at such time.
"Level I Pricing Period" means any period during which the Pricing
Ratio is less than or equal to 2.00:1 and no Event of Default has occurred and
is continuing.
"Level II Pricing Period" means any period during which the Pricing
Ratio is greater than 2.00:1 but less than or equal to 2.50:1 and no Event of
Default has occurred and is continuing.
"Level III Pricing Period" means any period during which the Pricing
Ratio is greater than 2.50:1 but less than or equal to 3.00:1 and no Event of
Default has occurred and is continuing.
"Level IV Pricing Period" means any period during which the Pricing
Ratio is greater than 3.00:1 but less than or equal to 3.50:1 and no Event of
Default has occurred and is continuing.
"Level V Pricing Period" means any period that is not a Level I
Pricing Period, a Level II Pricing Period, a Level III Pricing Period or a Level
IV Pricing Period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
-16-
"Loan" means a Term Loan or a Revolving Loan (whether made as a Base
Rate Loan or a Euro-Dollar Loan) or a Swingline Loan, and "Loans" means Term
Loans or Revolving Loans or Swingline Loans or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Guarantee Agreement, the Trademark Collateral Agreement and the
Security Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(b).
"Management Notes" means promissory notes payable to the Borrower from
members of management of the Borrower and contributed to the Borrower as an
equity investment in the Borrower; provided that the aggregate principal amount
--------
of such promissory notes at any time outstanding shall not exceed $3,500,000.
"Margin Stock" has the meaning given such term under Regulation U.
"Material Adverse Effect" means (i) a materially adverse effect on the
assets, financial condition or results of operations of the Borrower and its
Consolidated Subsidiaries taken as a whole, (ii) material impairment of the
ability of the Borrower or any Subsidiary to perform any material Obligations
under the Loan Documents, or (iii) material impairment of the rights of or
benefits available to the Lenders under any Loan Document.
"Material Debt" means Debt of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions, in an
aggregate principal amount exceeding $5,000,000.
"Maturity Date" means October [ ], 2002.
"Maximum Subordinated Debt Prepayment" means, with respect to any
Equity Prepayment Event, (i) if the Equity Prepayment Percentage with respect
thereto is 100%, then $0.00, (ii) if the Equity Prepayment Percentage with
respect thereto is 75%, then an amount equal to 25% of the Equity Prepayment
Percentage of the Net Cash Proceeds in respect of such Equity Prepayment Event,
(iii) if the Equity Prepayment Percentage with respect thereto is 50%, then an
amount equal to 50% of the Equity Prepayment Percentage of the Net Cash Proceeds
in respect of such Equity Prepayment Event, or (iv) if the Equity Prepayment
Percentage with respect thereto is 0.0%, then $0.00.
-17-
"Minimum Adjusted Net Worth" means, at any date, the sum of (a)
$80,000,000, plus (b) 90% (or, if as of the end of the fiscal quarter for which
an amount is being calculated for purposes of this clause (b) "Minimum Adjusted
Net Worth" exceeds $150,000,000, then 50%) of the excess of (i) Consolidated Net
Income in respect of each fiscal quarter of the Borrower ending after December
9, 1996, and prior to such date of determination (adjusted as provided below),
minus (ii) as long as the Borrower is a partnership, the decrease in
Consolidated Adjusted Net Worth attributable to Tax Advances and Tax
Distributions made in respect of the Tax Distribution Amount for such fiscal
quarter, plus (c) 90% of each increase in Consolidated Adjusted Net Worth
attributable to the issuance of additional partnership interests or equity
securities by, or capital contributions to, or other equity investments in, the
Borrower after the Effective Date; provided that (i) "Minimum Adjusted Net
--------
Worth" shall not decrease if the amount determined pursuant to clause (b) above
in respect of any fiscal quarter is negative (and any such negative amount shall
be disregarded in calculating "Minimum Adjusted Net Worth") and (ii) for
purposes of clause (b) above, Consolidated Net Income shall be adjusted to
eliminate the effects thereon of the amortization of the initial write-up of
inventories resulting from the Acquisition and any accounting adjustments
resulting from the Conversion.
"Mortgage" means a mortgage, deed of trust or other security document
granting a lien on a Mortgaged Property to secure the Obligations.
"Mortgaged Property" means each real property and the improvements
thereto identified on Schedule 2.
"Net Cash Proceeds" means, with respect to any Prepayment Event or
Reinvestment Event or any other event requiring a calculation of "Net Cash
Proceeds" hereunder, an amount equal to the cash proceeds (including insurance
proceeds and condemnation awards) received by the Borrower and its Subsidiaries
from or in respect of such event (including cash received as proceeds from any
noncash consideration received in respect of any such event), less (i) any
expenses reasonably incurred by the Borrower and its Subsidiaries in respect of
such event, (ii) in the case of an Asset Sale Prepayment Event or Reinvestment
Event, amounts required to be applied to repay Debt (other than Loans or
Subordinated Debt) associated with the assets or properties subject to such
Event and reasonable reserves established in good faith by the Borrower to
satisfy any indemnification obligations undertaken in connection with such Event
or to pay other retained liabilities associated with such assets or properties,
(iii) taxes paid or payable by the Borrower and its Subsidiaries (as determined
reasonably and in good faith by the chief financial officer or chief accounting
officer of the Borrower) in respect of such event and (iv) as long as the
Borrower is a partnership, the increase, if any, in the Tax Distribution
-18-
Amount attributable to such event (as determined reasonably and in good faith by
the chief financial officer or chief accounting officer of the Borrower).
"Net Working Investment" means, at any date (i) the consolidated
current assets of the Borrower and its Consolidated Subsidiaries (excluding
cash, Temporary Cash Investments and the unamortized portion of the initial
write-up of inventories resulting from the Transactions) minus (ii) the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries (excluding any current liabilities in respect of Debt), all
determined as of such date. Net Working Investment at any date may be a
positive or negative number. Net Working Investment increases when it becomes
more positive or less negative and decreases when it become less positive or
more negative.
"Note" means a promissory note of the Borrower payable to a Lender,
substantially in the form of Exhibit A hereto for the applicable Class,
evidencing the obligation of the Borrower to repay the Loans made by such Lender
of a particular Class, and "Notes" means any of or all such promissory notes
issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.04.
"Obligations" means (a) the due and punctual payment by the Borrower
of (i) the principal of and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under Section
2.13 in respect of any Letter of Credit Disbursement, when and as due, including
interest thereon, if any, (iii) all other monetary obligations of the Borrower
to the Agent, the Security Agent, the Issuing Banks and the Lenders under this
Agreement and the other Loan Documents to which the Borrower is or is to be a
party and (iv) all monetary obligations of the Borrower under any Rate
Protection Agreement entered into with a counterparty that was a Lender at the
time such Rate Protection Agreement was entered into, (b) the due and punctual
performance of all other obligations of the Borrower under this Agreement and
the other Loan Documents and (c) the due and punctual payment and performance of
all obligations of each Subsidiary under the Loan Documents to which it is or is
to be a party.
"Parent" means, with respect to any Lender, any Person controlling
such Lender.
"Parent Corporation" means Brylane, Inc., a Delaware Corporation, and
its successors.
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"Parent Corporation Stock Plan" means an employee stock purchase plan
(or similar employee benefit arrangement) for employees of the Borrower and its
Subsidiaries that is administered by the Parent Corporation and qualifies under
Section 423 of the Internal Revenue Code.
"Participant" has the meaning set forth in Section 9.06(b).
"Partnership Agreement" means the partnership agreement of the
Borrower, as amended from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means (a) any acquisition by the Borrower of
assets or properties (other than Investments) to be utilized in the Borrower's
business, or comprising a separate business of the same type conducted by the
Borrower prior to such acquisition, excluding assets and properties acquired in
the ordinary course of business or (b) any acquisition by the Borrower of all
the outstanding capital stock of a corporation; provided that (i) no Default has
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occurred and is continuing at the time of, or would result from, such
acquisition, (ii) the consideration paid by the Borrower in connection with such
acquisition consists entirely of cash or common stock or Permitted Preferred
Stock of the Parent Corporation, or warrants or options to acquire any such
common stock or Permitted Preferred Stock, or a combination thereof, (iii) the
aggregate cash consideration paid by the Borrower in connection with such
acquisition and all previous acquisitions constituting "Permitted Acquisitions"
does not exceed the sum of (A) $50,000,000 plus (B) the Net Cash Proceeds from
Equity Prepayment Events previously received by the Borrower minus (C) the sum
of the aggregate amount that the Borrower has expended to make Restricted
Payments pursuant to clauses (f) and (g) of Section 5.12 plus the aggregate
principal amount of Term Loans required to have been prepaid pursuant to
subsection (e) of Section 2.08 in respect of such Net Cash Proceeds and pursuant
to clause (g) of Section 5.12 in order to permit Restricted Payments thereunder,
and (iv) if such acquisition is made pursuant to clause (b) above, then (A)
substantially all the business of the acquired corporation is of the same type
as the business conducted by the Borrower prior to such acquisition, (B) the
acquired corporation does not have any Debt that will remain outstanding after
giving effect to such acquisition (other than Debt that would be permitted under
clause (vii) of Section 5.11(a) if incurred by the Borrower at the time of such
acquisition), (C) such corporation does not have any subsidiaries (other than
subsidiaries that are liquidated or merged into the Borrower within 90 days
after such acquisition or that constitute Permitted Subsidiaries) and (D) such
corporation is liquidated or merged into the Borrower within 90 days after such
acquisition.
-20-
Notwithstanding the foregoing, the Acquisition shall not be considered to be a
"Permitted Acquisition".
"Permitted Preferred Stock" means preferred stock issued by the Parent
Corporation that is not subject to any mandatory redemption, repurchase or
exchange requirements.
"Permitted Subsidiary" means any Subsidiary that (i) is a Wholly Owned
Consolidated Subsidiary and (ii) complies with the requirements set forth in
Section 5.04(c) or, in the case of Finance Corp., Section 5.04(b).
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by a
member of the ERISA Group for employees of a member of the ERISA Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.
"Pledge Agreement" means the Pledge Agreement dated as of April 30,
1997, among the Borrower, the Subsidiaries parties thereto and the Security
Agent, as amended from time to time.
"Prepayment Event" means an Asset Sale Prepayment Event, a Debt
Prepayment Event or an Equity Prepayment Event.
"Pricing Ratio" means, at any date, the ratio of (i) the consolidated
Debt of the Borrower and its Consolidated Subsidiaries (excluding (a) the Letter
of Credit Exposure and the amount of any other outstanding letters of credit,
except to the extent such Letter of Credit Exposure and other outstanding
letters of credit represent unreimbursed drawings thereunder; provided that
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amounts excluded under this clause (a) shall not exceed $75,000,000, and (b)
contingent liabilities to repurchase accounts receivable pursuant to the Credit
Card Agreements, to the extent such contingent liabilities constitute Debt),
determined on a consolidated basis, divided by (ii) Adjusted EBITDA for the most
recent period of four consecutive fiscal quarters of the Borrower for which
financial statements have been delivered to the Agent; provided that, solely for
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purposes
-21-
of this definition, the consolidated Debt of the Borrower and its Consolidated
Subsidiaries shall be determined for purposes of clause (i) above on the basis
of (a) Term Loans outstanding on the last day of the most recent fiscal quarter
covered by the financial statements referred to in clause (ii) above, and (b)
the daily average outstanding amount of all other Debt during such most recent
period of four consecutive fiscal quarters; provided further that if the
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Acquisition or a Permitted Acquisition has occurred during the period since the
commencement of the period of four consecutive fiscal quarters for which such
Adjusted EBITDA has been determined and on or prior to such date of
determination, then such Adjusted EBITDA shall be determined on a pro forma
basis (i.e., based on the assumption that the Acquisition or such Permitted
----
Acquisition, as the case may be, occurred on the first day of such period of
four consecutive fiscal quarters) in accordance with generally accepted
accounting principles. A change in the Pricing Ratio shall be effective on the
date of receipt by the Agent of the Borrower's financial statements
demonstrating such change.
"Prime Rate" means the rate of interest publicly announced by ▇▇▇▇▇▇
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Payment Date" means each day that is the last Euro-Dollar
Business Day preceding the Saturday closest to January 31, April 30, July 31 and
October 31, of each year.
"Rate Protection Agreements" means interest rate protection
agreements, foreign currency exchange agreements and other interest or exchange
rate hedging, cap, collar or swap arrangements.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reinvestment Event" has the meaning set forth in the definition of
the term "Asset Sale Prepayment Event".
"Reportable Event" means any reportable event as defined in Section
4043(b) of ERISA, or the regulations issued thereunder, with respect to a Plan
(other than those excepted from such reporting requirements by virtue-thereof).
"Required Lenders" means at any time Lenders with Loans, Letter of
Credit Exposure and unused Commitments representing at least a majority of the
sum of the aggregate principal amount of Loans outstanding and the aggregate
amount of the Letter of Credit Exposure and unused Commitments at such time.
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"Restricted Payment" means (a) any Tax Advance, Tax Distribution or
other distribution by the Borrower to any one or more of the partners in the
Borrower or otherwise on account of any partnership interest in the Borrower,
(b) any payment or other consideration on account of the purchase, redemption,
retirement or acquisition of (i) any partnership interest in the Borrower or any
shares of the Parent Corporation's capital stock, (ii) any option, warrant or
other right to acquire any partnership interest in the Borrower or any shares of
the Parent Corporation's capital stock, (c) any payment or prepayment of
principal of or premium (if any) or interest on or any other amount in respect
of any Subordinated Debt, or (d) any payment or other consideration on account
of the prepayment, purchase, redemption, retirement, defeasance, acquisition,
termination, cancelation or compromise of any Subordinated Debt.
"Revolving Loan" means a loan made by a Lender pursuant to Section
2.01(c).
"Revolving Loan Availability Period" means the period from and
including the Effective Date to but excluding the Maturity Date, or such earlier
date as the Revolving Loan Commitments shall have expired or been terminated.
"Revolving Loan Commitment" means, as to any Lender, the obligation of
such Lender to make Revolving Loans to the Borrower and to acquire
participations in Letters of Credit in an aggregate principal amount at any one
time outstanding not exceeding the amount set forth opposite such Lender's name
in Schedule 1 hereto under the caption "Revolving Loan Commitment", as the same
may be reduced from time to time pursuant to Section 2.07 and subject to the
limitations of Sections 2.01(c) and 2.13.
"Security Agent" means ▇▇▇▇▇▇ Guaranty Trust Company of New York in
its capacity as security agent under the Security Documents and its successors
in such capacity.
"Security Agreement" means the Security Agreement dated as of April
30, 1997, among the Borrower, its Subsidiaries and the Security Agent, as
amended from time to time.
"Security Documents" means the Mortgages, the Pledge Agreement, the
Security Agreement and all other security agreements, mortgages, deeds of trust
and other documents and instruments executed and delivered pursuant to Section
5.08 in order to secure any Obligations.
"Stock Repurchase" means the repurchase by the Parent Corporation of
up to 2,500,000 shares of its common stock pursuant to the common stock
repurchase offer
-23-
described in the Form S-1 Registration Statement of the Parent Corporation filed
with the Securities and Exchange Commission on September 16, 1997, as amended
from time to time.
"Subordinated Debt" means the Convertible Subordinated Debt and Debt
in respect of the Subordinated Notes or any Debt incurred in compliance with
clause (ii) of Section 5.11(a) to refinance the Convertible Subordinated Debt or
the Subordinated Notes.
"Subordinated Debt Documents" means any indentures, notes or other
agreements, instruments or securities evidencing or governing the terms of any
Subordinated Debt, including any agreements or instruments pursuant to which any
Subordinated Debt is guaranteed or secured.
"Subordinated Debt Prepayment Amount" has the meaning set forth in
Section 2.08(e).
"Subordinated Guarantee Agreement" means an agreement pursuant to
which a Subsidiary Guarantees Subordinated Debt and which (i) is required by the
terms of a Subordinated Debt Document, (ii) is subordinated to such Subsidiary's
Debt in respect of the Obligations on the same terms that the Subordinated Debt
is required to be subordinated, (iii) is unsecured and (iv) does not impose any
additional covenants or other obligations (other than covenants and obligations
already contained in the Subordinated Debt Documents which become applicable by
virtue of such agreement) upon such Subsidiary.
"Subordinated Notes" means the senior subordinated notes due September
1, 2003 jointly issued by the Borrower and Finance Corp. in the aggregate
principal amount of $125,000,000.
"Subsidiary" means any corporation or other entity (including any
partnership) of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Borrower.
"Swingline Exposure" means at any time the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall mean its Applicable Percentage of the Swingline
Exposure at such time.
"Swingline Lender" means [ ], in its capacity as
lender of Swingline Loans hereunder, and its successors in such capacity.
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"Swingline Loan" means a loan made by the Swingline Lender pursuant to
Section 2.14.
"Tax Advance" means any loan made to a partner in the Borrower in
accordance with Section 5.01(c) of the Partnership Agreement.
"Tax Distribution" means any distribution made to a partner in the
Borrower in accordance with Section 5.01(b) or (d) of the Partnership Agreement.
"Tax Distribution Amount" means, in respect of any period during which
the Borrower is a partnership, an amount equal to (a) the sum of the highest
marginal Federal income tax rate and highest state and local income or franchise
tax rate applicable to any corporate partner in the Borrower on its income from
the Borrower for such period, expressed as a percentage, multiplied by (b) the
Borrower's taxable income for such period; provided that (i) the foregoing shall
--------
be determined giving effect to the deduction of state and local income and
franchise taxes for purposes of determining Federal income taxes, (ii) the
foregoing shall be determined giving effect to any carry forward of cumulative
tax losses of the Borrower from any previous period (to the extent not
previously utilized) since the organization of the Borrower and any investment
tax credits and other tax credits generated by the Borrower and (iii) the tax
rates determined pursuant to clause (a) above shall be based on the actual tax
rates applicable to the Parent Corporation. The "Tax Distribution Amount" for
any period may be estimated for any period, provided that such estimate is
reasonably made by the Borrower's chief financial officer or chief accounting
officer in good faith, but in the event that the Borrower files any Federal
income tax return that is inconsistent with its estimate for any period (or in
the event that it is subsequently determined that such estimate or the amounts
reflected in any such Federal income tax return were incorrect) then an
appropriate adjustment shall be made to the Tax Distribution Amount for the next
succeeding period or periods to reflect such discrepancy. The "Tax Distribution
Amount" also shall be increased by the amount of any Tax Distribution to be made
in accordance with Section 5.01(d) of the Partnership Agreement.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated in the highest grade by a nationally recognized credit rating agency,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, (iv)
repurchase agreements with respect to securities described in clause (i) above
entered into with an office of a bank or trust company meeting the criteria
specified in clause (iii) above, or
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(v) any mutual fund managed by a reputable investment manager that invests
substantially all of its assets in Investments of the type described in clauses
(i), (ii), (iii) or (iv) above; provided in each case that such Investment
--------
matures within one year from the date of acquisition thereof by the Borrower or
a Subsidiary (except that an Investment described in clause (v) above need not
satisfy the foregoing maturity requirement, but such Investment shall be subject
to redemption on demand and the Investments made by such mutual fund shall
satisfy the foregoing maturity requirement).
"Term Commitment" means, as to any Lender, the obligation of such
Lender to make Term Loans to the Borrower in an aggregate principal amount not
exceeding the amount set forth opposite such Lender's name in Schedule 1 hereto
under the caption "Term Commitment", as the same may be reduced from time to
time pursuant to Section 2.07.
"Term Loan" means a loan made by a Lender pursuant to Section 2.01(a).
"Termination Date" means the last day of the Revolving Loan
Availability Period or such earlier date as the Revolving Loan Commitments shall
have expired or been terminated, all Revolving Loans have been repaid in full,
all Letter of Credit Disbursements shall have been repaid in full, and all
Letters of Credit shall have expired or been canceled.
"The Limited" means The Limited, Inc., a Delaware corporation, and its
successors.
"Trademark Agreements" means, collectively, (i) the Trademark License
Agreement and the Electronic Media Trademark License Agreement previously
entered into among certain subsidiaries of The Limited as contemplated by the
Transaction Agreement, the rights of the licensees under which have been
assigned to the Borrower, as amended from time to time and (ii) each of (A) the
Assignment and License of Trademarks Agreement among The TJX Companies, Inc.,
▇▇▇▇▇▇▇▇'▇, Inc. and the Borrower, as amended from time to time, (B) the
Trademarks License Agreement among The TJX Companies, Inc. and the Borrower, as
amended from time to time, and (C) the Trademarks License Agreement among the
TJX Companies, Inc. and ▇▇▇▇▇▇▇▇'▇ Trade Name Sub, Inc., as amended from time to
time, each as entered into in connection with the Acquisition.
"Trademark Collateral Agreement" means the Trademark Collateral
Agreement dated as of April 30, 1997, among each of The Limited, certain
subsidiaries thereof and the Security Agent, as amended from time to time.
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"Transaction Agreement" means the Transaction Agreement dated as of
July 13, 1993, among VGP, VLP and certain subsidiaries of The Limited, as
amended from time to time.
"Transaction Documents" means (i) the Transaction Agreement, the
Partnership Agreement, the Credit Card Agreements, the Asset Purchase Agreements
and the Trademark Agreements and (ii) any and all contracts and agreements in
effect on the Effective Date between the Borrower and any Subsidiary, on the one
hand, and any Person in the Initial Control Group, on the other hand.
"Transactions" means the Financing Transactions and the Acquisition.
"Trigger Date" means the first date on which the Debt Coverage Ratio
is 2.50:1.00 or less for two consecutive fiscal quarters.
"Type" has the meaning set forth in Section 1.03.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested benefits under
such Plan exceeds (ii) the fair market value of all Plan assets, all determined
as of the then most recent valuation date for such Plan based on the actuarial
assumptions used to fund the Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the PBGC or
the Plan under Title IV of ERISA.
"VGP" means VGP Corporation, a Delaware corporation, and its
successors.
"VLP" means VLP Corporation, a Delaware corporation, and its
successors.
"Wholly Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
------------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated
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Subsidiaries delivered to the Lenders; provided that, if the Borrower notifies
--------
the Agent that the Borrower wishes to amend any covenant contained in Article V
or the definition of "Pricing Ratio" to eliminate the effect of any change in
generally accepted accounting principles on the operation of such covenant or
such definition (or if the Agent notifies the Borrower that the Required Lenders
wish to amend any such covenant or such definition for such purpose), then the
Borrower's compliance with such covenant or the calculation of the Pricing
Ratio, as applicable, shall be determined on the basis of generally accepted
accounting principles in effect immediately before the relevant change in
generally accepted accounting principles became effective, until either such
notice is withdrawn or such amendment becomes effective in accordance with this
Agreement.
SECTION 1.03. Types of Borrowings. The term "Borrowing" refers to
--------------------
the portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific Interest
Period (subject to clauses (1)(c), and (2)(b) of the definition of Interest
Period) pursuant to a Notice of Borrowing or Notice of Interest Rate Election.
Each Lender's ratable share of each Borrowing is referred to herein as a
separate "Loan". Borrowings and Loans hereunder are distinguished by "Class"
and by "Type". The "Class" of a Loan (or of a Commitment to make such a Loan or
of a Borrowing comprising such Loans) refers to whether such Loan is a Term Loan
or a Revolving Loan, each of which constitutes a Class. The "Type" of a Loan
refers to whether such Loan is a Base Rate Loan, a Euro-Dollar Loan or a
Swingline Loan. Borrowings and Loans may be identified by both Class and Type
(e.g., a "Revolving Euro-Dollar Loan" is a Loan which is both a Revolving Loan
-----
and a Euro-Dollar Loan).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Term Loans. Each Lender
-------------------- -----------
having a Term Loan Commitment severally agrees, on the terms and conditions set
forth in this Agreement, to make a loan to the Borrower on the Amendment
Effective Date in an aggregate principal amount not exceeding its Term
Commitment.
(b) Revolving Loans. Each Lender having a Revolving Loan Commitment
----------------
severally agrees, on the terms and conditions set forth in this Agreement, to
make loans to the Borrower from time to time during the Revolving Loan
Availability Period; provided that the aggregate principal amount of such
--------
Lender's loans at any one time outstanding shall not exceed the excess of (i)
the lesser of its Revolving Loan Commitment or its Applicable Percentage of the
Borrowing Base at such time, over (ii) its Letter of Credit
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Exposure at such time. Within the foregoing limit, the Borrower may borrow under
this subsection (c), repay or (to the extent permitted by Section 2.09) prepay
loans made under this subsection (c) and reborrow at any time during the
Revolving Loan Availability Period under this subsection (c).
(c) Borrowings Ratable. Each Borrowing under subsection (a), (b) or
-------------------
(c) of this Section 2.01 shall be made from the Lenders ratably in proportion to
their respective Commitments of the relevant Class.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give the
--------------------
Agent notice (a "Notice of Borrowing") not later than 10:00 A.M. (New York City
time) on the date of any Base Rate Borrowing and not later than 10:00 A.M. (New
York City time) at least three Euro-Dollar Business Days before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000 (except that any Borrowing
may be in the aggregate amount of the unused Commitment of the applicable
Class);
(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Lender of the contents thereof and of such Lender's share of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by the
Borrower.
(c) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Lender shall (except as provided in subsection (d) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Agent at its address specified in
or pursuant to Section 10.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
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(d) If any Lender (including the Swingline Lender) makes a new Loan
hereunder on a day on which the Borrower is to repay all or any part of an
outstanding Loan from such Lender, such Lender shall apply the proceeds of its
new Loan to make such repayment and only an amount equal to the difference (if
any) between the amount being borrowed and the amount being repaid shall be made
available by such Lender to the Agent as provided in subsection (b), or remitted
by the Borrower to the Agent as provided in Section 2.10, as the case may be.
(e) If the Agent has not received from the Borrower the payment
required by Section 2.13(g) by 12:30 P.M. (New York City time) on the date on
which an Issuing Bank has notified the Borrower and the Agent that payment of a
draft presented under any Letter of Credit will be made, as provided in Section
2.13(g), the Agent will promptly notify such Issuing Bank and each Lender of the
Letter of Credit Disbursement and, in the case of each Lender, its Applicable
Percentage of such Letter of Credit Disbursement. Not later than 2:00 P.M. (New
York City time) on such date, each Lender shall make available such Lender's
Applicable Percentage of such Letter of Credit Disbursement, in Federal or other
funds immediately available in New York City, to the Agent at its address
specified in or pursuant to Section 9.01, and the Agent will promptly make such
funds available to the applicable Issuing Bank. The Agent will promptly remit
to each Lender that shall have made such funds available its Applicable
Percentage of any amounts subsequently received by the Agent from the Borrower
in respect of such Letter of Credit Disbursement.
(f) Unless the Agent shall have received notice from a Lender prior
to the date of any Borrowing, or prior to the time of any required payment by
such Lender in respect of a Letter of Credit Disbursement, that such Lender will
not make available to the Agent such Lender's share of such Borrowing or
payment, the Agent may assume that such Lender has made such share available to
the Agent on the date of such Borrowing or payment in accordance with
subsections (c) and (d) or (e), as applicable, of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the Borrower or
an Issuing Bank, as applicable, on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such share available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available by the Agent until the
date such amount is repaid to the Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.05 or Section 2.13(g), as
applicable, and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall repay to the Agent such corresponding amount in respect of a
Borrowing, such amount so repaid shall constitute such Lender's Loan included in
such Borrowing for purposes of this Agreement.
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SECTION 2.03. Notes. (a) Each Lender's Term Loans and Revolving
------
Loans shall be evidenced by a separate Note (in the form applicable to such
Class) payable to the order of such Lender for the account of its Applicable
Lending Office in an amount equal to (i) in the case of its Note evidencing Term
Loans, the aggregate principal amount of Term Loans made by such Lender (or its
predecessor in interest) on the Effective Date, or (ii) in the case of its Note
evidencing Revolving Loans, the aggregate Commitment of such Lender of such
Class.
(b) Each Lender may, by notice to the Borrower and the Agent, request
that its Loans of a particular Type and Class be evidenced by a separate Note.
Each such Note shall be in substantially the form of Exhibit A hereto applicable
to the relevant Class with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant Type. Each reference in this Agreement
to the "Note" or "Notes" of such Lender shall be deemed to refer to and include
any or all of such Notes, as the context may require.
(c) Upon receipt of each Lender's Note or Notes pursuant to Section
3.01(b), the Agent shall mail such Note or Notes to such Lender. Each Lender
shall record the date and amount of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and
prior to any transfer of any of its Notes shall endorse on the schedule forming
a part thereof appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding; provided that the failure of any
--------
Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes. Each Lender is hereby
irrevocably authorized by the Borrower so to endorse its Note and to attach to
and make a part of its Note a continuation of any such schedule as and when
required.
SECTION 2.04. Interest Rate Elections. (a) The initial Type of
------------------------
Loans comprising each Borrowing, and the duration of the initial Interest Period
applicable thereto if they are initially Euro-Dollar Loans, shall be as
specified in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the Type of, or the duration of
the Interest Period applicable to, the Loans included in any Borrowing
(excluding overdue Loans and subject in each case to the provisions of the
definition of Interest Period and Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
designate such Loans as Euro-Dollar Loans, may elect to continue such Loans
as Base Rate Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and Euro-Dollar
Loans; and
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(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
designate such Loans as Base Rate Loans, may elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and Euro-Dollar
Loans.
Notwithstanding the foregoing, the Borrower may not elect an Interest Period for
Euro-Dollar Loans of any Class unless (A) the aggregate outstanding principal
amount of such Euro-Dollar Loans (including any such Euro-Dollar Loans of the
same Class made pursuant to Section 2.01 on the date that such Interest Period
is to begin) to which such Interest Period will apply is at least $5,000,000 and
(B) such election will not result in the total number of outstanding Euro-Dollar
Borrowings exceeding 10 at any time.
(b) Any election permitted by subsection (a) of this Section may
become effective on any Euro-Dollar Business Day specified by the Borrower (the
"Election Date"); provided that the Borrower may not specify an Election Date
--------
with respect to an outstanding Euro-Dollar Loan that is not the last day of the
Interest Period therefor. Each such election shall be made by the Borrower by
delivering a notice (a "Notice of Interest Rate Election") to the Agent not
later than 10:00 A.M. (New York City time) at least one Domestic Business Day
before the Election Date, if all the resulting Loans will be Base Rate Loans,
and at least three Euro-Dollar Business Days before the Election Date, if the
resulting Loans will include Euro-Dollar Loans. Each Notice of Interest Rate
Election shall specify with respect to the outstanding Loans to which such
notice applies:
(i) the Election Date;
(ii) if the Type of Loan is to be changed, the new Type of Loan and,
if such new Type is a Euro-Dollar Loan, the duration of the first Interest
Period applicable thereto;
(iii) if such Loans are Euro-Dollar Loans and the Type of such Loans
is to be continued for an additional or different Interest Period, the
duration of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a combination of Base Rate
Loans and Euro-Dollar Loans, the information specified in clauses (i)
through (iii) above as to each resulting Borrowing and the aggregate amount
of each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
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(c) Upon receipt of a Notice of Interest Rate Election, the Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
share of such Borrowing and such notice shall not thereafter be revocable by the
Borrower.
(d) If the Borrower (i) fails to deliver a timely Notice of Interest
Rate Election to the Agent electing to continue or change the Type of, or the
duration of the Interest Period applicable to, the Loans included in any
Borrowing as provided in this Section and (ii) has not theretofore delivered a
notice of prepayment relating to such Loans, then the Borrower shall be deemed
to have given the Agent a Notice of Interest Rate Election electing to change
the Type of such Loans to (or continue the Type thereof as) Base Rate Loans,
with an Interest Period commencing on the last day of the then current Interest
Period.
SECTION 2.05. Interest Rates. (a) Each Base Rate Loan shall bear
---------------
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the sum of
the applicable Base Rate Margin at the time and the Base Rate for such day.
Such interest shall be payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by law, overdue interest
on any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to such Base Rate Loan for such day. Each Swingline Loan shall be a
Base Rate Loan and shall bear interest as provided in this paragraph.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the applicable Euro-Dollar Margin at the time plus
the applicable Adjusted London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three months after the first
day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100 of l%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upwards, if necessary, to the next higher 1/16 of l%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such
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Euro-Dollar Reference Bank to which such Interest Period is to apply and for a
period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar 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). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(c) Any overdue principal of and, to the extent permitted by law,
overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the applicable Euro-Dollar Margin at the time
plus the Adjusted London Interbank Offered Rate applicable to such Loan and (ii)
the applicable Euro-Dollar Margin at the time plus the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100 of l%) by dividing (x)
the average (rounded upwards, if necessary, to the next higher 1/16 of 1%) of
the respective rates per annum at which one-day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than three months as the Agent may select) deposits in dollars
in an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Lenders by telecopy, telex or cable of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(e) Each Euro-Dollar Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any Euro-
Dollar Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant
-34-
interest rate on the basis of the quotation or quotations furnished by the
remaining Euro-Dollar Reference Bank or Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.06. Commitment Fees. During the period from and including
----------------
the date of execution and delivery of this Agreement to but excluding the last
day of the Revolving Loan Availability Period, the Borrower shall pay to the
Agent for the account of the Lenders ratably in proportion to their Revolving
Loan Commitments a commitment fee at the applicable rate specified below on the
daily average amount by which the aggregate amount of the Revolving Loan
Commitments exceeds the sum of the Letter of Credit Exposure and the aggregate
outstanding principal amount of the Revolving Loans. Such commitment fee shall
accrue at the rate of (i) 0.25% per annum during any Level I Pricing Period,
(ii) 0.30% per annum during any Level II Pricing Period, (iii) 0.375% per annum
during any Level III Pricing Period or Level IV Pricing Period or (iv) 0.4375%
during any Level V Pricing Period. If the rate at which the commitment fee
accrues shall change, the daily average amount referred to above shall be
determined separately for the periods before and after such change. During the
period from and including the date of execution and delivery of this Agreement
to but excluding the Effective Date or earlier termination of the Term
Commitments, the Borrower shall pay to the Agent for the account of the Lenders
ratably in proportion to their Term Commitments a commitment fee at the rate of
0.50% per annum on the amount of their respective Term Commitments. All such
commitment fees shall accrue from and including the date of execution and
delivery of this Agreement to but excluding, in the case of the Term
Commitments, the Effective Date or earlier termination of the Term Commitments,
or, in the case of the Revolving Loan Commitments, the last day of the Revolving
Loan Availability Period. Accrued commitment fees under this paragraph shall be
calculated by the Agent as of the Effective Date, as of each Quarterly Payment
Date and as of the date of termination of the Revolving Loan Commitments in
their entirety. The Agent shall make such calculation and notify the Borrower
of the amount so calculated within three Domestic Business Days after each date
as of which such calculation is so required, and such fees shall be payable by
the Borrower upon receipt of such notice, except that commitment fees accrued
prior to the Effective Date or any earlier termination of the Commitments shall
be payable on such date.
SECTION 2.07. Termination or Reduction of Commitments. (a) During
----------------------------------------
the Revolving Loan Availability Period, the Borrower may, upon at least three
Domestic Business Days' notice to the Agent, (i) terminate the Revolving Loan
Commitments at any time, if there is no Letter of Credit Exposure at such time
and if no Revolving Loans are outstanding at such time, or (ii) ratably reduce
from time to time by an aggregate amount of $5,000,000 or any larger multiple of
$1,000,000 the aggregate amount of the Revolving Loan Commitments in excess of
the sum of the Letter of Credit Exposure and the
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aggregate outstanding principal amount of the Revolving Loans and Swingline
Loans; provided that the Borrower may not terminate or reduce the Revolving Loan
--------
Commitments pursuant to this subsection (a) at any time that any Term Loans
remain outstanding.
(b) After the Term Loans have been fully repaid, the Revolving Loan
Commitments shall be ratably reduced at each time that a prepayment would have
been required in respect of the Term Loans pursuant to subsection (e) or (f) of
Section 2.08 if Term Loans were then outstanding, by an amount equal to the
prepayment that would have been so required.
(c) The Term Commitments shall automatically terminate at the close
of business on the Amendment Effective Date.
SECTION 2.08. Mandatory Repayments and Prepayments. (a) Subject to
-------------------------------------
adjustment as provided in subsection (i) of this Section, on each date specified
below the Borrower shall repay Term Loans in the aggregate amount, if any, set
forth under the caption "Amount" opposite such date:
Amount
--------------
May 2, 1998 $ 2,500,000.00
August 1, 1998 $ 2,500,000.00
October 31, 1998 $ 2,500,000.00
January 30, 1999 $ 2,500,000.00
May 1, 1999 $ 5,000,000.00
July 31, 1999 $ 5,000,000.00
October 30, 1999 $ 5,000,000.00
January 29, 2000 $ 5,000,000.00
April 29, 2000 $10,000,000.00
July 29, 2000 $10,000,000.00
October 28, 2000 $10,000,000.00
February 3, 2001 $10,000,000.00
May 5, 2001 $15,000,000.00
August 4, 2001 $15,000,000.00
November 3, 2001 $15,000,000.00
February 2, 2002 $15,000,000.00
May 4, 2002 $15,000,000.00
Maturity Date $15,000,000.00
(b) Any Term Loans outstanding on the Maturity Date shall be due and
payable on such date, together with accrued interest thereon.
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(c) Any Revolving Loans and Swingline Loans outstanding on the
Termination Date shall be due and payable on such date, together with accrued
interest thereon.
(d) In the event and on each occasion that the sum of the Letter of
Credit Exposure plus the aggregate outstanding principal amount of the Revolving
Loans and the Swingline Loans exceeds the lesser of the Borrowing Base or the
sum of the Revolving Loan Commitments, the Borrower shall forthwith prepay
Revolving Loans or Swingline Loans (or, if no Revolving Loans or Swingline Loans
are outstanding, provide cash collateral in respect of the Letter of Credit
Exposure pursuant to Section 2.13(k) and thereupon such cash shall be deemed to
reduce the Letter of Credit Exposure by an equivalent amount solely for purposes
of this subsection) in an amount equal to such excess.
(e) Subject to subsection (k) below, in the event and on each
occasion after the Effective Date that a Prepayment Event occurs, the Borrower
shall, promptly following (and in any event not later than the Domestic Business
Day next following) the receipt of Net Cash Proceeds in respect of such
Prepayment Event, prepay Term Loans in an aggregate principal amount equal to
100% of such Net Cash Proceeds, in the case of an Asset Sale Prepayment Event or
Debt Prepayment Event, or the applicable Equity Prepayment Percentage of such
Net Cash Proceeds, in the case of an Equity Prepayment Event; provided that (i)
--------
no such prepayment shall be required in an aggregate principal amount less than
$1,000,000 and any receipt of Net Cash Proceeds that would otherwise result in
prepayment of a lesser amount shall cumulate until the aggregate amount of Net
Cash Proceeds from Prepayment Events received and not yet applied hereunder
equals or exceeds $1,000,000, at which time such prepayment shall be made, and
(ii) in the case of an Equity Prepayment Event, if no Default has occurred and
is continuing at the time, the Borrower may, at its option, elect by notice
delivered to the Agent on or prior to the date that the prepayment in respect of
such event would be required pursuant to the foregoing provisions of this
subsection (e), to apply an amount specified in such notice (the amount so
specified, the "Subordinated Debt Prepayment Amount") to purchase, redeem,
prepay or acquire Subordinated Debt in accordance with clause (f) of Section
5.12; provided that the Subordinated Debt Prepayment Amount in respect of any
--------
Equity Prepayment Event shall not exceed the Maximum Subordinated Debt
Prepayment with respect thereto. If the Borrower delivers to the Agent a notice
with respect to an Equity Prepayment Event as provided in clause (ii) above,
then the prepayment of Term Loans required pursuant to this subsection (e) with
respect to such event shall be reduced by the Subordinated Debt Prepayment
Amount specified in such notice; provided that on the date 90 days after the
--------
date that such prepayment would have been required the Borrower shall deliver to
the Agent a certificate specifying the aggregate amount of Restricted Payments
made pursuant to clause (f) of Section 5.12 in respect of the applicable Equity
Prepayment Event and
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shall prepay Term Loans in an aggregate principal amount equal to the excess, if
any, of the Subordinated Debt Prepayment Amount specified by the Borrower in its
notice to the Agent referred to above over the aggregate amount of Restricted
Payments so made.
(f) Subject to subsection (k) below, as promptly as practicable but
in any event within 90 days after the end of each fiscal year of the Borrower,
commencing with the fiscal year ending on the Saturday closest to January 31,
1998, the Borrower shall prepay Term Loans in an aggregate principal amount
equal to the Excess Cash Flow with respect to such fiscal year multiplied by (i)
60%, if the Debt Coverage Ratio as of the last day of such fiscal year was
greater than or equal to 2.50:1 or (ii) 50%, if the Debt Coverage Ratio as of
the last day of such fiscal year was less than 2.50:1 but greater than or equal
to 2.00:1; provided that no prepayment shall be required pursuant to this
--------
subsection (f) with respect to the Excess Cash Flow for any fiscal year if the
Debt Coverage Ratio as of the last day of such fiscal year was less than 2.00:1.
The Borrower shall deliver to the Agent at or prior to the time of each
prepayment pursuant to this subsection (f) a certificate executed by the chief
financial officer of the Borrower setting forth, in a form acceptable to the
Agent, a reasonably detailed calculation of the amount of such prepayment.
(g) On the date of each repayment or prepayment of Loans pursuant to
this Section, the Borrower shall pay interest accrued on the principal amount
repaid or prepaid to the day of repayment or prepayment. The repayments and
prepayments of the Loans required by the respective subsections of this Section
and the optional prepayments permitted by Section 2.09 are separate and
cumulative, so that any one such repayment or prepayment shall reduce any other
repayment or prepayment only as and to the extent specified in subsection (i) of
this Section.
(h) Prior to the date of each mandatory repayment or prepayment
pursuant to this Section, the Borrower shall, by notice to the Agent given not
later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day
prior to the date of such repayment or prepayment, select which outstanding
Borrowings of the required Class are to be repaid or prepaid (in accordance with
subsection (i) of this Section, if applicable); provided that the Borrower shall
--------
not elect to prepay any Euro-Dollar Borrowing if a Base Rate Borrowing of the
required Class is outstanding. Upon receipt of such notice, the Agent shall
promptly notify each Lender of the contents thereof and of such Lender's ratable
share of such prepayment, and such notice shall not thereafter be revocable by
the Borrower. Each such repayment or prepayment shall be applied to repay or
prepay ratably the respective Loans included in the Borrowings so selected.
(i) Any mandatory prepayment of the Term Loans pursuant to subsection
(e) or (f) of this Section, and any optional prepayment of the Term Loans
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pursuant to Section 2.09, shall be applied to reduce the remaining scheduled
repayments of the Term Loans pursuant to subsection (a) of this Section pro
rata, except as provided in clause (iv) of Section 5.11(a) with respect to a
Debt Prepayment Event.
(j) Each Swingline Loan shall mature, and the principal amount
thereof shall be due and payable, together with accrued interest thereon, on the
last day of the Interest Period applicable to such Swingline Loan.
(k) Notwithstanding any other provisions of this Section, no
mandatory prepayment of the Term Loans shall be required pursuant to subsection
(e) or (f) of this Section after the Trigger Date so long as the Debt Coverage
Ratio remains 2.50:1.00 or less.
SECTION 2.09. Optional Prepayments. (a) Subject to subsection (b)
---------------------
below, the Borrower may, upon at least one Domestic Business Day's notice to the
Agent, in the case of Base Rate Borrowings, or three Euro-Dollar Business Days'
notice to the Agent, in the case of Euro-Dollar Borrowings, prepay any Borrowing
in whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment.
Each such notice of prepayment shall specify which outstanding Borrowing is to
be prepaid in connection therewith. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Lenders included in such
Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
voluntarily prepay all or any portion of the principal amount of any Euro-Dollar
Borrowing prior to the end of the related Interest Period. Any prepayment of a
Borrowing pursuant to this Section that includes Term Loans of either Class
shall be subject to the requirements of subsection (i) of Section 2.08.
(c) The Borrower may, upon notice to the Agent prior to 12:00 Noon
(New York City time) on the date of prepayment (which shall be a Domestic
Business Day), prepay any Swingline Loan in whole at any time, or from time to
time in part in amounts aggregating $1,000,000 or any multiple of $500,000 in
excess thereof, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment.
(d) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Lender (or, in the case of a Swingline
Loan, the Swingline Lender) of the contents thereof and of such Lender's ratable
share of such prepayment and such notice shall not thereafter be revocable by
the Borrower.
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SECTION 2.10. General Provisions as to Payments. (a) The Borrower
----------------------------------
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Lender its ratable share of each such payment received by the Agent for
the account of the Lenders. Whenever any payment of principal of, or interest
on, the Base Rate Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-
Dollar Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment, each Lender shall
repay to the Agent forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.11. Funding Losses. If any payment of principal with
---------------
respect to any Euro-Dollar Loan (pursuant to Article II, VI or VIII or
otherwise) is made on any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed pursuant to Section
2.05(c), or if the Borrower fails to borrow, continue or prepay any Euro-Dollar
Loans after notice has been given to any Lender in accordance with Section 2.02,
2.04 or 2.08, the Borrower shall reimburse each Lender within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow, provided that such Lender shall have delivered to the
--------
Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
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SECTION 2.12. Computation of Interest and Fees. Interest based on
---------------------------------
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All fees and other
interest shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.13. Letters of Credit. (a) The Borrower may request the
------------------
issuance, extension or renewal of Letters of Credit, in a form reasonably
acceptable to the Agent and the applicable Issuing Bank, appropriately
completed, for the account of the Borrower, at any time and from time to time
during the Revolving Loan Availability Period; provided that any Letter of
--------
Credit shall be issued only if, and each request by the Borrower for the
issuance of any Letter of Credit shall be deemed a representation and warranty
of the Borrower that, immediately following the issuance of any such Letter of
Credit, (i) the Letter of Credit Exposure shall not exceed $75,000,000, (ii) the
sum of the Letter of Credit Exposure and the aggregate principal amount of
outstanding Revolving Loans and Swingline Loans shall not exceed the then
current Borrowing Base and (iii) the sum of the Letter of Credit Exposure and
the aggregate principal amount of outstanding Revolving Loans and Swingline
Loans shall not exceed the aggregate Revolving Loan Commitments at the time.
(b) Each Letter of Credit shall expire at the close of business on
the date that is five Domestic Business Days prior to the last day of the
Revolving Loan Availability Period, unless such Letter of Credit expires by its
terms (or is required by subsection (c) below to expire) on an earlier date.
Each Letter of Credit shall provide for payments of drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at least
three Domestic Business Days' prior written or telex notice (or such shorter
notice as shall be acceptable to the applicable Issuing Bank) from the Borrower
to the Agent (which shall give prompt notice thereof to each Lender) and the
applicable Issuing Bank specifying the date of issuance, the date on which such
Letter of Credit is to expire (which shall not be later than the earlier of (i)
the date that is five Domestic Business Days prior to the last day of the
Revolving Loan Availability Period, and (ii) subject to extension, 180 days, in
the case of documentary or trade Letters of Credit, and one year, in the case of
standby Letters of Credit, after the date of any such Letter of Credit, or, if
such Letter of Credit provides that the expiry thereof may be accelerated upon
an Event of Default with respect to the Borrower specified in clause (h) or (i)
of Section 6.01, any later date permitted under clause (i) above), the amount of
such Letter of Credit, the name and address of the beneficiary of such Letter of
Credit, whether such Letter of Credit is a documentary or trade Letter of Credit
or a standby Letter of Credit, and such other information as may be
-41-
necessary or desirable to complete such Letter of Credit. Each Issuing Bank will
give the Agent prompt notice of the issuance and amount of such Letter of Credit
and the expiration of such Letter of Credit. Each Issuing Bank also will give
the Agent and the Borrower (i) daily notice of the amount available to be drawn
under each outstanding Letter of Credit and (ii) a quarterly summary indicating,
on a daily basis during such quarter, the issuance of any Letter of Credit and
the amount thereof, the expiration of any Letter of Credit and any payment on
drafts presented under Letters of Credit.
(d) Each Issuing Bank that issues a Letter of Credit, by the issuance
of a Letter of Credit and without any further action on the part of such Issuing
Bank or the Lenders in respect thereof, hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the Agent, on
behalf of such Issuing Bank, in accordance with Section 2.02(e), such Lender's
Applicable Percentage of each Letter of Credit Disbursement made by such Issuing
Bank and not reimbursed by the Borrower when due in accordance with subsection
(g) of this Section; provided that the Lenders shall not be obligated to make
--------
any such payment with respect to any wrongful Letter of Credit Disbursement made
as a result of the gross negligence or wilful misconduct of the applicable
Issuing Bank.
(e) Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to subsection (d) above in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever (subject only to the proviso in subsection
(d) above).
(f) During the Revolving Loan Availability Period (and thereafter, so
long as any Letter of Credit remains outstanding), the Borrower shall pay (i) to
the Agent for the account of the Lenders ratably in proportion to their
Revolving Loan Commitments a fee on the amount available to be drawn under each
outstanding Letter of Credit at a rate per annum equal to the applicable Euro-
Dollar Margin from time to time in effect with respect to Revolving Euro-Dollar
Loans (minus 0.25%, in the case of documentary or trade Letters of Credit), and
(ii) to each Issuing Bank for its own account, a fee at the rate per annum
specified in such Issuing Bank's Issuing Bank Agreement on the amount available
to be drawn under each outstanding Letter of Credit issued by such Issuing Bank.
Such fees shall accrue from and including the Effective Date to but excluding
the last day of the Revolving Loan Availability Period (provided that such fees
shall continue to accrue so long as any Letter of Credit remains outstanding).
Accrued fees under this
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subsection shall be calculated by the Agent as of each Quarterly Payment Date
and as of the Termination Date. The Agent shall make such calculation and notify
the Borrower of the amount so calculated within three Domestic Business Days
after each date as of which such calculation is so required, and such fees shall
be payable by the Borrower upon receipt of such notice. In addition to the
foregoing, the Borrower shall pay directly to each Issuing Bank, for its own
account, such Issuing Bank's customary processing and documentation fees in
connection with the issuance or amendment of or payment on any Letter of Credit,
payable within 15 days after demand therefor by such Issuing Bank.
(g) If an Issuing Bank shall pay any draft presented under a Letter
of Credit, the Borrower shall pay to the Agent, on behalf of such Issuing Bank,
an amount equal to the amount of such draft before 12:00 Noon (New York City
time), on the day on which such Issuing Bank shall have notified the Borrower
that payment of such draft will be made. The Agent will promptly pay any such
amounts received by it to such Issuing Bank. If the Borrower shall fail to pay
any amount required to be paid by it under this subsection when due, such unpaid
amount shall bear interest, for each day from and including the due date to but
excluding the date of payment, at a rate per annum equal to the interest rate
applicable to overdue Base Rate Revolving Loans.
(h) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in subsection (g) above shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances whatsoever, and
irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit
or any other Loan Document;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower, any Subsidiary or any other person may at any time have
against the beneficiary under any Letter of Credit, any Issuing Bank, the
Agent or any Lender or any other Person in connection with this Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; provided that such payment was not
--------
wrongfully made as a
-43-
result of the gross negligence or wilful misconduct of the applicable
Issuing Bank; and
(v) any other act or omission or delay of any kind or any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the
provisions of this subsection (h), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(i) It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a Letter of Credit resulted from an
Issuing Bank's gross negligence or wilful misconduct, an Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) an Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of the applicable
Issuing Bank. It is further understood and agreed that, notwithstanding the
proviso to clause (iv) of subsection (h) above, the Borrower's obligation
hereunder to reimburse Letter of Credit Disbursements will not be excused by the
gross negligence or wilful misconduct of an Issuing Bank to the extent that such
Letter of Credit Disbursement actually discharged a liability of, or otherwise
benefited, or was recovered by, the Borrower; provided that the foregoing shall
--------
not be construed to excuse an Issuing Bank from liability to the Borrower to the
extent of any direct damages suffered by the Borrower that are caused by such
Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof.
(j) Each Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. Each Issuing Bank shall as promptly as possible give
telephonic notification, confirmed by telex or telecopy, to the Agent and the
Borrower of such demand for payment and whether such Issuing Bank has made or
will make a Letter of Credit Disbursement thereunder, provided that the failure
to give such notice shall not relieve the
-44-
Borrower of its obligation to reimburse any such Letter of Credit Disbursement
in accordance with this Section. The Agent shall promptly give each Lender
notice thereof.
(k) In the event that the Borrower is required pursuant to the terms
of this Agreement or any other Loan Document to provide cash collateral in
respect of the Letter of Credit Exposure, the Borrower shall deposit in an
account with the Security Agent, for the benefit of the Lenders, an amount in
cash equal to the Letter of Credit Exposure (or such lesser amount as shall be
required hereunder or thereunder). Such deposit shall be held by the Security
Agent as collateral for the payment and performance of the Obligations. The
Security Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits in Temporary Cash Investments, which
investments shall be made as directed by the Borrower (unless such investments
shall be contrary to applicable law or regulation or a Default shall have
occurred and be continuing, in which case investments shall be made at the
option and sole but reasonable discretion of the Security Agent), such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall automatically be
applied by the Security Agent to reimburse each Issuing Bank for Letter of
Credit Disbursements and, if the maturity of the Loans has been accelerated, to
satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Domestic Business days after all Events of Default have been cured or
waived. If the Borrower is required to provide an amount of cash collateral
hereunder pursuant to Section 2.08(d), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower upon demand; provided that, after
--------
giving effect to such return, (i) the sum of the Letter of Credit Exposure plus
the aggregate outstanding principal amount of Revolving Loans would not exceed
the lesser of the aggregate Revolving Loan Commitments or the Borrowing Base and
(ii) no Default shall have occurred and be continuing.
(l) All letters of credit outstanding under the Existing Credit
Agreement as of the Effective Date shall be deemed to have been issued hereunder
on the Effective Date and shall constitute "Letters of Credit" for all purposes
of the Loan Documents.
(m) The Borrower, the Agent and any Lender that is willing to be an
Issuing Bank hereunder may agree that such Lender shall be an Issuing Bank by
the execution and delivery of an agreement substantially in the form of Exhibit
I (an "Issuing Bank Agreement"). The Agent shall notify the Lenders of the
identity of any Issuing Bank appointed pursuant to this subsection (m). The
Borrower also may terminate the status of any Issuing Bank as an Issuing Bank
hereunder at any time by at least three Domestic Business Days' prior notice to
such Issuing Bank and the Agent, and the Agent shall
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thereupon notify the Lenders of such termination; provided that such termination
--------
shall operate only to relieve such Issuing Bank of its obligation to issue
Letters of Credit hereunder and shall not affect such Issuing Bank's status as
an Issuing Bank or its rights and obligations hereunder with respect to any
Letters of Credit previously issued by it.
SECTION 2.14. Swingline Loans. (a) During the Revolving Loan
----------------
Availability Period the Swingline Lender agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower from time to time amounts that
will not result in (i) the aggregate principal amount of outstanding Swingline
Loans at any time exceeding $15,000,000, or (ii) the sum of the Letter of Credit
Exposure and the aggregate principal amount of all outstanding Swingline Loans
and Revolving Loans at any time exceeding the total Revolving Loan Commitments.
All Swingline Loans shall be made in Dollars.
(b) In order to request a Swingline Loan, the Borrower shall notify
the Agent of such request not later than 1:00 P.M. (New York City time) on the
day of a proposed Swingline Loan, specifying the proposed date (which shall be a
Domestic Business Day) and amount of the requested Swingline Loan (which shall
be $[1,000,000] or a larger multiple of $[500,000]) and the duration of the
Interest Period applicable thereto, subject to the definition of Interest
Period. The Agent will promptly advise the Swingline Lender of any such notice
received from the Borrower. The Swingline Lender shall make each Swingline Loan
available to the Borrower by means of a credit to the general deposit account of
the Borrower with the Swingline Lender by 2:00 P.M. (New York City time) on the
requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the Lenders
not later than 10:00 a.m., New York City time, on any Domestic Business Day
require the Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which the Lenders will acquire
participations. In furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
the Agent, for the account of the Swingline Lender, such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
Each Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.02 with respect to Loans made by such Lender (and Section 2.02 shall
apply, mutatis mutandis, to the payment obligations of the Lenders). The Agent
------- --------
shall notify the Borrower of any participations in any Swingline Loan acquired
-46-
pursuant to this paragraph. Any amounts received by the Swingline Lender from
the Borrower in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Agent; any such amounts received by the Agent shall be promptly
remitted by the Agent to the Lenders that shall have made their payments
pursuant to this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective,
--------------
and the Existing Credit Agreement shall be amended and restated in its entirety
as provided herein, on the date that each of the following conditions shall have
been satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Lender of a duly
executed Note or Notes, dated on or before the Amendment Effective Date
complying with the provisions of Section 2.03;
(c) receipt by the Agent of opinions of each of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇, L.L.P., ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇ and Ice ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇, in each case as counsel for the Borrower, substantially in the forms
of ▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇, ▇-▇ and D-4 hereto, respectively, and covering such
additional matters relating to the transactions contemplated hereby as the
Required Lenders may reasonably request;
(d) receipt by the Agent of a certificate signed by the Chairman and
Chief Executive Officer and any Vice President of the Borrower, dated the
Effective Date, to the effect set forth in clauses (c) and (d) of Section
3.02;
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(e) receipt by the Agent of counterparts of the Guarantee Agreement
duly executed by the parties thereto;
(f) receipt by the Security Agent of all documents it may reasonably
request to confirm the continued effectiveness of the Security Documents,
the grant and perfection of valid, first-priority security interests
thereunder and any other matters relevant thereto, all in form and
substance satisfactory to the Security Agent;
(g) the Required Lenders shall not have advised the Agent that, in
their judgment, there shall have occurred a material adverse change in the
assets, financial condition, prospects or results of operations of the
Borrower and its Subsidiaries, taken as a whole;
(h) the Parent Corporation shall consummate the Stock Repurchase
substantially simultaneously with the effectiveness of this Agreement and
the Amendment Effective Date for aggregate consideration not exceeding
$135,000,000;
(i) the Borrower shall have made arrangements satisfactory to the
Agent and the Documentation Agent to repay all loans outstanding under the
Existing Credit Agreement, together with accrued and unpaid interest, fees
and other amounts owing thereunder, in each case on the Amendment Effective
Date, without prejudice to the ability of the Borrower hereunder to
refinance such amounts with the proceeds of Loans made on the Amendment
Effective Date, and after giving effect thereto the only Debt of the
Borrower and its Subsidiaries on the Amendment Effective Date will be
Loans, Subordinated Debt and other Debt that was permitted by the Existing
Credit Agreement;
(j) receipt by the Agent of all fees and other compensation payable to
the Agent, the Documentation Agent, the Lenders or the Security Agent on or
prior to the Amendment Effective Date pursuant to their agreements with the
Borrower;
(k) receipt by the Agent of the certificate to be delivered on the
Amendment Effective Date pursuant to Section 5.03(b) and satisfaction of
the Lenders with the amount and scope of the Borrower's insurance coverage
set forth therein and the identity of the insurers providing such coverage;
and
(l) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Borrower and its Subsidiaries, the
corporate authority for and the validity of the Loan Documents, and any
other matters relevant hereto, all in form and substance satisfactory to
the Agent;
-48-
provided that this Agreement shall not become effective or be binding on any
--------
party hereto unless all of the foregoing conditions are satisfied not later than
[ ], 1997. The Agent shall promptly notify the Borrower and the
Lenders of the Amendment Effective Date, and such notice shall be conclusive and
binding on all parties hereto. Each of the parties hereto agrees that, as of the
Amendment Effective Date, each Lender shall be deemed to have assigned a
proportionate part of its rights and obligations under this Agreement and the
Notes to the other Lenders to the extent necessary such that the Commitments of
the Lenders as of the Amendment Effective Date shall be as set forth in Schedule
1 hereto and the participation of each Lender in any outstanding Letters of
Credit shall be proportionate to its pro rata share of the Commitments, and the
Lenders agree to assume, as of the Amendment Effective Date, such rights and
obligations to such extent.
SECTION 3.02. Each Credit Event. The obligation of any Lender to
------------------
make a Loan on the occasion of any Borrowing (it being understood that, for
purposes of this Section, a "Borrowing" does not include a change or
continuation of the Type of, or the duration of the Interest Period applicable
to, a previously outstanding Borrowing pursuant to Section 2.04) and of the
Issuing Bank to issue, extend or renew a Letter of Credit is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or a notice requesting issuance, extension or renewal of a
Letter of Credit as required by Section 2.13(c) or receipt by the Swingline
Lender of a notice requesting a Swingline Loan as required by Section 2.14,
as applicable;
(b) the fact that, immediately after such Borrowing or the issuance,
extension or renewal of such Letter of Credit, the aggregate outstanding
principal amount of the Loans of each Class and the Letter of Credit
Exposure will not exceed the limitations set forth in Sections 2.01,
2.13(a) and 2.14;
(c) the fact that, immediately after such Borrowing or issuance,
extension or renewal of such Letter of Credit, no Default shall have
occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents shall be true on
and as of the date of such Borrowing or issuance, extension or renewal of
such Letter of Credit (except to the extent such representations and
warranties expressly relate solely to an earlier date).
-49-
Each Borrowing hereunder and the issuance, extension or renewal of each Letter
of Credit hereunder shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing or issuance as to the facts specified in
clauses (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Existence and Power. The Borrower is a limited
--------------------
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has all powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted or proposed to be conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
--------------------------------------------
Contravention. The execution, delivery and performance by each of the Borrower
--------------
and its Subsidiaries of this Agreement and the other Loan Documents to which it
is to be a party and the consummation of the Financing Transactions are within
its powers, have been duly authorized by all necessary action on the part of the
Borrower, its partners, the Subsidiaries and their respective stockholders or
partners (as applicable), require no action by or in respect of, or filing with,
any Governmental Authority (other than (i) such as have been duly taken or made,
(ii) filings required to perfect Liens granted under the Security Documents and
(iii) compliance with "bulk sales" laws) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
partnership agreement, certificate of incorporation or By-laws (as applicable)
of the Borrower or any Subsidiary or of any judgment, injunction, order or
decree or (to the extent that such contravention or default could result in a
Material Adverse Effect) any agreement or other instrument binding upon the
Borrower or any Subsidiary or result in the creation or imposition of any Lien
(other than the Liens of the Security Documents) on any asset of the Borrower or
any of its Subsidiaries, in each case both before and after giving effect to the
Financing Transactions.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
---------------
binding agreement of the Borrower and the other Loan Documents, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of each of the Borrower and the Subsidiaries party thereto,
in each case enforceable in accordance with its terms.
-50-
SECTION 4.04. Financial Information; Title to Properties. (a) The
-------------------------------------------
consolidated balance sheet of the Borrower as of February 1, 1997 and the
related consolidated statements of operations, partnership equity and cash flows
for each of the two fiscal years ended February 1, 1997, reported on by Coopers
& ▇▇▇▇▇▇▇ and set forth in the Descriptive Materials, copies of which have been
delivered to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Borrower as of such date and the results of its operations and cash flows for
such years.
(b) The unaudited consolidated balance sheet of the Borrower as of
August 2, 1997, and the related unaudited consolidated statements of operations
and cash flows for the 13-week and 26-week periods ended August 2, 1997, set
forth in the Descriptive Materials, copies of which have been delivered to each
of the Lenders, fairly present, in conformity with generally accepted accounting
principles applied on a basis consistent with the financial statements referred
to in subsection (a) of this Section (except as disclosed therein), the
consolidated financial position of the Borrower as of such date and the results
of its operations for such periods (subject to normal year-end adjustments).
(c) The unaudited pro forma consolidated statement of income for the
26-week period ended August 2, 1997, set forth in the Descriptive Materials, has
been derived from the historical financial statements for such period referred
to in subsection (a) of this Section adjusted to give effect to the Transactions
on the basis described therein. Such pro forma consolidated statement of income
presents fairly, on a pro forma basis, the Borrower's consolidated income for
such period, assuming that the adjustments specified therein had occurred as
described therein.
(d) Since August 2, 1997, there has been no material adverse change
in the assets, financial condition or results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole.
(e) Each of the Borrower and the Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its material properties and
assets, except for minor defects in title that do not interfere with its ability
to conduct its business as currently conducted or proposed to be conducted or to
utilize such properties and assets for their intended purposes.
SECTION 4.05. Litigation. There is no injunction, stay, decree or
-----------
order of any Governmental Authority or any action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision, which in any such case could
-51-
have a Material Adverse Effect or which in any manner draws into question the
validity of this Agreement or the other Loan Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group
----------------------
has, in all material respects, fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan. No
member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan, or made any
amendment to any Plan, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any material liability under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Taxes. The Borrower and its Subsidiaries have filed or
------
caused to be filed all United States Federal income tax returns and all other
material tax returns which are required to be filed by them and have paid or
caused to be paid all taxes shown to be due on such returns or pursuant to any
assessment received by the Borrower or any Subsidiary, except where the same may
be contested in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Borrower,
adequate.
SECTION 4.08. Parent Corporation. As of the Amendment Effective
-------------------
Date, the Borrower is, directly or indirectly, wholly owned by the Parent
Corporation, the Parent Corporation does not have any subsidiaries, other than
the Borrower and the Subsidiaries and subsidiaries resulting from transfers to
the Parent Corporation of capital stock of corporations holding partnership
interests in the Borrower, and neither the Parent Corporation nor any of its
subsidiaries described above have any material assets (other than partnership
interests in the Borrower and assets of the Borrower and the Subsidiaries) or
liabilities (other than (i) liabilities fully indemnified by The Limited, (ii)
liabilities that also constituted liabilities of the Borrower prior to the
Conversion and (iii) liabilities of the Borrower and the Subsidiaries).
SECTION 4.09. Subsidiaries. Each of the Borrower's Subsidiaries is a
-------------
corporation, a general partnership or a limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all corporate or partnership powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. As of the
-52-
Amendment Effective Date, the only Subsidiaries of the Borrower shall be the
Subsidiaries identified on Schedule 4.10, each of which shall be a Permitted
Subsidiary.
SECTION 4.10. Not an Investment Company. The Borrower is not an
--------------------------
"investment company", nor is it controlled by an "investment company", within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.11. Compliance with Laws. Neither the Borrower nor any of
---------------------
the Subsidiaries is in violation of any law, rule or regulation, or in default
with respect to any judgment, writ, injunction or decree applicable to it of any
Governmental Authority, that (individually or in the aggregate) could result in
a Material Adverse Effect.
SECTION 4.12. Agreements. (a) Except as disclosed in the
-----------
Descriptive Materials, neither the Borrower nor any of the Subsidiaries is a
party to any agreement or instrument or subject to any partnership or corporate
restriction that has resulted or could result in a Material Adverse Effect.
Neither the Borrower nor any of the Subsidiaries is a party to any agreement or
instrument or subject to any restriction (other than restrictions on the payment
of dividends or partnership distributions imposed by law) that restricts or
impairs (i) the ability of the Borrower and its Subsidiaries to grant to the
Security Agent Liens on any of their assets to secure the Obligations or (ii)
the ability of any Subsidiary to pay dividends on its capital stock or
distributions to its partners, as applicable.
(b) Neither the Borrower nor any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Debt, or any other agreement or instrument to which it is a party or
by which it or any of its properties or assets are or may be bound, where such
default could result in a Material Adverse Effect.
SECTION 4.13. Federal Reserve Regulations. Neither the Borrower nor
----------------------------
any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
SECTION 4.14. Disclosure. All information (including the Descriptive
-----------
Materials but excluding projected financial information) furnished in writing by
or on behalf of the Borrower or any Subsidiary to the Agent or any Lender for
purposes of or in connection with this Agreement or any transaction contemplated
hereby was true and accurate in all material respects or based on reasonable
estimates on the date as of which such information was stated or certified. The
Borrower has disclosed to the Lenders in writing any and all facts (other than
prevailing economic conditions affecting similarly situated businesses
generally) known to any officer of the Borrower which materially and adversely
affect or may materially and adversely affect (to the extent the Borrower can
-53-
now reasonably foresee) the business, financial position or results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole. All projected financial information which has been furnished by or on
behalf of the Borrower or any Subsidiary to the Agent or any Lender was, at the
time so furnished, believed by the Borrower to have been prepared in a
reasonable manner and based on reasonable assumptions with respect to the
Borrower's business; provided that no representation is made by the Borrower
--------
that the future results of the Borrower will equal those set forth in such
projected financial information.
SECTION 4.15. Governmental Approvals. As of the Amendment Effective
-----------------------
Date, all consents and approvals of, and filings and registrations with, and all
other actions in respect of, all Governmental Authorities required in order to
consummate the Financing Transactions shall have been obtained, given, filed or
taken and shall be in full force and effect.
SECTION 4.16. Security Interests. (a) The security interests
-------------------
created in favor of the Security Agent under the Pledge Agreement will at all
times after the execution and delivery of the Pledge Agreement constitute valid,
first-priority, perfected security interests in the Pledged Securities (as
defined therein), and such Pledged Securities will be subject to no Liens (other
than unperfected Liens imposed by law) or security interests of any other
Person. No filings or recordings are or will be required in order to perfect
the security interests in the Pledged Securities created under the Pledge
Agreement.
(b) The security interests created in favor of the Security Agent for
the benefit of the Lenders under the Security Documents will constitute valid,
perfected security interests in the collateral subject thereto, subject only to
Liens permitted by the Loan Documents.
SECTION 4.17. Employment and Management Agreements. Except as
-------------------------------------
disclosed in Schedule 4.18, as of the Amendment Effective Date (after giving
effect to the Transactions) there are no (a) employment agreements covering
management employees of the Borrower, (b) agreements for management or
consulting services to which the Borrower is a party or by which it is bound, or
(c) collective bargaining agreements or other labor agreements covering any of
the employees of the Borrower.
SECTION 4.18. Capitalization. As of the Amendment Effective Date,
---------------
the only general partner in the Borrower is VGP, which is a wholly-owned
subsidiary of the Parent Corporation. As of the Amendment Effective Date, there
are no outstanding subscriptions, options, warrants, calls, rights (including
preemptive rights) or other agreements or commitments of any nature relating to
any partnership interests in the
-54-
Borrower, except as provided for in the Partnership Agreement and except with
respect to management plans and arrangements and the Convertible Subordinated
Debt.
SECTION 4.19. Environmental Matters. Except as disclosed in the
----------------------
environmental audit reports delivered to the Agent prior to the date of
execution of this Agreement, each of the Borrower and the Subsidiaries has
complied with all Environmental and Safety Laws, except for any noncompliance
that, individually or in the aggregate, could not reasonably be anticipated to
result in a Material Adverse Effect. None of the Borrower and the Subsidiaries
has received notice of any failure so to comply which alone or together with any
other such failure could result in a Material Adverse Effect. Except as
disclosed in the environmental audit reports delivered to the Agent prior to the
date of execution of this Agreement, the facilities of the Borrower and the
Subsidiaries do not treat, store or dispose of any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as those
terms are used in any Environmental and Safety Laws, in violation thereof where
such violation could result, individually or together with other violations, in
a Material Adverse Effect.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any Commitment
hereunder or any amount payable under any Loan Document remains unpaid or any
Letter of Credit remains outstanding:
SECTION 5.01. Information. The Borrower will deliver to each of the
------------
Lenders:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, consolidated and consolidating balance
sheets of the Borrower and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated and consolidating statements
of income and cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all reported
on by Coopers & ▇▇▇▇▇▇▇ or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of income and cash flows for
-55-
such quarter and for the portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Borrower's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail a list of Investments in order to
establish whether the Borrower was in compliance with Section 5.16, (ii)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.21, 5.22 and 5.23 on the date of such financial statements, (iii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto, (iv)
stating whether, since the date of the most recent financial statements
previously delivered pursuant to this Section, there has been any material
change in the generally accepted accounting principles applied in the
preparation of such statements and, if so, describing such change, (v)
identifying any Reinvestment Events that occurred during the previous six-
month period and the status of the reinvestment of the Net Cash Proceeds
thereof, (vi) as long as the Borrower is a partnership, setting forth the
Tax Distribution Amount and a reasonably detailed calculation thereof, and
(vii) setting forth the Pricing Ratio and a reasonably detailed calculation
thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to subclauses (ii), (vi) and
(vii) of clause (c) above;
(e) as soon as available and in any event within 20 days after the
Saturday closest to the last day of each calendar month, a summary
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of such Saturday and the related summary consolidated
statement of income for the fiscal month then ended and for the portion of
the Borrower's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal month and the
corresponding portion of the Borrower's previous fiscal year, prepared in
-56-
accordance with generally accepted accounting principles (subject to normal
year-end adjustments);
(f) within 20 days after the Saturday closest to the last day of each
calendar month (commencing with the month ending April 30, 1997, a
Borrowing Base Certificate as of such Saturday certified by the chief
financial officer or chief accounting officer of the Borrower (which
certificate the Agent and the Security Agent shall have the right to audit
at the expense of the Borrower; provided that not more than two such audits
--------
may be conducted at the Borrower's expense during any fiscal year of the
Borrower unless an Event of Default has occurred and is continuing);
(g) prompt notice of any default or alleged default under or breach or
alleged breach of the Trademark Agreements or Credit Card Agreements;
(h) prompt notice of each Prepayment Event or Reinvestment Event,
including a reasonably detailed calculation of the Net Cash Proceeds
therefrom;
(i) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(j) promptly upon the delivery or mailing thereof to the shareholders
of the Parent Corporation, copies of all reports, financial information
(including budgets or projections), proxy statements and other information
so delivered or mailed;
(k) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower, the Parent Corporation or Finance
Corp. shall have filed with the Securities and Exchange Commission;
(l) if and when any member of the ERISA Group (i) becomes aware of or
gives or is required to give notice to the PBGC of any Reportable Event
with respect to any Plan which might constitute grounds for or result in a
termination of such Plan by the PBGC under Title IV of ERISA, or knows that
the plan administrator of any Plan has become aware of or has given or is
required to give notice of any Reportable Event, a copy of the notice of
such Reportable Event given or required to be given to the PBGC if any such
notice is required;
-57-
(ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA under circumstances that would result in a material
amount of withdrawal liability, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, a copy of such notice; or (iv)
within 10 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Internal Revenue Code a notice of failure to make a
required installment or other payment with respect to a Plan, a statement
of the chief financial officer or the chief accounting officer of the
Borrower setting forth details as to such failure and the action that the
Borrower proposes to take with respect thereto, together with a copy of any
such notice given to the PBGC;
(m) promptly upon delivery thereof to the holders of Subordinated
Debt, copies of any and all reports, notices, financial information
(including any budgets or projections) and other information delivered to
such holders, to the extent not duplicative of information previously
delivered to the Lenders; and
(n) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Lender, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
-----------------------
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except in connection with a good faith
contest with the applicable obligee, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance; Casualty and
------------------------------------------------
Condemnation. (a) The Borrower will keep, and will cause each Subsidiary to
-------------
keep, all property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, (i) physical damage insurance on all real and personal property on an
all risks basis (including the perils of flood and quake), covering the repair
and replacement cost of all such property and consequential loss coverage for
business interruption and extra expense (such consequential loss coverage to be
in a reasonable amount in relation to the Borrower's gross revenues), (ii)
public liability insurance (including products/completed operations liability
coverage) in such amounts (on a per occurrence basis) as is customary with
prudent companies similarly situated in the same or similar businesses, and
(iii) such other insurance coverage in such amounts and with respect to such
risks as shall be
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required by the terms of any other Loan Document or as the Required Lenders may
reasonably request. All such insurance shall be provided by financially sound
and reputable insurers or such other insurers as the Required Lenders may
approve in writing. The Borrower will deliver to the Lenders (i) on the
Effective Date, a certificate dated such date showing the amount of coverage as
of such date, (ii) upon request of any Lender through the Agent from time to
time full information as to the insurance carried, (iii) within five days of
receipt of notice from any insurer a copy of any notice of cancelation or
material change in coverage from that existing on the Effective Date and (iv)
forthwith, notice of any cancelation or nonrenewal of coverage by the Borrower.
(c) The Borrower will furnish to the Agent and the Lenders prompt
written notice of any casualty or other insured damage to any portion of any
Mortgaged Property or the commencement of any action or proceeding for the
taking of any Mortgaged Property or any part thereof or interest therein under
power of eminent domain or by condemnation or similar proceeding. If any such
event results in Net Cash Proceeds (whether in the form of insurance proceeds,
condemnation award or otherwise), the Security Agent is authorized to collect
such Net Cash Proceeds and, if received by the Borrower or any Subsidiary, such
Net Cash Proceeds shall be paid over to the Security Agent; provided that if the
--------
aggregate Net Cash Proceeds in respect of such event are less than $5,000,000,
such Net Cash Proceeds shall be paid over to the Borrower unless a Default has
occurred and is continuing. All such Net Cash Proceeds retained by or paid over
to the Security Agent shall be held by the Security Agent and released from time
to time to pay the costs of repairing, restoring or replacing the affected
property in accordance with the terms of the applicable Mortgage, subject to the
provisions of the applicable Mortgage regarding application of such Net Cash
Proceeds during a Default. If any Net Cash Proceeds retained by or paid over to
the Security Agent as provided above continue to be held by the Security Agent
on the date that is two years after the collection of such Net Cash Proceeds,
then such Net Cash Proceeds shall be applied to prepay Term Loans as provided in
Section 2.08(e).
SECTION 5.04. Conduct of Business and Maintenance of Existence. (a)
-------------------------------------------------
The Borrower will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as conducted by the Borrower and its
Subsidiaries prior to the Amendment Effective Date, and will preserve, renew and
keep in full force and effect, and will cause each Subsidiary to preserve, renew
and keep in full force and effect, their respective existences and their
respective rights, privileges and franchises necessary or desirable in the
normal conduct of business.
(b) All outstanding shares of Finance Corp.'s capital stock shall be
owned directly by the Borrower, Finance Corp.'s only business or activity shall
be the issuance of
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the Subordinated Debt and activities incidental thereto and Finance Corp. shall
not own or acquire any assets.
(c) The only business or activity of a Permitted Subsidiary (other
than Finance Corp.) shall be (i) creative design activities associated with the
preparation of catalogues in connection with the Borrower's business, (ii) the
production and distribution of such catalogues, (iii) other activities
incidental to the Borrower's business, (iv) the leasing of property and
employment of management and employees for purposes of the foregoing activities,
(v) other activities incidental to such Permitted Subsidiary's business and (vi)
ownership of interests in other Permitted Subsidiaries. Without limiting the
generality of the foregoing, Permitted Subsidiaries (including Finance Corp.)
shall not own or acquire any inventory or collect or hold any revenues or other
proceeds generated from the sale of inventory, all of which activities shall be
conducted by the Borrower. The Borrower will not permit any Permitted
Subsidiary to incur any Debt (other than pursuant to the Guarantee Agreement,
the Security Documents and a Subordinated Guarantee Agreement and, in the case
of Finance Corp., the Subordinated Debt) or other liability (other than
liabilities for franchise taxes and similar liabilities incidental to its
existence).
(d) The only business or activity of the Parent Corporation and its
subsidiaries (other than the Borrower and its Subsidiaries) shall be the
ownership of the Borrower and activities incidental thereto, which may include
the establishment and administration of Parent Corporation Stock Plans. Without
limiting the generality of the foregoing, neither the Parent Corporation nor any
of its Subsidiaries (other than the Borrower and its Subsidiaries) will (i) have
any subsidiaries, other than the Borrower and its Subsidiaries and, in the case
of the Parent Corporation, wholly owned subsidiaries through which it indirectly
holds partnership interests in the Borrower, or (ii) have any material assets
(other than partnership interests in the Borrower) or liabilities (other than
(A) liabilities fully indemnified by The Limited, (B) liabilities that also
constituted liabilities of the Borrower prior to the Conversion, (C) liabilities
of the Borrower and its Subsidiaries and (D) liabilities arising by operation of
law or otherwise incidental to its existence).
SECTION 5.05. Compliance with Laws. The Borrower will comply, and
---------------------
cause each Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental and Safety Laws and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where the failure to
comply, either alone or combined with other failures to comply, could not have a
Material Adverse Effect.
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SECTION 5.06. Inspection of Property, Books and Records. The
------------------------------------------
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Lender
at such Lender's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired; provided that
--------
(a) reasonable advance notice shall be given to the Borrower of any such visit
or inspection of properties and (b) the Borrower shall be afforded an
opportunity to participate in any such discussions with independent public
accountants.
SECTION 5.07. Fiscal Year. The Borrower will cause its fiscal year
------------
to end on the Saturday closest to January 31 in each year.
SECTION 5.08. Further Assurances. The Borrower will execute any and
-------------------
all further documents, financing statements, agreements and instruments, and
take all further action, which may be required under applicable law, or which
the Required Lenders or the Agent or Security Agent may reasonably request, in
order to effectuate the transactions contemplated by the Loan Documents and in
order to grant, preserve, protect and perfect the validity and first priority of
the security interests created or intended to be created by the Security
Documents. In addition, (a) the Borrower will deliver prompt written notice to
the Lenders of each Permitted Acquisition describing the assets and properties
acquired and the Borrower will, at the Borrower's cost and expense, promptly
secure the Obligations by pledging or creating, or causing to be pledged or
created, first priority (subject to Liens incurred prior to the applicable
Permitted Acquisition) perfected security interests with respect to such assets
and properties as the Agent or the Required Lenders shall reasonably designate,
and (b) if the Borrower shall form or acquire any additional Subsidiary, the
Borrower will, at the Borrower's expense, cause such Subsidiary to become a
party to the Guarantee Agreement and the Security Agreement and pledge (or cause
to be pledged) the capital stock of such Subsidiary under the Pledge Agreement.
Such additional security interests and Liens will be created under security
agreements, mortgages, deeds of trust and other instruments and documents in
form and substance reasonably satisfactory to the Required Lenders, and the
Borrower shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Required Lenders shall reasonably request to evidence
compliance with this Section 5.08. The Borrower agrees to provide such evidence
as the Required Lenders shall reasonably request as to the perfection and
(subject to Liens incurred prior to the applicable Permitted Acquisition) first
priority status of each such security interest and Lien.
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SECTION 5.09. Subsidiaries; Partnerships. The Borrower will not have
---------------------------
any Subsidiaries other than (i) Wholly Owned Consolidated Subsidiaries acquired
pursuant to Permitted Acquisitions and liquidated or merged into the Borrower
within 90 days after the date of acquisition and (ii) Permitted Subsidiaries.
The Borrower will not, and will not permit any of its Subsidiaries to, enter
into any partnership (other than a partnership that is a Permitted Subsidiary)
or joint venture.
SECTION 5.10. Amendment of Certain Documents. The Borrower will not
-------------------------------
permit any amendment or modification to be made to, or any waiver of its rights
or the rights of any Subsidiary under, any Transaction Document or Subordinated
Debt Document, other than (a) amendments, modifications and waivers with respect
to the Credit Card Agreements that are not, individually or in the aggregate,
materially adverse to the interests of the Lenders, (b) amendments,
modifications and waivers with respect to the Trademark Agreement that are not,
individually or in the aggregate, adverse to the interests of the Borrower or
the Lenders, (c) amendments, modifications and waivers with respect to the
Subordinated Debt Documents limited to (i) immaterial changes necessary to
comply with the Trust Indenture Act of 1939, as amended, in connection with
registration under the Securities Act of 1933 and (ii) other changes that would
not result in the Subordinated Debt governed by such Subordinated Debt Documents
having terms and conditions that would not be permitted terms and conditions for
Subordinated Debt incurred to refinance the Convertible Subordinated Debt or the
Subordinated Notes (as the case may be), as described in the proviso to clause
(ii) of Section 5.11(a), and (d) amendments to the Partnership Agreement that
will not have the effect of increasing the amount of Tax Advances or Tax
Distributions and that are not, individually or in the aggregate, adverse to the
interests of the Borrower or the Lenders; provided that any such amendment,
--------
modification or waiver permitted hereunder shall be made only after prior notice
to the Lenders, and copies thereof shall be delivered to the Lenders.
SECTION 5.11. Debt; Preferred Stock; Rate Protection Agreements. (a)
--------------------------------------------------
The Borrower will not, nor will it permit any of its Subsidiaries to, incur or
at any time be liable with respect to any Debt, except:
(i) Debt outstanding under this Agreement and the other Loan
Documents;
(ii) unsecured Subordinated Debt in an aggregate principal amount not
exceeding $125,000,000 (in respect of the Subordinated Notes or any
permitted refinancing thereof) and $20,000,000 (in respect or the
Convertible Subordinated Debt or any permitted refinancing thereof) at any
time outstanding; provided that any Subordinated Debt incurred to refinance
--------
the Subordinated Notes or the Convertible Subordinated Debt shall have
terms and conditions no less favorable to the Borrower and the Lenders than
the Subordinated Notes or the Convertible
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Subordinated Debt, as the case may be, and, without limiting the generality
of the foregoing, shall (A) not require any payment of principal earlier
than the original scheduled maturity date of the Subordinated Notes or the
Convertible Subordinated Debt, as the case may be (except pursuant to
mandatory repurchase provisions that are the same as, or more favorable to
the Borrower than, those applicable to the Subordinated Notes or the
Convertible Subordinated Debt, as the case may be), (B) bear interest at a
fixed rate that is equal to or less than the rate of interest borne by the
Subordinated Notes or the Convertible Subordinated Debt, as the case may
be, and (C) have terms of subordination, covenants, events of default,
mandatory offers to repurchase and other material terms that are the same
as, or more favorable to the Borrower and the Lenders than, those
applicable to the Subordinated Notes or the Convertible Subordinated Debt,
as the case may be; provided further that any Subordinated Debt to be
-------- -------
incurred after the Effective Date shall not be incurred without reasonable
prior notice to the Lenders and prior delivery to the Lenders of copies of
the Subordinated Debt Documents to be executed and delivered in connection
therewith;
(iii) Capital Financing Debt in an aggregate principal amount not
exceeding (A) $10,000,000 at any time outstanding prior to the end of the
fiscal year ending on the Saturday closest to January 31, 1998, and (B)
$30,000,000 at any time outstanding thereafter;
(iv) unsecured Debt for borrowed money issued solely for cash
consideration; provided that the incurrence of such Debt shall constitute a
--------
Debt Prepayment Event and (A) all the proceeds of such Debt shall be
applied forthwith to the prepayment of Term Loans or, after the Term Loans
are fully repaid, the reduction of Revolving Loan Commitments and (B)
notwithstanding any contrary provision in this Agreement, any prepayment of
Term Loans of either Class required by clause (A) above shall be applied to
reduce subsequent scheduled repayments thereof pursuant to Section 2.08(a)
in reverse chronological order;
(v) Debt arising under the Credit Card Agreements, to the extent that
payment obligations thereunder are deemed to constitute Debt; provided that
--------
the foregoing shall not be construed to permit the sale of accounts
receivable pursuant to the Credit Card Agreements with recourse to the
Borrower or otherwise on terms and conditions (other than price) materially
less favorable to the Borrower than those specified in the Credit Card
Agreements as in effect on the Effective Date;
(vi) other unsecured Debt in an aggregate principal amount not
exceeding $5,000,000 at any time outstanding;
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(vii) Debt in respect of the financing of insurance premiums for
insurance obtained in the ordinary course of business; provided that the
--------
amount of such Debt relating to any policy of insurance shall not at any
time exceed the amount that the Borrower or a Subsidiary would be entitled
to receive as a refund of insurance premium if such insurance policy were
to be canceled at such time; and
(viii) unsecured Debt of any Wholly Owned Consolidated Subsidiary
owing to the Borrower in respect of an Investment made by the Borrower in
such Subsidiary in compliance with Section 5.16;
provided that the Borrower shall not permit any Subsidiary to incur or become
--------
liable for any Debt, whether or not permitted above, other than (1) Subordinated
Debt of Finance Corp. permitted under clause (ii) above, (2) Debt of a Wholly
Owned Consolidated Subsidiary acquired pursuant to a Permitted Acquisition that
is outstanding at the time of such acquisition to the extent permitted under
clause (vi) above, (3) Debt arising under the Guarantee Agreement or any
Security Document to which such Subsidiary is a party, (4) Subordinated Debt
arising under a Subordinated Guarantee Agreement to which such Subsidiary is a
party, if such Subsidiary is required to enter into such Subordinated Guarantee
Agreement by the terms of the Subordinated Debt Documents and if such Subsidiary
also Guarantees the Obligations pursuant to the Guarantee Agreement, and (5)
Debt permitted under clause (vii) or (viii) above.
(b) The Borrower will not, nor will it permit any of its Subsidiaries
to, issue any additional capital stock or partnership interests other than, in
the case of the Borrower, additional partnership interests issued in accordance
with the Partnership Agreement.
(c) The Borrower will from time to time enter into, and maintain in
effect, such Rate Protection Agreements as shall be necessary so that at all
times at least 45% of its long-term Debt (determined on a consolidated basis in
accordance with generally accepted accounting principles) consists of Debt that
bears a fixed rate of interest and Debt that is hedged pursuant to Rate
Protection Agreements to effectively bear interest at a fixed rate or to cap the
rate of interest thereon.
SECTION 5.12. Restricted Payments. The Borrower will not, nor will
--------------------
it permit any of its Subsidiaries to, declare or make or agree to make, directly
or indirectly, any Restricted Payment, except (a) the Borrower may pay interest
on the Subordinated Debt as and when due unless prohibited by the terms of
subordination applicable thereto; (b) the Borrower may refinance Subordinated
Debt with the proceeds of, or exchange Subordinated Debt for, Subordinated Debt
permitted under clause (ii) of Section 5.11(a) if no Default has occurred and is
continuing or would result therefrom; (c) the Borrower
-64-
may make Tax Advances and Tax Distributions if (i) no Default described in
clause (a) of Section 6.01 has occurred and is continuing, (ii) the Borrower is
a partnership at the time such Tax Advance or Tax Distribution is made and (iii)
the aggregate cumulative amount of Tax Advances and Tax Distributions does not
exceed the aggregate cumulative Tax Distribution Amounts for periods completed
since the Effective Date; (d) the Borrower may make Restricted Payments to VGP,
VLP or the Parent Corporation as reimbursement of out-of-pocket expenses
actually incurred by such Affiliates to third parties (not including other
Affiliates or employees of Affiliates) in connection with their respective
existences, the administration of the Borrower and the Subsidiaries and
activities incidental thereto, provided that aggregate Restricted Payments
pursuant to this clause (d) shall not exceed $250,000 during any fiscal year of
the Borrower; (e) the Borrower may make Restricted Payments in order to redeem,
repurchase or otherwise reacquire equity interests in the Parent Corporation
(including Restricted Payments to any partner or shareholder in the Borrower in
order to permit such partner or shareholder (either directly or indirectly
through additional payments or distributions to its parent entities) to redeem,
repurchase or otherwise reacquire equity interests in the Parent Corporation
from members of the Borrower's management, if (i) no Default has occurred and is
continuing and (ii) after giving effect to any such Restricted Payment, the
aggregate cumulative amount of Restricted Payments made pursuant to this clause
(e) shall not exceed the sum of $2,000,000 plus the amount of Net Cash Proceeds
received by the Borrower on or after the Effective Date and prior to making such
Restricted Payment from capital contributions attributable to the issuance by
the Parent Corporation of additional equity securities to members of management
of the Borrower; provided that Management Notes may be forgiven or returned
--------
without regard to the limitation in clause (e)(ii) above and the forgiveness or
return thereof shall not be treated as Restricted Payments for purposes of
determining compliance with such clause (e)(ii); (f) if an Equity Prepayment
Event occurs with respect to which the Equity Prepayment Percentage is greater
than 0.0%, the Borrower may purchase, redeem, prepay or acquire Subordinated
Debt if (i) no Default has occurred and is continuing, (ii) any Restricted
Payments made pursuant to this clause (f) shall be made within the 90-day period
provided for in Section 2.08(e) following delivery by the Borrower to the Agent
of a notice in accordance with Section 2.08(e) electing to make such Restricted
Payments in lieu of prepaying Term Loans as a result of an Equity Prepayment
Event, (iii) the aggregate amount of Restricted Payments made pursuant to this
clause (f) during any 90-day period referred to above shall not exceed the
Subordinated Debt Prepayment Amount specified in the applicable notice and (iv)
the aggregate principal amount of Subordinated Debt permitted by clause (ii) of
Section 5.11 (a) shall be permanently reduced by the aggregate principal amount
of Subordinated Debt purchased, redeemed, prepaid or acquired pursuant to this
clause (f); (g) if an Equity Prepayment Event occurs with respect to which the
Equity Prepayment Percentage is 0.0%, the Borrower may purchase, redeem, prepay
or acquire Subordinated Debt provided that (i) no Default has occurred and is
continuing, (ii) within two Domestic
-65-
Business Days after each Restricted Payment pursuant to this clause (g) the
Borrower shall make an optional prepayment of Term Loans in accordance with
Section 2.09 in an aggregate principal amount equal to the amount of such
Restricted Payment and notify the Agent that such optional prepayment is being
made in order to permit Restricted Payments pursuant to this clause (g) and
(iii) the sum of the aggregate Restricted Payments made pursuant to this clause
(g) plus the aggregate principal amount of Term Loans required to be prepaid as
a result of the foregoing clause (ii) of this clause (g) shall not exceed the
excess of (A) the Net Cash Proceeds from all Equity Prepayment Events after the
Effective Date with respect to which the Equity Prepayment Percentage was 0.0%
over (B) the aggregate amount of cash consideration paid by the Borrower in
connection with Permitted Acquisitions in reliance upon Net Cash Proceeds
referred to in clause (A); (h) the Borrower may make matching contributions on
behalf of its qualifying employees to a Parent Corporation Stock Plan pursuant
to the terms thereof; (i) the Borrower may make cash payments to the Parent
Corporation for the purpose of the repurchase of shares of its common stock in
the open market or otherwise, but only to the extent necessary to permit the
repurchase of a number of shares equal to the number of shares issued pursuant
to a Parent Corporation Stock Plan, provided that (1) no Default has occurred
--------
and is continuing at the time of, or would result from, such cash payment; (2)
the amount of such cash payments during any fiscal year of the Borrower may not
exceed $3,000,000; and (3) the sum of all cash payments made under this clause
(i) from and after the Effective Date shall not exceed $10,000,000; (j) the
Borrower may make cash payments to the Parent Corporation for the purpose of the
repurchase of up to 2,500,000 shares of its common stock pursuant to the Stock
Repurchase; and (k) if at the time thereof and after giving effect thereto no
Default has occurred and is continuing and the Debt Coverage Ratio is (and at
all times during the period of two consecutive fiscal quarters ended on or
immediately prior to such time was) 2.00 to 1.0 or less, the Borrower may (i)
make cash payments to the Parent Corporation in any fiscal year not exceeding in
the aggregate 50% of Consolidated Net Income for the immediately preceding
fiscal year and (ii) make payments on account of the prepayment, purchase,
redemption, defeasance, acquisition, termination, cancelation or compromise of
any Subordinated Debt in any fiscal year not exceeding in the aggregate the
difference of Excess Cash Flow for the immediately preceding fiscal year minus
the principal amount of Term Loans required to be prepaid in respect of such
Excess Cash Flow, provided in each case that (A) the Debt Coverage Ratio remains
--------
2.00 to 1.0 or less and (B) the sum of all Restricted Payments made pursuant to
this clause (k) in any fiscal year plus the principal amount of Term Loans
required to be prepaid in respect of Excess Cash Flow for the immediately
preceding fiscal year shall not exceed Excess Cash Flow for such immediately
preceding fiscal year.
SECTION 5.13. Mergers, Consolidations, Acquisitions and Sales of
--------------------------------------------------
Assets. (a) The Borrower will not, nor will it permit any of its Subsidiaries
-------
to, merge into or consolidate with any other Person, or permit any other Person
to merge into or
-66-
consolidate with it, or purchase or otherwise acquire (in one transaction or a
series of related transactions) any material assets, except that (i) the
foregoing shall not prohibit the consummation of the Acquisition, (ii) the
foregoing shall not prohibit the acquisition of assets in the ordinary course of
business (including Capital Expenditures permitted by Section 5.24), (iii) the
foregoing shall not prohibit Permitted Acquisitions, subject to 30 days' prior
written notice to the Lenders of such Permitted Acquisition describing the
material terms of such Permitted Acquisition and delivery to the Lenders prior
to consummation of such Permitted Acquisition of a certificate of the chief
financial officer or the chief accounting officer of the Borrower, setting forth
calculations establishing to the reasonable satisfaction of the Agent that the
Borrower will be in compliance with Section 5.23 upon giving effect to such
Permitted Acquisition, (iv) if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing any Wholly Owned
Consolidated Subsidiary (other than Finance Corp.) may merge or liquidate into
the Borrower in a transaction in which the Borrower is the survivor and (v) the
foregoing shall not prohibit capital contributions to the Borrower made in cash
or Investments by the Borrower in Subsidiaries permitted under Section 5.16;
provided that the acquisition of assets by Subsidiaries shall be subject to the
--------
further restrictions set forth in Section 5.04.
(b) The Borrower will not, nor will it permit any of its Subsidiaries
to, sell, assign, transfer or otherwise dispose of any asset, including any
stock, without the prior written consent of the Required Lenders to such sale,
assignment, transfer or disposition and the terms thereof; provided, however,
-------- -------
that the foregoing shall not prohibit the sale of (i) inventory in the ordinary
course of business, (ii) used or surplus equipment in the ordinary course of
business, (iii) credit card receivables pursuant to the Credit Card Agreements,
and (iv) other tangible personal property and real property not exceeding
$3,000,000 in fair market value in any fiscal year of the Borrower; provided
--------
further, however, that such sales shall be made for fair market value and solely
------- -------
for cash consideration.
SECTION 5.14. Transactions with Affiliates. The Borrower will not,
-----------------------------
nor will it permit any of its Subsidiaries to, directly or indirectly, (a) make
any Investment in an Affiliate, (b) sell, lease or otherwise transfer any assets
to or perform services for an Affiliate, (c) purchase, lease or acquire assets
or services from an Affiliate, or (d) enter into any other transaction directly
or indirectly with or for the benefit of an Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate); provided
--------
that (i) the Borrower or any of its Subsidiaries may enter into any such
transaction with an Affiliate that does not involve the payment of financial or
management advisory fees or similar consideration to an Affiliate if the
monetary or business consideration arising therefrom would not be less
advantageous to the Borrower or such Subsidiary than the monetary or business
consideration which it would obtain in a
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comparable arm's length transaction with a Person not an Affiliate, (ii) the
foregoing shall not prohibit the grant of warrants or options to acquire equity
interests in the Parent Corporation pursuant to management incentive
arrangements, (iii) the foregoing shall not prohibit the Restricted Payments
permitted under Section 5.12 and (iv) the foregoing shall not prohibit the
Transactions or the execution, delivery and performance by the Borrower of a
stockholders agreement and registration rights agreement substantially in the
respective forms attached to the Partnership Agreement and (v) the foregoing
shall not prohibit the payment described in Schedule 5.14.
SECTION 5.15. Sale and Lease-Back Transactions. The Borrower will
---------------------------------
not, nor will it permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
asset, real or personal, whether now owned or hereafter acquired, and thereafter
rent or lease such asset or other assets which it intends to use for
substantially the same purpose or purposes as the asset being sold or
transferred, except that the Borrower may enter into any such arrangement within
90 days after acquiring the asset that is sold or transferred; provided that (i)
--------
for purposes of determining compliance with clause (iii) of Section 5.11(a),
such arrangement shall be deemed to constitute Capital Financing Debt in a
principal amount equal to the amount that would constitute Debt if such
arrangement were accounted for as a capital lease and (ii) the Borrower shall
not enter into any such arrangement if, after giving effect thereto, the
Borrower would not be in compliance with clause (iii) of Section 5.11(a).
SECTION 5.16. Investments. The Borrower will not, nor will it permit
------------
any of its Subsidiaries to, make or acquire any Investment in any Person
(including any Subsidiary) other than:
(a) Temporary Cash Investments;
(b) the acquisition by the Borrower of all the outstanding capital
stock of a corporation pursuant to a Permitted Acquisition;
(c) the Management Notes;
(d) Tax Advances permitted under Section 5.12; and
(e) Investments consisting of advances and capital contributions made
by the Borrower in cash to any Permitted Subsidiary; provided that (i) such
--------
Investments in Finance Corp. shall be limited to amounts necessary to
discharge franchise taxes and similar liabilities incidental to its
existence, (ii) such Investments in any other Permitted Subsidiary shall be
limited to amounts necessary to discharge liabilities permitted to be
incurred by such Subsidiaries
-68-
under Section 5.04, (iii) no such Investment shall be made more than five
Domestic Business Days prior to the date that payment is to be made in
respect of the liability to be discharged with the proceeds of such
Investment and (iv) such Investments shall be represented by promissory
notes or capital stock pledged pursuant to the Pledge Agreement or
partnership interests subject to a perfected Lien in favor of the Security
Agent.
SECTION 5.17. Negative Pledge. The Borrower will not, nor will it
----------------
permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except Liens granted under the
Security Documents and except:
(a) any Lien (other than a Lien securing Debt) existing on any asset
(other than an asset subject to a security interest granted under the
Pledge Agreement or the Security Agreement) prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(b) Liens for taxes not delinquent or being contested in good faith
and by appropriate proceedings;
(c) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance;
(d) mechanics', workers', materialmen's, warehousemen's, landlords' or
other like Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith;
(e) easements, rights-of-way, charges, covenants, restrictions and
matters of public record, survey defects and imperfections of title that do
not in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business, in each
case affecting real property;
(f) the reservation by any prior grantor of any right, title or
interest in and to all oil, gas and other hydrocarbon substances, minerals,
ores and metals of every nature and kind in and under real property that do
not in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(g) any Liens securing Capital Financing Debt; provided that such Lien
--------
does not attach to any asset other than the asset financed by such Capital
Financing Debt and proceeds thereof;
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(h) Liens, if any, on credit card receivables sold pursuant to the
Credit Card Agreements that arise under the Credit Card Agreements by
virtue of such sale and proceeds thereof;
(i) Liens incurred in the ordinary course of business to secure
performance of surety and indemnity bonds, leases and other contracts
(other than to secure Debt);
(j) interests (other than Debt) of a lessor or lessee arising under a
lease;
(k) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with
imported goods, which duties are not delinquent or are being contested in
good faith by appropriate proceedings;
(l) unperfected Liens on inventory arising in the ordinary course of
business securing trade accounts payable to suppliers of such inventory
which are not past due or which are being contested in good faith; and
(m) Liens arising in the ordinary course of its business which (i) do
not attach to any asset subject to a security interest granted under the
Security Documents, (ii) do not secure Debt or any other monetary
obligation (other than judgments and appeal bonds not exceeding $2,000,000
in the aggregate) and (iii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof in the
operation of its business.
SECTION 5.18. Use of Proceeds and Letters of Credit. The Letters of
--------------------------------------
Credit and the proceeds of the Loans made under this Agreement will be used by
the Borrower only for the purposes set forth in the preliminary statement of
this Agreement. None of such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any Margin Stock.
SECTION 5.19. Grants of Negative Pledges or Dividend Restrictions.
----------------------------------------------------
The Borrower will not, nor will it permit any of its Subsidiaries to, agree to
or become bound by any agreement or other arrangement that would restrict or
impair (i) the ability of the Borrower and its Subsidiaries to grant to the
Security Agent a Lien on any of their respective properties or assets (provided
that the foregoing shall not prohibit restrictions in (a) agreements entered
into in connection with the incurrence of Capital Financing Debt that restrict
or impair the ability to grant Liens on the asset financed thereby while such
Capital Financing Debt remains outstanding or (b) the Credit Card Agreements
that
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restrict or impair the ability to grant Liens on accounts receivable sold
thereunder) or (ii) the ability of any Subsidiary of the Borrower to pay
dividends on its capital stock.
SECTION 5.20. Changes in Accounting. The Borrower will not, nor will
----------------------
it permit any of its Subsidiaries to, change its accounting policies or
practices from those utilized in the preparation of the financial statements of
the Borrower referred to in Section 4.04, except as permitted or required by
generally accepted accounting principles consistently applied.
SECTION 5.21 Fixed Charge Coverage Ratio. The Fixed Charge Coverage
----------------------------
Ratio for the period of four consecutive fiscal quarters ending on the last day
of each fiscal quarter of the Borrower set forth below will not be less than the
ratio set forth below opposite such fiscal quarters:
Fiscal Quarter Ending on: Ratio
------------------------- -----
November 1, 1997 2.20:1.0
January 31, 1998 2.20:1.0
May 2, 1998 2.20:1.0
August 1, 1998 2.20:1.0
October 31, 1998 2.40:1.0
January 30, 1999 2.40:1.0
May 1, 1999 2.40:1.0
July 31, 1999 2.40:1.0
October 30, 1999 2.75:1.0
January 29, 2000 2.75:1.0
April 29, 2000 2.75:1.0
July 29, 2000 2.75:1.0
October 28, 2000 3.0:1.0
February 3, 2001 3.0:1.0
May 5, 2001 3.0:1.0
August 4, 2001 3.0:1.0
November 3, 2001 3.0:1.0
February 2, 2002 3.0:1.0
May 4, 2002 3.0:1.0
August 3, 2002 3.0:1.0
SECTION 5.22. Minimum Adjusted Net Worth. Consolidated Adjusted Net
---------------------------
Worth will not at any date be less than Minimum Adjusted Net Worth at such date.
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SECTION 5.23. Debt Coverage Ratio. The Debt Coverage Ratio will not
--------------------
at any time during any period set forth below be greater than the ratio set
forth below with respect to such period:
Period
From and Including To and Excluding Ratio:
------------------ ---------------- ------
Effective Date January 31, 1998 4.5:1
January 31, 1998 January 30, 1999 3.9:1
January 30, 1999 January 29, 2000 3.40:1
January 29, 2000 February 3, 2001 2.8:1
February 3, 2001 February 2, 2002 2.25:1
February 2, 2002, and at all times thereafter 2.0:1
SECTION 5.24. Capital Expenditures. Capital Expenditures during any
---------------------
fiscal year of the Borrower, commencing with the fiscal year ending on the
Saturday closest to January 31, 1998, will not exceed the sum of (a) $12,500,000
plus (b) during any fiscal year of the Borrower other than the first such fiscal
year, the excess of $12,500,000 over the amount of Capital Expenditures during
the immediately preceding fiscal year; provided that additional Capital
--------
Expenditures not exceeding an aggregate of $50,000,000 for all such periods will
be permitted in excess of those permitted by clauses (a) and (b) above, except
that not more than $7,000,000 of such additional Capital Expenditures shall be
permitted during the first two such fiscal years; and provided further that, to
the extent that Capital Expenditures after December 9, 1996, but prior to the
Saturday closest to January 31, 1997, do not exceed $4,000,000, the excess of
$4,000,000 over the actual amount expended during such period may be added to
the amount of Capital Expenditures permitted under clause (a) above for the
fiscal year ending on the Saturday closest to January 31, 1998.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
------------------
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) when due any principal of any
Loan or any reimbursement obligation in respect of a Letter of Credit
Disbursement or
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(ii) within three Domestic Business Days of the date due, any interest on
any Loan, any fees or any other amount payable hereunder or under any other
Loan Document;
(b) the Borrower shall fail to observe or perform (i) any covenant
contained in clause (a) or (b) of Section 5.01 for three Domestic Business
Days after notice thereof has been given to the Borrower by the Agent at
the request of any Lender or (ii) any covenant contained in clause (i) of
Section 5.01 or in Section 5.07 or in Sections 5.09 to 5.24, inclusive;
(c) the Borrower or any Subsidiary shall fail to observe or perform
any covenant or agreement contained in any Loan Document (other than those
covered by clause (a) or (b) above) for 10 days after written notice
thereof has been given to the Borrower by the Agent at the request of any
Lender;
(d) any representation, warranty, certification or statement made by
the Borrower or any Subsidiary in any Loan Document or in any certificate,
financial statement or other document delivered pursuant to any Loan
Document shall prove to have been incorrect in any material respect when
made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment of
principal, interest or premium in respect of any Material Debt (other than
the Obligations) at maturity;
(f) any event or condition (including, without limitation, failure to
make any payment when due) shall occur which results in the acceleration of
the maturity of any Material Debt or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any
Person acting on such holder's behalf to accelerate the maturity thereof or
to require the prepayment, redemption or repurchase thereof or to terminate
any commitment to lend such Debt;
(g) any of the Trademark Agreements (other than those referred to in
clause (ii) of the definition thereof) or the Credit Card Agreements shall
be canceled, terminated or repudiated (other than termination of a Credit
Card Agreement in connection with the replacement thereof with another
Credit Card Agreement), or any event shall occur that results in any of
such Trademark Agreements having a term that expires earlier than the
initial term thereof, or any default, breach or other event shall occur
that would permit a termination of any of such Trademark Agreements (if the
Trademark Collateral Agreement were not in
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effect) or the Credit Card Agreements and shall continue beyond any
applicable grace period;
(h) the Parent Corporation, the Borrower or any Subsidiary (i) shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or
(ii) shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or (iii) shall make a general assignment for the
benefit of creditors, or (iv) shall fail generally to pay its debts as they
become due, or (v) shall take any corporate action to authorize any of the
foregoing;
(i) an involuntary case or other proceeding shall be commenced against
the Parent Corporation, the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Parent Corporation, the Borrower or any Subsidiary under the
Federal bankruptcy laws as now or hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA or Section
412 of the Internal Revenue Code; or notice of intent to terminate a Plan
or Plans having aggregate Unfunded Liabilities in excess of $2,000,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any
Plan against any member of the ERISA Group to enforce Section 515 or
4219(c)(5) of ERISA where the amount in controversy exceeds $2,000,000 and
such proceeding shall not have been dismissed within 30 days thereafter; or
a Reportable Event or Reportable Events shall have occurred with respect to
a Material Plan and the Agent shall have notified the Borrower that the
Required Lenders have made a determination that, on the basis of such
Reportable Event or Reportable Events, there are reasonable grounds for the
termination of
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such Material Plan by the PBGC or for the appointment by an appropriate
United States District Court of a trustee to administer such Material Plan;
(k) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $2,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and shall continue
unsatisfied and unstayed for a period of 10 days, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of
the Borrower or any Subsidiary to enforce any such judgment;
(l) a Change of Control shall occur; or
(m) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any
Subsidiary not to be, a valid, perfected, first priority security interest
in respect of any material amount of collateral, other than as a result of
an act or omission of the Security Agent, the Agent or any Lender and
subject to exceptions as to priority expressly permitted under the Loan
Documents;
then, and in every such event, the Agent shall (i) if requested by Lenders
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate, (ii) if
requested by Lenders holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable (in whole or, in the sole discretion of the
Lenders, from time to time in part) without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower, (iii)
if requested by Lenders having more than 50% of the Letter of Credit Exposure,
require cash collateral as contemplated by Section 2.13(k) in an amount not
exceeding the Letter of Credit Exposure, (iv) exercise and direct the Security
Agent to exercise remedies available under the Guarantee Agreement, the Security
Documents or otherwise, as requested by the Required Lenders, or (v) any
combination of the foregoing; provided that in the case of any of the Events of
--------
Default specified in clause (h) or (i) above with respect to the Parent
Corporation or the Borrower without any notice to the Parent Corporation or the
Borrower or any other act by the Agent or the Lenders, the Commitments shall
thereupon terminate and the Notes (together with accrued interest thereon) shall
become immediately due and payable (in whole) without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower.
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SECTION 6.02. Notice of Default. The Agent shall give notice to the
------------------
Borrower under clause (b)(i) or (c) of Section 6.01 promptly upon being
requested to do so by any Lender, and shall thereupon notify all the Lenders
thereof.
ARTICLE VII
THE AGENT, SECURITY AGENT AND ISSUING BANKS
SECTION 7.01. Appointment and Authorization. Each Lender irrevocably
------------------------------
appoints and authorizes each of the Agent, the Security Agent, the Swingline
Lender and any Issuing Bank (each being referred to as an "Agent" for purposes
of this Article VII) to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to such Agent by the terms hereof or thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Each Lender that is an Agent
---------------------
shall have the same rights and powers under this Agreement as any other Lender
and may exercise or refrain from exercising the same as though it were not an
Agent, and each such Lender and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not an Agent.
SECTION 7.03. Action by Agent. The obligations of any Agent under
----------------
the Loan Documents are only those expressly set forth herein and therein.
Without limiting the generality of the foregoing, no Agent shall be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. Each Agent may consult with
--------------------------
legal counsel (who may be counsel for 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.
SECTION 7.05. Liability of Agent. Neither any Agent nor any of its
-------------------
directors, officers, agents, or employees shall be liable for any action taken
or not taken by it in connection herewith (i) with the consent or at the request
of the Required Lenders or (ii) in the absence of its own gross negligence or
willful misconduct. Neither any Agent nor any of its directors, officers,
agents or
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employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or any Subsidiary; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to it; or (iv) the validity, effectiveness or
genuineness of this Agreement, any other Loan Document or Transaction Document
or any other instrument or writing furnished in connection herewith. No Agent
shall incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a telecopy, bank wire,
telex or similar writing) believed by it to be genuine or to be signed by the
proper party or parties.
SECTION 7.06. Indemnification. Each Lender shall, ratably in
----------------
accordance with its Loans, Letter of Credit Exposure and unused Commitment,
indemnify each Agent (to the extent not reimbursed by the Borrower) against any
cost, expense (including counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from such Agent's gross negligence or
willful misconduct) that such Agent may suffer or incur in connection with this
Agreement or any other Loan Document or any action taken or omitted by such
Agent hereunder or thereunder.
SECTION 7.07. Credit Decision. Each Lender acknowledges that it has,
----------------
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. Any Agent (other than an Issuing Bank
----------------
in respect of Letters of Credit issued by it) may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor to
such Agent after consultation with the Borrower (but the foregoing shall not be
construed to require any consent or approval by the Borrower). If no successor
to such Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which, in the case of the Agent under this Agreement,
shall be a commercial bank organized or licensed under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of its appointment as an
Agent by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Agent, and the
retiring Agent shall be discharged from its
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duties and obligations. After any retiring Agent's resignation, the provisions
of this Article shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was an Agent.
SECTION 7.09. Agents Fees. The Borrower shall pay to each Agent for
------------
its own account fees in the amounts and at the times previously agreed upon
between the Borrower and such Agent.
SECTION 7.10. Sub-Agents. Each Agent may perform any of its
-----------
obligations and exercise any of its rights under the Loan Documents by or
through sub-agents. The provisions of this Article VII shall inure to the
benefit of any sub-agent of any Agent in the same manner and to the same extent
as they inure to the benefit of such Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If on or prior to the first day of any Interest Period for any Euro-
-------
Dollar Borrowing:
(a) the Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
the Euro-Dollar Reference Banks in the relevant market for such Interest
Period, or
(b) Lenders having 50% or more of the aggregate amount of the
Commitments or Loans of the relevant Class advise the Agent that the
Adjusted London Interbank Offered Rate, as the case may be, as determined
by the Agent will not adequately and fairly reflect the cost to such
Lenders of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Lenders to make
Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the Agent at
least two Domestic Business Days before the date of any Euro-Dollar Borrowing
for which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
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SECTION 8.02. Illegality. If, on or after the date of this
-----------
Agreement, the adoption of any applicable law, rule or regulation, 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, or compliance by any Lender (or its
Euro-Dollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Lender (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Lender shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Lenders and the Borrower, whereupon until such Lender notifies the Borrower and
the Agent that the circumstances giving rise to such suspension no longer exist,
the obligation of such Lender to make Euro-Dollar Loans shall be suspended.
Before giving any notice to the Agent pursuant to this Section, such Lender
shall designate a different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender. If such Lender shall
determine that it may not lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans to maturity and shall so specify in such notice,
the Borrower shall immediately prepay in full the then outstanding principal
amount of each such Euro-Dollar Loan, together with accrued interest thereon.
Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Lender (on which
interest and principal shall be payable contemporaneously with the related Euro-
Dollar Loans of the other Lenders), and such Lender shall make such a Base Rate
Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
----------------------------------
the date hereof the adoption of any applicable law, rule or regulation, 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, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) shall subject any Lender (or its Applicable Lending Office) to any
tax, duty or other charge with respect to its Euro-Dollar Loans, its Notes,
its participations in Letters of Credit or its obligation to make Euro-
Dollar Loans or acquire participations in Letters of Credit, or shall
change the basis of taxation of payments to any Lender (or its Applicable
Lending Office) of the principal of or interest on its Euro-Dollar Loans or
any other amounts due under this Agreement in respect of its Euro-Dollar
Loans or its obligation to make Euro-Dollar Loans (except for changes in
the rate of tax on, or determined by reference to, the overall net income
of such Lender or its Applicable Lending Office imposed by the
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jurisdiction in which such Lender's principal executive office or
Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Lender (or its Applicable Lending Office) or shall impose on any
Lender (or its Applicable Lending Office) or on the London interbank market
any other condition affecting its Euro-Dollar Loans, its Notes, its
participations in Letters of Credit or its obligation to make Euro-Dollar
Loans or acquire participations in Letters of Credit;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan
or holding or acquiring a participation in any Letter of Credit, or to reduce
the amount of any sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement or under its Note with respect thereto, by
an amount deemed by such Lender to be material, then, within 15 days after
demand by such Lender (with a copy to the Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
increased cost or reduction.
(b) If any Lender shall have determined that, after the date hereof,
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, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender (or its Parent)
as a consequence of such Lender's obligations hereunder to a level below that
which such Lender (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender (or its Parent) for such reduction.
(c) Each Lender will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable
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Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate of any Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed Rate
---------------------------------------------------
Loans. If (a) the obligation of any Lender to make Euro-Dollar Loans has been
------
suspended pursuant to Section 8.02 or (b) any Lender has demanded compensation
under Section 8.03(a) and the Borrower shall, by at least five Euro-Dollar
Business Days' prior notice to such Lender through the Agent, have elected that
the provisions of this Section shall apply to such Lender, then, unless and
until such Lender notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer apply:
(i) all Loans which would otherwise be made by such Lender as Euro-
Dollar Loans shall be made instead as Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Euro-
Dollar Loans of the other Lenders); and
(ii) after each of its Euro-Dollar Loans has been repaid, all payments
of principal which would otherwise be applied to repay Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
SECTION 8.05. Replacement of Lenders. In the event (a) any Lender
-----------------------
delivers a notice under Section 8.02 or (b) any Lender demands compensation
pursuant to Section 8.03, then the Borrower may, at its sole expense and
effort, require such Lender to assign, without recourse (in accordance with
Section 9.06), all of its rights and obligations under this Agreement and the
Notes to an Assignee which shall assume such assigned obligations; provided that
--------
(i) such assignment shall not conflict with any law, rule or regulation or order
of any court or other Governmental Authority having jurisdiction, (ii) the
Borrower shall have received the written consent of the Agent (and of an Issuing
Bank, if such Lender has a Revolving Loan Commitment) and (iii) such Assignee
(or, in the case of amounts other than principal, interest and accrued Fees, the
Borrower) shall have paid to the transferor Lender in immediately available
funds an amount equal to the sum of the principal of and interest accrued to the
date of such payment on the outstanding Loans and participations in Letter of
Credit Disbursements of such Lender, plus all Fees and other amounts accrued for
the account of such Lender hereunder (including any amounts under Section 2.11
and Section 8.03, it being understood that such assignment shall be treated as a
prepayment for purposes of Section 2.11); provided further that if prior to any
-------- -------
such assignment the circumstances or event that resulted in such
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Lender's notice under Section 8.02 or demand for compensation under Section
8.03, as the case may be, cease to cause such Lender to suffer increased costs
or reductions in amounts received or receivable or reduction in return on
capital, or cease to have the consequences specified in Section 8.02, as the
case may be (including as a result of any action taken by such Lender), or if
such Lender shall waive its right to claim further compensation under Section
8.03 in respect of such circumstances or event or shall withdraw its notice
under Section 8.02 in respect of such circumstances or event, as the case may
be, then such Lender shall not thereafter be required to make any such
assignment hereunder.
SECTION 8.06. Taxes. (a) For the purposes of this Section 8.06, the
------
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any Note, and all liabilities with
respect thereto, excluding (i) in the case of each Lender, each Issuing Bank and
---------
the Agent, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which such Lender, such Issuing Bank
or the Agent (as the case may be) is organized or in which its principal
executive office is located or, in the case of each Lender, in which its
Applicable Lending Office is located and (ii) in the case of each Lender, any
United States withholding tax imposed on such payments but only to the extent
that such Lender is subject to United States withholding tax at the time such
Lender first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any other Loan
Document or from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Loan Document.
(b) Any and all payments by the Borrower to or for the account of any
Lender, any Issuing Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
--------
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) such Lender, such Issuing Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv)
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the Borrower shall furnish to the Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Lender, each Issuing Bank
and the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Lender, such Issuing Bank or
the Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be paid within 15 days after such Lender, such Issuing Bank or the Agent
(as the case may be) makes demand therefor.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower and the Agent with (i) Internal Revenue Service form 1001 or 4224,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which exempts the Lender from
United States withholding tax or reduces the rate of withholding tax on payments
of interest for the account of such Lender or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States or (ii) if such Lender is not a
"bank" or other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Code form 1001 or 4224 pursuant
to clause (i) above, a Certificate re Non-Bank Status together with two original
copies of Internal Revenue Service form W-8 (or any successor form prescribed by
the Internal Revenue Service) and any other statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is entitled to the benefits under an income tax
treaty to which the United States is a party which exempts the Lender from
United States withholding tax or reduces the rate of withholding tax on payments
of interest for the account of such Lender.
(e) For any period with respect to which a Lender has failed to
provide the Borrower or the Agent with the appropriate form pursuant to Section
8.06(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Lender shall not be entitled to indemnification under Section
8.06(b) or (c) with respect to Taxes imposed by the United States; provided that
--------
if a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver
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a form required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section, then such Lender will change
the jurisdiction of its Applicable Lending Office if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) in the judgment of such Lender, is not otherwise disadvantageous (other
than in a de minimis respect) to such Lender.
-- -------
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
--------
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case the Borrower, each Issuing Bank, the Swingline Lender or
the Agent, at its address or telecopy number set forth on the signature pages
hereof (with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇.▇. ▇▇▇▇, in the case of any
notice to the Borrower relating to a Default), (y) in the case of any Lender, at
its address or telex number set forth in its Administrative Questionnaire or (z)
in the case of any party, at such other address or telecopy or telex number as
such party may hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answer back is received, (ii) if
given by mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid, or (iii) if given by any
other means, when delivered at the address specified in this Section; provided
--------
that notices to the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent, the
-----------
Security Agent, any Issuing Bank or any Lender in exercising any right, power or
privilege hereunder or under any other Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
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SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a) The
---------------------------------------------
Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent, the
Security Agent, the Documentation Agent and (in the case of expenses relating to
the issuance of a Letter of Credit) the Issuing Bank, including fees and
disbursements of special counsel for the Agent and the Documentation Agent, in
connection with the preparation of this Agreement and the other Loan Documents,
any primary or secondary syndication of the credit facilities hereunder, any
waiver or consent hereunder or thereunder or any amendment hereof or thereof or
any Default or alleged Default hereunder and (ii) if an Event of Default occurs,
all reasonable out-of-pocket expenses incurred by the Agent, the Security Agent,
any Issuing Bank or any Lender, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy and other
enforcement proceedings resulting therefrom. The Borrower shall indemnify each
Lender against any transfer taxes, documentary taxes, assessments or charges
made by any Governmental Authority by reason of the execution and delivery of
this Agreement or the other Loan Documents.
(b) The Borrower agrees to indemnify the Agent, the Security Agent,
the Documentation Agent, each Issuing Bank and each Lender and hold the Agent,
the Security Agent, each Issuing Bank and each Lender harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind,
including, without limitation, the reasonable fees and disbursements of counsel,
which may be incurred by any Lender (or by the Agent, the Documentation Agent,
the Security Agent or any Issuing Bank in connection with its actions as such)
in connection with any investigative, administrative or judicial proceeding
(whether or not the Agent, the Documentation Agent, the Security Agent, such
Issuing Bank or such Lender shall be designated a party thereto) relating to or
arising out of any Loan Document or any actual or proposed use of proceeds of
Loans or Letters of Credit hereunder; provided that neither the Agent, the
--------
Documentation Agent, the Security Agent, any Issuing Bank nor any Lender shall
have the right to be indemnified hereunder for its own gross negligence or
wilful misconduct as determined by a court of competent jurisdiction.
(c) The provisions of this Section 9.03 shall remain in effect and
survive regardless of any termination of this Agreement or the repayment of the
Obligations.
SECTION 9.04. Sharing of Set-Offs. Each Lender agrees that if it
--------------------
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of its claims in respect of
Letter of Credit Disbursements and principal and interest due with respect to
any Note held by it which is greater than the proportion received by any other
Lender in respect of the aggregate amount of claims in respect of Letter of
Credit Disbursements and principal and interest due with respect to any Note
held by such other Lender, the Lender receiving such
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proportionately greater payment shall purchase such participations in the claims
in respect of Letter of Credit Disbursements and Notes held by the other
Lenders, and such other adjustments shall be made, as may be required so that
all such payments of claims in respect of Letter of Credit Disbursements and of
principal and interest with respect to the Notes held by the Lenders shall be
shared by the Lenders pro rata; provided that nothing in this Section shall
--------
impair the right of any Lender to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Loan
Documents. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Letter of Credit
or Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
-----------------------
Agreement or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed or otherwise approved in
writing by the Borrower and the Required Lenders (and, if the rights or duties
of the Agent, the Security Agent, the Swingline Lender or the Issuing Banks are
affected thereby, by the Agent, the Security Agent, the Swingline Lender or the
Issuing Banks, as the case may be); provided that no such amendment or waiver
--------
shall (i) increase the Commitment of any Lender or subject any Lender to any
additional obligation without the consent of such Lender, (ii) reduce the
principal of or rate of interest on any Loan or any fees hereunder without the
consent of each Lender affected thereby, (iii) postpone the date fixed for any
payment of principal of any Loan under Section 2.08(a), (b) or (c) or for any
reimbursement of a Letter of Credit Disbursement or payment of interest on any
Loan or any fees hereunder or for any reduction or termination of any Commitment
without the consent of each Lender affected thereby, (iv) permit the termination
of the Trademark Agreement or any Credit Card Agreements, or any amendment or
waiver thereof that would be materially adverse to the interests of the Borrower
or the Lenders, without the consent of each Lender, (v) permit the release of
any material amount of collateral under any Security Document (except as
provided therein), without the consent of each Lender, (vi) change the
percentage of the Commitments, the percentage of the aggregate unpaid principal
amount of the Notes or the number of Lenders which shall be required for the
Lenders or any of them to take any action under this Section or any other
provision of this Agreement, without the consent of each Lender, or (vii) change
any provisions of any Loan Document in a manner that by its terms adversely
affects the rights in respect of payments due to Lenders holding Loans of any
Class differently than those holding Loans of any other Class, without the
consent of Lenders holding a majority in interest of the outstanding Loans and
unused Commitments of each affected Class (in addition to any other consent
required under any other clause of this Section).
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SECTION 9.06. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Lenders.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in any or all of its
Commitment or its Loans or its participations in Letters of Credit. In the
event of any such grant by a Lender of a participating interest to a
Participant, whether or not upon notice to the Borrower and the Agent, such
Lender shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which any Lender
may grant such a participating interest shall provide that such Lender shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
--------
that such participation agreement may provide that such Lender will not agree to
any modification, amendment or waiver described in clause (i), (ii), (iii), (iv)
or (v) of Section 9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article VIII and Section 2.11 with
respect to its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (d) below shall be given effect for purposes
of this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Lender may at any time assign to one or more banks or other
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an instrument
executed by such Assignee and such transferor Lender, with (and subject to) the
subscribed consent of the Borrower and the Agent (except in each case in the
case of assignments to Lenders or Affiliates of Lenders), which consents shall
not be unreasonably withheld, and, in the case of an assignment of a Revolving
Loan Commitment, the Issuing Banks and the Swingline Lender; provided that (i)
--------
each such assignment shall be in a minimum amount of $5,000,000 or, if less, all
the remaining rights and obligations of the transferor Lender, and (ii) any such
assignment of rights and obligations in respect of any Class of Loans or
Commitments shall be made ratably of all rights and obligations in respect of
such Class but shall not require a ratable assignment of rights and obligations
in respect of another Class. Upon execution and delivery of such an instrument,
payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such
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Assignee, delivery to the Agent of an executed copy of such instrument and
payment to the Agent by the Assignor of a processing fee of $3,500, then such
Assignee shall be a Lender party to this Agreement and shall have all the rights
and obligations of a Lender with a Commitment as set forth in such instrument of
assumption, and the transferor Lender shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Lender, the Agent and the Borrower shall
make appropriate arrangements so that, if required, a new Note or Notes are
issued to the Assignee, at the Borrower's expense. If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of any United States Federal income taxes in
accordance with Section 8.06. The Agent will maintain a copy of each instrument
of assignment delivered to and accepted by it pursuant to this Section 9.06(c)
and a register for the recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The Agent will not grant its consent to any
assignment by any Lender without recording such assignment in the Register.
(d) Any Lender may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.06 than such Lender would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.06
requiring such Lender to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.07. Collateral. Each of the Lenders represents to the
-----------
Agent and each of the other Lenders that it in good faith is not relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.08. Waiver of Trial by Jury. Each of the parties hereto
------------------------
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement or any other Loan Document or the
transactions contemplated hereby.
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SECTION 9.09. New York Law. THIS AGREEMENT AND EACH NOTE SHALL BE
-------------
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 9.10. Counterparts; Integration. This Agreement may be
--------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.11. Limitation on Recourse. Notwithstanding any contrary
-----------------------
provision of this Agreement or any other Loan Document, it is expressly agreed
that the Agent, the Security Agent, each Issuing Bank and each Lender shall look
solely to the assets of the Borrower (and of any Subsidiary party to the
Guarantee Agreement or any Security Document) for the payment and performance of
the obligations of the Borrower hereunder and thereunder, without recourse
against any partner in the Borrower or any assets of such partner on account of
such obligations.
SECTION 9.12. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein or in the Notes to the contrary, if at any time the applicable interest
rate, together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other Loan Document, or otherwise contracted for, charged, received, taken or
reserved by any Lender, shall exceed the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by such
Lender in accordance with applicable law, the rate of interest payable under the
Note or Notes held by such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
SECTION 9.13. Effect of Amendment and Restatement. Accrued interest
------------------------------------
and fees under the Existing Credit Agreement prior to the Amendment Effective
Date shall not be affected by this Agreement; provided that interest rates and
--------
fees accruing on and after the Amendment Effective Date shall be calculated in
accordance with, and after giving effect to, this Agreement. After giving
effect to the effectiveness of this Agreement on the Amendment Effective Date,
the other Loan Documents shall continue in full force and effect, including,
without limitation, with respect to the creation and perfection of valid, first
priority security interests in the collateral hereunder. Unless and until the
Amendment Effective Date, the Existing Credit Agreement shall continue in full
force and effect and not be affected hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BRYLANE, L.P.,
by VGP CORPORATION,
General Partner,
by
-------------------------------
Title: Vice President,
Treasurer and Secretary
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of Chief
Financial Officer
Telecopy number:▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Agent,
by
-------------------------------
Title: Vice President
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telex number:177615 MGT UT
Telecopy number:▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK,
by
-------------------------------
Title: Vice President
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▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORPORATION,
by
-------------------------------
Title: Vice President
World Financial Center
North Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
BANKBOSTON, N.A.,
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
by
-------------------------------
Title: Assistant Vice President
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
by
-------------------------------
Title: Director
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FLEET NATIONAL BANK,
by
-------------------------------
Title: Assistant Vice President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A.
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE FUJI BANK, LIMITED,
by
-------------------------------
Title: Joint General Manager
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
by
-------------------------------
Title: Deputy General Manager
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PNC BANK, NATIONAL ASSOCIATION
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
UNION BANK OF CALIFORNIA, N.A.,
by
-------------------------------
Title: Senior Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
CORESTATES BANK,
by
-------------------------------
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-93-
CAISSE NATIONALE DE CREDIT AGRICOLE,
by
-------------------------------
Title: First Vice President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
NATIONAL CITY BANK OF INDIANA,
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE SUMITOMO BANK, LTD.,
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
by
-------------------------------
Title: Vice President and
Manager
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ARAB BANKING CORPORATION,
by
-------------------------------
Title: Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by
-------------------------------
Title: Senior Vice President/
Portfolio Manager
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY,
by
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Title: Managing Director
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METROPOLITAN LIFE INSURANCE CO.,
by
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Title: Assistant Vice President
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-95-
KZH HOLDING CORPORATION,
by
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Title: Authorized Agent
c/o Chase Manhattan Bank
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PARIBAS CAPITAL FUNDING,
by
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Title: Director
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AMSOUTH BANK OF ALABAMA,
by
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Title: Commerical Banking
Officer
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THE BANK OF NEW YORK,
by
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Title: Vice President
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