SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended October 28,
1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from ______________
to ______________
Commission File Number 1-7562
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1697231
(State of Incorporation) (I.R.S. Employer
Identification No.)
One Harrison
San Francisco, California 94105
(Address of principal executive offices)
Registrant's telephone number, including area code: (415)952-4400
_______________________
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.05 par value New York Stock Exchange, Inc.
(Title of class) Pacific Stock Exchange, Inc.
(Name of each exchange where registered)
Securities registered pursuant to Section 12(g) of the Act: None
_______________________
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
Common Stock, $0.05 par value, 143,859,338 shares as of December 8, 1995
<TABLE>
PART 1 THE GAP, INC. AND SUBSIDIARIES ITEM 1
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($000) October 28, January 28, October 29,
1995 1995 1994
(Unaudited) (See Note 1) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and equivalents $ 324,182 $ 414,487 $ 223,654
Short-term investments 116,357 173,543 159,077
Merchandise inventory 704,847 370,638 537,343
Prepaid expenses and other 106,724 97,019 90,626
Total Current Assets 1,252,110 1,055,687 1,010,700
Property and equipment (net) 926,165 828,777 801,554
Long- term investments 7,059 32,097 62,418
Lease rights and other assets 101,436 87,683 73,632
Total Assets $ 2,286,770 $ 2,004,244 $ 1,948,304
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 17,781 $ 2,478 $ 2,936
Accounts payable 358,394 263,724 304,703
Accrued expenses 213,942 185,375 169,552
Income taxes payable 55,934 41,156 28,043
Deferred lease credits and other current liabilities 6,784 7,127 6,681
Total Current Liabilities 652,835 499,860 511,915
Long-term Liabilities:
Deferred lease credits and other liabilities 146,260 129,152 119,719
146,260 129,152 119,719
Stockholders' Equity:
Common stock $.05 par value
Authorized 500,000,000 shares
Issued 157,790,787, 156,972,777
and 156,661,757 shares
Outstanding 143,486,359, 144,764,749
and 145,927,229 shares 7,891 7,849 7,834
Additional paid-in capital 332,553 298,413 285,096
Retained earnings 1,431,433 1,282,301 1,180,442
Foreign currency translation adjustment (6,347) (8,320) (4,521)
Restricted stock plan deferred compensation (54,392) (54,265) (49,695)
Treasury stock, at cost (223,463) (150,746) (102,486)
1,487,675 1,375,232 1,316,670
Total Liabilities and Stockholders' Equity $ 2,286,770 $ 2,004,244 $ 1,948,304
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
THE GAP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
Unaudited October 28, October 29, October 28, October 29,
($000 except per share amounts) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 1,155,929 $ 988,346 $ 2,873,131 $ 2,513,147
Costs and expenses
Cost of goods sold and 697,879 609,498 1,875,331 1,579,705
occupancy expenses
Operating expenses 266,939 227,728 679,557 605,777
Net interest income (2,066) (3,669) (11,345) (5,355)
Earnings before income taxes 193,177 154,789 329,588 333,020
Income taxes 76,302 61,142 130,186 131,543
Net earnings $ 116,875 $ 93,647 $ 199,402 $ 201,477
Weighted average number
of shares 144,210,859 145,850,581 144,066,284 145,650,754
Earnings per share $ .81 $ .64 $ 1.38 $ 1.38
Cash dividends per share $ .12 $ .12 $ .36 $ .34
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
THE GAP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Unaudited ($000) Thirty-Nine Weeks Ended
October 28, 1995 October 29, 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $199,402 $201,477
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 147,114 123,574
Tax benefit from exercise of stock options by
employees and from vesting of restricted stock 9,325 15,562
Deferred income taxes - (7,331)
Change in operating assets and liabilities:
Merchandise inventory (334,197) (205,157)
Prepaid expenses and other (19,567) (6,712)
Accounts payable 95,925 87,236
Accrued expenses 28,526 5,870
Income taxes payable 14,647 (42,137)
Deferred lease credits and other
long-term liabilities 16,541 22,782
Net cash provided by operating activities 157,716 195,164
Cash Flows from Investing Activities:
Maturity (purchase) of short-term
investments - net 82,224 (52,329)
Purchase of long-term investments - (85,669)
Purchases of property and equipment (223,024) (164,170)
Acquisition of lease rights and other assets (7,378) (4,560)
Net cash used for investing activities (148,178) (306,728)
Cash Flows from Financing Activities:
Net (decrease) increase in notes payable 15,303 (5,765)
Payment on long-term debt - (75,000)
Issuance of common stock 7,297 12,770
Purchase of treasury stock (72,717) (10,032)
Cash dividends paid (50,270) (47,870)
Net cash used for financing activities (100,387) (125,897)
Effect of exchange rate changes on cash 544 783
Net (decrease) increase in cash and equivalents (90,305) (236,678)
Cash and equivalents at beginning of year 414,487 460,332
Cash and equivalents at end of quarter $324,182 $223,654
See accompanying notes to consolidated financial statements.
</TABLE>
THE GAP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated balance sheets as of October 28, 1995 and October 29, 1994,
and the interim consolidated statements of earnings for the thirteen and
thirty-nine weeks ended October 28, 1995 and October 29, 1994 and the interim
consolidated statements of cash flows for the thirty-nine weeks ended October
28, 1995 and October 29, 1994 have been prepared by the Company, without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) considered necessary to present fairly the
financial position, results of operations and cash flows of the Company at
October 28, 1995 and October 29, 1994, and for all periods presented, have
been made.
Certain information and footnote disclosures normally included in the annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted from these interim financial statements. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended
January 28, 1995.
The results of operations for the thirty-nine weeks ended October 28, 1995 are
not necessarily indicative of the operating results that may be expected for
the year ending February 3, 1996.
Certain reclassifications have been made to the 1994 financial statements to
conform to classifications used in 1995.
2. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Year-to-date 1995 and 1994 gross interest payments were $3.4 million and $7.4
million respectively; income tax payments were $105.5 million and $155.1
million respectively.
Deloitte &
Touche LLP 2101 Webster Street Telephone:(510)287-2700
Oakland, California 94612 Facsimile:(510)835-4888
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
The Gap, Inc.:
We have reviewed that accompanying consolidated balance sheets of The Gap,
Inc. and subsidiaries as of October 28, 1995 and October 29, 1994 and the
related consolidated statements of earnings for the thirteen week and thirty-
nine week periods ended October 28, 1995 and October 29, 1994 and of cash
flows for the thirty-nine week periods ending October 28, 1995 and October 29,
1994. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such interim consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previous audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Gap, Inc. and subsidiaries
as of January 28, 1995, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated March 2, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
January 28, 1995 is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it was derived.
November 8, 1995
Deloitte Touche
Tohmatsu
International
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Sales
Thirteen Weeks Ended Thirty-nine Weeks Ended
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
Net sales ($000) 1,155,929 988,346 2,873,131 2,513,147
Total net
sales growth
percentage 17 10 14 12
Comparable
store sales
growth
percentage 0 <2> <2> 2
Net sales
per average
square foot 111 115 290 310
Fifty-two Weeks Ended
October 28, October 29,
1995 1994
Number of:
New stores 209 143
Expanded stores 61 93
Closed stores 43 51
The increases in third quarter and year-to-date 1995 net sales over the same
periods last year were primarily attributable to the opening of new stores
(net of stores closed) and the expansion of existing stores.
The declines in third quarter and year-to-date net sales per average square
foot from the same periods last year were attributable to increases in the
average size of new stores in connection with the Company's store expansion
program and continued store growth in the Old Navy division with lower priced
merchandise and significantly larger stores.
For the four week period ended November 25, 1995, net sales increased 19
percent over the same period last year. Comparable store sales increased 1
percent in both November 1995 and November 1994. However, comparable store
sales for the last week of November 1995 (the first week of the Christmas
selling season) were disappointing. The retail sales environment continues to
be challenging and results for the fourth quarter will be dependent upon
Christmas holiday period sales.
Cost of Goods Sold and Occupancy Expenses
Cost of goods sold and occupancy expenses as a percentage of net sales
decreased to 60.4 percent for the third quarter of 1995 from 61.7 percent for
the same period in 1994. The resulting 1.3 percentage point increase in gross
margin net of occupancy expenses was attributable to higher merchandise
margins due to increased regular priced selling.
Cost of goods sold and occupancy expenses as a percentage of net sales
increased to 65.3 percent for the year-to-date period from 62.9 percent for
the same period in 1994. The resulting 2.4 percentage point decrease in gross
margin net of occupancy expenses was attributable to a 2.1 percentage point
decrease in merchandise margin as a percentage of net sales and a .3
percentage point increase in occupancy expenses as a percentage of net sales.
The decrease in merchandise margin as a percentage of net sales was driven by
a decline in initial merchandise margin, primarily in the first half. The
increase in occupancy expenses as a percentage of net sales was primarily
attributable to a lack of sales leverage resulting from negative comparable
store sales.
The Company reviews its inventory levels in order to identify slow-moving
merchandise and broken assortments (items no longer in stock in a sufficient
range of sizes) and uses markdowns to clear merchandise. Such markdowns may
have an adverse impact on earnings, depending upon the extent of the markdowns
and amount of inventory affected.
Operating Expenses
Operating expenses were essentially flat as a percentage of net sales at 23.1
percent for the third quarter of 1995 compared to 23.0 percent for the same
period last year.
Operating expenses decreased as a percentage of net sales to 23.6 percent
year-to-date compared to 24.1 percent for the same period last year. The .5
percentage point decrease was primarily attributable to a decrease in
incentive bonus expense as a percentage of net sales. Due to the Company's
performance relative to financial targets, less bonus expense was recognized
this year.
Net Interest Income
Net interest income was approximately $2.1 million for the third quarter
compared to net interest income of $3.7 million for the same period last year.
The decrease was primarily attributable to additional interest expense
recognized for various other obligations, partially offset by an increase in
income from higher average interest rates.
For the thirty-nine weeks ended October 28, 1995, net interest income was
approximately $11.3 million compared to net interest income of $5.4 million
last year. The change was attributable to an increase in income from higher
average interest rates and reductions in interest expense resulting from the
June 1994 repayment of long-term debt.
Income Taxes
The effective income tax rate was 39.5 percent for the first nine months of
both 1995 and 1994. The Company does not anticipate any changes in the
effective tax rate for the remainder of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The following sets forth certain measures of the Company's liquidity:
Thirty-nine weeks ended
October 28, 1995 October 29, 1994
Cash provided by operating
activities ($000) $157,716 $195,164
Working capital ($000) $599,275 $498,785
Current ratio 1.92:1 1.97:1
For the thirty-nine weeks ended October 28, 1995, the decrease in cash flows
from operating activities was attributable to an increased investment in
inventory partially offset by a decrease in income tax payments. The
Company's overall cash and liquidity position continues to be strong.
The Company funds inventory expenditures during normal and peak periods
through a combination of cash flows provided by operating activities and
normal trade credit arrangements. The Company's business follows a seasonal
pattern, peaking over a period of about ten weeks during the late summer and
holiday months.
For the thirty-nine weeks ended October 28, 1995, capital expenditures, net
of construction allowances and dispositions, totalled approximately $214
million. These expenditures included the addition of 162 new stores, the
expansion of 44 stores and the remodeling of certain stores resulting in a net
increase in store space of approximately 1.5 million square feet or 16
percent since January 28, 1995.
For fiscal year 1995, the Company expects capital expenditures to total
approximately $300 million, net of construction allowances, representing the
addition of approximately 200 to 225 new stores, the expansion of
approximately 50 to 70 stores, and the remodeling of certain stores. Square
footage growth is expected to be approximately 20 percent after accounting for
store closings. New stores are generally expected to be leased. The Company
expects to fund such capital expenditures with cash flow from operations.
For fiscal year 1996, the Company currently expects capital expenditures to
total approximately $300 to $350 million, net of construction allowances.
These expenditures include the addition of approximately 200 new stores, and
the expansion of approximately 55 stores. Square footage growth is expected
to be approximately 15 to 20 percent after accounting for store closings. The
amounts above include planned expenditures for administrative facilities,
distribution centers and equipment.
The Company continues to explore alternatives for additional office space in
San Francisco and San Bruno, California. The Company has commenced
construction of a distribution center in Gallatin, Tennessee for an estimated
cost at completion of $45 to $55 million. The facility is expected to be in
operation in late 1996.
The Company has a credit agreement which provides for a $250 million revolving
credit facility until March 1998. In addition, the credit agreement provides
for the issuance of letters of credit up to $500 million at any one time. The
Company had outstanding letters of credit of approximately $417 million at
October 28, 1995.
During the third quarter of 1995, the Company acquired 828,100 shares of its
common stock for $30,739,000. The shares were purchased under a program
announced in October 1994 to repurchase up to 9 million shares of the
Company's outstanding common stock. To date under this program, 3,569,900
shares have been repurchased for $120,977,000.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(10) Credit Agreement, dated as of August 1, 1995, among
Registrant and Citicorp USA Inc.; Bank of America
National Trust & Savings Texas, N.A.; The Royal Bank
of Canada; Bank of Montreal; Societe Generale; The
Fuji Bank, Limited; U.S. National Bank of Oregon;
Morgan Guaranty Trust Company of New York; The
Sumitomo Bank Limited; and Citibank, N.A.
(11) Computation of Earnings per Share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
b) The Company did not file any reports on Form 8-K during the
three months ended October 28, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly
authorized.
THE GAP, INC.
Date: December 8, 1995 By /s/ Warren R. Hashagen
Warren R. Hashagen
Chief Financial Officer
(Principal financial officer of the registrant)
Date: December 8, 1995 By /s/ Millard S. Drexler
Millard S. Drexler
President and Chief
Executive Officer
EXHIBIT INDEX
(10) Credit Agreement, dated as of August 1, 1995, among Registrant and
Citicorp USA Inc.; Bank of America National Trust & Savings
Association; National Westminster Bank PLC; Nationsbank of Texas,
N.A.; The Royal Bank of Canada; Bank of Montreal; Societe Generale;
The Fuji Bank, Limited; U.S. National Bank of Oregon; Morgan Guaranty
Trust Company of New York; The Sumitomo Bank Limited; and Citibank, N.A.
(11) Computation of Earnings per Share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
CREDIT AGREEMENT, dated as of August 1, 1995 (this
"Agreement"), among The Gap, Inc., a Delaware corporation (the
"Borrower"), the LC Subsidiaries (as hereinafter defined), the
banks and financial institutions (the "Banks") listed on the
signature pages hereof, Citibank, N.A. ("Citibank), as issuing
bank (the "Issuing Bank") and Citicorp USA Inc. ("CUSA"), as
agent (the "Agent") for the Lenders and Issuing Bank hereunder:
PRELIMINARY STATEMENT: The Borrower has requested the
Banks to make available to it up to $250,000,000 in revolving
credit and term loans to be used for general corporate purposes.
The Borrower has requested the Issuing Bank to issue from time to
time documentary letters of credit for its account and for the
account of the LC Subsidiaries (as hereinafter defined) in an
aggregate face amount at any time outstanding not to exceed
$500,000,000. Subject to the terms and conditions of this
Agreement, the Banks agree to make such revolving credit and term
loans, and the Issuing Bank agrees to issue such documentary
letters of credit.
NOW THEREFORE, the Borrower, the LC Subsidiaries (as
hereinafter defined), the Banks, the Lenders from time to time
party hereto, the Issuing Bank and the Agent agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. As used in
this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"A Advance" means an advance by an A Lender to the
Borrower as part of an A Borrowing and refers to an Adjusted
CD Rate Advance, a Base Rate Advance or a Eurodollar Rate
Advance, each of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of
simultaneous A Advances of the same Type made by each of the
A Lenders pursuant to Section 2.01.
"A Commitment" means, as to each A Lender, the amount
set forth opposite such A Lender's name on the signature
pages hereof under the caption "A Commitment" or, if such
A Lender has entered into one or more Assignment and
Acceptances, the amount set forth for such A Lender with
respect thereto in the Register maintained by the Agent
pursuant to Section 10.07 hereof.
"A Lender" means any Lender having an A Commitment or
to which A Advances are owed.
"Adjusted CD Rate" means, for any Interest Period for
each Adjusted CD Rate Advance comprising part of the same
A Borrowing, an interest rate per annum equal to the sum of:
(a) the rate per annum obtained by dividing (i)
the rate of interest determined by the Agent to be the
average (rounded upward to the nearest whole multiple
of 1/100 of 1% per annum, if such average is not such a
multiple) of the consensus bid rate determined by each
of the Reference Banks for the bid rates per annum, at
9:00 A.M. (New York City time) (or as soon thereafter
as practicable) on the first day of such Interest
Period, of New York certificate of deposit dealers of
recognized standing selected by such Reference Bank for
the purchase at face value of certificates of deposit
of such Reference Bank in an amount substantially equal
to such Reference Bank's Adjusted CD Rate Advance
comprising part of such A Borrowing and with a maturity
equal to such Interest Period by (ii) a percentage
equal to 100% minus the Adjusted CD Rate Reserve
Percentage (as defined below) for such Interest Period,
plus
(b) the Assessment Rate (as defined below) for
such Interest Period.
The Adjusted CD Rate for the Interest Period for each
Adjusted CD Rate Advance comprising part of the same
A Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from
the Reference Banks on the first day of such Interest
Period, subject, however, to the provisions of Section 2.09.
"Adjusted CD Rate Margin" means at any date of
determination:
(i) 3/8% per annum at all times prior to the
Revolver Termination Date; and
(ii) 1/2% per annum at all times from and after
the Revolver Termination Date.
The "Adjusted CD Rate Reserve Percentage" for any
Interest Period for each Adjusted CD Rate Advance comprising
part of the same A Borrowing means the reserve percentage
applicable on the first day of such Interest Period under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with deposits
exceeding one billion dollars with respect to liabilities
consisting of or including (among other liabilities) U.S.
dollar nonpersonal time deposits in the United States with a
maturity equal to such Interest Period. The "Assessment
Rate" for any Interest Period for each Adjusted CD Rate
Advance comprising part of the same A Borrowing means the
annual assessment rate estimated by the Agent on the first
day of such Interest Period for determining the then current
annual assessment payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of the Agent in the United
States.
"Adjusted CD Rate Advance" means an A Advance which
bears interest as provided in Section 2.07(b).
"Advance" means an A Advance or a B Advance, and
"Advances" means the A Advances and the B Advances.
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by, or
is under common control with, such Person, or is a director
or officer of such Person.
"Alternative Currency" means any lawful currency other
than Dollars which is freely transferable and convertible
into Dollars and which the Issuing Bank can obtain in the
ordinary course of its business.
"Anniversary Date" means June 30 in each calendar year
occurring during the term of this Agreement.
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of
a Base Rate Advance, such Lender's CD Lending Office in the
case of an Adjusted CD Rate Advance, and such Lender's
Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a B Advance, the office of such
Lender notified by such Lender to the Agent as its
Applicable Lending Office with respect to such B Advance.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an Eligible
Assignee, and accepted by the Agent, in substantially the
form of Exhibit B hereto.
"B Advance" means an advance by an A Lender to the
Borrower as part of a B Borrowing resulting from the auction
bidding procedure described in Section 2.03.
"B Borrowing" means a borrowing consisting of
simultaneous B Advances from each of the A Lenders whose
offer to make one or more B Advances as part of such
borrowing has been accepted by the Borrower under the
auction bidding procedure described in Section 2.03.
"B Reduction" has the meaning specified in Section
2.01.
"Base Rate" means, for any period, a fluctuating
interest rate per annum as shall be in effect from time to
time which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate;
(b) 1/2% per annum above the latest three-week
moving average of secondary market morning offering
rates in the United States for three-month certificates
of deposit of major United States money market banks,
such three-week moving average being determined weekly
on each Monday (or, if any such date is not a Business
Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by the
Agent on the basis of such rates reported by
certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the
basis of quotations for such rates received by the
Agent from three New York certificate of deposit
dealers of recognized standing selected by the Agent,
in either case adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent; and
(c) 1/2% per annum above the Federal Funds Rate.
"Base Rate Advance" means an A Advance which bears
interest as provided in Section 2.07(a).
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which banks
are not required or authorized to close in New York City or
San Francisco, California and a day on which wire transfers
may be effectuated among member banks of the Federal Reserve
System through use of the fedwire funds transfer system and
(i) if the applicable Business Day relates to any Eurodollar
Rate Advances, a day on which dealings are carried on in the
London interbank market and (ii) if the applicable Business
Day relates to any Letter of Credit denominated in an
Alternative Currency, a day on which commercial banks are
open for business in the country of issue of such
Alternative Currency and on which dealings in such
Alternative Currency are carried on by such commercial banks
in such country of issue.
"Capital Lease" of any Person means any lease of any
property (whether real, personal or mixed) by such Person as
lessee, which lease should, in accordance with generally
accepted accounting principles, be required to be accounted
for as a capital lease on the balance sheet of such Person.
"Cash Equivalent" means (i) direct obligations issued
by or unconditionally guaranteed by the United States
government or issued by any agency thereof and supported by
the full faith and credit of the United States government,
in each case maturing within twelve months from the date of
acquisition thereof, (ii) commercial paper maturing not more
than 270 days from the date of acquisition thereof issued by
a United States corporation and, at the time of acquisition,
having the highest ratings obtainable from both Standard &
Poor's Corporation and Moody's Investors Service, Inc.,
(iii) Dollar denominated investments in money market funds
and (iv) certificates of deposit, banker's acceptances, and
secured repurchase agreements, in each case maturing within
one year from the date of acquisition, and issued by or
entered into with any banking institution having a combined
capital and surplus of not less than $500,000,000.
"CD Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "CD Lending
Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a
Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the
Agent.
"CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. section 9601 et seq.), and any regulations
promulgated thereunder.
"Change of Control" means the occurrence, after the
date of this Agreement, of (i) any Person or two or more
Persons acting in concert acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of securities of the Borrower
(or other securities convertible into such securities)
representing 50% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election
of directors; or (ii) during any period of up to 24
consecutive months, commencing before or after the date of
this Agreement, individuals who at the beginning of such
24-month period were directors of the Borrower ceasing for
any reason to constitute a majority of the Board of
Directors of the Borrower unless the Persons replacing such
individuals were nominated by the Board of Directors of the
Borrower; or (iii) any Person or two or more Persons acting
in concert acquiring by contract or otherwise, or entering
into a contract or arrangement which upon consummation will
result in its or their acquisition of, control over
securities of the Borrower (or other securities convertible
into such securities) representing 50% or more of the
combined voting power of all securities of the Borrower
entitled to vote in the election of directors; provided,
that, the Person or group of Persons referred to in
clauses (i) and (iii) of this definition of Change of
Control shall not include any Person listed on Schedule III
hereto or any group of Persons in which one or more of the
Persons listed on Schedule III are members.
"Consolidated" and any derivative thereof each means,
with reference to the accounts or financial reports of any
Person, the consolidated accounts or financial reports of
such Person and each Subsidiary of such Person determined in
accordance with generally accepted accounting principles,
including principles of consolidation, consistent with those
applied in the preparation of the Consolidated financial
statements of the Borrower referred to in Section 6.01(e).
"Convert", "Conversion" and "Converted" each refers to
a conversion of A Advances of one Type into A Advances of
another Type pursuant to Section 2.09 or 2.10.
"Current Assets" of any Person means, as of any date of
determination, all assets of such Person which should, in
accordance with generally accepted accounting principles, be
classified as current assets of a company conducting a
business the same as or similar to that of such Person.
"Current Liabilities" of any Person means, as of any
date of determination, (i) all Debt which by its terms is
payable on demand or matures within one year from the date
of creation (excluding any Debt renewable or extendible, at
the exclusive option of the debtor, to a date more than one
year from such date or arising under a revolving credit or
similar agreement that unconditionally obligates the lender
or lenders to extend credit in respect thereof during a
period of more than one year from such date and excluding
the undrawn amounts of letters of credit if not required to
be included as current liabilities under generally accepted
accounting principles) and (ii) all other items (including
taxes accrued as estimated) which in accordance with
generally accepted accounting principles should be included
as current liabilities of such Person, in each case
including all amounts required to be paid or prepaid with
respect to any Debt of such Person within one year from the
date of determination.
"Current Ratio" of any Person means, at any date of
determination, the ratio that such Person's (i) Current
Assets plus the dollar amount of the A Commitments then
available to be utilized hereunder (after giving effect to
any B reduction) bears to (ii) Current Liabilities.
"Debt" of any Person means, without duplication,
(i) all indebtedness of such Person for borrowed money or
for the deferred purchase price (excluding any deferred
purchase price that constitutes an account payable incurred
in the ordinary course of business) of property or services,
(ii) all obligations of such Person in connection with any
agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any capital stock of such Person
or to purchase, redeem or acquire for value any warrants,
rights or options to acquire such capital stock, now or
hereafter outstanding, (iii) all obligations of such Person
evidenced by bonds, notes, debentures, convertible
debentures or other similar instruments, (iv) all
indebtedness created or arising under any conditional sale
or other title retention agreement (other than under any
such agreement which constitutes or creates an account
payable incurred in the ordinary course of business) with
respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such
agreement in the event of default, acceleration, or
termination are limited to repossession or sale of such
property), (v) all Capital Lease obligations of such Person,
(vi) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to
purchase or acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (v)
above, (vii) all Debt referred to in clause (i), (ii),
(iii), (iv), (v) or (vi) above secured by (or for which the
holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any lien, security interest or
other charge or encumbrance upon or in property (including,
without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or
become liable for the payment of such Debt and (viii) all
mandatorily redeemable preferred stock of such Person,
valued at the applicable redemption price, plus accrued and
unpaid dividends payable in respect of such redeemable
preferred stock.
"Debt to Capital Ratio" of any Person means, at any
date of determination, the ratio that such Person's (i) Debt
plus Projected Operating Lease Expense bears to (ii) Net
Worth (excluding from the computation of such Person's Total
Assets used in computing such Person's Net Worth any
Intangible Assets of such Person in excess of $50,000,000
plus Debt plus Projected Operating Lease Expense.
"Default" means an event which would constitute an
Event of Default but for the requirement that notice be
given or time elapse, or both; provided, that, for the
purposes of Section 5.02(b) and Section 5.03(b), "Default"
shall not include non-compliance with Section 7.03(a) or (b)
unless the notice contemplated by Section 8.01(c)(iii) has
been given.
"Dollars", "dollars" and the sign "$" each means lawful
money of the United States.
"Domestic Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in
the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) a commercial bank
organized under the laws of the United States, or any State
thereof, and having Total Assets in excess of
$5,000,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the OECD or
has concluded special lending arrangements with the
International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any
such country, and having Total Assets in excess of
$5,000,000,000; provided, that, such bank is acting through
a branch or agency located in the United States; (iii) the
central bank of any country which is a member of the OECD;
(iv) any Bank or Lender or Affiliate of a Bank or Lender;
(v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership or
other entity) which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary
course of its business, and having Total Assets in excess of
$5,000,000,000; and (vi) any other Person mutually
acceptable to the Borrower and the Agent.
"Environmental Laws" means any and all laws, statutes,
ordinances, rules, regulations, judgments, orders, decrees,
permits, licenses, or other governmental restrictions or
requirements relating to the environment or any Hazardous
Substance.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which is a member of a controlled group
of which the Borrower or any Subsidiary of the Borrower is a
member or which is under common control with the Borrower or
any Subsidiary of the Borrower within the meaning of Section
414 of the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to
that term in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any
Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such
Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for
each Eurodollar Rate Advance comprising part of the same
A Borrowing, an interest rate per annum equal to the average
(rounded upward to the nearest whole multiple of 1/16 of 1%
per annum) of the rates per annum at which deposits in
Dollars are offered by the principal office of each of the
Reference Banks in London, England, to prime banks in the
London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period
in an amount substantially equal to such Reference Bank's
Eurodollar Rate Advance comprising part of such A Borrowing
and for a period equal to such Interest Period. The
Eurodollar Rate for the Interest Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing shall
be determined by the Agent on the basis of the applicable
rates given to and received by the Agent from the Reference
Banks two Business Days prior to the first day of such
Interest Period, subject, however, to the provisions of
Section 2.09.
"Eurodollar Rate Advance" means an A Advance which
bears interest as provided in Section 2.07(c).
"Eurodollar Rate Margin" means at any date of
determination:
(i) 1/4% per annum prior to the Revolver
Termination Date; and
(ii) 3/8% per annum at all times from and after
the Revolver Termination Date.
"Eurodollar Rate Reserve Percentage" of any Lender for
any Interest Period for any Eurodollar Rate Advance means
the reserve percentage applicable during such Interest
Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those
days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued
from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve
requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"Events of Default" has the meaning specified in
Section 8.01.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for such day on such transactions received
by the Agent from three Federal funds brokers of recognized
standing selected by it.
"Fiscal Quarter" means any quarter in any Fiscal Year,
the duration of such quarter being defined in accordance
with generally accepted accounting principles consistent
with those applied in the preparation of the Borrower's
financial statements referred to in Section 6.01(e).
"Fiscal Year" means a fiscal year of the Borrower and
its Subsidiaries.
"Fixed Charges" of any Person means, for any period and
without duplication, the sum of (i) net Interest Expense
(including the interest portion of rentals under Capital
Leases) of such Person for such period, (ii) net Operating
Lease Expense of such Person for such period, and (iii) the
aggregate scheduled principal amount of all Debt described
in clauses (i), (iii), (iv) and (v) of the definition of
"Debt" (including the principal portion of rentals under
Capital Leases) of such Person for such period.
"Fixed Charge Coverage Ratio" of any Person means, at
any date of determination and for any period, the ratio that
such Person's (i) Net Income (before deduction for taxes),
plus Interest Expense, plus Operating Lease Expense at such
date and for such period bears to (ii) Fixed Charges at such
date and for such period.
"Hazardous Substance" means (i) any hazardous substance
or toxic substance as such terms are presently defined or
used in section 101(14) of CERCLA (42 U.S.C. section 9601(14)), in 33
U.S.C. section 1251 et.seq. (Clean Water Act), or 15 U.S.C. section 2601
et.seq. (Toxic Substances Control Act) and (ii) as of any
date of determination, any additional substances or
materials which are hereafter incorporated in or added to
the definition of "hazardous substance" or "toxic substance"
for purposes of CERCLA or any other applicable law.
"Intangible Assets" of a Person means, to the extent
included in such Person's Total Assets, all of the
following: (i) goodwill, organizational expenses, research
and development expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles,
(ii) any write-up in the book value of any asset resulting
from a reevaluation thereof subsequent to January 28, 1995
and (iii) any items not included in clauses (i) and (ii)
above which are or should be treated as intangibles in
conformity with generally accepted accounting principles,
except for leasehold improvements and lease interests, as
defined in Accounting Research Bulletin 43.
"Interest Expense" of any Person for any period means
the aggregate amount of interest or fees (other than agency
fees payable to the Agent, as such) paid, accrued or
scheduled to be paid or accrued in respect of any Debt
(including the interest portion of rentals under Capital
Leases) and all but the principal component of payments in
respect of conditional sales, equipment trust or other title
retention agreements paid, accrued or scheduled to be paid
or accrued by such Person during such period, determined in
accordance with generally accepted accounting principles.
"Interest Period" means, for each Adjusted CD Rate
Advance or Eurodollar Rate Advance comprising part of the
same A Borrowing, the period commencing on the date of such
Type of A Advance or the date of the Conversion of any
A Advance into such Type of an A Advance and ending on the
last day of the period selected by the Borrower pursuant to
the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be 30, 60,
90 or 180 days in the case of an Adjusted CD Rate Advance,
and 1, 2, 3 or 6 months in the case of a Eurodollar Rate
Advance, in each case as the Borrower may, upon notice
received by the Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the first day
of such Interest Period, select; provided, however, that:
(i) the Borrower may not select any Interest
Period which ends after the Revolver Termination Date;
(ii) Interest Periods commencing on the same date
for A Advances comprising part of the same A Borrowing
shall be of the same duration;
(iii) whenever the last day of any Interest
Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding
Business Day, provided, in the case of any Interest
Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest
Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the
next preceding Business Day; and
(iv) the Borrower may request in a Notice of
A Borrowing an Interest Period of 9 or 12 months for a
Eurodollar Rate Advance and the Interest Period for
such Eurodollar Rate Advance shall be 9 or 12 months,
as requested by the Borrower, if, and only if, the
Agent determines a Eurodollar Rate for the tenor of
such Interest Period and the Majority A Lenders do not
notify the Agent pursuant to Section 2.09(b) that the
Eurodollar Rate for such Interest Period will not
adequately reflect the cost to such Majority A Lenders
of making, funding or maintaining their respective
Eurodollar Rate Advances for such Interest Period; if
both of the preceding conditions are not satisfied with
respect to such requested 9 or 12 month Interest
Period, the duration of the requested Interest Period
shall be the alternative specified in the Notice of
A Borrowing, or, if no alternative Interest Period is
selected, 6 months.
"Issue" means, with respect to any Letter of Credit,
either to issue, or to extend the expiry of, or to renew, or
to increase the amount of, such Letter of Credit, and the
term "Issued" or "Issuance" shall have corresponding
meanings.
"Issuing Bank" means Citibank or any Affiliate of
Citibank that may from time to time Issue Letters of Credit
for the account of the Borrower or for the account of any
LC Subsidiary.
"LC Commitment" means, as to any LC Lender, the amount
set forth opposite such LC Lender's name on the signature
pages hereof under the caption "LC Commitment" or, if such
LC Lender has entered into one or more Assignment and
Acceptances, the amount set forth for such LC Lender with
respect thereto in the Register maintained by the Agent
pursuant to Section 10.07 hereof.
"LC Commitment Percentage" means, with respect to each
LC Lender, the percentage of which the then existing
LC Commitment of such LC Lender is of the LC Commitments of
all LC Lenders; provided, however, that with respect to
Letters of Credit which expire after the LC Termination Date
has occurred, the LC Commitment Percentage of each LC Lender
shall be the percentage of which such LC Lender's LC
Commitment immediately prior to the LC Termination Date is
of the LC Commitment of all LC Lenders immediately prior to
the LC Termination Date.
"LC Lender" means any Lender that has a LC Commitment
or which, at the date of determination, has purchased
(pursuant to Section 3.04) a participation in a Letter of
Credit.
"LC Subsidiary" means, as of the date hereof, the
Subsidiaries of the Borrower listed on Schedule V hereto
and, after the date hereof, any other Subsidiary of the
Borrower that may from time to time become a party hereto
(with respect to Letters of Credit only) and for whose
account the Issuing Bank may from time to time Issue Letters
of Credit.
"LC Termination Date" means, subject to Section 3.11
hereof, July 2, 1996, or the earlier date of termination in
whole of the LC Commitments pursuant to Section 3.09 or
Section 8.01.
"Lenders" means the Banks listed on the signature pages
hereof and each Eligible Assignee that shall become a party
hereto pursuant to Section 10.07.
"Letter of Credit" means a documentary letter of credit
in form satisfactory to the Issuing Bank, which is at any
time Issued by the Issuing Bank pursuant to Article III, in
each case as amended, supplemented or otherwise modified
from time to time.
"Letter of Credit Liability" means, as of any date of
determination, all then existing liabilities of the Borrower
and the LC Subsidiaries to the Issuing Bank in respect of
the Letters of Credit Issued for the Borrower's account and
for the account of the LC Subsidiaries, whether such
liability is contingent or fixed, and shall, in each case,
consist of the sum of (i) the aggregate maximum amount then
available to be drawn under such Letters of Credit (the
determination of such maximum amount to assume compliance
with all conditions for drawing) and (ii) the aggregate
amount which has then been paid by, and not been reimbursed
to, the Issuing Bank under such Letters of Credit. For the
purposes of determining the Letter of Credit Liability, the
face amount of Letters of Credit outstanding in an
Alternative Currency shall be expressed as the equivalent of
such Alternative Currency in Dollars.
"Lien" means any assignment, chattel mortgage, pledge
or other security interest or any mortgage, deed of trust or
other lien, or other charge or encumbrance, upon property or
rights (including after-acquired property or rights), or any
preferential arrangement with respect to property or rights
(including after-acquired property or rights) which has the
practical effect of constituting a security interest or
lien.
"Majority Combined Lenders" means the Lenders having at
least 66 2/3% of the aggregate "Credit Exposure." For the
purposes hereof, "Credit Exposure" of any Lender shall mean,
at any date of determination, the maximum dollar amount that
such Lender could be then required by the terms hereof
(assuming all conditions to Borrowings and Issuances were
satisfied) to expend to (i) purchase participations in
Letters of Credit pursuant to Section 3.04 hereof (including
any amounts so expended and not reimbursed at the date of
determination) and (ii) fund A Advances (including any
amounts so expended to fund A Advances outstanding on the
date of determination).
"Majority A Lenders" means, at any time, A Lenders owed
at least 66 2/3% of the then aggregate unpaid principal
amount of the A Advances held by A Lenders, or, if no such
principal amount is then outstanding, A Lenders having at
least 66 2/3% of the A Commitments.
"Majority LC Lenders" means, at any time, LC Lenders
which have purchased participations in (pursuant to Section
3.04 hereof) at least 66 2/3% of the Letters of Credit and
Letter of Credit Liability then outstanding, or if no
Letters of Credit are then outstanding, LC Lenders having at
least 66 2/3% of the LC Commitments.
"Margin Stock" has the meaning assigned to such term in
Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Material Adverse Effect" means a material adverse
effect on the financial condition or results of operations
of the Borrower and its Subsidiaries taken as a whole.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which the Borrower
or any Subsidiary of the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Income" of any Person means, for any period, net
income before (i) extraordinary items, (ii) the results of
discontinued operations and (iii) the effect of any
cumulative change in accounting principles, determined in
accordance with generally accepted accounting principles.
"Net Worth" of any Person means, as of any date of
determination, the excess of such Person's Total Assets over
Total Liabilities.
"Non-Retail Assets" means property (tangible and
intangible) that is not used, sold or consumed in a Retail
Business.
"Non-Retail Business" means, with respect to any
Person, that such Person is not engaged in the Retail
Business.
"Notice of A Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of a B Borrowing" has the meaning specified in
Section 2.03(a).
"Obligations" means all obligations of the Borrower and
the LC Subsidiaries now or hereafter existing under this
Agreement, whether for principal (including reimbursement
for amounts drawn under Letters of Credit), interest, fees,
expenses, indemnification or otherwise.
"OECD" means the Organization for Economic Cooperation
and Development.
"Operating Lease" means any lease, rental contract,
occupancy agreement, license or other similar arrangement
with respect to real, personal or mixed property which is
not a Capital Lease.
"Operating Lease Expense" of any Person for any period
means the aggregate amount of rent and fees paid or accrued
by such Person in respect of Operating Leases during such
period, determined in accordance with generally accepted
accounting principles.
"Payment Office" means, for Dollars, the principal
office of the Issuing Bank in New York City, located on the
date hereof at 399 Park Avenue, New York, New York 10043,
and, for any Alternative Currency, such office of the
Issuing Bank as shall be from time to time selected by the
Issuing Bank and notified by the Issuing Bank to the
Borrower, the LC Subsidiaries and the LC Lenders.
"Permitted Lien" means:
(i) Liens for taxes, assessments or governmental
charges or levies to the extent not past due or to the
extent contested, in good faith, by appropriate proceedings
and for which adequate reserves have been established;
(ii) Liens imposed by law, such as materialman's,
mechanic's, carrier's, worker's, landlord's and repairman's
Liens and other similar Liens arising in the ordinary course
of business which relate to obligations which are not
overdue for a period of more than 30 days or which are being
contested in good faith, by appropriate proceedings and for
which reserves required by generally accepted accounting
principles have been established;
(iii) pledges or deposits in the ordinary course of
business to secure nondelinquent obligations under worker's
compensation or unemployment laws or similar legislation or
to secure the performance of leases or contracts entered
into in the ordinary course of business or of public or
nondelinquent statutory obligations, bids, or appeal bonds;
(iv) Liens upon or in, and limited to, any property
acquired or held by the Borrower or any of its Subsidiaries
to secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing or
refinancing the acquisition of any such property to be
subject to such Liens, or Liens existing on any such
property at the time of acquisition;
(v) Liens upon any assets subject to a Capital Lease
and securing payment of the obligations arising under such
Capital Lease;
(vi) zoning restrictions, easements, licenses,
landlord's Liens or restrictions on the use of property
which do not materially impair the use of such property in
the operation of the business of the Borrower or any of its
Subsidiaries;
(vii) Liens of the Borrower and its Subsidiaries
not described in the foregoing clauses (i) through (vi),
existing of the date hereof and listed on Schedule II
hereof;
(viii) Liens not described in subclauses (i) through
(vii) above that relate to liabilities not in excess of
$10,000,000 in the aggregate; and
(ix) extensions, renewals or replacements of Liens
described in subclauses (iv), (v), (vii) and (viii) for the
same or lesser amount; provided, that, no such extension,
renewal or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed
or replaced.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency
thereof.
"Plan" means an employee benefit plan (other than a
Multiemployer Plan) maintained by the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate for its
employees and subject to Title IV of ERISA.
"Projected Operating Lease Expense" means the greater
of (i) six times the projected minimum Operating Lease
Expense of the Borrower and its Subsidiaries as specified by
the Borrower in its annual financial statements delivered
pursuant to Section 7.04 (iii) for the immediately
succeeding Fiscal Year and (ii) six times the actual minimum
Operating Lease Expense of the Borrower and its Subsidiaries
at the Fiscal Quarter end immediately preceding the date of
determination for the immediately preceding four Fiscal
Quarters.
"RCRA" means the Resource Conservation and Recovery Act
of 1976, as amended (42 U.S.C. section 6901 et seq.), and any
regulations promulgated thereunder.
"Reference Banks" means Citibank, N.A., National
Westminster Bank PLC and Bank of America National Trust &
Savings Association.
"Responsible Officer" means, with respect to any
certificate, report or notice to be delivered or given
hereunder, unless the context otherwise requires, the
president, chief executive officer or chief financial
officer of the Borrower or other executive officer of the
Borrower who in the normal performance of his or her
operational duties would have knowledge of the subject
matter relating to such certificate, report or notice.
"Register" has the meaning specified in
Section 10.07(c).
"Retail Assets" means property (tangible and
intangible) that is used, sold or consumed in a Retail
Business.
"Retail Business" means, with respect to any Person,
that such Person is engaged in the business of
manufacturing, producing, supplying, distributing or selling
apparel, accessories and related products or goods.
"Revolver Termination Date" means, subject to Section
2.14 hereof, June 30, 1998 or the earlier date of
termination in whole of the A Commitments pursuant to
Section 2.05 or 8.01.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, trust or other Person of which
more than 50% of the outstanding capital stock (or similar
property right in the case of partnerships and trusts)
having ordinary voting power to elect a majority of the
board of directors of such corporation (or similar governing
body or Person with respect to partnerships and trusts)
(irrespective of whether or not at the time capital stock of
any other class or classes of such corporation shall or
might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other
Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person.
"Tangible Net Worth" of a Person means, at any date of
determination, the excess of such Person's Total Assets
(exclusive of Intangible Assets) over such Person's Total
Liabilities.
"Total Assets" of any Person means all property,
whether real, personal, tangible, intangible or otherwise,
which, in accordance with generally accepted accounting
principles, should be included in determining total assets
as shown on the assets portion of a balance sheet of such
Person.
"Total Liabilities" of any Person means all
obligations, including, without limitation, all Debt of such
Person, which, in accordance with generally accepted
accounting principles, should be included in determining
total liabilities as shown on the liabilities portion of a
balance sheet of such Person.
SECTION 1.02 Computation of Time Periods. In
this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means
"to but excluding".
SECTION 1.03 Accounting Terms. All accounting
terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial
statements referred to in Section 6.01(e).
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01 The A Advances. Each A Lender
severally agrees, on the terms and conditions hereinafter set
forth, to make A Advances to the Borrower from time to time on
any Business Day during the period from the date hereof until the
Revolver Termination Date in an aggregate amount not to exceed at
any time outstanding such A Lender's A Commitment, provided,
that, the aggregate amount of the A Commitments of the A Lenders
shall be deemed used from time to time to the extent of the
aggregate amount of the B Advances then outstanding and such
deemed use of the aggregate amount of the A Commitments shall be
applied to the A Lenders ratably according to their respective
A Commitments (such deemed use of the aggregate amount of the
A Commitments being a "B Reduction"). Each A Borrowing shall be
in an aggregate amount not less than (i) $15,000,000, in the case
of an A Borrowing consisting of Eurodollar Rate Advances or
Adjusted CD Rate Advances and (ii) $1,000,000, in the case of an
A Borrowing consisting of Base Rate Advances, or, in each case,
in integral multiples of $1,000,000 in excess thereof and shall
consist of A Advances of the same Type made on the same day by
the A Lenders ratably according to their respective
A Commitments. Within the limits of each A Lender's
A Commitment, the Borrower may from time to time borrow, prepay
pursuant to Section 2.11(b) and reborrow under this Section 2.01.
SECTION 2.02 Making the A Advances. (a) Each
A Borrowing shall be made on notice, given not later than
12:00 noon (New York City time) on the (i) third Business Day
prior to the date of the proposed A Borrowing, if such proposed
A Borrowing consists of Eurodollar Rate Advances or Adjusted
CD Rate Advances and (ii) Business Day prior to the date of such
proposed A Borrowing, if such proposed Borrowing consists of Base
Rate Advances, by the Borrower to the Agent, which shall give to
each A Lender prompt notice thereof by telecopier, telex or
cable. Each such notice of an A Borrowing (a "Notice of
A Borrowing") shall be by telecopier, telex, cable or telephone
(and if by telephone, confirmed immediately in writing), in
substantially the form of Exhibit A-1 hereto, specifying therein
the requested (i) date of such A Borrowing, (ii) Type of
A Advances comprising such A Borrowing, (iii) aggregate amount of
such A Borrowing and (iv) in the case of an A Borrowing comprised
of Adjusted CD Rate Advances or Eurodollar Rate Advances, initial
Interest Period for each such A Advance. Each A Lender shall,
before 12:00 noon (New York City time) on the date of such
A Borrowing, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in
Section 10.02, in same day funds, such A Lender's ratable portion
of such A Borrowing. After the Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in
Article V, the Agent will make such funds available to the
Borrower at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding, the Borrower may not select Adjusted CD Rate
Advances or Eurodollar Rate Advances for any A Borrowing if the
aggregate amount of such A Borrowing is less than $1,000,000
multiplied by the number of A Lenders.
(c) Each Notice of A Borrowing shall be
irrevocable and binding on the Borrower. In the case of any
A Borrowing which the related Notice of A Borrowing specifies is
to be comprised of Adjusted CD Rate Advances or Eurodollar Rate
Advances, the Borrower shall indemnify each A Lender against any
loss, cost or expense incurred by such A Lender as a result of
any failure to fulfill on or before the date specified in such
Notice of A Borrowing for such A Borrowing the applicable
conditions set forth in Article V, including, without limitation,
any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such A Lender to fund the A Advance to
be made by such A Lender as part of such A Borrowing when such
A Advance, as a result of such failure, is not made on such date.
(d) Unless the Agent shall have received notice
from an A Lender prior to the date of any A Borrowing that such
A Lender will not make available to the Agent such A Lender's
ratable portion of such A Borrowing, the Agent may assume that
such A Lender has made such portion available to the Agent on the
date of such A Borrowing in accordance with subsection (a) of
this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such A Lender
shall not have so made such ratable portion available to the
Agent, such A 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 to the Borrower until the date such amount is
repaid to the Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to A Advances comprising
such A Borrowing and (ii) in the case of such A Lender, the
Federal Funds Rate. If such A Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute
such A Lender's A Advance as part of such A Borrowing for
purposes of this Agreement.
(e) The failure of any A Lender to make the
A Advance to be made by it as part of any A Borrowing shall not
relieve any other A Lender of its obligation, if any, hereunder
to make its A Advance on the date of such A Borrowing, but no
A Lender shall be responsible for the failure of any other
A Lender to make the A Advance to be made by such other A Lender
on the date of any A Borrowing.
SECTION 2.03 The B Advances. (a) Each A Lender
severally agrees that the Borrower may make B Borrowings under
this Section 2.03 from time to time on any Business Day during
the period from the date hereof until the date occurring 7 days
prior to the Revolver Termination Date in the manner set forth
below; provided, that, following the making of each B Borrowing,
the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the A Commitments of the A Lenders
(computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under
this Section 2.03 by delivering to the Agent (or to each
A Lender if the Borrower is conducting the auction for
B Advances pursuant to subsection (g) of this Section 2.03),
by telecopier, telex or cable, confirmed immediately in
writing, a notice of a B Borrowing (a "Notice of
B Borrowing"), in substantially the form of Exhibit A-2
hereto, specifying the date and aggregate amount of the
proposed B Borrowing, the maturity date for repayment of
each B Advance to be made as part of such B Borrowing (which
maturity date may not be earlier than the date occurring 7
days after the date of such B Borrowing or later than the
Revolver Termination Date), the interest payment date or
dates relating thereto, and any other terms to be applicable
to such B Borrowing, not later than 3:00 P.M. (New York City
time) (A) at least one Business Day prior to the date of the
proposed B Borrowing, if the Borrower shall specify in the
Notice of B Borrowing that the rates of interest to be
offered by the A Lenders shall be fixed rates per annum and
(B) at least four Business Days prior to the date of the
proposed B Borrowing, if the Borrower shall instead specify
in the Notice of B Borrowing the basis to be used by the
A Lenders in determining the rates of interest to be offered
by them. If the Agent is conducting the auction for
B Advances, it shall in turn promptly notify each A Lender
of each request for a B Borrowing received by it from the
Borrower by sending such A Lender a copy of the related
Notice of B Borrowing.
(ii) Each A Lender may, if, in its sole
discretion, it elects to do so, irrevocably offer to make
one or more B Advances to the Borrower as part of such
proposed B Borrowing at a rate or rates of interest
specified by such Lender in its sole discretion, by
notifying the Agent (which shall give prompt notice thereof
to the Borrower) or the Borrower (if it is conducting the
auction for B Advances pursuant to subsection (g) of this
Section 2.03), before 10:30 A.M. (New York City time) (A) on
the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of
paragraph (i) above and (B) three Business Days before the
date of such proposed B Borrowing, in the case of a Notice
of B Borrowing delivered pursuant to clause (B) of paragraph
(i) above, of the minimum amount and maximum amount of each
B Advance which such A Lender would be willing to make as
part of such proposed B Borrowing (which amounts may,
subject to the proviso to the first sentence of this Section
2.03(a), exceed such A Lender's A Commitment), the rate or
rates of interest therefor and such A Lender's Applicable
Lending Office with respect to such B Advance; provided,
that, if the Agent in its capacity as an A Lender shall, in
its sole discretion, elect to make any such offer and the
Agent is conducting the auction for B Advances, it shall
notify the Borrower of such offer before 10:00 A.M. (New
York City time) on the date on which notice of such election
is to be given to the Agent by the other A Lenders. If any
A Lender shall elect not to make such an offer, such
A Lender shall so notify the Agent, or the Borrower (if it
is conducting the auction for the B Advances pursuant to
subsection (g) of this Section 2.03), before 10:30 A.M. (New
York City time) on the date on which notice of such election
is to be given to the Agent or the Borrower (if it is
conducting the auction for the B Advances pursuant to
subsection (g) of this Section 2.03) by the other A Lenders,
and such A Lender shall not be obligated to, and shall not,
make any B Advance as part of such B Borrowing; provided,
that, the failure by any A Lender to give such notice shall
not cause such A Lender to be obligated to make any
B Advance as part of such proposed B Borrowing.
(iii) The Borrower shall, in turn, (A) before
12:00 noon (New York City time) on the date of such proposed
B Borrowing, in the case of a Notice of B Borrowing
delivered pursuant to clause (A) of paragraph (i) above and
(B) before 1:00 P.M. (New York City time) three Business
Days before the date of such proposed B Borrowing, in the
case of a Notice of B Borrowing delivered pursuant to clause
(B) of paragraph (i) above, either:
(x) cancel such B Borrowing by giving the Agent
(or each A Lender if the Borrower is conducting the
auction for the B Advances pursuant to subsection (g)
of this Section 2.03) notice to that effect; or
(y) accept one or more of the offers made by
any A Lender or A Lenders pursuant to paragraph (ii)
above, in its sole discretion, by giving notice to the
Agent (or each such A Lender, if the Borrower is
conducting the auction for B Advances pursuant to
subsection (g) of this Section 2.03) of the amount of
each B Advance (which amount shall be equal to or
greater than the minimum amount, and equal to or less
than the maximum amount, notified to the Borrower by
the Agent on behalf of such A Lender (or by each
A Lender, if the Borrower is conducting the auction for
B Advances pursuant to subsection (g) of this Section
2.03) for such B Advance pursuant to paragraph (ii)
above) to be made by each A Lender as part of such
B Borrowing, and reject any remaining offers made by
A Lenders pursuant to paragraph (ii) above by giving
the Agent (or each A Lender, if the Borrower is
conducting the auction for B Advances pursuant to
subsection (g) of this Section 2.03) notice to that
effect.
(iv) If the Borrower notifies the Agent that such
B Borrowing is cancelled pursuant to paragraph (iii)(x)
above, the Agent shall give prompt notice thereof to the
A Lenders, and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the
offers made by any A Lender or A Lenders pursuant to
paragraph (iii)(y) above, the Agent, if it is conducting the
auction for the B Advances, or the Borrower, if it is
conducting the auction for the B Advances pursuant to
subsection (g) of this Section 2.03, shall promptly notify
(A) each A Lender that has made an offer as described in
paragraph (ii) above, of the date and aggregate amount of
such B Borrowing, of the lowest and highest interest rates
offered to the Borrower by the A Lenders in connection with
such B Borrowing and whether or not any offer or offers made
by such A Lender pursuant to paragraph (ii) above have been
accepted by the Borrower and (B) each A Lender that is to
make a B Advance as part of such B Borrowing, of the amount
of each B Advance to be made by such A Lender as part of
such B Borrowing. If the Borrower is conducting the auction
for the B Advances pursuant to subsection (g) of this
Section 2.03, it shall concurrently with the notices given
by it to the A Lenders pursuant to the previous sentence,
provide a copy of all such notices to the Agent. The Agent
shall in turn notify each A Lender that is to make a
B Advance as part of such B Borrowing, upon receipt, that
the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article V.
Each A Lender that is to make a B Advance as part of such
B Borrowing shall, before 2:00 P.M. (New York City time) on
the date of such B Borrowing specified in the notice
received from the Agent (or from the Borrower if it is
conducting the auction for B Advances pursuant to subsection
(g) of this Section 2.03) pursuant to clause (A) above or
any later time when such A Lender shall have received notice
from the Agent pursuant to the preceding sentence, make
available (i) if the Agent is conducting the auction for
B Advances, to the Agent for the account of its Applicable
Lending Office at its address referred to in Section 10.02
such A Lender's portion of such B Borrowing, in same day
funds or (ii) if the Borrower is conducting the auction for
B Advances pursuant subsection (g) of this Section 2.03, to
the Borrower at the account designated by it, such
A Lender's portion of such B Borrowing, in same day funds.
Upon fulfillment of the applicable conditions set forth in
Article V, and after receipt by the Agent of such funds (if
the Agent conducted the auction relating to such B
Borrowing), the Agent will make such funds available to the
Borrower at the Agent's aforesaid address. Promptly after
each B Borrowing the Agent will notify each A Lender of the
amount of the B Borrowing, the consequent B Reduction and
the dates upon which such B Reduction commenced and will
terminate.
(b) Each B Borrowing shall be in an aggregate
amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and, following the making of each
B Borrowing, the Borrower shall be in compliance with the
limitation set forth in the proviso to the first sentence of
subsection (a) above. The Borrower may not accept offers for B
Advances in excess of the aggregate amount specified in its
Notice of B Borrowing given with respect to each proposed B
Borrowing.
(c) Within the limits and on the conditions set forth
in this Section 2.03, the Borrower may from time to time borrow
under this Section 2.03, repay or prepay pursuant to subsection
(d) below, and reborrow under this Section 2.03. The Borrower
may not make more than one B Borrowing on any Business Day.
(d) If the Agent conducted the applicable auction
relating to the B Advance to be repaid, the Borrower shall repay
to the Agent for the account of each A Lender which has made a
B Advance on the maturity date of each B Advance (such maturity
date being that specified by the A Lender for repayment of such
B Advance in the related offer delivered pursuant to subsection
(a)(ii) above), the then unpaid principal amount of such
B Advance. If the Borrower conducted the applicable auction
relating to the B Advance to be repaid, the Borrower shall repay
directly to each A Lender that made a B Advance on the maturity
date of each B Advance (such maturity date being that specified
by the A Lender for repayment of such B Advance in the related
offer delivered pursuant to subsection (a)(ii) above), the then
unpaid principal amount of such B Advance at the account
designated by such A Lender to the Borrower. The Borrower shall
have no right to prepay any principal amount of any B Advance
unless, and then only on the terms, specified for such B Advance
in the offer delivered pursuant to subsection (a)(ii) above.
(e) The Borrower shall pay interest on the unpaid
principal amount of each B Advance from the date of such
B Advance to the date the principal amount of such B Advance is
repaid in full, at the rate of interest for such B Advance
specified by the A Lender making such B Advance in its offer with
respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the
Borrower in its Notice of B Borrowing with respect thereto
delivered pursuant to subsection (a)(i) above. Such interest
shall be paid directly to the A Lender that made the B Advance at
the account designated by it to the Borrower, if the Borrower
conducted the applicable auction relating to the B Advance on
which interest is to be paid, and to the Agent for the account
the Applicable Lending Office of each A Lender that made a
B Advance, if the Agent conducted the auction relating to the
B Advance on which interest is to be paid.
(f) The indebtedness of the Borrower to an A Lender
resulting from each B Advance made to the Borrower as part of a
B Borrowing shall be evidenced by such A Lender's loan account
referred to in Section 4.04; provided, however, that upon the
request of such A Lender, the Borrower shall execute and deliver
to such A Lender a promissory note, in substantially the form of
Exhibit E hereto, in the face amount of the B Advance made by
such A Lender as part of a B Borrowing.
(g) If the Borrower so elects, it may conduct, from
time to time, auctions for B Advances in accordance with the
foregoing provisions.
SECTION 2.04 Fees. (a) Facility Fee. The
Borrower agrees to pay to the Agent for the account of each
A Lender a facility fee of 0.10% per annum on the amount of such
A Lender's A Commitment (computed without giving effect to any
B Reduction or any other usage of the A Commitment of such
Lender), payable quarterly in arrears on the last day of each
January, April, July and October and on the Revolver Termination
Date.
(b) Commitment Fee. If, at the end of any Fiscal
Quarter of the Borrower, the Borrower's Consolidated Fixed Charge
Coverage Ratio (as determined pursuant to Section 7.03(d)) is
less than 1.6 to 1.0, the Borrower agrees to pay to the Agent for
the account of each A Lender a commitment fee on the average
daily unused portion of such Lender's A Commitment during such
Fiscal Quarter at the rate of 1/8% per annum. The commitment fee
payable hereunder shall be payable concurrently with the
Borrower's delivery of the certificate provided for in Section
7.04(i) hereof if such certificate indicates a Consolidated Fixed
Charge Coverage Ratio (as determined pursuant to Section 7.03(d))
of less than 1.6 to 1.0 and concurrently with the Borrower's
delivery of the financial statements provided for in
Section 7.04(ii) or (iii)(as applicable) hereof if such financial
statements and the statement accompanying the same indicate a
Fixed Charge Coverage Ratio (as determined pursuant to
Section 7.03(d)) of less than 1.6 to 1.0 and the certificate
delivered pursuant to Section 7.04(i) did not indicate a
Consolidated Fixed Charge Coverage Ratio of less than 1.6 to 1.0
as at the end of such Fiscal Quarter. No commitment fee shall be
payable hereunder after the Revolver Termination Date.
(c) Consolidated Fixed Charge Coverage Ratio Payment.
If the Borrower's Consolidated Fixed Charge Coverage Ratio
(determined as provided in Section 7.03(d)) is less than 1.6 to
1.0 as at the end of any Fiscal Quarter, then the Borrower shall
pay additional interest (the "Additional Interest Payment") on
all A Advances that were outstanding during such Fiscal Quarter
as follows:
(i) a dollar amount equal to 1/4% per annum on
the principal amount of all Eurodollar Rate Advances
outstanding during such Fiscal Quarter for the period
outstanding during such Fiscal Quarter; and
(ii) a dollar amount equal to 1/4% per annum on
the principal amount of all Adjusted CD Rate Advances
outstanding during such Fiscal Quarter for the period
outstanding during such Fiscal Quarter.
The Additional Interest Payment shall be made by the Borrower
(i) concurrently with its delivery of the certificate provided
for in Section 7.04(i) if such certificate indicates a
Consolidated Fixed Charge Coverage Ratio as at the end of such
Fiscal Quarter (determined as provided in Section 7.03(d)) of
less than 1.6 to 1.0 or (ii) concurrently with its delivery of
the financial statements provided for in Section 7.04(ii) or
(iii)(as applicable) if such financial statements and the
statement accompanying the same indicate a Consolidated Fixed
Charge Coverage Ratio as at the end of such Fiscal
Quarter(determined as provided pursuant to Section 7.03(d)) of
less than 1.6 to 1.0 and the certificate delivered pursuant to
Section 7.04(i) did not indicate a Consolidated Fixed Charge
Coverage Ratio of less than 1.6 to 1.0 as at the end of such
Fiscal Quarter.
(d) Agent's Fees. The Borrower hereby agrees to pay
to the Agent the fees and charges referred to in the certain
letter agreement, dated as of the date hereof, among the
Borrower, the Issuing Bank and the Agent.
SECTION 2.05 Reduction of the A Commitments.
The Borrower shall have the right, upon at least three Business
Days' notice to the Agent, to irrevocably terminate in whole or
reduce ratably in part the unused portions of the respective
A Commitments of the A Lenders, provided, that, the aggregate
amount of the A Commitments of the A Lenders shall not be reduced
to an amount which is less than the aggregate principal amount of
the B Advances then outstanding and provided, further, that each
partial reduction shall be in the aggregate amount of $25,000,000
or an integral multiple of $1,000,000 in excess thereof.
SECTION 2.06 Repayment of A Advances. The
Borrower shall repay in full the principal amount of each
A Advance owing to each A Lender, together with accrued interest
and fees thereon, on the Revolver Termination Date.
SECTION 2.07 Interest on A Advances. The
Borrower shall pay interest on the unpaid principal amount of
each A Advance made by each A Lender from the date of such
A Advance until such principal amount shall be paid in full, at
the following rates per annum:
(a) Base Rate Advances. If such A Advance is a
Base Rate Advance, a rate per annum equal at all times to
the Base Rate in effect from time to time, payable quarterly
on the last day of each April, July, October, and January
and on the date such Base Rate Advance shall be Converted or
paid in full; provided, that, any amount of principal which
is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Base Rate in effect from
time to time.
(b) Adjusted CD Rate Advances. If such A Advance is
an Adjusted CD Rate Advance, a rate per annum equal at all
times during the Interest Period for such A Advance to the
sum of the Adjusted CD Rate for such Interest Period plus
the Adjusted CD Rate Margin, payable on the last day of such
Interest Period and, if such Interest Period has a duration
of more than 90 days, on each day which occurs during such
Interest Period every 90 days from the first day of such
Interest Period; provided, that, any amount of principal
which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid
in full, payable on demand, at a rate per annum equal at all
times to (x) after the expiration of the Interest Period
related to such principal amount, 2% per annum above the
Base Rate in effect from time to time and (y) prior to the
expiration of the Interest period related to such principal
amount, 2% per annum above the rate per annum required to be
paid on such A Advance immediately prior to the date on
which such amount became due.
(c) Eurodollar Rate Advances. If such A Advance
is a Eurodollar Rate Advance, a rate per annum equal at all
times during the Interest Period for such A Advance to the
sum of the Eurodollar Rate for such Interest Period plus the
Eurodollar Rate Margin, payable on the last day of such
Interest Period and, if such Interest Period has a duration
of more than three months, on each day which occurs during
such Interest Period every three months from the first day
of such Interest Period; provided, that, any amount of
principal which is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest,
from the date on which such amount is due until such amount
is paid in full, payable on demand, at a rate per annum
equal at all times to (x) after the expiration of the
Interest Period related to such principal amount, 2% per
annum above the Base Rate in effect from time to time and
(y) prior to the expiration of the Interest Period related
to such principal amount, 2% per annum above the rate per
annum required to be paid on such A Advance immediately
prior to the date on which such principal amount became due.
SECTION 2.08 Additional Interest on Eurodollar
Rate Advances. The Borrower shall pay to each A Lender, so long
as such A Lender shall be required under regulations of the Board
of Governors of the Federal Reserve System to maintain reserves
with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Advance of such
A Lender, from the date of such A Advance until such principal
amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the
Eurodollar Rate for the Interest Period for such A Advance from
(ii) the rate obtained by dividing such Eurodollar Rate by a
percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such A Lender for such Interest Period, payable on
each date on which interest is payable on such A Advance. Such
additional interest shall be determined by such A Lender and
notified to the Borrower through the Agent.
SECTION 2.09 Interest Rate Determination.
(a) Each Reference Bank agrees to furnish to the Agent timely
information for the purpose of determining the Adjusted CD Rate
or Eurodollar Rate, as applicable. If any one or more of the
Reference Banks shall not furnish such timely information to the
Agent for the purpose of determining any such interest rate, the
Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks. The
Agent shall give prompt notice to the Borrower and the A Lenders
of the applicable interest rate determined by the Agent for
purposes of Section 2.07(a), (b) or (c), and the applicable rate,
if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section 2.07(b) or
(c).
(b) If, with respect to any Eurodollar Rate
Advances, the Majority A Lenders notify the Agent that the
Eurodollar Rate for any Interest Period for such Advances will
not adequately reflect the cost to such Majority A Lenders of
making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so
notify the Borrower and the A Lenders, whereupon:
(i) each outstanding Eurodollar Rate Advance
will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance,
and
(ii) the obligation of the A Lenders to make,
or to Convert A Advances into, Eurodollar Rate Advances
shall be suspended until the Agent shall notify the Borrower
and the A Lenders that the circumstances causing such
suspension no longer exist.
(c) If the Borrower shall fail to select the
duration of any Interest Period for any Adjusted CD Rate Advances
or any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01,
the Agent will forthwith so notify the Borrower and the A Lenders
and such Advances will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate
Advances.
(d) On the date on which the aggregate unpaid
principal amount of A Advances comprising any A Borrowing shall
be reduced, by payment or prepayment or otherwise, to less than
$1,000,000 multiplied by the number of A Lenders, such A Advances
shall, if they are Advances of a Type other than Base Rate
Advances, automatically Convert into Base Rate Advances, and on
and after such date the right of the Borrower to Convert such
A Advances into Advances of a Type other than Base Rate Advances
shall terminate; provided, however, that if and so long as each
such A Advance shall be of the same Type and have the same
Interest Period as A Advances comprising another A Borrowing or
other A Borrowings, and the aggregate unpaid principal amount of
all such A Advances shall equal or exceed $1,000,000 multiplied
by the number of A Lenders, the Borrower shall have the right to
continue all such A Advances as, or to Convert all such
A Advances into, Advances of such Type having such Interest
Period.
(e) If fewer than two Reference Banks furnish timely
information to the Agent for determining the Adjusted CD Rate for
any Adjusted CD Rate Advances, or the Eurodollar Rate for any
Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Borrower
and the A Lenders that the interest rate cannot be
determined for such Adjusted CD Rate Advances or Eurodollar
Rate Advances, as the case may be,
(ii) each such Advance will automatically, on the
last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance (or if such Advance is then
a Base Rate Advance, will continue as a Base Rate Advance),
and
(iii) the obligation of the A Lenders to make,
or to Convert A Advances into, Adjusted CD Rate Advances or
Eurodollar Rate Advances, as the case may be, shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exist.
SECTION 2.10 Voluntary Conversion of A Advances.
The Borrower may on any Business Day, upon notice given to the
Agent not later than 12:00 noon (New York City time) on the third
Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.09 and 2.13, Convert all
A Advances of one Type comprising the same A Borrowing into
Advances of another Type; provided, however, that any Conversion
of any Adjusted CD Rate Advances or Eurodollar Rate Advances into
Advances of another Type shall be made on, and only on, the last
day of an Interest Period for such Adjusted CD Rate Advances or
Eurodollar Rate Advances. Each such notice of a Conversion
shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the A Advances to be Converted, and
(iii) if such Conversion is into Adjusted CD Rate Advances or
Eurodollar Rate Advances, the duration of the Interest Period for
each such A Advance.
SECTION 2.11 No Prepayments of A Advances.
(a) The Borrower shall have no right to prepay any principal
amount of any A Advances other than as provided in subsection (b)
below.
(b) The Borrower may, upon at least (i) two
Business Day's, in the case of Eurodollar Rate Advances and
Adjusted CD Rate Advances and (ii) same Business Day's, in the
case of Base Rate Advances, notice to the Agent (to be received
by the Agent prior to 12:00 noon (New York City time) stating the
proposed date and aggregate principal amount of the prepayment,
and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the A Advances comprising part
of the same A Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each
partial prepayment shall be in an aggregate principal amount not
less than $15,000,000 if made with respect to Eurodollar Rate
Advances or Adjusted CD Rate Advances, or $1,000,000, if made
with respect to Base Rate Advances, and in each case in
$1,000,000 integral multiples in excess thereof and (y) in the
case of any such prepayment of an Adjusted CD Advance or
Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the A Lenders in respect thereof pursuant to Section
10.04(b).
SECTION 2.12 Increased Costs. (a) If, due to
either (i) the introduction of or any change at any time after
the date of this Agreement (other than any change by way of
imposition or increase of reserve requirements, in the case of
Adjusted CD Rate Advances, included in the Adjusted CD Rate
Reserve Percentage or, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance
after the date of this Agreement with any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law), there shall be any increase in the
cost to any A Lender of agreeing to make or making, funding or
maintaining Adjusted CD Rate Advances or Eurodollar Rate
Advances, then the Borrower shall from time to time, upon demand
by such A Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such A Lender additional amounts
sufficient to compensate such A Lender for such increased cost;
provided, that, the Borrower shall have no obligation to
reimburse any A Lender for increased costs incurred more than 60
days prior to the date of such demand. A certificate as to the
amount of such increased cost setting forth the basis for the
calculation of such increased costs, submitted to the Borrower
and the Agent by such A Lender, shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, at any time after the date of this
Agreement, any A Lender determines that compliance with any law
or regulation or any guideline or request from any central bank
or other governmental authority (whether or not having the force
of law) affects or would affect the amount of capital required or
expected to be maintained by such A Lender or any corporation
controlling such A Lender and that the amount of such capital is
increased by or based upon the existence of such A Lender's
commitment to lend hereunder and other commitments of this type,
then, upon demand by such A Lender (with a copy of such demand to
the Agent), the Borrower shall immediately pay to the Agent for
the account of such A Lender, from time to time as specified by
such A Lender, additional amounts sufficient to compensate such
A Lender or such corporation in the light of such circumstances,
to the extent that such A Lender reasonably determines such
increase in capital to be allocable to the existence of such
A Lender's commitment to lend hereunder; provided, that, the
Borrower shall have no obligation to pay such compensatory
amounts that relate to an actual increase in the capital of such
A Lender undertaken by such A Lender more than 60 days prior to
the date of such demand. A certificate as to such amounts
submitted to the Borrower and the Agent by such A Lender and
setting forth the basis for the calculation of such amount shall
be conclusive and binding for all purposes, absent manifest
error.
(c) Without affecting its rights under
Sections 2.12(a) or 2.12(b) or any other provision of this
Agreement, each A Lender agrees that if there is any increase in
any cost to or reduction in any amount receivable by such
A Lender with respect to which the Borrower would be obligated to
compensate such A Lender pursuant to Sections 2.12(a) or 2.12(b),
such A Lender shall use reasonable efforts to select an
alternative Applicable Lending Office which would not result in
any such increase in any cost to or reduction in any amount
receivable by such A Lender; provided, however, that no A Lender
shall be obligated to select an alternative Applicable Lending
Office if such A Lender determines that (i) as a result of such
selection such A Lender would be in violation of any applicable
law, regulation, treaty, or guideline, or would incur additional
costs or expenses or (ii) such selection would be inadvisable for
regulatory reasons or inconsistent with the interests of such
A Lender.
(d) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 2.12 shall
survive the payment in full (after the Revolver Termination Date)
of all Obligations.
SECTION 2.13 Illegality. (a) Notwithstanding
any other provision of this Agreement, if any A Lender shall
notify the Agent that the introduction of or any change in or in
the interpretation of any law or regulation makes it unlawful or
impossible, or any central bank or other governmental authority
asserts that it is unlawful, for any A Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate
Advances hereunder, (i) the obligation of the A Lenders to make,
or to Convert A Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the
A Lenders that the circumstances causing such suspension no
longer exist and (ii) the Borrower shall forthwith prepay in full
all Eurodollar Rate Advances of all A Lenders then outstanding,
together with interest accrued thereon, unless the Borrower,
within five Business Days of notice from the Agent, Converts all
Eurodollar Rate Advances of all A Lenders then outstanding into
Advances of another Type in accordance with Section 2.10.
(b) Without affecting its rights under Section 2.13(a)
or under any other provision of this Agreement, each A Lender
agrees that if it becomes unlawful or impossible for such
A Lender to make, maintain or fund its Eurodollar Rate Advances
as contemplated by this Agreement, such A Lender shall use
reasonable efforts to select an alternative Applicable Lending
Office from which such A Lender may maintain and give effect to
its obligations under this Agreement with respect to making,
funding and maintaining such Eurodollar Rate Advances; provided,
however, that no A Lender shall be obligated to select an
alternative Applicable Lending Office if such A Lender determines
that (i) as a result of such selection such A Lender would be in
violation of any applicable law, regulation, or treaty, or would
incur additional costs or expenses or (ii) such selection would
be inadvisable for regulatory reasons or inconsistent with the
interests of such A Lender.
SECTION 2.14 Extension of Revolver Termination
Date. At least 45 but not more than 60 days prior to the next
Anniversary Date, the Borrower, by written notice to the Agent,
may request that the Revolver Termination Date be extended one
calendar year from its then current scheduled expiration. The
Agent shall promptly notify each A Lender of such request, and
each A Lender shall in turn, within 30 days prior to such next
Anniversary Date, notify the Borrower and the Agent in writing
regarding whether such A Lender will consent to such extension.
If, and only if, all A Lenders consent in writing to such
extension prior to the tenth Business Day preceding such next
Anniversary Date, the Revolver Termination Date shall be so
extended for such one calendar year and references herein to the
"Revolver Termination Date" shall refer to such "Revolver
Termination Date" as so extended. If any A Lender shall fail to
deliver such notice to the Borrower and the Agent as provided
above, such A Lender shall be deemed not to have consented to any
requested extension and all of the A Lenders' A Commitments shall
terminate on the scheduled Revolver Termination Date. It is
understood that no A Lender shall have any obligation whatsoever
to agree to any request made by the Borrower for an extension of
the Revolver Termination Date.
ARTICLE III
AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATIONS THEREIN
SECTION 3.01 Letters of Credit. The Issuing
Bank agrees, on the terms and conditions hereinafter set forth,
to Issue for the account of the Borrower or any LC Subsidiary,
one or more Letters of Credit from time to time during the period
from the date of this Agreement until the date which occurs one
day before the LC Termination Date in an aggregate undrawn amount
not to exceed at any time $500,000,000 (inclusive of the Dollar
equivalent of Letters of Credit Issued in an Alternative
Currency), each such Letter of Credit upon its Issuance to expire
on or before the date which occurs one year from the date of its
Issuance; provided, however, that the Issuing Bank shall not be
obligated to Issue any Letter of Credit if:
(i) after giving effect to the Issuance of such Letter
of Credit, the then outstanding aggregate amount of all
Letter of Credit Liability shall exceed the total of the
LC Commitments of the LC Lenders;
(ii) the Agent or the Majority LC Lenders shall have
notified the Issuing Bank and the Borrower that no further
Letters of Credit are to be Issued by the Issuing Bank due
to failure to meet any of the applicable conditions set
forth in Article V, and such notice has not expired or been
withdrawn; or
(iii) after giving effect to the Issuance of any
Letter of Credit denominated in an Alternative Currency, the
then outstanding aggregate amount of all Letter of Credit
Liability with respect to all Letters of Credit denominated
in an Alternative Currency equals or exceeds (on a Dollar
equivalent basis) $50,000,000.
Within the limits of the obligations of the Issuing Bank set
forth above, the Borrower and each LC Subsidiary may request the
Issuing Bank to Issue one or more Letters of Credit, reimburse
the Issuing Bank for payments made thereunder pursuant to
Section 3.03(a) and request the Issuing Bank to Issue one or more
additional Letters of Credit under this Section 3.01.
SECTION 3.02 Issuing the Letters of Credit.
Each Letter of Credit shall be Issued on notice from the Borrower
or any LC Subsidiary, as the case may be, to the Issuing Bank as
provided in the application and agreement governing such Letter
of Credit specifying the date, amount, currency, expiry and
beneficiary thereof, accompanied by such documents as the Issuing
Bank may specify to the Borrower or LC Subsidiary, as the case
may be, in form and substance satisfactory to the Issuing Bank.
On the date specified by the Borrower or LC Subsidiary, as the
case may be, in such notice and upon fulfillment of the
applicable conditions set forth in Section 3.01, the Issuing Bank
will Issue such Letter of Credit and shall promptly notify the
Agent thereof.
SECTION 3.03 Reimbursement Obligations. (a) The
Borrower or the appropriate LC Subsidiary, as the case may be,
shall:
(i) pay to the Issuing Bank an amount equal to, and in
reimbursement for, each amount which such Issuing Bank pays
under any Letter of Credit not later than the date which
occurs one Business Day after payment of such amount by such
Issuing Bank under such Letter of Credit; and
(ii) pay to the Issuing Bank interest on any
amount remaining unpaid under clause (i) above from the date
on which such Issuing Bank pays such amount under any Letter
of Credit until such amount is reimbursed in full to such
Issuing Bank pursuant to clause (i) above, payable on
demand, at a fluctuating rate per annum equal to the sum of
the Base Rate in effect from time to time plus 2% per annum.
(b) All amounts to be reimbursed to the Issuing Bank
in accordance with subsection (a) above may, subject to the
limitations set forth in Section 2.01 (inclusive of the minimum
borrowing limitations), be paid from the proceeds of A Advances
or B Advances.
SECTION 3.04 Participations Purchased by the
Lenders. (a) On the date of Issuance of each Letter of Credit
the Issuing Bank shall be deemed irrevocably and unconditionally
to have sold and transferred to each LC Lender without recourse
or warranty, and each LC Lender shall be deemed to have
irrevocably and unconditionally purchased and received from such
Issuing Bank, an undivided interest and participation, to the
extent of such Lender's LC Commitment Percentage in effect from
time to time, in such Letter of Credit and all Letter of Credit
Liability relating to such Letter of Credit and all documents
securing, guaranteeing, supporting, or otherwise benefiting the
payment of such Letter of Credit Liability. The Agent or the
Issuing Bank will notify each Lender promptly after the close of
each calendar month of all Letters of Credit then outstanding and
of their respective dates of Issue, outstanding amounts (on a
Dollar equivalent basis) as at the end of such month, currency,
expiry dates and reference numbers.
(b) In the event that any reimbursement obligation
under Section 3.03(a) is not paid when due to the Issuing Bank
with respect to any Letter of Credit, the Issuing Bank shall
promptly notify the LC Lenders of the amount of such
reimbursement obligation (on a Dollar equivalent basis in the
case of Letters of Credit denominated in an Alternative Currency)
and each LC Lender shall immediately pay to the Issuing Bank, in
lawful money of the United States and in same day funds, an
amount equal to such LC Lender's LC Commitment Percentage then in
effect of the amount of such unpaid reimbursement obligation with
interest at the Federal Funds Rate for each day after such
notification until such amount is paid to the Issuing Bank.
(c) Promptly after the Issuing Bank receives a payment
(including interest payments) on account of a reimbursement
obligation with respect to any Letter of Credit, such Issuing
Bank shall promptly pay to each LC Lender which funded its
participation therein, in lawful money of the United States the
Dollar equivalent of funds so received, in an amount equal to
such LC Lender's Commitment Percentage thereof.
(d) Upon the request of any LC Lender, the Agent shall
furnish, or cause the Issuing Bank to furnish, to such LC Lender
copies of any outstanding Letter of Credit and any application
and agreement for letter of credit as may be reasonably requested
by such LC Lender.
(e) The obligation of each LC Lender to make payments
under subsection (b) above shall be unconditional and irrevocable
and shall be made under all circumstances, including, without
limitation, any of the circumstances referred to in
Section 3.06(b) other than in connection with circumstances
involving any willful misconduct or gross negligence of the
Issuing Bank in Issuing a Letter of Credit or in determining
whether documents presented under a Letter of Credit comply with
the terms thereof.
(f) If any payment received on account of any
reimbursement obligation with respect to a Letter of Credit and
distributed to a LC Lender as a participant under Section 3.04(c)
is thereafter recovered from the Issuing Bank in connection with
any bankruptcy or insolvency proceeding relating to the Borrower
or an LC Subsidiary, each LC Lender which received such
distribution shall, upon demand by the Issuing Bank, repay to
such Issuing Bank such LC Lender's ratable share of the amount so
recovered together with an amount equal to such LC Lender's
ratable share (according to the proportion of (i) the amount of
such LC Lender's required repayment to (ii) the total amount so
recovered) of any interest or other amount paid or payable by
such Issuing Bank in respect of the total amount so recovered.
SECTION 3.05 Letter of Credit Fees.
(a) Facility Fee. The Borrower hereby agrees to pay to each
LC Lender (in accordance with its LC Commitment Percentage) a
letter of credit facility fee equal to 0.08% per annum on the
total amount of LC Commitments (regardless of the actual or
deemed usage thereof) payable quarterly in arrears on the last
day of each January, April, July and October and on the
LC Termination Date.
(b) Issuing Bank Fees. The Borrower hereby agrees to
pay to the Issuing Bank the fees and charges referred to in that
certain letter agreement, dated as of the date hereof, among the
Borrower, the Issuing Bank and the Agent.
SECTION 3.06 Indemnification; Nature of the
Issuing Bank's Duties. (a) The Borrower agrees to indemnify and
save harmless the Agent, the Issuing Bank and each Lender from
and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) which the Agent, such Issuing Bank or such
Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the Issuance of any Letter of Credit or (ii) any
action or proceeding relating to a court order, injunction, or
other process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under any Letter of Credit;
provided, that, the Issuing Bank shall not be indemnified for any
of the foregoing caused by its gross negligence or willful
misconduct.
(b) The obligations of the Borrower and each
LC Subsidiary hereunder with respect to Letters of Credit shall
be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms hereof under all circumstances,
including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit or this Agreement or any agreement or
instrument relating thereto;
(ii) the existence of any claim, setoff, defense
or other right which the Borrower or any LC Subsidiary
may have at any time against the beneficiary, or any
transferee, of any Letter of Credit, or the Issuing
Bank, any Lender, or any other Person;
(iii) any draft, certificate, or other document
presented under any 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) any lack of validity, effectiveness, or
sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part;
(v) any loss or delay in the transmission or
otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds
thereof;
(vi) any exchange, release or non-perfection of
any collateral, or any release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any
of the obligations of the Borrower or an LC Subsidiary
in respect of the Letters of Credit;
(vii) any change in the time, manner or place of
payment of, or in any other terms of, all or any of the
obligations of the Borrower or any LC Subsidiary in
respect of the Letters of Credit or any other amendment
or waiver of or any consent to departure from all or
any of this Agreement;
(viii) any failure of the beneficiary of a Letter
of Credit to strictly comply with the conditions
required in order to draw upon any Letter of Credit;
(ix) any misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or
(x) any other circumstance or happening
whatsoever, whether or not similar to the foregoing;
provided, that, notwithstanding the foregoing, the Issuing Bank
shall not be relieved of any liability it may otherwise have as a
result of its gross negligence or willful misconduct.
SECTION 3.07 Increased Costs. (a) Change in
Law. If, at any time after the date of this Agreement, any
change in any law or regulation or in the interpretation thereof
by any court or administrative or governmental authority charged
with the administration thereof shall either (i) impose, modify
or deem applicable any reserve, special deposit or similar
requirement against letters of credit or guarantees issued by, or
assets held by or deposits in or for the account of, the Issuing
Bank or any LC Lender or (ii) impose on the Issuing Bank or any
LC Lender any other condition regarding this Agreement or the
Letters of Credit or any collateral thereon, and the result of
any event referred to in clause (i) or (ii) above shall be to
increase the cost to the Issuing Bank or such LC Lender of
issuing or maintaining, funding or purchasing participations in
the Letters of Credit, then, upon demand by the Issuing Bank or
such LC Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of the Issuing
Bank or such LC Lender, from time to time as specified by the
Issuing Bank or such LC Lender, additional amounts sufficient to
compensate the Issuing Bank or such LC Lender for such increased
cost; provided, that, the Borrower shall have no obligation to
reimburse the Issuing Bank or any LC Lender for increased costs
incurred more than 60 days prior to the date of such demand. A
certificate as to the amount of such increased cost setting forth
the basis for the calculation of such increased costs, submitted
by the Issuing Bank or an LC Lender to the Borrower, shall be
conclusive and binding for all purposes, absent manifest error.
(b) Capital. If, at any time after the date of this
Agreement, the Issuing Bank or LC Lender determines that
compliance with any law or regulation or any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the amount
of capital required or expected to be maintained by the Issuing
Bank or such LC Lender or any corporation controlling Issuing
Bank or such LC Lender and that the amount of such capital is
increased by or based upon the existence of the Issuing Bank's or
LC Lender's commitment hereunder and other commitments of this
type or the issuance of (or commitment to purchase of
participations in) the Letters of Credit (or similar contingent
obligations), then, upon demand by the Issuing Bank or such
LC Lender (with a copy of such demand to the Agent), the Borrower
shall pay to the Agent for the account of the Issuing Bank or
such LC Lender, from time to time as specified by the Issuing
Bank or such LC Lender, additional amounts sufficient to
compensate the Issuing Bank or such LC Lender or such corporation
in the light of such circumstances, to the extent that the
Issuing Bank or such LC Lender reasonably determines such
increase in capital to be allocable to the existence of the
Issuing Bank's or such LC Lender's commitment hereunder;
provided, that, the Borrower shall have no obligation to pay such
compensatory amounts that relate to an actual increase in the
capital of the Issuing Bank or such LC Lender undertaken by the
Issuing Bank or such LC Lender more than 60 days prior to the
date of such demand. A certificate as to such amounts setting
forth the basis for the calculation of such amount submitted to
the Borrower and the Agent by the Issuing Bank or an LC Lender
shall be conclusive and binding for all purposes, absent manifest
error.
(c) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 3.07 shall
survive the payment in full (after the LC Termination Date) of
all Obligations.
(d) Without affecting its rights under
Sections 3.07(a) or 3.07(b) or any other provision of this
Agreement, the Issuing Bank and each LC Lender agrees that if
there is any increase in any cost to or reduction in any amount
receivable by such Issuing Bank or LC Lender with respect to
which the Borrower would be obligated to compensate such
LC Lender pursuant to Sections 3.07(a) or 3.07(b), such Issuing
Bank or LC Lender shall use reasonable efforts to select an
alternative issuing office or Applicable Lending Office, as the
case may be, which would not result in any such increase in any
cost to or reduction in any amount receivable by the Issuing Bank
or such LC Lender; provided, however, that the Issuing Bank and
each LC Lender shall not be obligated to select an alternative
issuing office or Applicable Lending Office if the Issuing Bank
or such LC Lender determines that (i) as a result of such
selection the Issuing Bank or such LC Lender would be in
violation of any applicable law, regulation, treaty, or
guideline, or would incur additional costs or expenses or
(ii) such selection would be inadvisable for regulatory reasons
or inconsistent with the interests of the Issuing Bank or such
LC Lender.
SECTION 3.08 Uniform Customs and Practice. The
Uniform Customs and Practice for Documentary Credits as most
recently published by the International Chamber of Commerce
("UCP") shall in all respects be deemed a part of this Article
III as if incorporated herein and shall apply to the Letters of
Credit.
SECTION 3.09 Reduction of LC Commitments. The
Borrower shall have the right, upon at least three Business Days'
notice to the Issuing Bank and the Agent, to irrevocably
terminate in whole or in part the Issuing Bank's commitment to
issue Letters of Credit as specified in Section 3.01 (which
reduction shall without further act reduce in whole or ratably in
part the respective LC Commitments of the LC Lenders), provided,
that, each partial reduction shall be in the aggregate amount of
$25,000,000 or an integral multiple of $1,000,000 in excess
thereof and no such reduction shall reduce the LC Commitments
below the then outstanding amount of Letter of Credit Liability.
SECTION 3.10 Existing Letters of Credit. The
Issuing Bank currently has outstanding documentary and trade
letters of credit opened for the account of the Borrower and
certain of the LC Subsidiaries (the "Existing Letters of Credit")
each of which is listed on Schedule IV. From and after the date
hereof and upon fulfillment of the conditions to initial Issuance
specified in Section 5.01 hereof, each such Existing Letter of
Credit shall be deemed and treated for all purposes hereof
(including, without limitation, the calculation of fees payable
under Section 3.05, and calculating the usage of the Issuing
Bank's commitment under Section 3.01) as a "Letter of Credit"
hereunder, the participation interest of each LC Lender, without
further action on its part, in such Existing Letters of Credit
shall be deemed extinguished in full and each LC Lender, without
further act on its part, shall be deemed to have purchased a
participation in each such Existing Letter of Credit as provided
in Section 3.04 hereof in accordance with its LC Commitment
Percentage.
SECTION 3.11 Extension of LC Termination Date.
At least 30 but not more than 45 days prior to the LC Termination
Date, the Borrower, by written notice to the Agent, may request
that the LC Termination Date be extended for a period of 364 days
from its then current scheduled expiration. The Agent shall
promptly notify the Issuing Bank and each LC Lender of such
request, and the Issuing Bank and each LC Lender shall in turn,
within, but not earlier than, 30 days prior to such LC
Termination Date, notify the Borrower and the Agent in writing
regarding whether the Issuing Bank or such LC Lender (as the case
may be) will consent to such extension. If, and only if, all
LC Lenders and the Issuing Bank consent in writing to such
extension prior to the tenth Business Day preceding such LC
Termination Date, the LC Termination Date shall be so extended
for such 364-day period and references herein to the
"LC Termination Date" shall refer to such "LC Termination Date"
as so extended. If the Issuing Bank or any LC Lender shall fail
to deliver such notice to the Borrower and the Agent as provided
above, the Issuing Bank or such Lender shall be deemed not to
have consented to such requested extension and the Issuing Bank's
and all LC Lenders' LC Commitments shall terminate on the
scheduled LC Termination Date. It is understood that neither the
Issuing Bank nor any LC Lender shall have any obligation
whatsoever to agree to any request made by the Borrower for an
extension of the LC Termination Date.
SECTION 3.12 Currency Provisions.
(a) Equivalents.
For purposes of the provisions of this Article III, (i) the
equivalent in Dollars of any Alternative Currency shall be
determined by using the mean of the bid and offer quoted spot
rates at which the Issuing Bank's principal office in New York,
New York offers to exchange Dollars for such Alternative Currency
in New York, New York at 11:00 A.M. (New York City time) on the
Business Day on which such equivalent is to be determined and
(ii) the equivalent in any Alternative Currency of Dollars shall
be determined by using the mean of the bid and offer quoted spot
rates at which the Issuing Bank's principal office in New York,
New York offers to exchange such Alternative Currency for Dollars
in New York, New York at 11:00 A.M. (New York City time) on the
Business Day on which such equivalent is to be determined.
(b) Issuing Bank's Commitment/LC Commitments. For
purposes of determining the unused portion of the Issuing Bank's
commitment specified in Section 3.01(a) and of each LC Lender's
Commitment, the equivalent in Dollars of each Letter of Credit
issued by the Issuing Bank in an Alternative Currency as
determined on the date of the Issuance of such Letter of Credit
shall be the amount of the Issuing Bank's commitment used in
connection with the Issuance of such Letter of Credit and the
resulting proportionate amount of each LC Lender's LC Commitment
used, such reduction to be calculated in accordance with its
LC Commitment Percentage. Further adjustments shall be made with
respect to the unused portion of the Issuing Bank's commitment to
Issue Letters of Credit and each such LC Lender's LC Commitment
based upon fluctuations thereafter in the value of the
Alternative Currency of such Letter of Credit as provided in
subsection (c) below.
(c) Mark to Market. If, on any day, the equivalent in
Dollars of the aggregate face amount of all Letters of Credit
then outstanding (less the aggregate amount of cash collateral
held by the Issuing Bank with respect to outstanding Letters of
Credit) exceeds the total of the LC Commitments, the Borrower
shall immediately pay to the Issuing Bank, in Dollars, (i) the
Dollar amount of such excess plus (ii) a Dollar amount equal to
the lesser of (A) $1,000,000 and (B) 10% of the Dollar equivalent
of all then existing Letter of Credit Liability relating to
Letters of Credit denominated in Alternative Currencies, which
amount shall be held by the Issuing Bank as cash collateral for
its obligations with respect to outstanding Letters of Credit.
Concurrently with such payment, the Borrower shall enter into a
cash collateral agreement with the Issuing Bank in form and
substance satisfactory to the Issuing Bank. Amounts on deposit
with the Issuing Bank as cash collateral shall be invested in
Cash Equivalents as directed by the Borrower and shall be
released at the earlier of the date on which the aggregate of all
Letter of Credit Liability does not exceed $495,000,000 or on the
LC Termination Date.
(d) Monthly Report. The Issuing Bank, on the last
Business Day of each month until the LC Termination Date, shall
calculate the Letter of Credit Liability on such date (converting
any amounts of the Letter of Credit Liability which are
denominated in an Alternative Currency to Dollars for purposes of
such calculation), and shall promptly send notice of (i) such
Letter of Credit Liability and (ii) the Dollar amount of any
excess of Letter Credit Liability over total LC Commitments to
the Borrower and to each LC Lender, and the Borrower shall
promptly upon receipt thereof make the payments provided for in
subsection (c) above if applicable.
SECTION 3.13 Subsidiary Guaranty.
(a) Generally. The Issuing Bank may, from time to time, Issue
Letters of Credit for the account of each LC Subsidiary provided,
that, the reimbursement and other obligations of each such
LC Subsidiary are and remain unconditionally guaranteed by the
Borrower pursuant to this Section 3.13.
(b) Guaranty. The Borrower hereby unconditionally
guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the
LC Subsidiaries now or hereafter existing under this Agreement
with respect to Letters of Credit issued for the account of any
of the LC Subsidiaries, including any extensions, modifications,
substitutions, amendments and renewals thereof, whether for
reimbursement obligations, interest, fees, expenses or otherwise
(such obligations being the "Subsidiary Obligations"), and agrees
to pay any and all expenses (including counsel fees and expenses)
incurred by the Issuing Bank or the LC Lenders in enforcing any
rights hereunder with respect to the Subsidiary Obligations.
Without limiting the generality of the foregoing, the Borrower's
liability shall extend to all amounts which constitute part of
the Subsidiary Obligations and would be owed by any LC Subsidiary
to the Issuing Bank or the LC Lenders hereunder, or under the
Letters of Credit issued for the account of an LC Subsidiary, but
for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar
proceeding involving such LC Subsidiary.
(c) Guaranty Absolute. The Borrower guarantees that
the Subsidiary Obligations will be paid strictly in accordance
with the terms hereof regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of
such terms or the rights of the Issuing Bank or the LC Lenders
with respect thereto. The obligations of the Borrower hereunder
are independent of the Subsidiary Obligations and a separate
action or actions may be brought and prosecuted against the
Borrower to enforce the guaranty contained in this Section 3.13,
irrespective of whether any action is brought against any
LC Subsidiary or whether any LC Subsidiary is joined in any such
action or actions. The liability of the Borrower under the
guaranty contained in this Section 3.13 shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of
any of the Subsidiary Obligations or any agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Subsidiary Obligations, or any other amendment or
waiver of or any consent to departure herefrom with
respect to Letters of Credit issued for the account of
an LC Subsidiary including, without limitation, any
increase in the Subsidiary Obligations resulting from
the Issuance of Letters of Credit beyond the aggregate
limitation specified in Section 3.01(a) to any and all
LC Subsidiaries or otherwise;
(iii) any taking, exchange, release or
non-perfection of any collateral, or any taking,
release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of
the Subsidiary Obligations;
(iv) any manner of application of collateral,
or proceeds thereof, to all or any of the Subsidiary
Obligations, or any manner of sale or other disposition
of any collateral for all or any of the Subsidiary
Obligations or any other assets of an LC Subsidiary;
(v) any change, restructuring or termination
of the corporate structure or existence of an
LC Subsidiary; or
(vi) any other circumstance which might
otherwise constitute a defense available to, or a
discharge of, a third party guarantor.
The guaranty provided in this Section 3.13 shall continue to be
effective or be reinstated, as the case may be, if at any time
any payment of any of the Subsidiary Obligations is rescinded or
must otherwise be returned by the Issuing Bank or any LC Lender
upon the insolvency, bankruptcy or reorganization of an
LC Subsidiary or otherwise, all as though such payment had not
been made.
(d) Waivers. The Borrower hereby waives, to the
extent permitted by applicable law:
(i) any requirement that the Issuing Bank or any
LC Lender secure or insure any security interest or
lien or any property subject thereto or exhaust any
right or take any action against any LC Subsidiary or
any other Person or any collateral;
(ii) any defense arising by reason of any claim or
defense based upon an election of remedies by the
Issuing Bank or any LC Lender (including, without
limitation, an election to nonjudicially foreclose on
any real or personal property collateral) which in any
manner impairs, reduces, releases or otherwise
adversely affects its subrogation, reimbursement or
contribution rights or other rights to proceed against
any LC Subsidiary or any other Person or any
collateral;
(iii) any defense arising by reason of the
failure of any LC Subsidiary to properly execute any
letter of credit application and agreement or otherwise
comply with applicable legal formalities;
(iv) any defense or benefits that may be derived
from California Civil Code sections 2808, 2809, 2810, 2819,
2845 or 2850, or California Code of Civil Procedure
sections 580a, 580d or 726, or comparable provisions of the
laws of any other jurisdiction and all other suretyship
defenses it would otherwise have under the laws of
California or any other jurisdiction;
(v) any duty on the part of the Issuing Bank or
any LC Lender to disclose to the Borrower any matter,
fact or thing relating to the business, operation or
condition of any LC Subsidiary and its respective
assets now known or hereafter known by the Issuing Bank
or any LC Lender;
(vi) all benefits of any statute of limitations
affecting the Borrower's liability under or the
enforcement of the guaranty provided in this
Section 3.13 or any of the Subsidiary Obligations or
any collateral;
(vii) all setoffs and counterclaims;
(viii) promptness, diligence, presentment, demand
for performance and protest;
(ix) notice of nonperformance, default,
acceleration, protest or dishonor;
(x) except for any notice otherwise required by
applicable laws that may not be effectively waived by
the Borrower, notice of sale or other disposition of
any collateral; and
(xi) notice of acceptance of the guaranty provided
in this Section 3.13 and of the existence, creation or
incurring of new or additional Subsidiary Obligations.
SECTION 3.14 Dollar Payment Obligation.
Notwithstanding any other term or provision hereof to the
contrary, if the Borrower or any LC Subsidiary fails to reimburse
the Issuing Bank for any payment made by the Issuing Bank under a
Letter of Credit denominated in an Alternative Currency by the
close of business on the Business Day when due at the Payment
Office specified for such reimbursement payment, then the payment
made by such Issuing Bank in such Alternative Currency shall be
converted into Dollars (the "Dollar Payment Amount") by the
Issuing Bank as provided for herein, and each of the Borrower and
each LC Subsidiary for whose account such Letter of Credit was
Issued agrees that it shall be unconditionally obligated to, and
shall immediately, reimburse the Issuing Bank the Dollar Payment
Amount at the Issuing Bank's then Payment Office for Dollars.
SECTION 3.15 Applications. This Agreement shall
control over any provision of any application and agreement for
Letters of Credit to the contrary, but additive or supplemental
provisions of any such application and agreement shall apply to
each Letter of Credit Issued pursuant to such application and
agreement.
SECTION 3.16 LC Subsidiaries. Any Subsidiary of
the Borrower not an LC Subsidiary on the date hereof may become
an "LC Subsidiary" hereunder by delivering to the Issuing Bank
(which shall promptly forward a copy thereof to each LC Lender
and the Agent) an agreement, in form and substance satisfactory
to the Issuing Bank, wherein such Subsidiary agrees to be bound
by all terms and provisions of this Agreement relating to Letters
of Credit to be issued for the account of such Subsidiary and
delivers a written consent of the Borrower assenting to the
inclusion of such Subsidiary as an "LC Subsidiary" hereunder.
Unless objected to by the Majority LC Lenders within the 10 day
period referred to below, such Subsidiary shall become an
"LC Subsidiary" hereunder 10 days after the Issuing Bank notifies
the Borrower that such agreement and consent are in form and
substance satisfactory to it; provided, that, no Subsidiary shall
become an "LC Subsidiary" until the Issuing Bank shall have
notified the Borrower in writing that such agreement and consent
are in form and substance satisfactory to the Issuing Bank.
ARTICLE IV
PAYMENTS, TAXES, EXTENSIONS, ETC.
SECTION 4.01 Payments and
Computations/Borrowings.
(a) The Borrower shall make each payment hereunder with respect
to Article II, the A Advances, the A Lenders, the B Advances and
the Agent free and clear of all claims, charges, offsets or
deductions whatsoever not later than 12:00 noon (New York City
time) on the day when due in U.S. dollars to the Agent (unless
otherwise specified in Section 2.03 with respect to the B
Advances) at its address referred to in Section 10.02 in same day
funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or
interest or facility or commitment fees ratably (other than
amounts payable pursuant to Section 2.03, 2.08, 2.12 or 4.02) to
the A Lenders for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any
other amount payable to such A Lender to be distributed to the
appropriate A Lender or A Lenders and applied in accordance with
the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 10.07(d),
from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder in
respect of the interest assigned thereby to the A Lender assignee
thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) The Borrower and each LC Subsidiary hereby
authorize the Agent and each A Lender if and to the extent
payment owed to the Agent or such A Lender is not paid when due
hereunder to charge from time to time against any or all of the
Borrower's or such LC Subsidiary's accounts with the Agent or
such A Lender any amount so due.
(c) All computations of interest based on the Base
Rate and of facility fees shall be made by the Agent on the basis
of a year of 365 or 366 days, as the case may be, and all
computations of interest relating to commitment fees, fixed rates
of interest on B Advances or based on the Adjusted CD Rate, the
Eurodollar Rate or the Federal Funds Rate shall be made by the
Agent, and all computations of interest pursuant to Section 2.08
shall be made by an A Lender, on the basis of a year of 360 days,
in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which
such interest or commitment fees are payable. Each determination
by the Agent (or, in the case of Section 2.08, by an A Lender) of
an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(d) Whenever any payment hereunder shall be stated to
be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment
of interest or facility or commitment fee, as the case may be;
provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made
in the next following calendar month, such payment shall be made
on the next preceding Business Day.
(e) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
A Lender or A 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
such A Lender or A Lenders on such due date an amount equal to
the amount then due such A Lender or A Lenders. If and to the
extent that the Borrower shall not have so made such payment in
full to the Agent, each such A Lender shall repay to the Agent
forthwith on demand such amount distributed to such A Lender
together with interest thereon, for each day from the date such
amount is distributed to such A Lender until the date such
A Lender repays such amount to the Agent, at the Federal Funds
Rate.
SECTION 4.02 Taxes/Borrowings. (a) Any and all
payments by the Borrower hereunder shall be made free and clear
of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each
A Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws
of which such A Lender or the Agent (as the case may be) is
organized or any political subdivision thereof and, in the case
of each A Lender, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction of such A Lender's
Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
to any A Lender or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 4.02) such A Lender 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 and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) The Borrower will reimburse each A Lender and the
Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 4.02) paid by
such A Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This reimbursement shall be
made within 30 days from the date such A Lender or the Agent (as
the case may be) makes written demand therefor. The Agent and
each A Lender, as the case may be, shall give prompt (within 10
Business Days) notice to the Borrower of the payment by the Agent
or such A Lender, as the case may be, of such Taxes or Other
Taxes, and of the assertion by any governmental or taxing
authority that such Taxes or Other Taxes are due and payable, but
the failure to give such notice shall not affect the Borrower's
obligations hereunder to reimburse the Agent and each A Lender
for such Taxes or Other Taxes, except that the Borrower shall not
be liable for penalties or interest accrued or incurred after
such 10 Business Day period until such time as it receives the
notice contemplated above, after which time it shall be liable
for interest and penalties accrued or incurred prior to or during
such 10 Business Day period and accrued or incurred after such
receipt. The Borrower shall not be liable for any penalties,
interest, expense or other liability with respect to such Taxes
or Other Taxes after it has reimbursed the amount thereof to the
Agent or the appropriate A Lender, as the case may be.
(d) Each A 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 Bank and on the date of the Assignment and Acceptance
pursuant to which it becomes an A Lender in the case of each
other A Lender, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such A Lender
remains lawfully able to do so), shall provide the Borrower with
Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service,
certifying that such A Lender is entitled to benefits under an
income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest 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. If the form provided by an A Lender at the
time such A Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess
of zero, withholding tax at such rate shall be considered
excluded from "Taxes" as defined in Section 4.02(a).
(e) For any period with respect to which an
A Lender has failed to provide the Borrower with the appropriate
form described in Section 4.02(d) (other than if such failure is
due to a change in law occurring subsequent to the date on which
a form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection
(d) above), such A Lender shall not be entitled to
indemnification under Section 4.02(a) with respect to Taxes
imposed by the United States; provided, however, that should an
A Lender become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such
steps as the A Lender shall reasonably request to assist the
A Lender to recover such Taxes.
(f) Notwithstanding any contrary provisions of
this Agreement, in the event that an A Lender that originally
provided such form as may be required under Section 4.02(d)
thereafter ceases to qualify for complete exemption from United
States withholding tax, such A Lender may assign its interest
under this Agreement to any assignee and such assignee shall be
entitled to the same benefits under this Section 4.02 as the
assignor provided, that, the rate of United States withholding
tax applicable to such assignee shall not exceed the rate then
applicable to the assignor.
(g) Without affecting its rights under this
Section 4.02 or any provision of this Agreement, each A Lender
agrees that if any Taxes or Other Taxes are imposed and required
by law to be paid or to be withheld from any amount payable to
any A Lender or its Applicable Lending Office with respect to
which the Borrower would be obligated pursuant to this Section
4.02 to increase any amounts payable to such A Lender or to pay
any such Taxes or Other Taxes, such A Lender shall use reasonable
efforts to select an alternative Applicable Lending Office which
would not result in the imposition of such Taxes or Other Taxes;
provided, however, that no A Lender shall be obligated to select
an alternative Applicable Lending Office if such A Lender
determines that (i) as a result of such selection such A Lender
would be in violation of an applicable law, regulation, or
treaty, or would incur additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or
inconsistent with the interests of such A Lender.
(h) Each A Lender agrees with the Borrower that it
will take all reasonable actions by all usual means (i) to secure
and maintain all benefits available to it under the provisions of
any applicable double tax treaty concluded by the United States
of America to which it may be entitled by reason of the location
of such A Lender's Applicable Lending Office or place of
incorporation or its status as an enterprise of any jurisdiction
having any such applicable double tax treaty, if such benefit
would reduce the amount payable by the Borrower in accordance
with this Section 4.02 and (ii) otherwise to cooperate with the
Borrower to minimize the amount payable by the Borrower pursuant
to this Section 4.02; provided, however, that no A Lender shall
be obliged to disclose to the Borrower any information regarding
its tax affairs or tax computations nor to reorder its tax
affairs or tax planning pursuant hereto.
(i) Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 4.02 shall
survive the payment in full of the Obligations.
SECTION 4.03 Sharing of Payments,
Etc./Borrowings. If any A Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the A Advances made
by it (other than pursuant to Section 2.08, 2.12 or 4.02) in
excess of its ratable share of payments on account of the
A Advances obtained by all the A Lenders, such A Lender shall
forthwith purchase from the other A Lenders such participations
in the A Advances made by them as shall be necessary to cause
such purchasing A Lender to share the excess payment ratably with
each of them, provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing
A Lender, such purchase from each A Lender shall be rescinded and
such A Lender shall repay to the purchasing A Lender the purchase
price to the extent of such recovery together with an amount
equal to such A Lender's ratable share (according to the
proportion of (i) the amount of such A Lender's required
repayment to (ii) the total amount so recovered from the
purchasing A Lender) of any interest or other amount paid or
payable by the purchasing A Lender in respect of the total amount
so recovered. The Borrower agrees that any A Lender so
purchasing a participation from another Lender pursuant to this
Section 4.03 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such
A Lender were the direct creditor of the Borrower in the amount
of such participation.
SECTION 4.04 Evidence of Debt/Borrowings.
(a) Each A Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of
the Borrower to such A Lender resulting from each Advance owing
to such A Lender from time to time, including the amounts of
principal and interest payable and paid to such A Lender from
time to time hereunder.
(b) The Register maintained by the Agent pursuant to
Section 10.07(c) shall include a control account, and a
subsidiary account for each A Lender, in which accounts (taken
together) shall be recorded (i) the date and amount of each
A Borrowing made hereunder, the Type of Advances comprising such
A Borrowing and the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted
by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each
A Lender hereunder, and (iv) the amount of any sum received by
the Agent from the Borrower hereunder and each A Lender's share
thereof.
(c) The entries made in the Register shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 4.05 Payments and Computations/Letters
of Credit. (a) The Borrower and each LC Subsidiary, as the case
may be, shall make each payment with respect to the Letters of
Credit, the Issuing Bank or the LC Lenders to be made by it free
and clear of all claims, charges, offsets or deductions
whatsoever not later than (i) if such payment relates to facility
or commitment fees or amounts (other than reimbursements for
payments in an Alternative Currency made under Letters of Credit)
or if such payment relates to a Letter of Credit denominated in
Dollars, 12:00 noon (New York City time) on the day when due in
Dollars to the Issuing Bank at its address referred to in Section
10.02 in same day funds and (ii) if such payment relates to
reimbursement of a Letter of Credit denominated in an Alternative
Currency, (A) in such Alternative Currency, at the Issuing Bank's
Payment Office therefor so long as such payment is made by the
close of business on the Business Day when due and (B) thereafter
in Dollars (at the then Dollar equivalent of the amount due on
such preceding Business Day), by 12:00 noon (New York City time)
to the Issuing Bank at its address referred to in Section 10.02
in same day funds as provided in Section 3.14 above. The Issuing
Bank will promptly thereafter (if amounts are owed to the
LC Lenders by the terms hereof) cause to be distributed like
funds relating to the payment of reimbursement obligations or
facility or commitment fees ratably (other than amounts payable
pursuant to Section 3.03(a), 3.07, or 4.06) to the LC Lenders for
the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to
the Issuing Bank or to such LC Lender to be distributed to the
appropriate LC Lender or LC Lenders and applied in accordance
with the terms of this Agreement. Upon the Agent's acceptance of
an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 10.07(d),
from and after the effective date specified in such Assignment
and Acceptance, the Issuing Bank shall make all payments
hereunder in respect of the interest assigned thereby to the
LC Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly
between themselves.
(b) The Borrower and each LC Subsidiary hereby
authorize each LC Lender and the Issuing Bank, if and to the
extent payment owed to such LC Lender or the Issuing Bank
(including the immediate repayments of participations purchased
and funded by an LC Lender pursuant to Section 3.04) is not paid
when due hereunder to charge from time to time against any or all
of the Borrower's or such LC Subsidiary's accounts with such
LC Lender or Issuing Bank any amount so due.
(c) All computations of interest based on the
Base Rate and of facility and commitment fees shall be made by
the Issuing Bank on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the
Federal Funds Rate shall be made by the Issuing Bank on the basis
of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in
the period for which such interest, facility or commitment fees
are payable. Each determination by the Issuing Bank of an
interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the
computation of payment of interest or facility or commitment fee,
as the case may be.
(e) Unless the Issuing Bank shall have received
notice from the Borrower prior to the date on which any payment
is due to the Issuing Bank or LC Lenders hereunder that the
Borrower will not make such payment in full, the Issuing Bank may
assume that the Borrower has made such payment in full to the
Issuing Bank on such date and the Issuing Bank may, in reliance
upon such assumption, cause to be distributed to such LC Lender
or LC Lenders on such due date an amount equal to the amount then
due such LC Lender or LC Lenders. If and to the extent that the
Borrower shall not have so made such payment in full to the
Issuing Bank, each such LC Lender shall repay to the Issuing Bank
forthwith on demand such amount distributed to such LC Lender
together with interest thereon, for each day from the date such
amount is distributed to such LC Lender until the date such
LC Lender repays such amount to the Issuing Bank, at the Federal
Funds Rate.
SECTION 4.06 Taxes/Letters of Credit. (a) Any
and all payments by the Borrower and each LC Subsidiary hereunder
with respect to the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of
each LC Lender and the Issuing Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the
laws of which such LC Lender or the Issuing Bank (as the case may
be) is organized or any political subdivision thereof and, in the
case of each LC Lender, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower or any
LC Subsidiary shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to any LC Lender or
the Issuing Bank, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this Section 4.06) such LC Lender or the Issuing Bank (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 and (iii) the Borrower or the
appropriate LC Subsidiary shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or
the Letters of Credit (hereinafter referred to as "Other Taxes").
(c) The Borrower will reimburse each LC Lender and the
Issuing Bank for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 4.06)
paid by such LC Lender or the Issuing Bank (as the case may be)
and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
reimbursement shall be made within 30 days from the date such
LC Lender or the Issuing Bank (as the case may be) makes written
demand therefor. The Issuing Bank and each LC Lender, as the
case may be, shall give prompt (within 10 Business Days) notice
to the Borrower of the payment by the Issuing Bank or such
LC Lender, as the case may be, of such Taxes or other Taxes, and
of the assertion by any governmental or taxing authority that
such Taxes or other Taxes are due and payable, but the failure to
give such notice shall not affect the Borrower's obligations
hereunder to reimburse the Issuing Bank and each LC Lender for
such Taxes or other Taxes, except that the Borrower shall not be
liable for penalties or interest accrued or incurred after such
10 Business Day period until such time as it receives the notice
contemplated above, after which time it shall be liable for
interest and penalties accrued or incurred prior to or during
such 10 Business Day period and accrued or incurred after such
receipt. The Borrower shall not be liable for any penalties,
interest, expense or other liability with respect to such Taxes
or Other Taxes after it has reimbursed the amount thereof to the
Issuing Bank or the appropriate LC Lender.
(d) Each LC 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 Bank and on the date of the Assignment and Acceptance
pursuant to which it becomes an LC Lender in the case of each
other LC Lender, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such LC Lender
remains lawfully able to do so), shall provide the Borrower with
Internal Revenue Service Form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service,
certifying that such LC Lender is entitled to benefits under an
income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest 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. If the form provided by a LC Lender at the
time such LC Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess
of zero, withholding tax at such rate shall be considered
excluded from "Taxes" as defined in Section 4.06(a).
(e) For any period with respect to which an LC Lender
has failed to provide the Borrower with the appropriate form
described in Section 4.06(d) (other than if such failure is due
to a change in law occurring subsequent to the date on which a
form originally was required to be provided, or if such form
otherwise is not required under the first sentence of subsection
(d) above), such LC Lender shall not be entitled to
indemnification under Section 4.06(a) with respect to Taxes
imposed by the United States; provided, however, that should an
LC Lender become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such
steps as the LC Lender shall reasonably request to assist the
LC Lender to recover such Taxes.
(f) Notwithstanding any contrary provisions of this
Agreement, in the event that an LC Lender that originally
provided such form as may be required under Section 4.06(d)
thereafter ceases to qualify for complete exemption from United
States withholding tax, such LC Lender may assign its interest
under this Agreement to any assignee and such assignee shall be
entitled to the same benefits under this Section 4.06 as the
assignor provided that the rate of United States withholding tax
applicable to such assignee shall not exceed the rate then
applicable to the assignor.
(g) Without affecting its rights under this
Section 4.06 or any other provision of this Agreement, the
Issuing Bank and each LC Lender agrees that if any Taxes or Other
Taxes are imposed and required by law to be paid or to be
withheld from any amount payable to the Issuing Bank or any
LC Lender or its Applicable Lending Office with respect to which
the Borrower would be obligated pursuant to this Section 4.06 to
increase any amounts payable to the Issuing Bank or such
LC Lender or to pay any such Taxes or Other Taxes, the Issuing
Bank or such LC Lender shall use reasonable efforts to select an
alternative issuing office or Applicable Lending Office, as the
case may be, which would not result in the imposition of such
Taxes or Other Taxes; provided, however, that the Issuing Bank
and each LC Lender shall not be obligated to select an
alternative issuing office or Applicable Lending Office, as the
case may be, if the Issuing Bank or such LC Lender determines
that (i) as a result of such selection the Issuing Bank or such
LC Lender would be in violation of an applicable law, regulation,
or treaty, or would incur additional costs or expenses or
(ii) such selection would be inadvisable for regulatory reasons
or inconsistent with the interests of such LC Lender.
(h) Each LC Lender agrees with the Borrower that it
will take all reasonable actions by all usual means (i) to secure
and maintain the benefit of all benefits available to it under
the provisions of any applicable double tax treaty concluded by
the United States of America to which it may be entitled by
reason of the location of such LC Lender's Applicable Lending
Office or place of incorporation or its status as an enterprise
of any jurisdiction having any such applicable double tax treaty,
if such benefit would reduce the amount payable by the Borrower
or an LC Subsidiary in accordance with this Section 4.07 and
(ii) otherwise to cooperate with the Borrower to minimize the
amount payable by the Borrower or any LC Subsidiary pursuant to
this Section 4.07; provided, however, that no LC Lender shall be
obliged to disclose to the Borrower or any LC Subsidiary any
information regarding its tax affairs or tax computations nor to
reorder its tax affairs or tax planning pursuant hereto.
(i) Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 4.06 shall
survive the payment in full of the Obligations.
SECTION 4.07 Sharing of Payments, Etc./Letters
of Credit. If any LC Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any Letter of Credit
Liability of the Borrower or any LC Subsidiary hereunder (other
than pursuant to Section 3.07 or 4.06) in excess of its
LC Commitment Percentage of any such payments on account of such
Letter of Credit Liability obtained by all the LC Lenders, such
LC Lender shall forthwith purchase from the other LC Lenders such
participations in such LC Lender's participations purchased
pursuant to Section 3.04 as shall be necessary to cause such
purchasing LC Lender to share the excess payment ratably with
each other LC Lender, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing LC Lender such purchase from each LC Lender shall be
rescinded and each such LC Lender shall repay to the purchasing
LC Lender the purchase price to the extent of such recovery
together with an amount equal to each such LC Lender's ratable
share (according to the proportion of (i) the amount of such
LC Lender's required repayment to (ii) the total amount so
recovered from the purchasing LC Lender) of any interest or other
amount paid or payable by the purchasing LC Lender in respect of
the total amount so recovered. The Borrower and each
LC Subsidiary agrees that any LC Lender so purchasing a
sub-participation from another LC Lender pursuant to this
Section 4.07 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of
set-off) with respect to such sub-participation as fully as if
such LC Lender were the direct creditor of the Borrower or each
LC Subsidiary in the amount of such participation.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01 Condition Precedent to Initial
Advances/Issuance. The obligation of each A Lender to make its
initial Advance and of the Issuing Bank to issue the initial
Letter of Credit is subject to the condition precedent that the
Issuing Bank shall have received on or before the day of the
initial Borrowing (and initial Issuance) the following, in form
and substance satisfactory to the Agent and in sufficient copies
for each Lender:
(a) Certified copies of all documents evidencing
necessary corporate action and governmental approvals, if
any, with respect to this Agreement.
(b) A certificate of the Vice President-Treasurer of
the Borrower certifying the names and true signatures of the
officers of the Borrower and each LC Subsidiary authorized
to sign this Agreement and the other documents to be
delivered hereunder (including, without limitation, Letter
of Credit applications and agreements).
(c) A favorable opinion of Borrower's and the
LC Subsidiaries' General Counsel or Associate General
Counsel, substantially in the form of Exhibit C hereto, and
as to such other matters as any Lender through the Agent may
reasonably request.
(d) A favorable opinion of Shearman & Sterling,
counsel for the Agent, substantially in the form of
Exhibit D hereto.
SECTION 5.02 Conditions Precedent to Each
A Borrowing/Issuance. The obligation of each A Lender to make an
A Advance on the occasion of each A Borrowing (including the
initial A Borrowing) and the obligation of the Issuing Bank to
Issue each Letter of Credit (including the initial Letter of
Credit) shall be subject to the further conditions precedent that
on the date of such A Borrowing or Issuance (i) the following
statements shall be true (and each of the giving of the
applicable Notice of A Borrowing and the acceptance by the
Borrower of the proceeds of such A Borrowing and the request for
Issuance by the Borrower or an LC Subsidiary shall constitute a
representation and warranty by the Borrower or such LC Subsidiary
that on the date of such A Borrowing or Issuance such statements
are true):
(a) The representations and warranties contained
in Section 6.01 are correct on and as of the date of such
A Borrowing or Issuance, before and after giving effect to
such A Borrowing or Issuance, and to the application of the
proceeds therefrom, as though made on and as of such date,
and
(b) No event has occurred and is continuing,
or would result from such A Borrowing or from the
application of the proceeds therefrom or Issuance, which
constitutes an Event of Default or Default;
and (ii) the Agent shall have received such other approvals,
opinions or documents as the Agent may reasonably request.
SECTION 5.03 Conditions Precedent to Each
B Borrowing. The obligation of each A Lender which is to make a
B Advance on the occasion of a B Borrowing (including the initial
B Borrowing) to make such B Advance as part of such B Borrowing
is subject to the conditions precedent that (i) the Agent shall
have received the written confirmatory Notice of B Borrowing with
respect thereto or the notices from the Borrower contemplated by
the second sentence of Section 2.03(a)(v) and (ii) on the date of
such B Borrowing the following statements shall be true (and each
of the giving of the applicable Notice of B Borrowing and the
acceptance by the Borrower of the proceeds of such B Borrowing
shall constitute a representation and warranty by the Borrower
that on the date of such B Borrowing such statements are true):
(a) The representations and warranties contained
in Section 6.01 are correct on and as of the date of such
B Borrowing, before and after giving effect to such
B Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date,
(b) No event has occurred and is continuing, or
would result from such B Borrowing or from the application
of the proceeds therefrom, which constitutes an Event of
Default or Default, and
(c) No event has occurred and no circumstance exists
as a result of which the information concerning the Borrower
that has been provided to the Agent and each A Lender by the
Borrower in connection herewith would, taken as a whole,
include an untrue statement of a material fact or omit to
state any material fact or any fact necessary to make the
statements contained therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of
the Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of
Delaware; each LC Subsidiary is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Borrower and
each of its Subsidiaries possess all corporate powers and
all other authorizations and licenses necessary to engage in
their respective businesses, except where the failure to so
possess would not have a Material Adverse Effect.
(b) The execution, delivery and performance by the
Borrower and each LC Subsidiary of this Agreement are within
the Borrower's and such LC Subsidiary's respective corporate
powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Borrower's or any
LC Subsidiary's charter or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower
or any LC Subsidiary or their respective properties.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Borrower or each
LC Subsidiary of this Agreement.
(d) This Agreement is the legal, valid and binding
obligation of the Borrower and each LC Subsidiary
enforceable against the Borrower and each LC Subsidiary in
accordance with its terms.
(e) The Consolidated balance sheets of the Borrower
and its Subsidiaries as at January 28, 1995, and the related
Consolidated statements of income and retained earnings of
the Borrower and its Subsidiaries for the Fiscal Year then
ended, certified by Deloitte & Touche, and the Consolidated
balance sheets of the Borrower and its Subsidiaries at
April 29, 1995, and the related Consolidated statements of
income and retained earnings of the Borrower and its
Subsidiaries for the three months then ended, duly certified
by a Responsible Officer of the Borrower, copies of which
have been furnished to each Lender, fairly present (subject
to year-end adjustment in the case of the April 29, 1995
financial statements) the Consolidated financial condition
of the Borrower and its Subsidiaries as at such dates and
the results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles
consistently applied, and since January 28, 1995, there has
been no change in such condition or operations which,
considering the surrounding circumstances, will, or is
reasonably likely to, cause a breach of any of the financial
covenants contained in Section 7.03 hereof.
(f) There is no pending or, to the best of Borrower's
knowledge, threatened action or proceeding affecting the
Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which has a reasonable
probability (taking into account the exhaustion of all
appeals and the assertion of all defenses) of having a
Material Adverse Effect or which purports to affect the
legality, validity or enforceability of this Agreement.
(g) The Borrower and its Subsidiaries are not engaged
in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no proceeds of any
Advance will be used by the Borrower or any of its
Subsidiaries to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
(h) Neither the Borrower nor any of its Subsidiaries
is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(i) Except as has been disclosed in writing to the
Lenders, neither the Borrower nor any of its Subsidiaries
has any Plans. Neither the Borrower nor any ERISA Affiliate
is a party or subject to, or has any obligation to make
payments, to, any Multiemployer Plan.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01 Affirmative Covenants. The
Borrower will, unless the Majority Combined Lenders shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply, in all material respects with
all applicable laws (including, without limitation, all
Environmental Liens), rules, regulations and orders, such
compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property
except to the extent contested in good faith or where the
failure to comply would not have a Material Adverse Effect.
(b) Preservation of Corporate Existence, Etc.
Preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its corporate existence, rights
(charter and statutory), and franchises except if, in the
reasonable business judgment of the Borrower or such
Subsidiary, as the case may be, it is in its best economic
interest not to preserve and maintain such rights or
franchises and such failure to preserve and maintain such
rights or franchises would not materially adversely affect
the rights of the Lenders or the Issuing Bank hereunder or
the ability of the Borrower to perform its obligations
hereunder.
(c) Visitation Rights. Permit the Agent, the Issuing
Bank and any Lender or any agents or representatives thereof
from time to time during normal business hours to examine
and make copies of and abstracts from the records and books
of account of, and upon reasonable prior notice to visit the
properties of, the Borrower and its Subsidiaries during
reasonable business hours, without hindrance or delay, and
to discuss the affairs, finances and accounts of the
Borrower and its Subsidiaries with any of their respective
directors, officers or agents.
(d) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in
which full and correct entries shall be made of all
financial transactions and the assets and business of the
Borrower and each of its Subsidiaries in accordance with
sound business practice.
(e) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its Subsidiaries to maintain and
preserve, all of its properties which are used or useful in
the conduct of its business in good working order and
condition, ordinary wear and tear excepted, consistent with
sound business practice, except where the failure to so
maintain and preserve would not have a Material Adverse
Effect.
(f) Maintenance of Insurance. Maintain, and cause
each of its Subsidiaries to maintain, insurance (other than
earthquake insurance) in amounts, from responsible and
reputable insurance companies or associations, with
limitations, of types and on terms as is customary for the
industry; provided, that, the Borrower and each of its
Subsidiaries may self-insure risks and liabilities in
accordance with its practice as of the date hereof and may
in addition self-insure risks and liabilities in amounts as
are customarily self-insured by similarly situated Persons
in the industry.
(g) Employment of Technology, Disposal of Hazardous
Materials, Etc. (i) Employ, and cause each of its
Subsidiaries to employ, appropriate technology and
compliance procedures to maintain compliance with any
applicable Environmental Laws except where the failure to so
employ would not have a Material Adverse Effect, (ii) obtain
and maintain, and cause each of its Subsidiaries to obtain
and maintain, any and all material permits required by
applicable Environmental Laws in connection with its or its
Subsidiaries' operations and (iii) dispose of, and cause
each of its Subsidiaries to dispose of, any and all
Hazardous Substances only at facilities and with carriers
reasonably believed to possess valid permits under RCRA, if
applicable, and any applicable state and local Environmental
Laws except where the failure to so dispose would not have a
Material Adverse Effect. The Borrower shall use its best
efforts, and cause each of its Subsidiaries to use its best
efforts, to obtain all certificates required by law to be
obtained by the Borrower and its Subsidiaries from all
contractors employed by the Borrower or any of its
Subsidiaries in connection with the transport or disposal of
any Hazardous Substances except where failure to transport
or dispose in accordance with any applicable Environmental
Laws would not have a Material Adverse Effect.
(h) Environmental Matters. If the Borrower or any of
its Subsidiaries shall:
(i) receive written notice that any material
violation of any Environmental Laws may have been
committed or is about to be committed by the Borrower
or any of its Subsidiaries the cure of which would
result in expenditures exceeding $1,000,000;
(ii) receive written notice that any
administrative or judicial complaint or order has been
filed or is about to be filed against the Borrower or
any of its Subsidiaries alleging any material violation
of any Environmental Laws or requiring the Borrower or
any of its Subsidiaries to take any action (which, if
taken, would result in expenditures exceeding
$1,000,000) in connection with the release or
threatened release of Hazardous Substances or solid
waste into the environment; or
(iii) receive written notice from a
federal, state, foreign or local governmental agency or
private party alleging that the Borrower or any of its
Subsidiaries is liable or responsible for costs in
excess of $1,000,000 associated with the response to
cleanup, stabilization or neutralization of any
Environmental Activity;
then it shall provide the Agent with a copy of such notice
within five Business Days of the Borrower's or such
Subsidiary's receipt thereof.
(i) Guaranty. Within ten Business Days after the
request of the Majority Combined Lenders made through the
Agent, cause its Subsidiaries designated in such request to
enter into and deliver a guaranty of the Obligations, such
guaranty to be in form and substance satisfactory to the
Majority Combined Lenders.
SECTION 7.02 Negative Covenants. The Borrower
will not, without the written consent of the Majority Combined
Lenders:
(a) Liens, Etc. Create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any
Lien, other than Permitted Liens and Liens upon or with
respect to Margin Stock.
(b) Debt. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Debt if,
immediately after giving effect to the incurrence of such
Debt and the receipt and application of any proceeds
thereof, the Borrower and its Subsidiaries, on a
Consolidated basis, would be in violation of any financial
covenant specified in Section 7.03 hereof.
(c) Mergers, Etc. Merge or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the
Borrower may merge or consolidate with or into, or dispose
of assets to, any other Subsidiary of the Borrower and
except that any Subsidiary of the Borrower may merge into or
dispose of assets to the Borrower and the Borrower may merge
or consolidate with or into, and any Subsidiary of the
Borrower may merge or consolidate with or into, any other
Person, provided in each case that, immediately after giving
effect to such proposed transaction, no Event of Default or
Default shall exist, and in the case of any merger or
consolidation to which the Borrower is a party, the Person
into which the Borrower shall be merged or formed by any
such consolidation shall be a corporation organized and
existing under the laws of the United States of America or
any State thereof and shall assume the Borrower's
obligations hereunder in an agreement or instrument in form
and substance reasonably satisfactory to the Agent.
(d) Asset Acquisition, Investments, Mergers.
(i) Asset Acquisitions. Purchase, or permit any of its
Subsidiaries to purchase, all or substantially all the
assets of any Person (an "Asset Acquisition") unless (A) if
such Asset Acquisition involves the purchase of Retail
Assets, the purchase price of the Retail Assets to be
purchased in such Asset Acquisition is less than 50% of the
book value of the Borrower's Consolidated Total Assets
immediately prior to such Asset Acquisition or (B) if such
Asset Acquisition involves the purchase of Non-Retail
Assets, the purchase price of the Non-Retail Assets to be
purchased in such Asset Acquisition is less than 25% of the
book value of the Borrower's Consolidated Total Assets
immediately prior to such Asset Acquisition and (C)
immediately prior to and after giving effect to such Asset
Acquisition no Event of Default or Default shall exist.
(ii) Investments. Make, or permit any of its
Subsidiaries to make, an investment in any Person by
way of the purchase of such Person's capital stock or
securities or the making of capital contributions with
respect thereto (an "Investment") unless (A) if such
Investment is in a Person predominantly engaged in the
Retail Business, the purchase price and dollar amount
of capital contributions made with respect to such
Investment is less than 50% of the Borrower's
Consolidated Total Assets immediately prior to such
Investment or (B) if such Investment is in a Person
engaged predominantly in the Non-Retail Business, the
purchase price and dollar amount of capital
contributions made with respect to such Investment is
less than 25% of the Borrower's Consolidated Total
Assets immediately prior to such Investment and (C)
such Investment is made with the permission of the
Board of Directors of the Person in whom the Investment
is being made and immediately prior to and after giving
effect to such Investment no Event of Default or
Default shall exist. The foregoing limitation shall
not restrict the Borrower's and its Subsidiaries'
ability to make investments in the instruments
described in Schedule VI hereto; provided, that, the
term of any such instrument or investment shall not
exceed five calendar years on the date of investment.
(iii) Mergers. Consummate, or permit the
consummation of, any merger or consolidation
(regardless of whether it is otherwise permitted by
Section 7.02(c)) if immediately after giving effect to
such merger or consolidation the book value of
Consolidated Non-Retail Assets of the surviving
corporation is greater than 25% of the book value of
Borrower's Consolidated Total Assets, or the book value
of the Consolidated Retail Assets of the surviving
corporation is greater than 50% of the Borrower's
Consolidated Total Assets, in each case immediately
prior to such merger or consolidation provided, that,
Subsidiaries of the Borrower may merge into or with the
Borrower or any other Subsidiary of the Borrower
without regard to the restrictions of this
Section 7.02(d)(iii).
(e) Change in Nature of Business. Make any material
change in the nature of the business of the Borrower and its
Subsidiaries as conducted as of the date hereof.
SECTION 7.03 Financial Covenants. The Borrower
will not, without the written consent of the Majority Combined
Lenders:
(a) Tangible Net Worth. Permit, at any time, the
Borrower's Consolidated Tangible Net Worth to be less than
$300,000,000.
(b) Debt to Capital Ratio. Permit, at any time, the
Borrower's Consolidated Debt to Capital Ratio to exceed .78
to 1.0.
(c) Current Ratio. Permit, as at the end of each
Fiscal Quarter of the Borrower, the Borrower's Consolidated
Current Ratio to be less than 1.25 to 1.0.
(d) Fixed Charge Coverage Ratio. Permit, for each
period of four consecutive Fiscal Quarters of the Borrower,
the Borrower's Consolidated Fixed Charge Coverage Ratio for
such four Fiscal Quarter period to be less than 1.5 to 1.0,
such Consolidated Fixed Charge Coverage Ratio to be
calculated as at the end of each Fiscal Quarter of the
Borrower for the four Fiscal Quarter period ending on such
day.
SECTION 7.04 Reporting Requirements. The
Borrower will furnish to the Lenders:
(i) within 30 days after the end of each of the first
three Fiscal Quarter of the Borrower and within 45 days
after the end of the fourth Fiscal Quarter of the Borrower,
a certificate of the chief financial officer or treasurer of
the Borrower setting forth the Consolidated Fixed Charge
Coverage Ratio of the Borrower at as the end of such Fiscal
Quarter for the four Fiscal Quarter period ending on such
day;
(ii) as soon as available and in any event within 60
days after the end of each of the first three Fiscal
Quarters of the Borrower, Consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal
Quarters and Consolidated statements of income and retained
earnings of the Borrower and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, certified by the chief
financial officer or treasurer of the Borrower and
accompanied by a certificate of said officer stating
(i) that such have been prepared in accordance with
generally accepted accounting principles, (ii) whether or
not he or she has knowledge of the occurrence of any Event
of Default or Default and, if so, stating in reasonable
detail the facts with respect thereto and (iii) whether or
not the Borrower is in compliance with the requirements set
forth in Section 7.03 (which certificate shall contain the
computations used by such chief financial officer in
determining such compliance or non-compliance);
(iii) as soon as available and in any event within
120 days after the end of each Fiscal Year of the Borrower,
a copy of the annual report for such year for the Borrower
and its Subsidiaries, containing Consolidated financial
statements of the Borrower and its Subsidiaries for such
Fiscal Year certified in a manner acceptable to the Majority
Combined Lenders by Deloitte & Touche or other independent
public accountants reasonably acceptable to the Majority
Combined Lenders;
(iv) within 120 days after the end of each Fiscal Year
of the Borrower, a certificate of the chief financial
officer or treasurer of the Borrower stating (i) whether or
not he or she has knowledge of the occurrence of any Event
of Default or Default and, if so, stating in reasonable
detail the facts with respect thereto, and (ii) whether or
not the Borrower is in compliance with the requirements set
forth in Section 7.03 (which certificate shall contain the
computations used by such chief financial officer in
determining such compliance or non-compliance);
(v) as soon as possible and in any event within five
days after a Responsible Officer becomes aware of each Event
of Default and Default, a statement of a Responsible Officer
of the Borrower setting forth details of such Event of
Default or Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(vi) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to any of its
security holders, and copies of all reports and registration
statements which the Borrower or any Subsidiary files with
the Securities and Exchange Commission or any national
securities exchange;
(vii) promptly after the filing or receiving
thereof, copies of all reports and notices which the
Borrower or any Subsidiary files under ERISA with the
Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the
Borrower or any Subsidiary receives from such entities other
than immaterial regular periodic notices and reports and
notices and reports of general circulation;
(viii) within 90 days after the end of each Fiscal
Year of the Borrower, a summary, prepared by a Responsible
Officer of the Borrower, of the Borrower's (and its
Subsidiaries') major insurance coverages (and the amount of
self-insurance) then in effect; and
(ix) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any
of its Subsidiaries as the Issuing Bank, or any Lender
through the Agent, may from time to time reasonably request.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01 Events of Default. If any of the
following events ("Events of Default") shall occur and be
continuing:
(a) The Borrower or any LC Subsidiary shall fail to
pay any principal of any Advance or any reimbursement
obligation under any Letter of Credit when the same becomes
due and payable; or shall fail to pay any interest on any
Advance, fees or any other amounts hereunder within two days
after the same become due and payable by it; or
(b) Any representation or warranty made by the
Borrower herein (whether made on behalf of itself, an
LC Subsidiary or otherwise) or by the Borrower (or any of
its officers) in connection with this Agreement shall prove
to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe
(i) the covenant contained in Section 7.03(c) or (d); or
(ii) shall have permitted, as at the end of any Fiscal
Quarter of the Borrower, the Borrower's Consolidated Debt to
Capital Ratio to exceed .78 to 1.0 or the Borrower's
Consolidated Tangible Net Worth to be less than
$300,000,000; or (iii) any term, covenant or agreement
contained in Section 7.03(a) or (b) or Section 7.02(c) or
(d) for a period of five days after written notice thereof
shall have been given to the Borrower by the Issuing Bank,
the Agent or any Lender; or (iv) any other term, covenant or
agreement contained in this Agreement on its part to be
performed or observed if the failure to perform or observe
such other term, covenant or agreement shall remain
unremedied for 30 days after written notice thereof shall
have been given to the Borrower by the Issuing Bank, the
Agent or any Lender; or
(d) The Borrower or any of its Subsidiaries shall fail
to pay any principal of or premium or interest on any Debt
which is outstanding in a principal amount of at least
$10,000,000 in the aggregate (but excluding Debt hereunder)
of the Borrower or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration
of, the maturity of such Debt (other than any such Debt owed
to a Lender or an Affiliate of a Lender if such event or
condition shall relate solely to a restriction on the pledge
or other disposition of Margin Stock owned by the Borrower
or any of its Subsidiaries); or any such Debt shall be
declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to
be made, in each case prior to the stated maturity thereof;
or
(e) The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted
by or against the Borrower or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall
occur; or the Borrower or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set
forth above in this subsection (e); or
(f) Any judgment or order for the payment of
money in excess of $10,000,000 shall be rendered against the
Borrower or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be
any period of ten consecutive days during which a stay of
enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(g) a Change in Control shall have occurred;
then, and in any such event, the Agent shall at the request,
or may with the consent, of the Majority Combined Lenders,
by notice to the Borrower, (A) declare the obligation of
each A Lender to make Advances to be terminated, whereupon
the same shall forthwith terminate, (B), declare the
Advances, all interest thereon and all other amounts payable
under this Agreement to be forthwith due and payable,
whereupon the Advances, all such interest and all such
amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by the
Borrower, (C) declare the obligation of the Issuing Bank to
issue further Letters of Credit to be terminated, whereupon
the same shall forthwith terminate, and/or (D) demand that
the Borrower, and if such demand is made the Borrower shall,
pay to the Agent for the benefit of the Issuing Bank, an
amount in immediately available funds equal to the then
outstanding Letter of Credit Liability (plus the amounts
specified by Section 3.12, if applicable) which shall be
held by the Agent (or the Issuing Bank) as cash collateral
in a cash collateral account under the exclusive control and
dominion of the Agent (or Issuing Bank) and applied to the
reduction of such Letter of Credit Liability as drawings are
made on outstanding Letters of Credit; provided, however,
that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower or any of its
Subsidiaries under the Federal Bankruptcy Code, the
obligation of each Lender to make Advances shall
automatically be terminated, the then outstanding Advances,
all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower and the obligation of the
Issuing Bank to Issue Letters of Credit shall automatically
be terminated.
ARTICLE IX
THE AGENT
SECTION 9.01 Authorization and Action. Each
Lender and the Issuing Bank hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or
collection of the Advances), the Agent shall not be required to
exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the
Majority Combined Lenders, and such instructions shall be binding
upon all Lenders; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable
law. The Agent agrees to give to each Lender prompt notice of
each notice given to it by the Borrower pursuant to the terms of
this Agreement unless the distribution of such notice is
otherwise provided for herein.
The Issuing Bank shall act on behalf of the LC Lenders
with respect to any Letters of Credit Issued by it and the
documents associated therewith until such time and except for so
long as the Agent may elect to act for such Issuing Bank with
respect thereto; provided, however, that the Issuing Bank shall
have all of the benefits and immunities (i) provided to the Agent
in this Article IX with respect to any acts taken or omissions
suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application
and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Agent", as used in this
Article IX, included the Issuing Bank with respect to such acts
or omissions, and (ii) as additionally provided in this Agreement
with respect to the Issuing Bank.
SECTION 9.02 Agent's Reliance, Etc. Neither the
Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i)
may treat the Lender which made any Advance (or purchased or
funded a participation with respect to a Letter of Credit) as the
holder and owner of the Debt resulting therefrom until the Agent
receives and accepts an Assignment and Acceptance entered into by
such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 10.07; (ii) may consult with legal counsel
(including 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 in good faith
by it in accordance with the advice of such counsel, accountants
or experts; (iii) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (iv) shall
not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to
inspect the property (including the books and records) of the
Borrower or its Subsidiaries; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument
or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 9.03 CUSA, Citibank and Affiliates.
With respect to CUSA's A Commitment, its LC Commitment and the
Advances made by it, and with respect to Citibank as Issuing
Bank, CUSA and Citibank shall have the same rights and powers
under this Agreement as any other Lender and may exercise the
same as though it were not the Agent or Issuing Bank, as the case
may be; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include CUSA and Citibank in their
individual capacities. CUSA, Citibank and each of their
respective Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower, any of its Subsidiaries and
any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if CUSA were not the
Agent or Citibank were not the Issuing Bank, as the case may be,
and without any duty to account therefor to the Lenders.
SECTION 9.04 Lender Credit Decision. Each
Lender acknowledges that it has, independently and without
reliance upon the Agent, the Issuing Bank or any other Lender and
based on the financial statements referred to in Section 6.01 and
such other 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 the Agent, the Issuing
Bank 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 action
under this Agreement.
SECTION 9.05 Indemnification. (a) Agent. The
Lenders agree to indemnify the Agent (to the extent not
reimbursed by the Borrower or any LC Subsidiary), ratably,
according to their respective Credit Exposures, from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by
the Agent under this Agreement, provided, that, no Lender shall
be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with
the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent is not reimbursed for such expenses
by the Borrower.
(b) Issuing Bank. The LC Lenders agree to indemnify
the Issuing Bank (to the extent not reimbursed by the Borrower or
any LC Subsidiary), ratably according to their respective
LC Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or
asserted against the Issuing Bank in any way relating to or
arising out of this Agreement and the Letters of Credit or any
action taken or omitted by the Issuing Bank under this Agreement
or the Letters of Credit, provided, that, no LC Lender shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence
or wilful misconduct. Without limitation of the foregoing, each
LC Lender agrees to reimburse the Issuing Bank promptly upon
demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Issuing Bank in
connection with the preparation, execution, administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement or
the Letters of Credit, to the extent that the Issuing Bank is not
reimbursed for such expenses by the Borrower.
SECTION 9.06 Successor Agent/Issuing Bank
(a) Agent. The Agent may resign at any time by giving ten days'
prior written notice thereof to the Lenders and the Borrower and
may be removed at any time with or without cause by the Majority
Combined Lenders; provided, that, the Agent may resign without
having given such notice if it is required to do so as a matter
of law. Upon any such resignation or removal, the Majority
Combined Lenders, after consulting with the Borrower and giving
due consideration to any successor agent recommended by the
Borrower, shall have the right to appoint a successor Agent with
the consent of the Borrower (which shall not be unreasonably
withheld). If no successor Agent shall have been so appointed by
the Majority Combined Lenders and consented to by the Borrower,
and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the
Majority Combined Lenders' removal of the retiring Agent, then
the retiring Agent may, after consulting with the Borrower and
giving due consideration to any successor agent recommended by
the Borrower, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized or licensed to
do business under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.
(b) Issuing Bank. The Issuing Bank may be
removed at any time with or without cause jointly by the Majority
Combined Lenders and the Borrower. Upon any removal of the
Issuing Bank, the Majority Combined Lenders and the Borrower
shall jointly have the right to appoint a successor Issuing Bank.
If no successor Issuing Bank shall have been so appointed by the
Majority Combined Lenders and the Borrower, and shall have
accepted such appointment, within 30 days after the removal of
the Issuing Bank, the Issuing Bank may, on behalf of the Lenders
appoint a successor Issuing Bank, which shall be a commercial
bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as
Issuing Bank, such successor Issuing Bank shall thereupon succeed
to and become vested with all the rights, powers, privileges and
duties of the retiring Issuing Bank, and the Issuing Bank shall
be discharged from its duties and obligations under this
Agreement. After any retiring Issuing Bank is removed hereunder
as Issuing Bank, the provisions of this Article IX shall inure to
its benefit as to any actions taken by it while it was Issuing
Bank under this Agreement. Notwithstanding the foregoing, the
Issuing Bank may not be removed unless prior to or
contemporaneously with such removal it shall have received a
Dollar amount, in immediately available funds, equal to all
outstanding Letter of Credit Liability then outstanding and then
owing to the Issuing Bank and shall have been indemnified by the
Borrower, the LC Lenders and such successor Issuing Bank, to the
Issuing Bank's satisfaction, against all Letter of Credit
Liability. The fee letter referred to in Section 3.05(b) (or any
replacement thereof) shall continue to inure to such Issuing
Bank's benefit, and such Issuing Bank shall continue to be bound
thereby, until such time as all Letter of Credit Liability
outstanding on the effective date of such Issuing Bank's removal
has been discharged in full.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendments, Etc. (a) Majority
Combined Lenders. Except as is otherwise expressly provided in
this Section 10.01, no amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Combined Lenders.
(b) Majority A Lenders. The Majority A Lenders may
(and shall have the exclusive right to), in writing, amend, waive
or consent to any departure from Article II hereof (and the
definitions used therein) and Article IV hereof as it relates to
the A Advances, without the consent of the Majority Combined
Lenders; provided, however, that no amendment, waiver or consent
(whether effected by the Majority A Lenders pursuant to this
subsection (b) or by the Majority Combined Lenders pursuant to
subsection (a)) shall, unless in writing and signed by all the
A Lenders, do any of the following: (i) waive any of the
conditions specified in Section 5.01 or 5.02 as they relate to
A Borrowings and A Advances, (ii) increase the A Commitments of
the A Lenders or subject the A Lenders to any additional
obligations, (iii) reduce the principal of, or interest on, the
A Advances or any fees or other amounts payable hereunder to the
A Lenders, (iv) postpone any date fixed for any payment of
principal of, or interest on, the A Advances or any fees or other
amounts payable hereunder to the A Lenders, (v) change the
percentage of the A Commitments or of the aggregate unpaid
principal amount of the A Advances, or the number of A Lenders,
which shall be required for the A Lenders or any of them to take
any action hereunder or (vi) amend this subsection (b) of this
Section 10.01.
(c) Majority LC Lenders. The Majority LC Lenders may
(and shall have the exclusive right to), in writing, amend, waive
or consent to any departure from Article III hereof (and the
definitions used therein) and Article IV hereof as it relates to
the Letters of Credit, without the consent of the Majority
Combined Lenders; provided, however, that no amendment, waiver or
consent (whether effected by the Majority LC Lenders pursuant to
this subsection (c) or by the Majority Combined Lenders pursuant
to subsection (a)) shall, unless in writing and signed by all the
LC Lenders, do any of the following: (i) waive any of the
conditions specified in Section 5.01 or 5.02, as they relate to
the Issuance of Letters of Credit, (ii) increase the
LC Commitments of the LC Lenders or subject the LC Lenders to any
additional obligations, (iii) reduce any amounts due hereunder or
any fees or other amounts payable hereunder with respect to the
Letters of Credit to the LC Lenders or the Issuing Bank,
(iv) postpone any date fixed for any payment of any fees or other
amounts payable hereunder with respect to the Letters of Credit
to the LC Lenders or the Issuing Bank, (v) change the percentage
of the LC Commitments or of the aggregate unpaid Letter of Credit
Liability hereunder, or the number of LC Lenders, which shall be
required for the LC Lenders or any of them to take any action
hereunder, or (vi) amend this subsection (c) of this
Section 10.01.
(d) Agent and Issuing Bank. No amendment, waiver or
consent given or effected pursuant to this Section 10.01 shall,
unless in writing and signed by the Agent or the Issuing Bank, as
the case may be, in addition to the Lenders required above to
take such action, affect the rights, obligations or duties of the
Agent or the Issuing Bank, as the case may be, under this
Agreement.
(e) Limitation of Scope. All waivers and consents
granted under this Section 10.01 shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10.02 Notices, Etc. All notices and
other communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication)
and mailed, sent by overnight courier, telecopied, telegraphed,
telexed, cabled or delivered, if to the Borrower, at its address
at 900 Cherry Avenue, San Bruno, CA 94066 Attention: Treasurer;
if to any Lender, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; if to the Agent,
at its address at 399 Park Avenue, New York, New York 10043,
Attention: Credit Administration; and if to the Issuing Bank, at
its address at 399 Park Avenue, New York, New York 10043,
Attention: Letter of Credit Administration; with a copy, in the
case of notices to the Agent or the Issuing Bank, to Citicorp
North America, Inc., One Sansome Street, San Francisco,
California 94104, Attention: Carolyn Wendler, or, as to each
party, at such other address or to such other person as shall be
designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed,
be effective three days after being deposited in the mails, when
sent by overnight courier, be effective one day after being sent
by overnight courier, when telecopied or delivered to the
telegraph company, be effective when received or delivered to the
cable company, respectively; and when delivered by hand, be
effective upon delivery except that notices and communications to
the Agent pursuant to Article II or IX and to the Issuing Bank
pursuant to Article III or IX shall not be effective until
received by the Agent or Issuing Bank, as the case may be.
SECTION 10.03 No Waiver; Remedies. No failure on
the part of any Lender, the Issuing Bank or the Agent to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 10.04 Costs and Expenses. (a) The
Borrower agrees to pay on demand all costs and expenses of the
Agent and Issuing Bank incurred in connection with the
preparation, execution, delivery, modification and amendment of
this Agreement, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent and Issuing Bank
with respect thereto and with respect to advising the Agent and
Issuing Bank as to their respective rights and responsibilities
under this Agreement with respect thereto. The Borrower further
agrees to pay on demand all costs and expenses of the Agent, the
Issuing Bank and each Lender (including, without limitation,
reasonable counsel fees and expenses), incurred in connection
with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and the other
documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of their respective rights hereunder.
(b) If any payment of principal of, or Conversion
of, any Adjusted CD Rate Advance or Eurodollar Rate Advance is
made other than on the last day of the Interest Period for such
A Advance, as a result of a payment or Conversion pursuant to
Section 2.09(d), 2.11 or 2.13 or acceleration of the maturity of
the Advances pursuant to Section 8.01 or for any other reason,
the Borrower shall, upon demand by any A Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of
such A Lender any amounts required to compensate such A Lender
for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or Conversion,
including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by any A Lender to fund or maintain such A Advance.
(c) The Borrower agrees to indemnify and hold harmless
each of the Agent, each Lender and the Issuing Bank and each of
their Affiliates and their respective officers, directors,
employees, agents and advisors (each, an "Indemnified Party")
from and against any and all claims, damages, liabilities and
expenses (including, without limitation, fees and disbursements
of counsel), which may be incurred by or asserted against any
Indemnified Party in connection with or arising out of any
investigation, litigation, or proceeding (whether or not such
Indemnified Party is party thereto) related to any acquisition or
proposed acquisition by the Borrower, or by any Subsidiary of the
Borrower, of all or any portion of the stock or substantially all
the assets of any Person or any use or proposed use of the
Advances or Letters of Credit by the Borrower or any
LC Subsidiary, except to the extent such claim, damage, liability
or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In
the event this indemnity is unenforceable as a matter of law as
to a particular matter or consequence referred to herein, it
shall be enforceable to the full extent permitted by law. The
indemnification provisions set forth above shall be in addition
to any liability the Borrower may otherwise have. Without
prejudice to the survival of any other obligation of the Borrower
hereunder, the indemnities and obligations of the Borrower
contained in this Section 10.04 shall survive the payment in full
of all the Obligations.
(d) The Borrower hereby acknowledges that the funding
method by each Lender of its Advances hereunder shall be in the
sole discretion of such Lender. The Borrower agrees that for
purposes of any determination to be made under Sections 2.08,
2.12(a), 2.13 or 10.04(b) of this Agreement each Lender shall be
deemed to have funded its Eurodollar Rate Advances with proceeds
of Dollar deposits in the London interbank market.
SECTION 10.05 Right of Set-off. Upon (i) the
occurrence and during the continuance of any Event of Default and
(ii) the making of the request or the granting of the consent
specified by Section 8.01 to authorize the Agent to declare the
Advances due and payable pursuant to the provisions of Section
8.01 or to demand payment of (or cash collateralization of) all
then outstanding Letter of Credit Liability, each Lender and each
of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the
credit or the account of the Borrower or any LC Subsidiary
against any and all of the obligations of the Borrower or any
LC Subsidiary now or hereafter existing under this Agreement to
such Lender (including, to the fullest extent permitted by law,
obligations indirectly owed to such Lender by virtue of its
purchase of a participation or sub-participation of the Letter of
Credit Liability pursuant to Section 3.04), whether or not such
Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and
application made by such Lender or any of its Affiliates,
provided, that, the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each
Lender and its Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other
rights of set-off) which such Lender and its Affiliates may have.
SECTION 10.06 Binding Effect. This Agreement
shall become effective when it shall have been executed by the
Borrower, each LC Subsidiary to be a party hereto on the date
hereof, the Issuing Bank and the Agent and when the Agent shall
have been notified by each Bank that such Bank has executed it
and thereafter shall be binding upon and inure to the benefit of
the Borrower, each LC Subsidiary, the Issuing Bank, the Agent and
each Lender and their respective successors and assigns, except
that the Borrower and each LC Subsidiary shall not have the right
to assign its respective rights hereunder or any interest herein
without the prior written consent of the Lenders.
SECTION 10.07 Assignments and Participations.
(a) Each Lender may, and if demanded by the Borrower (following
a demand by such Lender pursuant to Section 2.08, 2.12, 3.07,
4.02 or 4.06, or after such Lender has declined to vote in favor
of extension of the Revolver Termination Date or LC Termination
Date, as the case may be, pursuant to Section 2.14 or 3.11, upon
at least 20 Business Days' notice to such Lender and the Agent),
will, assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion, respectively,
of its A Commitment and the A Advances owing to it and/or of its
LC Commitment and participations in Letter of Credit Liability);
provided, however, that (i) each such respective assignment shall
be of a percentage of all rights and obligations under this
Agreement (other than any B Advances) (w) in respect of the
assigning Lender's A Commitment and A Advances and/or (x) in
respect of the assigning Lender's LC Commitment and
participations in Letter of Credit Liability, as the case may be,
that is constant and not varying over time, (ii) the respective
amounts of the rights and obligations (y) under the A Commitment
and A Advances of the assigning a Lender and/or (z) under the LC
Commitment and participations in Letter of Credit Liability of
the assigning lender, as the case may be, being assigned pursuant
to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall
in no event be less than 5% of all such rights and obligations or
less than $5,000,000 (or an integral multiple of $500,000 in
excess thereof), as the case may be, in the case of each of (y)
and/or (z), (iii) each such assignment shall be to an Eligible
Assignee consented to by the Borrower (which shall not
unreasonably withhold its consent); provided, that, the
Borrower's consent need not be obtained if such assignment is
made to an Affiliate of the assigning Lender, (iv) each such
assignment made as a result of a demand by the Borrower pursuant
to this Section 10.07(a) shall be arranged by the Borrower (at
its expense, including, without limitation, payment of the
processing and recordation fee referred to in subclause (vi)
hereof) after consultation with the Agent and shall be either an
assignment of all of the rights and obligations of the assigning
Lender under this Agreement or an assignment of a portion of such
rights and obligations made concurrently with another such
assignment or other such assignments which together cover all of
the rights and obligations of the assigning Lender under this
Agreement, (v) no Lender shall be obligated to make any such
assignment as a result of a demand by the Borrower pursuant to
this Section 10.07(a) unless and until such Lender shall have
received one or more payments from either the Borrower or one or
more Eligible Assignees in an aggregate amount at least equal to
the aggregate outstanding principal amount of the Advances owing
to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts
payable to such Lender under this Agreement, and (vi) the parties
to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment
and Acceptance, together with a processing and recordation fee of
$2,000; provided, that, no such fee shall be payable in
connection with an assignment by an assigning Lender to an
Affiliate of such assigning Lender. Upon such execution,
delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
Without limiting the qualifications set forth in the first
sentence of this Section 10.07(a), but to clarify such sentence,
any Lender having both an A Commitment and an LC Commitment may
assign all or a portion of its rights and obligations relating to
one of these commitments and at the same time assign none, all,
the same portion or a different portion of its rights and
obligations relating to the other commitment, provided that any
assignment of any portion (including all) of a Lender's rights
and obligations relating to its A Commitment shall include an
assignment of the same portion (including all if applicable) of
such Lender's rights and obligations relating to its A Advances
and any assignment of any portion (including all) of a Lender's
rights and obligations relating to its LC Commitment shall
include an assignment of the same portion (including all if
applicable) of such Lender's rights and obligations relating to
participations in Letter of Credit Liability.
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any
LC Subsidiary or the performance or observance by the Borrower or
any LC Subsidiary of any of its obligations under this Agreement
or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements
referred to in Section 6.01 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, the Issuing Bank, such assigning Lender
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 action under this
Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent or
the Issuing Bank to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to
the Agent or the Issuing Bank by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred
to in Section 10.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the
LC Commitment of and A Commitment of, and principal amount of the
A Advances owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that
it is an Eligible Assignee, the Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the
form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(e) Each Lender may assign or participate to one or
more banks or other entities any B Advance held by it without
regard to any of the restrictions placed on assignments elsewhere
in this Section 10.07 or this Agreement; provided, that, any
participation shall be made in accordance with subsection (f)
hereof and provided, further, that any assignee of a B Advance
that is not then a Lender hereunder shall not be entitled to
demand any payments under Section 2.08, 2.12 or 4.02 hereof and
shall have no voting rights or other rights of a Lender hereunder
other than the right to demand and receive interest and principal
payments at the times when due with respect to the B Advance
owned by it.
(f) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights
and obligations under this Agreement (including, without
limitation, all or a portion of its A Commitment and
LC Commitment and the Advances owing to it; provided, however,
that (i) such Lender's obligations under this Agreement
(including, without limitation, its A Commitment to the Borrower
hereunder and LC Commitment) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender
shall remain the owner of any Advance for all purposes of this
Agreement, and (iv) the Borrower, the Issuing Bank, the Agent and
the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Agreement, provided, further, that, to the
extent of any such participation (unless otherwise stated therein
and subject to the preceding proviso), the purchaser of such
participation shall, to the fullest extent permitted by law, have
the same rights and benefits hereunder as it would have if it
were a Lender hereunder; and provided, further, that each such
participation shall be granted pursuant to an agreement providing
that the purchaser thereof shall not have the right to consent or
object to any action by the selling Lender (who shall retain such
right) other than an action which would (i) reduce principal of
or interest on any Advance, any amount due hereunder with respect
to the Letters of Credit or other amounts or fees in which such
purchaser has an interest, (ii) postpone any date fixed for
payment of principal of or interest on any such Advance, such
amounts due with respect to Letters of Credit or other amounts
or such fees, or (iii) extend the LC Termination Date or the
Revolver Termination Date, as the case may be.
(g) Upon written request of the Borrower to an
A Lender, such A Lender shall, to the extent consistent with the
policies of such A Lender, inform the Borrower of the Dollar
amount of any Full Term Participation (as hereinafter defined)
that such A Lender has entered into; provided, however, that no
A Lender shall be obligated to disclose such information if the
disclosure thereof would constitute a violation of law or
regulation or violate any confidentiality agreement to which such
A Lender is subject. For the purposes of this subsection (g),
"Full Term Participation" means a participation by an A Lender to
another Person whereby such other Person has purchased (pursuant
to a participation agreement) all or a portion of such A Lender's
A Commitment from the effective date of such participation
agreement to the Revolver Termination Date.
(h) Notwithstanding anything herein contained to the
contrary, each Lender may assign any of its rights and
obligations under this Agreement to any of its Affiliates without
notice to or consent of the Borrower or the Agent; and each
Lender or any of its Affiliates may assign any of its rights
(including, without limitation, rights to payment of principal
and/or interest hereunder) under this Agreement to any Federal
Reserve Bank without notice to or consent of the Borrower or the
Agent.
SECTION 10.08 Severability of Provisions. Any
provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.09 Independence of Provisions. All
agreements and covenants hereunder shall be given independent
effect such that if a particular action or condition is
prohibited by the terms of any such agreement or covenant, the
fact that such action or condition would be permitted within the
limitations of another agreement or covenant shall not be
construed as allowing such action to be taken or condition to
exist.
SECTION 10.10 Confidentiality. Each Lender, the
Issuing Bank and the Agent agrees that it will not disclose to
any third party any written information marked "Confidential"
provided to it by the Borrower; provided, that, the foregoing
will not (i) restrict the ability of the Agent, the Issuing Bank,
the Lenders and any loan participants from freely exchanging such
information among themselves (and their respective employees,
attorneys, agents and advisors), (ii) restrict the ability to
disclose such information to a prospective Eligible Assignee or
participant, provided, that, such Eligible Assignee or
participant executes a confidentiality agreement with the selling
Lender agreeing to be bound by the terms hereof prior to
disclosure of such information to such Eligible Assignee or
participant or (iii) prohibit the disclosure of such information
to the extent such information (a) becomes publicly available,
(b) becomes available through a Person not a Subsidiary, (c) is
required to be disclosed pursuant to court order, subpoena, other
legal process, regulatory request or otherwise by law or (d) is
disclosed in litigation with the Borrower or any of its
Subsidiaries.
SECTION 10.11 Headings. Article and Section
headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 10.12 Entire Agreement. This Agreement
sets forth the entire agreement of the parties with respect to
its subject matter and, except for the letter agreement referred
to in Sections 2.04(d) and 3.05(b), supersedes all previous
understandings, written or oral, in respect thereof.
SECTION 10.13 Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 10.14 Consent to Jurisdiction. (a) Each
of the parties hereto hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in
the County of New York, The City of New York, in any action or
proceeding arising out of or relating to this Agreement, and each
of the parties hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined
in such New York State court or such Federal court. Each of the
parties hereby irrevocably agrees, to the fullest extent each may
effectively do so, that each will not assert any defense that
such courts do not have subject matter or personal jurisdiction
of such action or proceeding or over any party hereto. Each of
the parties hereby irrevocably consents to the service of copies
of the summons and complaint and any other process which may be
served in any such action or proceeding by certified mail, return
receipt requested, or by delivering of a copy of such process to
such party at its address specified in Section 10.02 or by any
other method permitted by law. Each of the parties hereby agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or by any other manner provided by law.
(b) Nothing in this Section 10.14 shall affect the
right of any of the parties hereto to serve legal process in any
other manner permitted by law or affect the right of any of the
parties to bring any action or proceeding against any of the
parties or their property in the courts of other jurisdictions.
SECTION 10.15 GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, EXCEPT, IN THE CASE OF ARTICLE III, TO
THE EXTENT SUCH LAWS ARE INCONSISTENT WITH THE UCP.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE LC SUBSIDIARIES, THE AGENT, THE LENDERS AND THE
ISSUING BANK HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
ADVANCES OR THE LETTERS OF CREDIT, OR THE ACTIONS OF THE AGENT,
ANY LENDER OR THE ISSUING BANK IN CONNECTION WITH THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
THE BORROWER:
THE GAP, INC.
By
Name:
Title:
THE LC SUBSIDIARIES:
BANANA REPUBLIC, INC.
By
Name:
Title:
GPS (GREAT BRITAIN) LIMITED
By
Name:
Title:
GAP (CANADA) INC.
By
Name:
Title:
GAP INTERNATIONAL SOURCING
LIMITED
By
Name:
Title:
GAP INTERNATIONAL SOURCING PTE.
LTD.
By
Name:
Title:
GAP (JAPAN) K.K.
By
Name:
Title:
THE AGENT:
CITICORP USA INC.
By
Name:
Title:
THE BANKS:
A Commitment CITICORP USA INC.
$ 50,000,000
LC Commitment
$100,000,000
By
Name:
Title:
A Commitment BANK OF AMERICA NATIONAL
$ 35,000,000 TRUST & SAVINGS ASSOCIATION
LC Commitment
$ 85,000,000
By
Name:
Title:
A Commitment NATIONAL WESTMINSTER
$ 20,000,000 BANK PLC
LC Commitment Los Angeles Branch
$ 65,000,000
By
Name:
Title:
Nassau Branch
By
Name:
Title:
A Commitment NATIONSBANK OF TEXAS, N.A.
$ 30,000,000
LC Commitment
$ 35,000,000
By
Name:
Title:
A Commitment THE ROYAL BANK OF CANADA
$ 20,000,000
LC Commitment
$ 30,000,000
By
Name:
Title:
A Commitment BANK OF MONTREAL
$ 10,000,000
LC Commitment
$ 35,000,000
By
Name:
Title:
A Commitment SOCIETE GENERALE
$ 20,000,000
LC Commitment
$ 30,000,000
By
Name:
Title:
A Commitment THE FUJI BANK, LIMITED
$ 15,000,000
LC Commitment
$ 30,000,000
By
Name:
Title:
A Commitment U.S. NATIONAL BANK OF OREGON
$ 15,000,000
LC Commitment
$ 30,000,000
By
Name:
Title:
A Commitment MORGAN GUARANTY TRUST
$ 20,000,000 COMPANY OF NEW YORK
LC Commitment
$ 30,000,000
By
Name:
Title:
A Commitment THE SUMITOMO BANK LIMITED
$ 15,000,000
LC Commitment
$ 30,000,000
By
Name:
Title:
$250,000,000 Total of the A Commitments
$500,000,000 Total of the LC Commitments
THE ISSUING BANK:
CITIBANK, N.A.
By
Name:
Title:
<PAGE>
Schedule I
The Gap, Inc.
Credit Agreement, Dated as of August 1, 1995
Name of Bank Domestic Lending Office CD Lending Office
Eurodollar Lending Office
Citicorp USA, Inc. Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attention: Credit Administration
and
Attention: Carolyn Wendler
Tel: (415) 627-6363
Fax: (415) 433-0307
Bank of America 1850 Gateway Blvd.
NT & SA Concord, CA 94520
Telephone: (510) 675-7132
Fax: (510) 675-7531/7532
Attention: Joyce Drumgoole
National Westminster Bank 175 Water Street
PLC, Los Angeles Branch New York, NY 10038
Telephone: (212) 602-4149
Fax: (212) 602-4118
Attention: Robert Passarello
National Westminster 175 Water Street
Bank PLC, Nassau Branch New York, NY 10038
Tel.: (212) 602-
4149
Fax: (212) 602-
4118
Att'n: Robert
Passarello
NationsBank of Texas, N.A. 444 South Flower Street, Suite
4100
Los Angeles, CA 90071-2901
Telephone: (415) 974-0774
Telephone: (213) 624-3916
Fax: (213) 624-5812
Attention: Brooke Berg
The Royal Bank Grand Cayman
of Canada (North America No. 2) Branch
c/o Portland Branch
1515 S. W. 5th Avenue
Portland, Oregon 97201
Telephone: (503) 224-2282
Fax: (503) 224-0925
Attention: Victoria Hang
Bank of Montreal 115 South LaSalle Street
11th Floor
Chicago, IL 60603
Telephone: (213) 239-0651
Fax: (213) 239-0680
Attention: Ted Anderson
Societe Generale Los Angeles Branch
2029 Century Park East
Suite 2900
Los Angeles, CA 90067
Telephone: (310) 788-7117
Fax: (310) 203-0539
Attention: Tuliuh Wu
The Fuji Bank, Limited San Francisco Agency
601 California Street, Suite 500
San Francisco, CA 94108
Telephone: (415) 362-4740
Fax: (415) 362-4613
Administrative contact: Candi Eng
U.S. National National Corporate Banking Division
Bank of Oregon 555 S.W. Oak Street, Suite 400
Portland, OR 97204
Telephone: (503) 275-5871
Fax: (503) 275-5428
Attention: Janet E. Jordan, Vice President
Morgan Guaranty Trust 60 Wall Street
Company of New York New York, NY 10260
Telephone: (212) 648-6976
Fax: (212) 648-5014 or -5023
Attention: Carl Mehldau
The Sumitomo Los Angeles Branch
Bank Limited 777 South Figueroa Street
Suite 2600
Los Angeles, CA 90017
Telephone: (213) 955-0855
Fax: (213) 623-6832
Attention: Al Galluzzo
<PAGE>
Schedule II
None
<PAGE>
Schedule III
CHANGE OF CONTROL
1. Donald G. Fisher
2. Doris Fisher
3. Millard S. Drexler
4. Any person related by blood or marriage to any of the
foregoing persons and any trust as to which any of such
persons has beneficial ownership of the assets of the
trust.
5. The current executive officers of The Gap, Inc.
<PAGE>
Schedule IV
EXISTING LETTERS OF CREDIT
<PAGE>
Schedule V
LC SUBSIDIARIES
(As of date of this Agreement)
1. Banana Republic, Inc.
2. GPS (Great Britain) Limited
3. Gap (Canada) Inc.
4. Gap International Sourcing Limited
5. Gap International Sourcing Pte. Ltd.
6. Gap (Japan) K.K.
<PAGE>
Schedule VI
PERMITTED INVESTMENTS
1. Obligations issued or guaranteed by the United States
Government.
2. Commercial paper of issuers having a rating of P-1 by
Moodys or A-1 by S&P or a rating of not less than P-2 by
Moodys and A-2 by S&P.
3. Banker's acceptances, certificates of deposit and
eurodollar time deposits (including bank money market
funds) from commercial banks with commercial paper ratings
(or equivalent long-term debt ratings) as specified in 2
above.
4. Tax-exempt securities rated Aaa by Moodys or AAA by S&P or
Aa by Moodys or AA by S&P or A by Moodys or A by S&P.
5. Secured repurchase agreements involving any of the
instruments referred to in 1-4 above and having the
ratings specified in 1-4 above, as applicable, with an
institution or institutions whose commercial paper (or
long term debt rating) satisfies the criteria specified in
2 above.
6. Money market preferred stock (not issued by a thrift,
saving and loans institution or analogous institution)
rated Aaa by Moodys or AAA by S&P.
7. Loan participations purchased from major money center
banks provided the borrower associated with such
participation has a long-term debt rating of P-1 by Moodys
or A-1 by S&P or P-2 by Moodys and A-2 by S&P.
Moodys = Moody's Investors Service, Inc.
S&P = Standard & Poor's Corporation
<TABLE>
THE GAP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net earnings ($000) $ 116,875 $ 93,647 $ 199,402 $ 201,477
Weighted average shares of
common stock outstanding
during the period 144,210,859 145,850,581 144,066,284 145,650,754
Add incremental shares from
assumed exercise of stock
options (primary) 554,758 440,092 517,731 701,118
144,765,617 146,290,673 144,584,015 146,351,872
Primary earnings per share $ .81 $ .64 $ 1.38 $ 1.38
Weighted average shares of
common stock outstanding
during the period 144,210,859 145,850,581 144,066,284 145,650,754
Add incremental shares from
assumed exercise of stock
options (fully-diluted) 678,078 440,870 674,409 721,658
144,888,937 146,291,451 144,740,693 146,372,412
Fully-diluted earnings
per share $ .81 $ .64 $ 1.38 $ 1.38
NOTE: The information provided above is presented in accordance with
Regulation S-K, Item 601(b)(11), while net earnings per share on
the Consolidated Statements of Earnings is presented in accordance
with APB Opinion 15. The information in this exhibit is not required
under APB Opinion 15, as the difference between primary and
fully-diluted earnings per share and earnings per share calculated
on a weighted average shares basis is less than 3%.
</TABLE>
Deloitte &
Touche LLP 2101 Webster Street Telephone: (510) 297-2700
Oakland, California 94612-3027 Facsimile: (510) 835-4888
To the Board of Directors and Stockholders of
The Gap, Inc.:
We have made reviews, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim consolidated financial statements of The Gap, Inc. and subsidiaries
for the thirteen and thirty-nine week periods ended October 28, 1995 and
October 29, 1994, as indicated in our report dated November 8, 1995; because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended October 28, 1995, is
incorporated by reference in Post Effective Amendment No. 1 to Registration
Statement No. 2-72586, Registration Statement No. 2-60029, Registration
Statement No. 33-39089, Registration Statement No. 33-40505, Registration
Statement No. 33-54686, Registration Statement No. 33-54688, Registration
Statement No. 33-54690 and Registration Statement No. 33-56021.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
December 8, 1995
Deloitte Touche
Tohmatsu
International
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> OCT-28-1995
<CASH> 324,182
<SECURITIES> 116,357
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 704,847
<CURRENT-ASSETS> 1,252,110
<PP&E> 1,495,627
<DEPRECIATION> 569,462
<TOTAL-ASSETS> 2,286,770
<CURRENT-LIABILITIES> 652,835
<BONDS> 0
<COMMON> 7,891
0
0
<OTHER-SE> 1,479,784
<TOTAL-LIABILITY-AND-EQUITY> 2,286,770
<SALES> 1,155,929
<TOTAL-REVENUES> 1,155,929
<CGS> 697,879
<TOTAL-COSTS> 266,939
<OTHER-EXPENSES> (2,066)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 193,177
<INCOME-TAX> 76,302
<INCOME-CONTINUING> 116,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,875
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
