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 August 2, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______________ to
______________
Commission File Number 1-7562
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) 427-2000
_______________________
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, 268,114,161 shares as of August 25, 1997
<TABLE>
PART 1 THE GAP, INC. AND SUBSIDIARIES
ITEM 1 CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
($000) August 2, February 1, August 3,
1997 1997 1996
(Unaudited) (See Note 1) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 220,148 $ 485,644 $ 514,213
Short-term investments 37,454 135,632 74,061
Merchandise inventory 791,925 578,765 573,080
Prepaid expenses and other 151,562 129,214 142,549
Total Current Assets 1,201,089 1,329,255 1,303,903
Property and equipment (net) 1,234,384 1,135,720 1,018,729
Long-term investments 5,465 36,138 53,963
Lease rights and other assets 135,811 125,814 82,705
Total Assets $ 2,576,749 $ 2,626,927 $ 2,459,300
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable 90,245 40,050 67,196
Accounts payable 384,464 351,754 313,866
Accrued expenses 264,499 282,494 218,655
Income taxes payable 31,402 91,806 32,877
Deferred lease credits and other current liabilities 11,905 8,792 8,902
Total Current Liabilities 782,515 774,896 641,496
Long-term Liabilities:
Deferred lease credits and other liabilities 234,273 197,561 166,395
234,273 197,561 166,395
Stockholders' Equity:
Common stock $.05 par value
Authorized 500,000,000 shares
Issued 318,561,437, 317,864,090
and 317,312,752 shares
Outstanding 268,045,522, 274,517,331
and 283,396,874 shares 15,929 15,895 15,866
Additional paid-in capital 477,052 442,049 415,135
Retained earnings 2,051,955 1,938,352 1,674,266
Foreign currency translation adjustment (6,490) (5,187) (7,468)
Restricted stock plan deferred compensation (38,068) (47,838) (46,903)
Treasury stock, at cost (940,417) (688,801) (399,487)
1,559,961 1,654,470 1,651,409
Total Liabilities and Stockholders' Equity $ 2,576,749 $ 2,626,927 $ 2,459,300
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE GAP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Thirteen Weeks Ended Twenty-six Weeks Ended
Unaudited August 2, August 3, August 2, August 3,
($000 except per share amounts) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 1,345,221 $ 1,120,335 $ 2,576,407 $ 2,233,489
Costs and expenses
Cost of goods sold and 883,086 720,165 1,672,212 1,419,479
occupancy expenses
Operating expenses 352,462 295,381 664,373 578,008
Net interest income (1,459) (3,956) (6,197) (7,574)
Earnings before income taxes 111,132 108,745 246,019 243,576
Income taxes 41,674 42,955 92,257 96,213
Net earnings $ 69,458 $ 65,790 $ 153,762 $ 147,363
Weighted average number
of shares 269,687,093 286,179,138 271,581,001 287,092,901
Earnings per share $ 0.26 $ 0.23 $ 0.57 $ 0.51
Cash dividends per share $ 0.075 $ 0.075 $ 0.15 $ 0.15
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE GAP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited ($000) Twenty-six Weeks Ended
August 2, 1997 August 3, 1996
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 153,762 $ 147,363
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization (a) 126,540 105,986
Tax benefit from exercise of stock options by
employees and from vesting of restricted stock 12,707 43,526
Change in operating assets and liabilities:
Merchandise inventory (213,821) (90,068)
Prepaid expenses and other (25,251) (14,973)
Accounts payable 36,366 50,131
Accrued expenses (17,525) 24,035
Income taxes payable (60,321) (33,385)
Deferred lease credits and other
long-term liabilities 36,310 17,392
Net cash provided by operating activities 48,767 250,007
Cash Flows from Investing Activities:
Net maturity of short-term investments 137,263 23,463
Purchase of long-term investments (49,188) (31,611)
Sale of long-term investments 40,810 -
Purchase of property and equipment (211,383) (151,033)
Acquisition of lease rights and other assets (10,681) (8,428)
Net cash used for investing activities (93,179) (167,609)
Cash Flows from Financing Activities:
Net increase in notes payable 50,279 44,639
Issuance of common stock 20,782 26,565
Purchase of treasury stock (251,616) (177,427)
Cash dividends paid (40,160) (42,444)
Net cash used for financing activities (220,715) (148,667)
Effect of exchange rate changes on cash (369) 916
Net decrease in cash and equivalents (265,496) (65,353)
Cash and equivalents at beginning of year 485,644 579,566
Cash and equivalents at end of quarter $ 220,148 $ 514,213
See accompanying notes to consolidated financial statements.
(a) Includes amortization of restricted stock.
</TABLE>
THE GAP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheets as of August 2, 1997 and August
3, 1996, and the interim condensed consolidated statements of earnings
and the interim condensed consolidated statements of cash flows for the
thirteen and twenty-six weeks ended August 2, 1997 and August 3, 1996
have been prepared by the Company, without audit. In the opinion of
management, such statements include 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 August 2, 1997 and August 3, 1996, and for all periods presented.
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 February 1, 1997.
The results of operations for the twenty-six weeks ended August 2, 1997
are not necessarily indicative of the operating results that may be
expected for the year ending January 31, 1998.
2. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Year-to-date 1997 and 1996 gross interest payments were $1.7 million and
$1.9 million respectively; income tax payments were $140.8 million and
$85.7 million respectively.
3. DERIVATIVES
The Company enters into foreign exchange contracts to reduce exposure to
foreign currency exchange risk. These contracts are primarily designated
and effective as hedges of commitments to purchase merchandise. The market
value gains and losses on these contracts are deferred and recognized as
part of the underlying cost to purchase the merchandise.
During the second quarter, the Company entered into various put option
contracts to repurchase up to 2,000,000 shares of Gap stock. The contracts
have exercise prices ranging from $36.77 to $42.67, with expiration dates
ranging from September 1997 through November 1997.
Also in the second quarter, the Company entered into interest rate swaps
in order to reduce interest rate risk on a substantial portion of its
intended issuance of its long-term debt. The Company intends to amortize
any gain or loss associated with these swaps over the life of the debt
securities.
4. RECLASSIFICATION OF INVESTMENTS
Prior to July 1997, investments were classified as held to maturity and
were carried at amortized cost. In July 1997 the Company sold short-and
long-term debt securities prior to their maturity. The Company used the
proceeds for general corporate purposes. Consequently, at August 2,
1997, all investments are classified as available for sale and are
reported at fair market value. The gains and losses on investments are
deferred and recorded in equity.
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statements
of Accounting Standards No. 130, Reporting Comprehensive Income, which
requires that an enterprise report, by major components and as a single
total, the change in its net assets during the period from non-owner
sources; and No. 131, Disclosures About Segments of an Enterprise and
Related Information, which establishes annual and interim reporting
standards for an enterprise's operating segments and related disclosures
about its products, services, geographic areas and major customers.
Adoption of these standards will not impact the Company's consolidated
financial position, results of operations or cash flows, and any effect
will be limited to the form and content of its disclosures. Both
statements are effective for fiscal years beginning after December 15,
1997, with earlier application permitted.
Deloitte &
Touche LLP
50 Fremont Street Telephone:(415) 247-4000
San Francisco, California 94105-2230 Facsimile:(415) 247-4329
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
The Gap, Inc.:
We have reviewed the accompanying condensed consolidated balance sheets of
The Gap, Inc. and subsidiaries as of August 2, 1997 and August 3, 1996 and
the related condensed consolidated statements of earnings for the thirteen
and twenty-six week periods ended August 2, 1997 and August 3, 1996 and
condensed consolidated statements of cash flows for the twenty-six week
periods ended August 2, 1997 and August 3, 1996. These financial statements
are the responsibility of the Company's management.
We conducted our reviews 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 consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Gap, Inc. and subsidiaries
as of February 1, 1997, 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 February 27, 1997, 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 February 1, 1997 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it was derived.
/s/ Deloitte & Touche LLP
San Francisco, California
August 12, 1997
THE GAP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information below contains certain forward-looking statements which reflect
the Company's current view with respect to future events and financial
performance. Wherever used, the words "expect," "plan," "anticipate,"
"believe," and similar expressions identify forward-looking statements.
Any such forward-looking statements are subject to risks and uncertainties that
could cause the Company's actual results of operations to differ materially
from historical results or current expectations. Some of these risks include,
without limitation, ongoing competitive pressures in the apparel industry, a
continuation or exacerbation of the current over-capacity problem affecting the
industry, and/or changes in the level of consumer spending or preferences in
apparel, and other factors that may be described in the Company's filings with
the Securities and Exchange Commission. Future economic and industry trends
that could potentially impact revenues and profitability remain difficult to
predict.
The Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that any
projected results expressed or implied therein will not be realized.
<TABLE>
RESULTS OF OPERATIONS
Net Sales
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
August 2, 1997 August 3, 1996 August 2, 1997 August 3, 1996
<S> <C> <C> <C> <C> <C>
Net sales ($000) 1,345,221 1,120,335 2,576,407 2,233,489
Total net sales 20 29 15 30
growth percentage
Comparable store sales 4 9 0 9
growth percentage
Net sales per average 99 96 194 194
square foot ($)
Square footage of gross store
space at period end (000) 13,750 11,805
Fifty-two Fifty-three
weeks ended weeks ended
August 2, 1997 August 3, 1996
Number of
New stores 254 219
Expanded stores 56 47
Closed stores 27 47
</TABLE>
The increases in second quarter and the first half of 1997 net sales over the
same periods last year were attributable to the increase in retail selling
space, both through the opening of new stores (net of stores closed) and the
expansion of existing stores. Growth in comparable stores sales also
contributed to the increase in net sales for the quarter.
Cost of Goods Sold and Occupancy Expenses
Cost of goods sold and occupancy expenses as a percentage of net sales
increased to 65.6 percent for the second quarter of 1997 from 64.3 percent for
the same period in 1996. The 1.3 percentage point decrease in gross margin net
of occupancy expenses was attributable to a 2.0 percentage point decrease in
merchandise margins as a percentage of net sales, offset by a .7 percentage
point decrease in occupancy expenses as a percentage of net sales.
For the first half of 1997, cost of goods sold and occupancy expenses as a
percentage of net sales increased to 64.9 percent from 63.5 percent for the
same period in 1996. The 1.4 percentage point decrease in gross margin net of
occupancy expenses was attributable to a 1.6 percentage point decrease in
merchandise margins as a percentage of net sales offset by a .2 percentage
point decrease in occupancy expenses as a percentage of net sales.
For the second quarter and first half of 1997, decreases in merchandise margins
as a percentage of net sales resulted from a smaller percentage of merchandise
sold at regular prices when compared to the same periods last year. Margin
achieved on marked-down goods was also lower than that of last year.
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.
For the second quarter and first half of 1997, occupancy expenses decreased as
a percentage of net sales when compared to the same periods last year. The
decrease in occupancy expenses as a percentage of net sales for the quarter was
primarily attributable to leverage achieved through increases in comparable
store sales. The growth of the Old Navy division, with lower occupancy
expenses when compared to other divisions, primarily caused the decrease in the
first half of 1997 from the same period in 1996.
Operating Expenses
Operating expenses as a percentage of net sales decreased to 26.2 percent for
the second quarter of 1997 from 26.4 percent for the same period in 1996. The
.2 percentage point decrease was primarily attributable to a .4 percentage
point decrease in charitable contributions expense and a .5 percentage point
decrease in incentive bonus accruals and stock-based compensation, offset by a
planned .7 percentage point increase in advertising/marketing costs to support
the Company's brands. The decrease in charitable contributions expense
represents a beneficial comparison between 1997 and 1996, as the Company, in
1996, made an additional contribution to the Gap Foundation.
Incentive bonus is accrued quarterly based on year-to-date performance measured
against established targets. The rate of accrual in 1997 was lower than that
in 1996.
For the first half of 1997, operating expenses as a percentage of net sales
were essentially flat at 25.8 percent when compared to the same period in 1996.
A .7 percentage point increase in advertising/marketing costs offset a .5
percentage point decrease in incentive bonus accruals and stock-based
compensation, and a .3 percentage point decrease in charitable contributions
expense.
Net Interest Income/Expense
Net interest income was approximately $1.5 million for the second quarter and
$6.2 million for the first half of 1997 compared to net interest income of $4.0
million and $7.6 million for the same periods in 1996. The change in 1997 from
1996 was due to a decrease in average investments for the quarter and year-to-
date periods.
Income Taxes
The effective tax rate was 37.5 percent for the first half of 1997 compared to
39.5 percent for the first half of 1996. The decrease in the effective tax
rate was a result of the impact from tax planning initiatives to support
changing business needs.
LIQUIDITY AND CAPITAL RESOURCES
The following sets forth certain measures of the Company's liquidity:
Twenty-six weeks ended
August 2, 1997 August 3, 1996
Cash provided by operating activities ($000) $48,767 $250,007
Working capital ($000) $418,574 $662,407
Current ratio 1.5:1 2.0:1
For the twenty-six weeks ended August 2, 1997, the decrease in cash flows
provided by operating activities was primarily attributable to an increased
investment in inventory and the timing of certain payables and accrued
expenses, including income taxes.
The Company funds inventory expenditures during normal and peak periods through
a combination of cash flows provided by operations and normal trade credit
arrangements. The Company's business follows a seasonal pattern, peaking over
a total of about ten to twelve weeks during the late summer and holiday
periods.
The Company has committed credit facilities totalling $950 million, consisting
of an $800 million, 364-day revolving credit facility, and a $150 million, 5-
year revolving credit facility through June 30, 2002. These credit facilities
provide for the issuance of up to $450 million in letters of credit. The
Company has additional uncommitted credit facilities of $300 million for the
issuance of letters of credit. At August 2, 1997, the Company had outstanding
letters of credit of approximately $593 million.
To ensure long-term financial flexibility, management plans to issue $500
million of 10-year debt securities in the third quarter. The Company is filing
a registration statement with the Securities and Exchange Commission with
respect to these securities. The proceeds from this issuance are intended to
be used for general corporate purposes, including store expansion, brand
investment, development of additional distribution channels and repurchases
of the Company's common stock pursuant to its ongoing share repurchase
program. No assurances can be given that the Company will issue these
long-term debt securities.
For the twenty-six weeks ended August 2, 1997, capital expenditures net of
construction allowances and dispositions, totaled approximately $209 million.
These expenditures included the addition of 141 new stores, the expansion of 36
stores and the remodeling of certain stores, resulting in a net increase in
store space of approximately 1.1 million square feet or 9 percent since
February 1, 1997.
For 1997, the Company expects capital expenditures to total at least $450
million, net of construction allowances, representing the addition of at least
275 new stores, the expansion of at least 75 stores, and the remodeling of
certain stores. Planned expenditures also include amounts for corporate
offices, distribution centers, and equipment. The Company expects to fund such
capital expenditures through a combination of cash flow from operations and
other sources of financing. Square footage growth is expected to be
approximately 18 percent before store closings. New stores are generally
expected to be leased.
The Company is nearing completion on corporate offices in San Bruno,
California. The cost of completion is included above in the capital
expenditures projected for 1997. The Company continues to explore alternatives
for additional corporate offices in San Francisco and San Bruno, California.
In October 1996, the Board of Directors approved a program under which the
Company may repurchase up to 30 million shares of its outstanding common stock
in the open market over a three-year period. During the second quarter, the
Company acquired 3.5 million shares for approximately $131 million. To date
under this program, 12.0 million shares have been repurchased for approximately
$392 million.
During the second quarter the Company entered into various put option
contracts to repurchase up to 2,000,000 shares of Gap stock. The contracts
have exercise prices ranging from $36.77 to $42.67, with expiration dates
ranging from September 1997 through November 1997.
The Company enters into foreign exchange contracts to reduce exposure to
foreign currency exchange risk. These contracts are primarily designated
and effective as hedges of commitments to purchase merchandise. During
the second quarter, the Company entered into interest rate swaps in order
to reduce interest rate risk on a substantial portion of its intended
issuance of its long-term debt.
PART II
OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders
a) On May 20, 1997, the Annual Meeting of Stockholders of the Company
was held in San Francisco, California. There were 273,698,780 shares of common
stock outstanding on the record date and entitled to vote at the Annual
Meeting.
b) The following directors were elected:
Vote For Vote Withheld
Adrian D.P. Bellamy 248,595,894 837,887
John G. Bowes 248,594,133 839,647
Millard S. Drexler 248,563,883 869,897
Donald G. Fisher 248,563,913 869,867
Doris F. Fisher 248,565,822 867,959
Robert J. Fisher 248,566,823 866,957
Lucie J. Fjeldstad 248,595,795 837,986
William A. Hasler 253,595,123 838,658
John M. Lillie 248,596,917 836,863
Charles R. Schwab 248,594,941 838,840
Brooks Walker, Jr. 248,595,105 838,676
There were no abstentions and no broker non-votes.
c) The selection of Deloitte & Touche, LLP as independent auditors for
the fiscal year ending January 31, 1998 was ratified with 249,115,349 votes in
favor and 68,273 against.
There were 250,158 abstentions.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(10.1) Amendment Number 1 to the Registrant's 1996
Stock Option and Award Plan
(10.2) Termination Agreement dated July 1, 1997 related to Credit
Agreement dated August 1, 1995 between the Registrant and
Citicorp USA Inc.
(10.3) $800,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.4) $150,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.5) Form of Nonqualified Stock Option Agreement for employees
under Registrant's 1996 Stock Option and Award Plan.
(10.6) Form of Nonqualified Stock Option Agreement for directors
under Registrant's 1996 Stock Option and Award Plan.
(10.7) Form of Restricted Stock Agreement under Registrant's 1996
Stock Option and Award Plan.
(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 August 2, 1997.
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: August 26, 1997 By /s/ Warren R. Hashagen
Warren R. Hashagen
Chief Financial Officer
(Principal financial officer
of the registrant)
Date: August 26, 1997 By /s/ Millard S. Drexler
Millard S. Drexler
President and Chief Executive
Officer
EXHIBIT INDEX
(10.1) Amendment Number 1 to the Registrant's 1996 Stock Option and
Award Plan
(10.2) Termination Agreement dated July 1, 1997 related to Credit
Agreement dated August 1, 1995 between the Registrant and
Citicorp USA Inc.
(10.3) $800,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.4) $150,000,000 Credit Agreement dated as of July 1, 1997
between the Registrant; Citicorp USA INC.; Bank Of America
National; Trust & Savings Association; The Hongkong and
Shanghai Banking Corporation Limited; Nationsbank Of Texas,
N.A.; The Royal Bank Of Canada; Bank Of Montreal; Societe
Generale; The Fuji Bank, Limited; Morgan Guaranty Trust
Company Of New York; The Sumitomo Bank Limited; Deutsche Bank
AG New York Branch And/Or Cayman Islands Branch; Union Bank
Of Switzerland, New York Branch; U.S. National Bank Of
Oregon; and Citibank, N.A.
(10.5) Form of Nonqualified Stock Option Agreement for employees
under Registrant's 1996 Stock Option and Award Plan.
(10.6) Form of Nonqualified Stock Option Agreement for directors
under Registrant's 1996 Stock Option and Award Plan.
(10.7) Form of Restricted Stock Agreement under Registrant's 1996
Stock Option and Award Plan.
(11) Computation of Earnings per Share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
AMENDMENT NO. 1 TO
THE GAP, INC.
1996 STOCK OPTION AND AWARD PLAN
The Gap, Inc., having adopted The Gap, Inc. 1996 Stock Option and Award Plan
(the "Plan") effective as of March 26, 1996, hereby amends the Plan,
effective as of May 20, 1997, as follows:
1. The second sentence of Section 9.1.1 is hereby amended in its
entirety to read as follows:
Such Option shall be granted upon appointment to the Board.
2. The third sentence of Section 9.1.1 is hereby amended in its
entirety to read as follows:
Thereafter, for so long as the Nonemployee Director remains such,
he or she annually shall be granted an Option for an additional
2,500 Shares.
3. The first sentence of Section 9.1.2 is hereby amended in its
entirety to read as follows:
Each Nonemployee Director who became a Nonemployee Director prior
to the effective date of the Plan annually shall be granted an
Option to purchase 2,500 Shares for as long as he or she remains a
Nonemployee Director.
IN WITNESS WHEREOF, The Gap, Inc., by its duly authorized officer, has
executed this Amendment No. 1 as of the date indicated below.
THE GAP, INC.
Date: May 20, 1997 By /s/ Anne B. Gust
Title: Senior Vice President
and General Counsel
July 1, 1997
The Gap, Inc. and
the LC Subsidiaries
referred to in the Credit
Agreement as defined below
Re: Credit Agreement dated as of August 1, 1995
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of
August 1, 1995, among The Gap, Inc., a Delaware corporation (the "Borrower"),
the LC Subsidiaries parties thereto, the Lenders parties thereto, Citibank,
N.A. ("Citibank"), as Issuing Bank, and Citicorp USA Inc. ("CUSA"), as Agent
for the Issuing Bank and the Lenders, as amended by the Amendment to Credit
Agreement, dated as of June 3, 1996 (such credit agreement, as so amended,
being referred to herein as the "Credit Agreement"; terms defined therein and
not otherwise defined herein being used herein as therein defined).
1. The Borrower and LC Subsidiaries wish to terminate in full
the A Commitments and LC Commitments on the date hereof and to pay all fees
and other amounts accrued as of the date hereof and payable under Sections
2.04 and 3.05 of the Credit Agreement. The parties hereto confirm that on the
date hereof there are no A Advances or B Advances outstanding.
2. On the date hereof, (i) the amount of fees accrued and
payable under Section 2.04(a) of the Credit Agreement (relating to facility
fees) is $38,219.18, (ii) the amount of fees accrued and payable under Section
2.04(b) of the Credit Agreement (relating to utilization fees payable) is
$0.00, (iii) the amount of fees accrued and payable under Section 2.04(c) of
the Credit Agreement (relating to commitment fees payable in relation to the
Borrower's Consolidated Fixed Charge Coverage Ratio) is $0.00, (iv) the amount
accrued and payable under Section 2.04(d) of the Credit Agreement (relating to
additional interest payable in relation to the Borrower's Consolidated Fixed
Charge Coverage Ratio) is $0.00, (v) the amount accrued and payable to the
Agent pursuant to Section 1 of that certain fee letter dated as of February 1,
1996 relating to the Agent's fees is $30,000, (vi) the amount accrued and
payable under Section 3.05(a) of the Credit Agreement (relating to Letter of
Credit facility fees) is $53,506.85 and (vii) the amount accrued and payable
under Section 3.05(b) of the Credit Agreement (relating to the Issuing Bank's
fees) is $0.00 (the amounts referred to in this paragraph 2 being the "Payoff
Amounts").
3. The A Commitments and LC Commitments are and shall be
deemed terminated in full as of the date hereof and the Lenders, Issuing Bank
and Agent shall have no further obligations to the Borrower or LC Subsidiaries
under the Credit Agreement. Subject to (i) receipt by the Agent and the
Issuing Bank, in immediately available funds, of the amounts comprising the
Payoff Amounts and (ii) the satisfaction of the conditions specified in
Section 5.01 of the Credit Agreement, dated as of July 1, 1997, among the
Borrower, certain subsidiaries of the Borrower, the banks and other financial
institutions party thereto, Citibank, as issuing bank, and CUSA, as agent for
the banks and issuing bank (the "364-Day Credit Agreement") and Section 4.01
of the Credit Agreement, dated as of July 1, 1997, among the Borrower, the
banks and other financial institutions party thereto, and CUSA, as agent for
the banks (the "Five-Year Credit Agreement" and, together with the 364-Day
Credit Agreement, the "New Credit Agreements"), and to the effectiveness of
such New Credit Agreements, including, without limitation, Section 3.10 of the
364-Day Credit Agreement, all Obligations of the Borrower and LC Subsidiaries
under the Credit Agreement shall be deemed satisfied in full, except for any
Obligations that the terms of the Credit Agreement provide shall survive the
payment of the Obligations and the Revolver Termination Date or LC Termination
Date, any and all of which shall continue to survive on the terms of the
Credit Agreement.
4. This letter agreement may be signed in any number of
counterparts each of which shall represent one signed original of this letter
agreement.
Very truly yours,
CITICORP USA INC., as Agent for the
Lenders and Issuing Bank
By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
Acknowledged and Agreed
THE GAP, INC.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
THE LC SUBSIDIARIES:
BANANA REPUBLIC, INC.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
GPS (GREAT BRITAIN) LIMITED
By /s/ Anne B. Gust
Name: Anne B. Gust
Title: Director
GAP (CANADA) INC.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
GAP INTERNATIONAL SOURCING LIMITED
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP INTERNATIONAL SOURCING PTE. LTD.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP (JAPAN) K.K.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
CREDIT AGREEMENT, dated as of July 1, 1997 (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 $350,000,000 in revolving credit 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 $450,000,000.
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 IDEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01Certain 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 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, in each case as such amount may be reduced or
increased pursuant to Section 2.05.
"A Commitment Increase" has the meaning specified in Section
2.05(b).
"A Lender" means any Lender having an A Commitment or to which
A Advances are owed.
"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.
"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.
"Applicable Lending Office" means, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base 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.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sec. 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.
"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.
"Default" means an event which would constitute an Event of
Default but for the requirement that notice be given or time elapse, or
both.
"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.
"EBITDA" means, for any period, Net Income plus, to the extent
deducted in determining such Net Income, the sum of (a) Interest
Expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense, all determined on a Consolidated basis for the
Borrower and its Subsidiaries in accordance with generally accepted
accounting principles.
"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 $10,000,000,000; (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
$10,000,000,000; 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 $10,000,000,000; 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(b).
"Eurodollar Rate Margin" means at any date of determination 0.165%
per annum at all times from and after the date hereof.
"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.
"Five-Year Credit Agreement" means the Credit Agreement dated as
of July 1, 1997 among the Borrower, the financial institutions party
thereto as lenders, and CUSA, as agent for such lenders, as the same may
be amended, supplemented or otherwise modified from time to time.
"Hazardous Substance" means (i) any hazardous substance or toxic
substance as such terms are presently defined or used in Sec. 101(14) of
CERCLA (42 U.S.C. Sec. 9601(14)), in 33 U.S.C. Sec. 1251 et.seq. (Clean Water
Act), or 15 U.S.C. Sec. 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.
"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 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 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, in each case as such amount may be reduced or
increased from time to time pursuant to Section 3.09."
"LC Commitment Increase" has the meaning specified in Section
3.09(b).
"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, June
30, 1998, 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.
"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 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.
"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 $20,000,000 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.
"RCRA" means the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. Sec. 6901 et seq.), and any regulations promulgated
thereunder.
"Reference Banks" means Citibank, N.A., The Hongkong and Shanghai
Banking Corporation Limited 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, home furnishings,
accessories, specialty foods 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.
"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.
"Type" refers to the distinction among Advances bearing interest
at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"UCP" has the meaning specified in Section 3.08.
SECTION 1.02Computation 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 1.03Accounting 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 IIAMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01The AAdvances. 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 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 2.02Making the AAdvances. (a) Each A Borrowing shall be
made on notice given not later than (i) 12:00 noon (New York City time) on the
third Business Day prior to the date of the proposed A Borrowing, if such
proposed A Borrowing consists of Eurodollar Rate Advances and (ii) 10:00 A.M.
(New York City time) on the day of such proposed A Borrowing, if such proposed
A 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
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 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 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 2.03The BAdvances. (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 2.04Fees. (a) Facility Fee. The Borrower agrees to pay
to the Agent for the account of each A Lender a facility fee, accruing at the
rate of 0.06% from and after the date hereof, 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 A Lender), payable quarterly in arrears on
the last day of each January, April, July and October and on the Revolver
Termination Date.
(b) Utilization Fee. The Borrower agrees to pay to the Agent
for the account of each A Lender a utilization fee, accruing, during all
periods from and after the date hereof when the aggregate amount of
outstanding A Advances made by such A Lender exceeds 50% of such A Lender's A
Commitment (without regard to any usage thereof), at the rate of 0.05%
per annum on the aggregate amount of such A Advances outstanding from time to
time during such periods, payable quarterly in arrears on the last day of each
January, April, July and October and on the Revolver Termination Date.
(c) Other Fees. The Borrower hereby agrees to pay 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 2.05Reduction and Increase of the ACommitments. (a) 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.
(b) Not more frequently than once in any period of twelve
consecutive calendar months occurring after the date hereof, the Borrower
shall have the right prior to the Revolver Termination Date to increase the
amount of the A Commitments of one or more A Lenders (each such increase being
an "A Commitment Increase"), provided that such A Lenders shall have consented
to such A Commitment Increase (which consent may be granted or withheld by any
A Lender in its sole and absolute discretion), on and subject to the following
terms:
(i) The aggregate amount of all A Commitment Increases and
LC Commitment Increases shall not exceed $200,000,000 after the date
hereof;
(ii) The aggregate amount of each A Commitment Increase
shall be in a minimum amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof;
(iii) Each A Commitment Increase shall increase the
aggregate amount of the A Commitments by the same amount;
(iv) No proposed A Commitment Increase shall occur unless
each of the following requirements in respect thereof shall have been
satisfied:
(A) The Agent shall have received from the Borrower
an irrevocable written notice (an "A Commitment Increase Notice"),
dated not earlier than 60 days before the proposed A Commitment
Increase Effective Date (as defined below) therefor and not later
than 30 days before such proposed A Commitment Increase Effective
Date, that (1) specifies (x) the aggregate amount of the proposed
A Commitment Increase, (y) the A Lenders whose A Commitments are
to be increased by the proposed A Commitment Increase and the
amount by which each such A Lender's A Commitment is to be so
increased and (z) the date (the "A Commitment Increase Effective
Date") on which the proposed A Commitment Increase shall become
effective, and (2) has been signed by each A Lender whose A
Commitment is to be increased, evidencing the consent of such A
Lender to the proposed A Commitment Increase;
(B) On and as of the A Commitment Increase Effective
Date of the proposed A Commitment Increase (1) the following
statements shall be true (and the giving of the applicable A
Commitment Increase Notice shall constitute a representation and
warranty by the Borrower that on such A Commitment Increase
Effective Date such statements are true):
(x) The representations and warranties
contained in Section 6.01 are correct on and as of
such A Commitment Increase Effective Date before and
after giving effect to the proposed A Commitment
Increase, as though made on and as of such date, and
(y) No event has occurred and is continuing,
or would result from such A Commitment Increase, which
constitutes an Event of Default or Default; and
(2) the Agent shall have received such other approvals, opinions
or documents as the Agent may reasonably request;
(v) Promptly following its receipt of an A Commitment
Increase Notice in proper form, the Agent shall deliver copies thereof
to each Lender. If, and only if, all of the terms, conditions and
requirements specified in paragraphs (i) through (iv) are satisfied in
respect of any proposed A Commitment on and as of the proposed A
Commitment Increase Effective Date thereof, then, as of such A
Commitment Increase Effective Date and from and after such date, (1) the
A Commitments of the A Lenders consenting to such A Commitment Increase
shall be increased by the respective amounts specified in the A
Commitment Increase Notice pertaining thereto and (2) references herein
to the amounts of the A Lenders' respective A Commitments shall refer to
respective amounts giving effect to such A Commitment Increase;
(vi) It is understood that no A Lender shall have any
obligation whatsoever to agree to any request made by the Borrower for
an A Commitment Increase;
(vii) On each A Commitment Increase Effective Date, each A
Lender whose A Commitment has been increased (each such A Lender being
an "Increasing A Lender") shall, before 12:00 noon (New York City time)
on such A Commitment Increase Effective Date, make available for the
account of its Applicable Lending Office to the Agent at the address
specified in Section 10.02, in same day funds, an amount equal to the
excess of (A) such Increasing A Lenders' ratable portion of the A
Borrowings then outstanding (calculated based on its A Commitment as a
percentage of the aggregate A Commitments of the A Lenders outstanding
after giving effect to the relevant A Commitment Increase) over (B) the
aggregate principal amount of then outstanding A Advances made by such
Increasing A Lender; and
(viii) After the Agent's receipt of such funds from
each such Increasing A Lender, the Agent will promptly thereafter cause
to be distributed like funds to the other A Lenders for the account of
their respective Applicable Lending Offices in an amount to each other A
Lender such that the aggregate amount of the outstanding A Advances
owing to each A Lender after giving effect to such distribution equals
such A Lender's ratable portion of the A Borrowings then outstanding
(calculated based on its aggregate A Commitments as a percentage of the
aggregate A Commitments of the A Lenders outstanding after giving effect
to the relevant A Commitment Increase). If the A Commitment Increase
Effective Date shall occur on a date that is not the last day of the
Interest Period for all Eurodollar Rate Advances then outstanding, (1)
the Borrower shall pay any amounts owing pursuant to Section 10.04(b) as
a result of the distributions to A Lenders under this Section 2.05(b)
and (2) for each A Borrowing comprised of Eurodollar Rate Advances, the
respective A Advances made by the Increasing A Lenders pursuant to this
Section 2.05(b) in respect of such A Borrowing shall be Base Rate
Advances until the last day of the then existing Interest Period for
such A Borrowing.
SECTION 2.06Repayment of AAdvances. 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 2.07Interest on AAdvances. 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) 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 2.08Additional 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 2.09Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of
determining the Eurodollar Rate. If any one or more of the Reference Banks
shall not furnish such timely information to the Agent for the purpose of
determining 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) or (b), 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).
(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 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 A 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 A
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, A Advances of such Type
having such Interest Period.
(e) If fewer than two Reference Banks furnish timely information
to the Agent for determining 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
Eurodollar Rate Advances,
(ii) each such A Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance (or if such A 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, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist.
SECTION 2.10Voluntary Conversion of AAdvances. 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 A
Advances of another Type; provided, however, that any Conversion of any
Eurodollar Rate Advances into A Advances of another Type shall be made on, and
only on, the last day of an Interest Period for such 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 Eurodollar Rate Advances, the
duration of the Interest Period for each such A Advance.
SECTION 2.11No Prepayments of AAdvances. (a) The Borrower shall
have no right to prepay any principal amount of any A Advances other than as
provided in subsection (b) below or Section 2.14.
(b) The Borrower may, upon at least (i) two Business Day's, in
the case of Eurodollar 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 $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 a Eurodollar Rate Advance, the
Borrower shall be obligated to reimburse the A Lenders in respect thereof
pursuant to Section 10.04(b).
SECTION 2.12Increased 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 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
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 2.13Illegality. (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 A 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
30 but not more than 45 days prior to the next Revolver Termination Date, the
Borrower, by written notice to the Agent, may request that the
Revolver Termination Date be extended for a period of 364 days 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 20 days prior to such
Revolver Termination Date, notify the Borrower and the Agent in writing
regarding whether such A Lender will consent to such extension. If, and only
if, (i) the Majority A Lenders consent in writing to such extension prior to
the tenth day preceding such Revolver Termination Date and (ii) the Majority
LC Lenders and the Issuing Bank consent to an extension of the LC Termination
Date pursuant to Section 3.11, the Revolver Termination Date shall be so
extended for such 364-day period 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 (each such A Lender being a
"Declining A Lender"), such Declining A Lender shall be deemed not to have
consented to any requested extension, such Declining A Lenders' A Commitments
shall terminate on the scheduled Revolver Termination Date and on such
scheduled Revolver Termination Date, the Borrower shall repay in full the
principal amount of A Advances owing to such Declining A Lender, together with
accrued interest thereon to the date of payment of such principal amount, all
fees payable to such Declining A Lender and all other amounts payable to such
Declining A Lender under this Agreement (including, but not limited to, any
increased costs or other additional amounts owing under Section 2.12, any
indemnification for Taxes or Other Taxes under Section 4.02, or any amounts
which may be required to be paid by the Borrower pursuant to Section
10.04(b)). 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 IIIAMOUNT AND TERMS OF LETTERS OFCREDIT AND PARTICIPATION THEREIN
SECTION 3.01Letters 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 LC Termination
Date in an aggregate undrawn amount not to exceed at any time the LC
Commitments of the LC Lenders in effect at such time (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) $75,000,000.
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 3.02Issuing 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 3.03Reimbursement 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 3.04Participations 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 remain
in effect after the occurrence of the LC Termination Date with respect to any
Letter of Credit that was Issued by the Issuing Bank on behalf of the Borrower
or any LC Subsidiary on or before the LC Termination Date and such payments
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 3.05Letter 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, accruing at a rate
of 0.06% per annum from and after the date hereof, (i) on the total amount of
LC Commitments from time to time from and after such date (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 and
(ii) on the aggregate amount of Letter of Credit Liability under all Letters
of Credit that are outstanding beyond the LC Termination Date (regardless of
the actual or deemed usage thereof) payable in arrears on the last day of each
January, April, July and October and on the first day after the LC Termination
Date on which no Letters of Credit are outstanding.
(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 3.06Indemnification; 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 3.07Increased 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 3.08Uniform 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 3.09Reductions and Increases in LC Commitments. (a) 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 reduce 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.
(b) Not more frequently than once in any period of twelve
consecutive calendar months occurring after the date hereof, the Borrower
shall have the right prior to the LC Termination Date to increase the amount
of the Issuing Bank's commitment to issue Letters of Credit and the amount of
the LC Commitments of one or more LC Lenders (each such increase being an "LC
Commitment Increase"), provided that the Issuing Bank and such LC Lenders
shall have consented to such LC Commitment Increase (which consent may be
granted or withheld by the Issuing Bank and any LC Lender in its sole and
absolute discretion), on and subject to the following terms:
(i) The aggregate amount of all LC Commitment Increases
and A Commitment Increases shall not exceed $200,000,000 after the date
hereof;
(ii) The aggregate amount of each LC Commitment Increase
shall be in a minimum amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof;
(iii) Each LC Commitment Increase shall increase the amount
of the Issuing Bank's commitment to issue Letters of Credit and the
aggregate amount of the LC Commitments by the same amount;
(iv) No proposed LC Commitment Increase shall occur unless
each of the following requirements in respect thereof shall have been
satisfied:
(A) The Agent shall have received from the Borrower
an irrevocable written notice (an "LC Commitment Increase
Notice"), dated not earlier than 60 days before the proposed LC
Commitment Increase Effective Date (as defined below) therefor and
not later than 30 days before such proposed LC Commitment Increase
Effective Date, that (1) specifies (x) the aggregate amount of the
proposed LC Commitment Increase, (y) the LC Lenders whose LC
Commitments are to be increased by the proposed LC Commitment
Increase and the amount by which each such LC Lender's LC
Commitment is to be so increased and (z) the date (the "LC
Commitment Increase Effective Date") on which the proposed LC
Commitment Increase shall become effective, and (2) has been
signed by the Issuing Bank and each LC Lender whose LC Commitment
is to be increased, evidencing the consent of the Issuing Bank and
such LC Lender to the proposed LC Commitment Increase;
(B) On and as of the LC Commitment Increase
Effective Date of the proposed LC Commitment Increase (1) the
following statements shall be true (and the giving of the
applicable LC Commitment Increase Notice shall constitute a
representation and warranty by the Borrower that on such LC
Commitment Increase Effective Date such statements are true):
(x) The representations and warranties
contained in Section 6.01 are correct on and as of
such LC Commitment Increase Effective Date before and
after giving effect to the proposed LC Commitment
Increase, as though made on and as of such date, and
(y) No event has occurred and is continuing,
or would result from such LC Commitment Increase,
which constitutes an Event of Default or Default; and
(2) the Agent shall have received such other approvals, opinions
or documents as the Agent may reasonably request;
(v) Promptly following its receipt of an LC Commitment
Increase Notice in proper form, the Agent shall deliver copies thereof
to the Issuing Bank and each Lender. If, and only if, all of the terms,
conditions and requirements specified in paragraphs (i) through (iv) are
satisfied in respect of any proposed LC Commitment on and as of the
proposed LC Commitment Increase Effective Date thereof, then, as of such
LC Commitment Increase Effective Date and from and after such date, (1)
the amount of the Issuing Bank's commitment to issue Letters of Credit
shall be increased by the amount of the proposed LC Commitment Increase
and the LC Commitments of the LC Lenders consenting to such LC
Commitment Increase shall be increased by the respective amounts
specified in the LC Commitment Increase Notice pertaining thereto and
(2) references herein to the amount of the Issuing Bank's commitment to
issue Letters of Credit and to the amounts of the LC Lenders' respective
LC Commitments shall refer to respective amounts giving effect to such
LC Commitment Increase; and
(vi) 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 LC Commitment Increase.
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") the outstanding balance of which is set forth 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, any participation interest existing prior to
the date hereof of any LC Lender in such Existing Letters of Credit shall,
without further action on its part, 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 3.11Extension 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 20 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, (i) the Majority LC Lenders and
the Issuing Bank consent in writing to such extension prior to the tenth day
preceding such LC Termination Date and (ii) the Majority A Lenders consent to
an extension of the Revolving Termination Date pursuant to Section 2.14, 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 LC Lender shall be deemed not to have
consented to such requested extension and such Issuing Bank's and such LC
Lenders' LC Commitments shall terminate on the scheduled LC Termination Date
(each such non-extending LC Lender being a "Non-Extending LC Lender");
provided, that the obligations of any Non-Extending LC Lender under Section
3.04(e) shall remain in effect as provided therein as to Letters of Credit
Issued on or before the LC Termination Date in effect prior to such extension.
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 3.12Currency 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 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, upon demand by the Agent, 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 (so long as no Default has occurred and is
continuing) be released (1) if the LC Termination Date has not occurred, on
the date on which the aggregate of all Letter of Credit Liability does not
exceed 99% of the aggregate amount of the LC Commitments then in effect
(without regard to any usage thereof) or (2) if the LC Termination Date has
occurred, on the first day after the LC Termination Date on which no Letters
of Credit are outstanding.
(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 3.13Subsidiary 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 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 any LC
Subsidiary's lack of corporate power or authority; 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 Secs. 2808, 2809, 2810, 2819, 2845 or 2850, or
California Code of Civil Procedure Secs. 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 3.14Dollar 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 3.15Applications. 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 3.16LC 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 IVPAYMENTS, TAXES, EXTENSIONS, ETC.
SECTION 4.01Payments 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, 2.05(b), 2.08, 2.12, 2.14 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
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 4.02Taxes/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 4.03Sharing 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 2.05(b), 2.08, 2.12, 2.14 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 4.04Evidence 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 4.05Payments 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 4.06Taxes/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 4.07Sharing 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 VCONDITIONS OF LENDING
SECTION 5.01Condition 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 of the Borrower evidencing
necessary corporate action and governmental approvals, if any, with
respect to this Agreement.
(b) A certificate of the Secretary or an Assistant Secretary 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 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.
(e) Such other approvals, opinions or documents as the Agent may
reasonably request.
SECTION 5.02Conditions Precedent to Each ABorrowing/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 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
(other than Section 6.01(e)) 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) (i) 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)
no event has occurred and is continuing which constitutes an "Event of
Default" or "Default" under the Five-Year Credit Agreement.
SECTION 5.03Conditions Precedent to Each BBorrowing. 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
(other than Section 6.01(e)) 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) (i) 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 (ii) no event has
occurred and is continuing which constitutes an "Event of Default" or
"Default" under the Five-Year Credit Agreement, 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 VIREPRESENTATIONS AND WARRANTIES
SECTION 6.01Representations 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 February 1, 1997, 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, copies of which have been furnished to each Lender, fairly
present the Consolidated financial condition of the Borrower and its
Subsidiaries as at such date and the results of the operations of the
Borrower and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since February 1, 1997, there has been no material adverse
change in the condition (financial or otherwise), operations, properties
or prospects of the Borrower and its Subsidiaries taken as a whole.
(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) Following the application of the proceeds of each Advance,
not more than 25 percent of the value of the assets (either of the
Borrower only or of the Borrower and its Subsidiaries on a Consolidated
basis) which are subject to any restriction on Liens set forth in this
Agreement or in any agreement or instrument between the Borrower and any
Lender or any Affiliate of any Lender relating to Debt and within the
scope of Section 8.01(d) will consist of 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) Set forth on Schedule VII hereto is a complete and accurate
list, as of the date hereof, of all Plans of the Borrower and its
Subsidiaries. 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 VIICOVENANTS OF THE BORROWER
SECTION 7.01Affirmative 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 7.02Negative 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 the 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,
subject to Section 7.02(d)(iii), 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, as
such Schedule may be amended from time to time by the Borrower.
The Borrower shall provide the Agent and each Lender a copy of
each change or amendment made to Schedule VI promptly after each
such change or amendment thereof.
(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 7.03Financial Covenant. The Borrower will not, without
the written consent of the Majority Combined Lenders, permit the ratio of Debt
on the last day of any Fiscal Quarter of the Borrower to EBITDA for the period
of four consecutive Fiscal Quarters of the Borrower ending on such day to be
greater than 3.00 to 1.00.
SECTION 7.04Reporting Requirements. The Borrower will furnish to
the Lenders:
(i) 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);
(ii) 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;
(iii) 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);
(iv) 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;
(v) 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;
(vi) 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;
(vii) 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
(viii) 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 VIIIEVENTS OF DEFAULT
SECTION 8.01Events 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; or (ii) any term, covenant or
agreement contained in 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 (iii) 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 of 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 A Lender to make A 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 IXTHE AGENT
SECTION 9.01Authorization 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 9.02Agent'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 9.03CUSA, 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 (and, as applicable, any of their respective
officers and directors) 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 9.04Lender 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 9.05Indemnification. (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. In the case of any
investigation, litigation or proceeding giving rise to any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
expenses or disbursements, this Section 9.05(a) applies whether any such
investigation, litigation or proceeding is brought by the Agent, the Issuing
Bank, any Lender or a third party.
(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 willful 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. In the case of any
investigation, litigation or proceeding giving rise to any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
expenses or disbursements, this Section 9.05(b) applies whether any such
investigation, litigation or proceeding is brought by the Issuing Bank, the
Agent, any Lender or a third party.
SECTION 9.06Successor 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 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 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 XMISCELLANEOUS
SECTION 10.01Amendments, 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 (other than as provided for in Section 2.05(b)) 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 (other than as permitted by Section 2.14), (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 (other than as provided for in Section 3.11)
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, (vi) release the Borrower from its obligation to comply
with Section 3.13 or (vii) 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 10.02Notices, 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, 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 10.03No 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 10.04Costs 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
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 2.05(b), 2.09(d), 2.11, 2.13 or 2.14 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 10.05Right of Setoff. 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 10.06Binding 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 10.07Assignments 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, 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, or
after any Lender has assigned all or any portion of its rights and obligations
under this Agreement to any Affiliate without the consent of the Borrower,
upon at least 10 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 A 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, provided that
any Lender so assigning to any of its Affiliates shall give prompt notice
thereof to the Borrower and the Agent, (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 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 the consent of the Borrower or the Agent,
provided that any Lender so assigning to any of its Affiliates shall give
prompt notice thereof to the Borrower and 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 10.08Severability 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 10.09Independence 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 10.10Confidentiality. 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 10.11Headings. 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 10.12Entire 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(c) and 3.05(b),
supersedes all previous understandings, written or oral, in respect thereof.
SECTION 10.13Execution 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 10.14Consent 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 10.15GOVERNING 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 10.16WAIVER 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 /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
THE LC SUBSIDIARIES:
BANANA REPUBLIC, INC.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
GPS (U.S.A.) LIMITED
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
GAP (CANADA) INC.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
GLORIOUS DAY COMPANY LIMITED (to be
renamed GAP INTERNATIONAL SOURCING
LIMITED)
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP INTERNATIONAL SOURCING PTE. LTD.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP (JAPAN) K.K.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP INTERNATIONAL SOURCING LIMITED
(to be renamed GAP INTERNATIONAL
SOURCING (HOLDINGS) LIMITED)
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
GAP (NETHERLANDS) B.V.
By /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Director
THE AGENT:
CITICORP USA INC.
By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
THE BANKS:
A Commitment CITICORP USA INC.
$36,842,105.26
LC Commitment
$47,368,421.05 By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
A Commitment BANK OF AMERICA NATIONAL
$31,315,789.47 TRUST & SAVINGS ASSOCIATION
LC Commitment
$40,263,157.89 By /s/ Maria Vickroy-Peralta
Name: Maria Vickroy-Peralta
Title: Vice President
A Commitment THE HONGKONG AND SHANGHAI $31,315,789.47
BANKING CORPORATION LIMITED
LC Commitment
$40,263,157.89 By /s/ J.C. Holsex
Name: J.C. Holsex
Title: Exec. Vice President
A Commitment NATIONSBANK OF TEXAS, N.A.
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Chas A. McDonell
Name: Chas A. McDonell
Title: Vice President
A Commitment THE ROYAL BANK OF CANADA
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Karen T. Hull
Name: Karen T. Hull
Title: Retail Group Manager
A Commitment BANK OF MONTREAL
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Beverly A. Blucher
Name: Beverly A. Blucher
Title: Senior Vice President
A Commitment SOCIETE GENERALE
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Maureen E. Kelly
Name: Maureen E. Kelly
Title: Vice President
A Commitment THE FUJI BANK, LIMITED
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Kazuo Kamio
Name: Kazuo Kamio
Title: General Manager
A Commitment MORGAN GUARANTY TRUST
$25,789,473.68 COMPANY OF NEW YORK
LC Commitment
$33,157,894.74 By /s/ Adam J. Silver
Name: Adam J. Silver
Title: Associate
A Commitment THE SUMITOMO BANK LIMITED
$25,789,473.68
LC Commitment
$33,157,894.74 By /s/ Kozo Masaki
Name: Kozo Masaki
Title: General Manager
A Commitment DEUTSCHE BANK AG NEW YORK BRANCH
$25,789,473.68 AND/OR CAYMAN ISLANDS BRANCH
LC Commitment
$33,157,894.74 By /s/ Joel D. Makowsky
Name: Joel D. Makowsky
Title: Assistant Vice President
By /s/ Susan M. O'Connor
Name: Susan M. O'Connor
Title: Director
A Commitment UNION BANK OF SWITZERLAND, NEW
$25,789,473.68 YORK BRANCH
LC Commitment
$33,157,894.74 By /s/ M. Terri Reilly
Name: M. Terri Reilly
Title: Assistant Treasurer
By /s/ Samuel Azizo
Name: Samuel Azizo
Title: Vice President
A Commitment U.S. NATIONAL BANK OF OREGON
$18,421,052.63
LC Commitment
$23,684,210.53 By /s/ Janet E. Jordan
Name: Janet E. Jordan
Title: Vice President
_________
$350,000,000 Total of the A Commitments
$450,000,000 Total of the LC Commitments
THE ISSUING BANK:
CITIBANK, N.A.
By /s/ Carolyn R. Bodmer
Name: Carolyn R. Bodmer
Title: Vice President
Schedule II
EXISTING LIENS
None
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 executive officers of The Gap, Inc. as of July 1, 1997.
Schedule IV
OUTSTANDING BALANCE OF EXISTING LETTERS OF CREDIT
$450,000,000
Schedule V
LC SUBSIDIARIES
(As of date of this Agreement)
1. Banana Republic, Inc.
2. GPS (U.S.A.) Limited
3. Gap (Canada) Inc.
4. Glorious Day Company Limited (to be renamed Gap International Sourcing
Limited)
5. Gap International Sourcing Pte. Ltd.
6. Gap (Japan) K.K.
7. Gap International Sourcing Limited (to be renamed Gap International
Sourcing (Holdings) Limited)
8. Gap (Netherlands) B.V.
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
Schedule VII
PLANS:
Gap VEBA Trust (Self-insured medical and dental claims)
GapShare Plan
Employee Benefit Premium Payment Plan - (Pre-tax employee contributions under
medical, dental plans)
Life Insurance and Accidental Death and Dismemberment Plan
Health Insurance Plan (HMOs and Employee Assistance Plan)
Short Term Disability Plan
Long Term Disability Plan
Tuition Reimbursement Program
Vision Care Plan
EXHIBIT A-1
NOTICE OF A BORROWING
Citicorp USA Inc., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, The Gap, Inc., refers to the Credit Agreement,
dated as of July 1, 1997 (the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the undersigned, certain of the
undersigned's Subsidiaries, certain Lenders parties thereto, Citibank, N.A.,
as Issuing Bank, and Citicorp USA Inc. as Agent for said Lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests an A Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such A Borrowing (the "Proposed A Borrowing") as required by Section 2.02(a)
of the Credit Agreement:
(i) The Business Day of the Proposed A Borrowing is ,
19 .
(ii) The Type of A Advances comprising the Proposed A
Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed A Borrowing is
$ .
(iv) The Interest Period for each A Advance made as part of
the Proposed A Borrowing is [ days] [ month[s]].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed A
Borrowing:
(A) the representations and warranties contained in Section 6.01
are correct, before and after giving effect to the Proposed A Borrowing
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 Proposed A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or Default.
Very truly yours,
THE GAP, INC.
By
Name:
Title:
EXHIBIT A-2
NOTICE OF B BORROWING
Citicorp USA Inc. , as Agent
for the Lenders parties
to the Credit Agreement
referred to below
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, The Gap, Inc., refers to the Credit Agreement,
dated as of July 1, 1997 (the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the undersigned, certain of the
undersigned's Subsidiaries, certain Lenders parties thereto, Citibank, N.A.,
as Issuing Bank, and Citicorp USA Inc. as Agent for said Lenders, and hereby
gives you notice pursuant to Section 2.03 of the Credit Agreement that the
undersigned hereby requests a B Borrowing under the Credit Agreement, and in
that connection sets forth the terms on which such B Borrowing (the "Proposed
B Borrowing") is requested to be made:
(A) Date of B Borrowing
(B) Amount of B Borrowing
(C) Maturity Date
(D) Interest Rate Basis
(E) Interest Payment Date(s)
(F)
(G)
(H)
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed B
Borrowing:
(a) the representations and warranties contained in Section 6.01
are correct, before and after giving effect to the Proposed 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 the Proposed B Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or Default;
(c) no event has occurred and no circumstance exists as a result
of which the information concerning the undersigned that has been
provided to the Agent and each Lender by the undersigned in connection
with the Credit Agreement 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; and
(d) the aggregate amount of the Proposed B Borrowing and all
other Borrowings to be made on the same day under the Credit Agreement
is within the aggregate amount of the unused A Commitments of the A
Lenders.
The undersigned hereby confirms that the Proposed B Borrowing is
to be made available to it in accordance with Section 2.03(a)(v) of the Credit
Agreement.
Very truly yours,
THE GAP, INC.
By
Name:
Title:
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated , 19
Reference is made to the Credit Agreement dated as of July 1, 1997
(the "Credit Agreement") among The Gap, Inc., a Delaware corporation (the
"Borrower"), certain Subsidiaries of the Borrower, as "LC Subsidiaries", the
Lenders (as defined in the Credit Agreement), Citibank, N.A., as Issuing Bank,
and Citicorp USA Inc. as Agent for the Lenders and Issuing Bank (the "Agent").
Terms defined in the Credit Agreement are used herein with the same meaning.
(the "Assignor") and (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, such respective
interests in and to all of the Assignor's rights and obligations under the
Credit Agreement as of the date hereof (other than in respect of B Advances)
which represent the respective percentage interests specified on Schedule 1 of
all outstanding rights and obligations under the Credit Agreement (other than
in respect of B Advances) in respect of (i) the Assignor's A Commitment and
the A Advances owing to the Assignor and/or (ii) the LC Commitment and
participations in Letter of Credit Liability of the Assignor. After giving
effect to such sale and assignment, (x) the Assignee's A Commitment and the
amount of the A Advances owing to the Assignee and (y) such Assignee's
LC Commitment and participations in Letter of Credit Liability will be as set
forth, respectively, in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interests being assigned by it hereunder and
that such interests are free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto and (iii) 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 their respective
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 6.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Issuing Bank, the Assignor 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 the Credit Agreement; (iii) confirms that it is an
Eligible Assignee; (iv) appoints and authorizes the Agent and Issuing Bank to
take such action on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent and Issuing Bank by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Lender; [and] (vi) specifies as its Domestic Lending Office (and address
for notices) and Eurodollar Lending Office the offices set forth beneath its
name on the signature pages hereof and [(vii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty].
4. Following the execution of this Assignment and Acceptance by
the Assignor and the Assignee, it will be delivered to the Agent for
acceptance and recording by the Agent. The effective date of this Assignment
and Acceptance shall be the date of acceptance thereof by the Agent, unless
otherwise specified on Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make (and shall direct the Issuing
Bank to make) all payments under the Credit Agreement in respect of the
interests assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
Schedule 1
to
Assignment and Acceptance
Dated , 19
Section 1.
Percentage Interest in A Commitment and A Advances:
Percentage Interest in LC Commitment and participations in Letter of
Credit Liability:
Section 2.
Assignee's A Commitment: $
Assignee's LC Commitment
Aggregate outstanding principal amount of A Advances owing to Assignee: $
Aggregate outstanding amount of Assignee's
participations in Letter of Credit Liability: $
Section 3.
Effective Date : , 19
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this day
of , 19
CITICORP USA, INC., as Agent
By:
Title:
EXHIBIT E
FORM OF AUCTION BORROWING NOTE
U.S. $ ___________Dated: ____________, 19___
FOR VALUE RECEIVED, the undersigned, THE GAP, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below), on
_________, 19___, the principal amount of _______________________ Dollars ($
________).
The Borrower promises to pay interest on the unpaid principal
amount hereof from the date hereof until such principal amount is paid in
full, at the interest rate and payable on the interest payment date or dates
provided below:
Interest Rate: _____% per annum (calculated on the basis of a year of
_____ days for the actual number of days elapsed).
[Insert variable calculation if applicable]
Interest Payment Date or Dates:
____________________________________________
Both principal and interest are payable in lawful money of the
United States of America to ___________________________ for the account of the
Lender at the office of ____________________________, at
___________________________________________, in same day funds, free and clear
of and without any deduction, with respect to the payee named above, subject
to Section 4.02 of the Credit Agreement referred to below, for any and all
present and future taxes, deductions, charges or withholdings, and all
liabilities with respect thereto.
This Promissory Note is one of the promissory notes referred to in
Section 2.03(f) of the Credit Agreement, dated as of July 1, 1997, among the
Borrower, the Lender and certain other banks parties thereto, Citibank, N.A.,
as Issuing Bank, and Citicorp USA Inc., as Agent for the Lender and such other
banks and the Issuing Bank (such Credit Agreement, as it may be amended,
restated or otherwise modified, being the "Credit Agreement"). The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
The Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York, United States, without
reference to principles of conflicts of laws.
THE GAP, INC.
By
Name:
Title:
CREDIT AGREEMENT, dated as of July 1, 1997 (this
"Agreement"), among The Gap, Inc., a Delaware corporation (the
"Borrower"), the banks and financial institutions (the "Banks")
listed on the signature pages hereof and Citicorp USA Inc. ("CUSA"),
as agent (the "Agent") for the Lenders hereunder:
PRELIMINARY STATEMENT: The Borrower has requested the
Banks to make available to it up to $150,000,000 in revolving credit
loans to be used for general corporate purposes. Subject to the
terms and conditions of this Agreement, the Banks agree to make such
revolving credit loans.
NOW THEREFORE, the Borrower, the Banks, the Lenders from
time to time party hereto and the Agent agree as follows:
ARTICLE IDEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01Certain 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 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 9.07
hereof, in each case as such amount may be reduced pursuant to
Section 2.05.
"A Lender" means any Lender having an A Commitment or to
which A Advances are owed.
"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.
"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, 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 if
the applicable Business Day relates to any Eurodollar Rate
Advances, a day on which dealings are carried on in the London
interbank market.
"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.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sec. 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 5.01(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.
"CP Rating" means, as of any date, the higher of the
ratings that have been most recently announced by either S&P
or Moody's, as the case may be, for any class of non-credit
enhanced commercial paper debt issued by the Borrower. For
purposes of the foregoing, (a) if only one of S&P and Moody's
shall have in effect a CP Rating, the Eurodollar Rate Margin
and the Facility Fee Percentage may be determined by reference
to the available rating; (b) if any rating established by S&P
or Moody's shall be changed, such change shall be effective as
of the date on which such change is first announced publicly
by the rating agency making such change; and (c) if S&P or
Moody's shall change the basis on which ratings are
established, each reference to the CP Rating announced by S&P
or Moody's, as the case may be, shall refer to the then
equivalent rating by S&P or Moody's, as the case may be.
"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 Rating" means, as of any date, the higher of the
ratings that have been most recently announced by either S&P
or Moody's, as the case may be, for any class of long-term
senior unsecured non-credit enhanced debt issued by the
Borrower. For purposes of the foregoing, (a) if only one of
S&P and Moody's shall have in effect a Debt Rating, the
Eurodollar Rate Margin and the Facility Fee Percentage may be
determined by reference to the available rating; (b) if any
rating established by S&P or Moody's shall be changed, such
change shall be effective as of the date on which such change
is first announced publicly by the rating agency making such
change; and (c) if S&P or Moody's shall change the basis on
which ratings are established, each reference to the Debt
Rating announced by S&P or Moody's, as the case may be, shall
refer to the then equivalent rating by S&P or Moody's, as the
case may be.
"Default" means an event which would constitute an Event
of Default but for the requirement that notice be given or
time elapse, or both.
"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.
"EBITDA" means, for any period, Net Income plus, to the
extent deducted in determining such Net Income, the sum of (a)
Interest Expense, (b) income tax expense, (c) depreciation
expense and (d) amortization expense, all determined on a
Consolidated basis for the Borrower and its Subsidiaries in
accordance with generally accepted accounting principles.
"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 $10,000,000,000;
(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 $10,000,000,000; 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 $10,000,000,000; 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(b).
"Eurodollar Rate Margin" means, as of any date, a
percentage per annum determined by reference to the highest of
the Debt Rating or the CP Rating, as the case may be, in
effect on such date as set forth below:
Debt Rating or CP
Rating
S&P/Moody's
Eurodollar Rate
Margin for
Eurodollar Rate
Advances
Level 1
Debt Rating:
A+ or above or A1
or above
.12%
Level 2
Debt Rating:
below A+ but at
least A- or below
A1 but at least
A3
or
CP Rating:
A1 or P1
.145%
Level 3
Debt Rating:
below A- but at
least BBB- or
below A3 but at
least Baa3
or
CP Rating:
below A1 or
below P1
.20%
Level 4
Debt Rating:
none for S&P or
Moody's or
below BBB- or
below Baa3
and
CP Rating:
None from S&P or
Moody's
.30%
"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
7.01.
"Facility Fee Percentage" means, as of any date, a
percentage per annum determined by reference to the highest of
the Debt Rating or the CP Rating, as the case may be, as set
forth below:
Debt Rating or CP
Rating
S&P/Moody's
Facility Fee
Level 1
Debt Rating:
A+ or above or A1
or above
.07%
Level 2
Debt Rating:
below A+ but at
least A- or below
A1 but at least
A3
or
CP Rating:
A1 or P1
.08%
Level 3
Debt Rating:
below A- but at
least BBB- or
below A3 but at
least Baa3
or
CP Rating:
below A1 or
below P1
.125%
Level 4
Debt Rating:
none for S&P or
Moody's or
below BBB- or
below Baa3
and
CP Rating:
None from S&P or
Moody's
.20%
"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 5.01(e).
"Fiscal Year" means a fiscal year of the Borrower and
its Subsidiaries.
"Hazardous Substance" means (i) any hazardous substance
or toxic substance as such terms are presently defined or used
in Sec. 101(14) of CERCLA (42 U.S.C. Sec. 9601(14)), in 33 U.S.C.
Sec. 1251 et.seq. (Clean Water Act), or 15 U.S.C. Sec. 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.
"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 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 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 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 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.
"Lenders" means the Banks listed on the signature pages
hereof and each Eligible Assignee that shall become a party
hereto pursuant to Section 9.07.
"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 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.
"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.
"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 B Borrowing" has the meaning specified in
Section 2.03(a).
"Obligations" means all obligations of the Borrower now
or hereafter existing under this Agreement, whether for
principal, interest, fees, expenses, indemnification or
otherwise.
"OECD" means the Organization for Economic Cooperation
and Development.
"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 $20,000,000 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.
"RCRA" means the Resource Conservation and Recovery Act
of 1976, as amended (42 U.S.C. Sec. 6901 et seq.), and any
regulations promulgated thereunder.
"Reference Banks" means Citibank, N.A., The Hongkong and
Shanghai Banking Corporation Limited 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 9.07(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, home
furnishings, accessories, specialty foods and related products
or goods.
"Revolver Termination Date" means, subject to Section
2.14 hereof, June 28, 2002 or the earlier date of termination
in whole of the A Commitments pursuant to Section 2.05 or
7.01.
"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.
"364-Day Credit Agreement" means the Credit Agreement
dated as of July 1, 1997 among the Borrower, the LC
Subsidiaries (as defined therein), the financial institutions
party thereto as lenders, Citibank, N.A., as Issuing Bank (as
defined therein), and CUSA, as agent for the Issuing Bank and
such lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"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.
"Type" refers to the distinction among Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
SECTION 1.02Computation 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 1.03Accounting 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 5.01(e).
ARTICLE IIAMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01The 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 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 2.02Making the A Advances. (a) Each A Borrowing
shall be made on notice, given not later than (i) 12:00 noon (New
York City time) on the third Business Day prior to the date of the
proposed A Borrowing, if such proposed A Borrowing consists of
Eurodollar Rate Advances and (ii) 10:00 A.M. (New York City time) on
the day of such proposed A Borrowing, if such proposed A 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 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 9.02, 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 IV,
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 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
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 IV, 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 2.03The BAdvances. (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 9.02 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 IV, 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 3.04; 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 2.04Fees.
(a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each A Lender a facility fee, accruing at
the rate per annum equal to the Facility Fee Percentage in effect
from and after the date hereof, 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 A Lender), payable quarterly
in arrears on the last day of each January, April, July and October
and on the Revolver Termination Date.
(b) Utilization Fee. The Borrower agrees to pay to
the Agent for the account of each A Lender a utilization fee,
accruing, during all periods from and after the date hereof when the
aggregate amount of outstanding A Advances made by such A Lender
exceeds 50% of such A Lender's A Commitment (without regard to any
usage thereof), at the rate of 0.05% per annum on the aggregate
amount of such A Advances outstanding from time to time during such
periods, payable quarterly in arrears on the last day of each
January, April, July and October and on the Revolver Termination
Date.
(c) Other Fees. The Borrower hereby agrees to pay the
fees and charges referred to in that certain letter agreement, dated
as of the date hereof, among the Borrower and the Agent.
SECTION 2.05Reduction 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, 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 2.06Repayment 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 2.07Interest 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) 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 2.08Additional 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 2.09Interest Rate Determination. (a) Each
Reference Bank agrees to furnish to the Agent timely information for
the purpose of determining the Eurodollar Rate. If any one or more
of the Reference Banks shall not furnish such timely information to
the Agent for the purpose of determining any 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) or (b), 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).
(b) If, with respect to any Eurodollar Rate Advances,
the Majority Lenders notify the Agent that the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect
the cost to such Majority 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 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 A 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 A 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, A Advances of
such Type having such Interest Period.
(e) If fewer than two Reference Banks furnish timely
information to the Agent for determining 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 Eurodollar Rate Advances,
(ii) each such A Advance will automatically, on
the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance (or if such A 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 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.
SECTION 2.10Voluntary 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 A Advances of another
Type; provided, however, that any Conversion of any Eurodollar Rate
Advances into A Advances of another Type shall be made on, and only
on, the last day of an Interest Period for such 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 Eurodollar Rate Advances, the duration of the
Interest Period for each such A Advance.
SECTION 2.11No 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 or Section
2.14.
(b) The Borrower may, upon at least (i) two Business
Day's, in the case of Eurodollar 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
$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 a Eurodollar Rate Advance, the
Borrower shall be obligated to reimburse the A Lenders in respect
thereof pursuant to Section 9.04(b).
SECTION 2.12Increased 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 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 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 2.13Illegality. (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 A 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 2.14Extension 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, the Majority
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 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 (each such A Lender being a "Declining A Lender"),
such Declining A Lender shall be deemed not to have consented to any
requested extension, such Declining A Lenders' A Commitments shall
terminate on the scheduled Revolver Termination Date then in effect
for such Declining A Lender, and on such scheduled Revolver
Termination Date the Borrower shall repay in full the principal
amount of A Advances owing to such Declining A Lender, together with
accrued interest thereon to the date of payment of such principal
amount, all fees payable to such Declining A Lender and all other
amounts payable to such Declining A Lender under this Agreement
(including, but not limited to any increased costs or other
additional amounts owing under Section 2.12, any indemnification for
Taxes or Other Taxes under Section 3.02, or any amounts which may be
required to be paid by the Borrower pursuant to Section 9.04(b)).
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 IIIPAYMENTS, TAXES, EXTENSIONS, ETC.
SECTION 3.01Payments and Computations. (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 B Advances) at its address referred to in
Section 9.02 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, 2.14 or
3.02) 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 9.07(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 hereby authorizes 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 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 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 3.02Taxes. (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 3.02) 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 3.02) 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 3.02(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 3.02(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 3.02(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 3.02(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 3.02 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 3.02 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 3.02 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 3.02
and (ii) otherwise to cooperate with the Borrower to minimize the
amount payable by the Borrower pursuant to this Section 3.02;
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 3.02 shall survive the
payment in full of the Obligations.
SECTION 3.03Sharing of Payments, Etc. 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, 2.14 or 3.02) in excess of its ratable share of payments on
account of the A Advances obtained by all the A Lenders, such Lender
shall forthwith purchase from the other 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 A Lender pursuant
to this Section 3.03 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 3.04Evidence of Debt. (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 9.07(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 Borrowing made
hereunder, the Type of Advances comprising such 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.
ARTICLE IVCONDITIONS OF LENDING
SECTION 4.01Condition Precedent to Initial Advances.
The obligation of each A Lender to make its initial Advance is
subject to the condition precedent that the Agent shall have
received on or before the day of the initial Borrowing the
following, in form and substance satisfactory to the Agent and in
sufficient copies for each Lender:
(a) Certified copies of all documents of the Borrower
evidencing necessary corporate action and governmental
approvals, if any, with respect to this Agreement.
(b) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign
this Agreement and the other documents to be delivered
hereunder.
(c) A favorable opinion of Borrower's 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.
(e) Such other approvals, opinions or documents as the
Agent may reasonably request.
SECTION 4.02Conditions Precedent to Each A Borrowing.
The obligation of each A Lender to make an A Advance on the occasion
of each A Borrowing (including the initial A Borrowing) shall be
subject to the further conditions precedent that on the date of such
A Borrowing 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 shall constitute a
representation and warranty by the Borrower that on the date of such
A Borrowing such statements are true):
(a) The representations and warranties contained in
Section 5.01 (other than Section 5.01(e)) are correct on and
as of the date of such A Borrowing, before and after giving
effect to such A Borrowing, and to the application of the
proceeds therefrom, as though made on and as of such date, and
(b) (i) No event has occurred and is continuing, or
would result from such A Borrowing or from the application of
the proceeds therefrom, which constitutes an Event of Default
or Default and (ii) no event has occurred and is continuing
which constitutes an "Event of Default" or a "Default" under
the 364-Day Credit Agreement.
SECTION 4.03Conditions Precedent to Each BBorrowing.
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 5.01 (other than Section 5.01(e)) 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) (i) 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 (ii) no event has occurred and is continuing
which constitutes an "Event of Default" or a "Default" under
the 364-Day Credit Agreement, 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 VREPRESENTATIONS AND WARRANTIES
SECTION 5.01Representations 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. 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 of this Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's
charter or by-laws or (ii) law or any contractual restriction
binding on or affecting the Borrower or its 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 of this Agreement.
(d) This Agreement is the legal, valid and binding
obligation of the Borrower enforceable against the Borrower
in accordance with its terms.
(e) The Consolidated balance sheets of the Borrower
and its Subsidiaries as at February 1, 1997, 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, copies of which have been
furnished to each Lender, fairly present the Consolidated
financial condition of the Borrower and its Subsidiaries as at
such date and the results of the operations of the Borrower
and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles
consistently applied, and since February 1, 1997, there has
been no material adverse change in the condition (financial or
otherwise), operations, properties or prospects of the
Borrower and its Subsidiaries taken as a whole.
(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) Following the application of the proceeds of each
Advance, not more than 25 percent of the value of the assets
(either of the Borrower only or of the Borrower and its
Subsidiaries on a Consolidated basis) which are subject to any
restriction on Liens set forth in this Agreement or in any
agreement or instrument between the Borrower and any Lender or
any Affiliate of any Lender relating to Debt and within the
scope of Section 8.01(d) will consist of 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) Set forth on Schedule V hereto is a complete and
accurate list, as of the date hereof, of all Plans of the
Borrower and its Subsidiaries. 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 VICOVENANTS OF THE BORROWER
SECTION 6.01Affirmative Covenants. The Borrower will,
unless the Majority 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 hereunder or the ability of the Borrower
to perform its obligations hereunder.
(c) Visitation Rights. Permit the Agent 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 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 Lenders.
SECTION 6.02Negative Covenants. The Borrower will not,
without the written consent of the Majority 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 the financial covenant specified in
Section 6.03 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, subject to Section
6.02(d)(iii), 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 IV
hereto, as such Schedule may be amended from time to
time by the Borrower. The Borrower shall provide the
Agent and each Lender a copy of each change or amendment
made to Schedule IV promptly after each such change or
amendment thereof.
(iii) Mergers. Consummate, or permit the
consummation of, any merger or consolidation (regardless
of whether it is otherwise permitted by Section 6.02(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 6.02(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 6.03Financial Covenant. The Borrower will not,
without the written consent of the Majority Lenders, permit the
ratio of Debt on the last day of any Fiscal Quarter of the Borrower
to EBITDA for the period of four consecutive Fiscal Quarters of the
Borrower ending on such day to be greater than 3.00 to 1.00.
SECTION 6.04Reporting Requirements. The Borrower will
furnish to the Lenders:
(i) 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 6.03 (which certificate
shall contain the computations used by such chief financial
officer in determining such compliance or non-compliance);
(ii) 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 Lenders by
Deloitte & Touche or other independent public accountants
reasonably acceptable to the Majority Lenders;
(iii) 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 6.03
(which certificate shall contain the computations used by such
chief financial officer in determining such compliance or
non-compliance);
(iv) 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;
(v) 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;
(vi) 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;
(vii) 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
(viii) such other information respecting the
condition or operations, financial or otherwise, of the
Borrower or any of its Subsidiaries as any Lender through the
Agent may from time to time reasonably request.
ARTICLE VIIEVENTS OF DEFAULT
SECTION 7.01Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of
any Advance 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 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 6.03; or (ii) any term,
covenant or agreement contained in Section 6.02(c) or (d) for
a period of five days after written notice thereof shall have
been given to the Borrower by the Agent or any Lender; or
(iii) 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
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 of Control shall have occurred;
then, and in any such event, the Agent shall at the request, or may
with the consent, of the Majority 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, and/or (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; 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 A Lender
to make A 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 shall automatically be terminated.
ARTICLE VIIITHE AGENT
SECTION 8.01Authorization and Action. Each Lender
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 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.
SECTION 8.02Agent'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 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 9.07;
(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 8.03CUSA and Affiliates. With respect to CUSA's
A Commitment and the Advances made by it, CUSA 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; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated,
include CUSA in its individual capacity. CUSA and each of its
Affiliates (and, as applicable, any of its officers and directors)
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 and without any duty
to account therefor to the Lenders.
SECTION 8.04Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial statements
referred to in Section 5.01 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 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 8.05Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed by the Borrower),
ratably, according to their respective principal amounts of A
Advances then outstanding or if no A Advances are outstanding,
ratably according to the respective amounts of their A Commitments),
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. In the case of any investigation,
litigation or proceeding giving rise to any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs expenses or disbursements, this Section 8.05 applies whether
any such investigation, litigation or proceeding is brought by the
Agent, any Lender or a third party.
SECTION 8.06Successor 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 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 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 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 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 VIII
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
ARTICLE IXMISCELLANEOUS
SECTION 9.01Amendments, Etc.
(a) Majority Lenders. 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 Lenders; provided,
however, that no amendment, waiver or consent 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 4.01 or 4.02 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 (other than as permitted
under Section 2.14), (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 (a) of this Section 9.01.
(b) Agent. No amendment, waiver or consent given or
effected pursuant to this Section 9.01 shall, unless in writing and
signed by the Agent in addition to the A Lenders required above to
take such action, affect the rights, obligations or duties of the
Agent under this Agreement.
(c) Limitation of Scope. All waivers and consents
granted under this Section 9.01 shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 9.02Notices, 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;
with a copy, in the case of notices to the Agent, to Citicorp North
America, Inc., One Sansome Street, San Francisco, California,
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 VIII shall
not be effective until received by the Agent.
SECTION 9.03No Waiver; Remedies. No failure on the part
of any Lender 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 9.04Costs and Expenses. (a) The Borrower agrees
to pay on demand all costs and expenses of the Agent 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 with
respect thereto and with respect to advising the Agent 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 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 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, 2.13 or 2.14 or
acceleration of the maturity of the Advances pursuant to
Section 7.01 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 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
by the Borrower, 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 9.04 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
9.04(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 9.05Right of Setoff. 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 7.01 to authorize the Agent to declare the Advances due and
payable pursuant to the provisions of Section 7.01, 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 against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement to
such Lender, 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 9.06Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower 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, the Agent and each Lender and
their respective successors and assigns, except that the Borrower
shall not have the right to assign its respective rights hereunder
or any interest herein without the prior written consent of the
Lenders.
SECTION 9.07Assignments 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 or 3.02, after such
Lender has declined to vote in favor of extension of the Revolver
Termination Date pursuant to Section 2.14, or after any Lender has
assigned all or any portion of its rights and obligations under this
Agreement to any Affiliate without the consent of the Borrower, upon
at least 20 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); 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) in
respect of the assigning A Lender's A Commitment and A Advances that
is constant and not varying over time, (ii) the respective amounts
of the rights and obligations under the A Commitment and A Advances
of the assigning A Lender, 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),
(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, provided that any Lender so assigning to any of its
Affiliates shall give prompt notice thereof to the Borrower and the
Agent, (iv) each such assignment made as a result of a demand by the
Borrower pursuant to this Section 9.07(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 9.07(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).
(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 the performance or observance by the
Borrower 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 5.01 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, 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 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; 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 9.02 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 A Commitment of, and
principal amount of the 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 9.07 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 3.02 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 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) 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 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 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 or other
amounts or such fees, or (iii) extend the Revolver Termination Date.
(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 the consent of
the Borrower or the Agent, provided that any Lender so assigning to
any of its Affiliates shall give prompt notice thereof to the
Borrower and 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 9.08Severability 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 9.09Independence 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 9.10Confidentiality. Each Lender 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 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 9.11Headings. 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 9.12Entire 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(c), supersedes all previous understandings, written or
oral, in respect thereof.
SECTION 9.13Execution 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 9.14Consent 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 9.02 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 9.14 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 9.15GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
SECTION 9.16WAIVER OF JURY TRIAL. EACH OF THE BORROWER,
THE AGENT AND THE LENDERS 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 OR THE
ADVANCES, OR THE ACTIONS OF THE AGENT OR ANY LENDER 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 /s/ Warren R. Hashagen
Name: Warren R. Hashagen
Title: Senior Vice President and
Chief Financial Officer
THE AGENT:
CITICORP USA INC.
By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
THE BANKS:
A Commitment CITICORP USA INC.
$15,789,473.68
By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
A Commitment BANK OF AMERICA NATIONAL
$13,421,052.63 TRUST & SAVINGS ASSOCIATION
By /s/ Maria Vickroy-Peralta
Name: Maria Vickroy-Peralta
Title: Vice President
A Commitment THE HONGKONG AND SHANGHAI
$13,421,052.63 BANKING CORPORATION LIMITED
By /s/ J.C. Holsex
Name: J.C. Holsex
Title: Exec. Vice President
A Commitment NATIONSBANK OF TEXAS, N.A.
$11,052,631.58
By /s/ Chas A. McDonell
Name: Chas A. McDonell
Title: Vice President
A Commitment THE ROYAL BANK OF CANADA
$11,052,631.58
By /s/ Karen T. Hull
Name: Karen T. Hull
Title: Retail Group Manager
A Commitment BANK OF MONTREAL
$11,052,631.58
By /s/ Beverly A. Blucher
Name: Beverly A. Blucher
Title: Senior Vice President
A Commitment SOCIETE GENERALE
$11,052,631.58
By /s/ Maureen E. Kelly
Name: Maureen E. Kelly
Title: Vice President
A Commitment THE FUJI BANK, LIMITED
$11,052,631.58
By /s/ Kazuo Kamio
Name: Kazuo Kamio
Title: General Manager
A Commitment MORGAN GUARANTY TRUST
$11,052,631.58 COMPANY OF NEW YORK
By /s/ Adam J. Silver
Name: Adam J. Silver
Title: Associate
A Commitment THE SUMITOMO BANK LIMITED
$11,052,631.58
By /s/ Kozo Masaki
Name: Kozo Masaki
Title: General Manager
A Commitment DEUTSCHE BANK AG NEW YORK BRANCH
$11,052,631.58 AND/OR CAYMAN ISLANDS BRANCH
By /s/ Joel D. Makowsky
Name: Joel D. Makowsky
Title: Assistant Vice President
By /s/ Susan M. O'Connor
Name: Susan M. O'Connor
Title: Director
A Commitment UNION BANK OF SWITZERLAND, NEW
$11,052,631.58 YORK BRANCH
By /s/ M. Terri Reilly
Name: M. Terri Reilly
Title: Assistant Treasurer
By /s/ Samuel Azizo
Name: Samuel Azizo
Title: Vice President
A Commitment U.S. NATIONAL BANK OF OREGON
$7,894,736.84
By /s/ Janet E. Jordan
Name: Janet E. Jordan
Title: Vice President
_____________
$150,000,000 Total of the A Commitments
Schedule II
EXISTING LIENS
None
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 executive officers of The Gap, Inc. as of July 1, 1997.
Schedule IV
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
Schedule V
PLANS:
Gap VEBA Trust (Self-insured medical and dental claims)
GapShare Plan
Employee Benefit Premium Payment Plan - (Pre-tax employee contributions
under medical, dental plans)
Life Insurance and Accidental Death and Dismemberment Plan
Health Insurance Plan (HMOs and Employee Assistance Plan)
Short Term Disability Plan
Long Term Disability Plan
Tuition Reimbursement Program
Vision Care Plan
EXHIBIT A-1
NOTICE OF A BORROWING
Citicorp USA Inc., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, The Gap, Inc., refers to the Credit Agreement,
dated as of July 1, 1997 (the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the undersigned, certain
Lenders parties thereto, and Citicorp USA Inc. as Agent for said Lenders,
and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the
Credit Agreement that the undersigned hereby requests an A Borrowing under
the Credit Agreement, and in that connection sets forth below the
information relating to such A Borrowing (the "Proposed A Borrowing") as
required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed A Borrowing is
, 19 .
(ii) The Type of A Advances comprising the Proposed A
Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed A Borrowing is
$ .
(iv) The Interest Period for each A Advance made as part
of the Proposed A Borrowing is [ days] [ month[s]].
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed A
Borrowing:
(A) the representations and warranties contained in Section
5.01 are correct, before and after giving effect to the Proposed A
Borrowing 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 Proposed A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or Default.
Very truly yours,
THE GAP, INC.
By
Name:
Title:
EXHIBIT A-2
NOTICE OF B BORROWING
Citicorp USA Inc. , as Agent
for the Lenders parties
to the Credit Agreement
referred to below
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, The Gap, Inc., refers to the Credit Agreement,
dated as of July 1, 1997 (the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the undersigned, certain
Lenders parties thereto, and Citicorp USA Inc. as Agent for said Lenders,
and hereby gives you notice pursuant to Section 2.03 of the Credit
Agreement that the undersigned hereby requests a B Borrowing under the
Credit Agreement, and in that connection sets forth the terms on which such
B Borrowing (the "Proposed B Borrowing") is requested to be made:
(A) Date of B Borrowing
(B) Amount of B Borrowing
(C) Maturity Date
(D) Interest Rate Basis
(E) Interest Payment Date(s)
(F)
(G)
(H)
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed B
Borrowing:
(a) the representations and warranties contained in Section
5.01 are correct, before and after giving effect to the Proposed 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 the Proposed B Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or Default;
(c) no event has occurred and no circumstance exists as a
result of which the information concerning the undersigned that has
been provided to the Agent and each Lender by the undersigned in
connection with the Credit Agreement 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; and
(d) the aggregate amount of the Proposed B Borrowing and all
other Borrowings to be made on the same day under the Credit
Agreement is within the aggregate amount of the unused A Commitments
of the A Lenders.
The undersigned hereby confirms that the Proposed B Borrowing
is to be made available to it in accordance with Section 2.03(a)(v) of the
Credit Agreement.
Very truly yours,
THE GAP, INC.
By
Name:
Title:
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Dated ,
Reference is made to the Credit Agreement dated as of July 1,
1997 (the "Credit Agreement") among The Gap, Inc., a Delaware corporation
(the "Borrower"), the Lenders (as defined in the Credit Agreement), and
Citicorp USA Inc. as Agent for the Lenders (the "Agent"). Terms defined in
the Credit Agreement are used herein with the same meaning.
(the "Assignor") and (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, such
respective interests in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof (other than in respect of
B Advances) which represent the respective percentage interests specified
on Schedule 1 of all outstanding rights and obligations under the Credit
Agreement (other than in respect of B Advances) in respect of the
Assignor's A Commitment and the A Advances owing to the Assignor. After
giving effect to such sale and assignment, the Assignee's A Commitment and
the amount of the A Advances owing to the Assignee will be as set forth in
Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interests being assigned by it hereunder
and that such interests are free and clear of any adverse claim; (ii) makes
no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto and (iii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrower or the performance or observance by
the Borrower of any of their respective obligations under the Credit
Agreement or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements
referred to in Section 5.01 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Acceptance; (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor 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 the Credit Agreement; (iii) confirms that
it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take
such action on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a
Lender; [and] (vi) specifies as its Domestic Lending Office (and address
for notices) and Eurodollar Lending Office the offices set forth beneath
its name on the signature pages hereof and [(vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to be made to
the Assignee under the Credit Agreement or such other documents as are
necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty].
4. Following the execution of this Assignment and Acceptance
by the Assignor and the Assignee, it will be delivered to the Agent for
acceptance and recording by the Agent. The effective date of this
Assignment and Acceptance shall be the date of acceptance thereof by the
Agent, unless otherwise specified on Schedule 1 hereto (the "Effective
Date").
5. Upon such acceptance and recording by the Agent, as of
the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the
Credit Agreement in respect of the interests assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees
with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto
Schedule 1
to
Assignment and Acceptance
Dated , __
Section 1.
Percentage Interest in A Commitment and A Advances:
Section 2.
Assignee's A Commitment: $
Aggregate outstanding principal amount
of A Advances owing to Assignee: $
Section 3.
Effective Date : ,___
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this day
of , ____
CITICORP USA, INC., as Agent
By:
Title:
EXHIBIT E
FORM OF AUCTION BORROWING NOTE
U.S. $ ___________Dated: ____________, ___
FOR VALUE RECEIVED, the undersigned, THE GAP, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below), on
_________, ___, the principal amount of _______________________ Dollars ($
________).
The Borrower promises to pay interest on the unpaid principal
amount hereof from the date hereof until such principal amount is paid in
full, at the interest rate and payable on the interest payment date or dates
provided below:
Interest Rate: _____% per annum (calculated on the basis of a year of
_____ days for the actual number of days elapsed).
[Insert variable calculation if applicable]
Interest Payment Date or Dates:
____________________________________________
Both principal and interest are payable in lawful money of the
United States of America to ___________________________ for the account of the
Lender at the office of ____________________________, at
___________________________________________, in same day funds, free and clear
of and without any deduction, with respect to the payee named above, subject
to Section 3.02 of the Credit Agreement referred to below, for any and all
present and future taxes, deductions, charges or withholdings, and all
liabilities with respect thereto.
This Promissory Note is one of the promissory notes referred to in
Section 2.03(f) of the Credit Agreement, dated as of July 1, 1997, among the
Borrower, the Lender and certain other banks parties thereto, and Citicorp USA
Inc., as Agent for the Lender and such other banks (such Credit Agreement, as
it may be amended, restated or otherwise modified, being the "Credit
Agreement"). The Credit Agreement, among other things, contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events.
The Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York, United States, without
reference to principles of conflicts of laws.
THE GAP, INC.
By
Name:
Title:
Grant No. ________
THE GAP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
The Gap, Inc. (the "Company") hereby grants to _______________ (the
"Employee"), a stock option under The Gap, Inc. 1996 Stock Option and Award
Plan (the "Plan"), to purchase shares of common stock of the Company, $0.05
par value ("Shares"). This option is subject to all of the terms and
conditions contained in this Agreement, including the terms and conditions
contained in the attached Appendix A. The date of this Agreement is ____.
Subject to the provisions of Appendix A and of the Plan, the principal
features of this option are as follows:
Number of Shares
Purchasable with this Option: ________
Price per Share: __________
Date Option was Granted: _________
Date Option is Scheduled to become Exercisable: _______
Latest Date Option Expires: _______
As provided in the Plan and in this Agreement, this option may
terminate before the date written above, including before the option becomes
exercisable or is exercised. For example, if Employee's employment ends
before the date this option becomes exercisable, this option will terminate at
the same time as Employee's employment terminates. See paragraphs 5, 6 and 7
of Appendix A for further information concerning how changes in employment
affect termination of this option. PLEASE BE SURE TO READ ALL OF APPENDIX A,
WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
IN WITNESS WHEREOF, the Company and the Employee have executed
this Agreement, in duplicate, to be effective as of the date first above
written.
THE GAP, INC.
Dated: _____________________________________
Donald G. Fisher
Chairman of the Board
My signature below indicates that I understand that this option is
subject to all of the terms and conditions of this Agreement (including the
attached Appendix A) and of the Plan.
EMPLOYEE
Dated: __________________ _____________________________________
Address:
_____________________________________________
_____________________________________________
_____________________________________________
Social Security No.: __________________________
APPENDIX A
TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION
1. Grant of Option. The Company hereby grants to Employee under the
Plan, as a separate incentive in connection with his or her employment and not
in lieu of any salary or other compensation for his or her services, a non-
qualified stock option to purchase, on the terms and conditions set forth in
this Agreement and the Plan, all or any part of the number of Shares set forth
on page 1 of this Agreement. The option granted hereby is not intended to be
an Incentive Stock Option within the meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share (the "Option Price")
shall be equal to the price set forth on page 1 of this Agreement, which is the
fair market value per Share on the date of this Agreement. The Option Price
shall be payable in the legal tender of the United States.
3. Number of Shares. The number and class of Shares specified in
paragraph 1 above, and/or the Option Price, are subject to appropriate
adjustment in the event of changes in the capital stock of the Company by
reason of stock dividends, split-ups or combinations of shares,
reclassifications, mergers, consolidations, reorganizations or liquidations.
Subject to any required action of the stockholders of the Company, if the
Company shall be the surviving corporation in any merger or consolidation, the
option granted hereunder (to the extent that it is still outstanding) shall
pertain to and apply to the securities to which a holder of the same number of
Shares that are then subject to the option would have been entitled. To the
extent that the foregoing adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Compensation and Stock Option
Committee of the Company's Board of Directors (the "Committee"), whose
determination in that respect shall be final, binding and conclusive.
4. Commencement of Exercisability. Except as otherwise provided in
this Agreement, the right to exercise the option awarded by this Agreement
shall accrue as to 100% of the Shares subject to such option on the third
anniversary date of the date of this Agreement, assuming that Employee is still
employed with the Company or an Affiliate on such date. If Employee is not
employed on such date, the option shall terminate, as set out in paragraph 7.
5. Postponement of Exercisability. Notwithstanding paragraph 4 or any
other provision of this Agreement, prior to the third anniversary of the date
of this Agreement, the Committee, in its sole discretion, may determine that
the right to exercise the option awarded by this Agreement shall accrue on a
date later than the third anniversary of this Agreement. The Committee shall
exercise its power to postpone the commencement of exercisability only if the
Committee, in its sole discretion, determines that Employee has taken a
personal leave of absence (as defined from time to time by the Committee) since
the date of this Agreement. The duration of the period of postponement shall
equal the duration of the personal leave of absence. If Employee does not
return from the personal leave of absence, the option shall terminate as set
out in paragraph 7.
6. Elimination of Exercisability. Notwithstanding paragraph 4 or any
other provision of this Agreement, prior to the third anniversary of the date
of this Agreement, the Committee, in its sole discretion, may determine that
the right to exercise the option awarded by this Agreement shall never accrue
as to all or part of the Shares specified in paragraph 1 (and as adjusted
pursuant to paragraph 3, if appropriate), in which case the option shall
terminate as to such Shares. The Committee shall exercise such power only if
the Committee, in its sole discretion, determines that (a) Employee's
employment with the Company or an Affiliate has been reduced to less than a
full-time basis, and/or (b) Employee has transferred to a position which, under
the Committee's then existing policy, normally would not qualify Employee to be
granted options under the Plan or to be granted the number of options granted
under this Agreement.
7. Termination of Option. In the event that Employee's employment
with the Company or an Affiliate terminates for any reason other than
Retirement (as defined in the Plan) or death, this option shall immediately
thereupon terminate. In the event of Employee's Retirement, Employee may,
within one (1) year after the date of such Retirement, or within ten (10) years
from the date of this Agreement, whichever shall first occur, exercise any
unexercised portion of the option (whether or not exercisable). In the event
that Employee shall die while in the employ of the Company or an Affiliate, any
unexercised portion of the option (whether or not exercisable) may be exercised
by Employee's beneficiary or transferee, as hereinafter provided, for a period
of one (1) year after the date of Employee's death or within ten (10) years
from the date of this Agreement, whichever shall first occur. Notwithstanding
the preceding two sentences, in the event that within one year of the date of
this Agreement, Employee dies or terminates employment due to Retirement, this
option shall immediately thereupon terminate.
8. Persons Eligible to Exercise. The option shall be exercisable
during Employee's lifetime only by Employee. The option shall be non-
transferable by Employee other than by a beneficiary designation made in a form
and manner acceptable to the Committee, or by will or the applicable laws of
descent and distribution.
9. Death of Employee. To the extent exercisable after Employee's
death, the option shall be exercised only by Employee's designated beneficiary
or beneficiaries, or if no beneficiary survives Employee, by the person or
persons entitled to the option under Employee's will, or if Employee shall fail
to make testamentary disposition of the option, his or her legal
representative. Any transferee exercising the option must furnish the Company
(a) written notice of his or her status as transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of the
option and compliance with any laws or regulations pertaining to said transfer,
and (c) written acceptance of the terms and conditions of the option as
prescribed in this Agreement.
10. Exercise of Option. The option may be exercised by the person then
entitled to do so as to any Shares which may then be purchased (a) by giving
written notice of exercise to the Company, specifying the number of full Shares
to be purchased and accompanied by full payment of the purchase price thereof
(and the amount of any income tax the Company determines is required to be
withheld by reason of such exercise), and (b) by giving satisfactory assurances
in writing if requested by the Company, signed by the person exercising the
option, that the Shares to be purchased upon such exercise are being purchased
for investment and not with a view to the distribution thereof.
11. No Rights of Stockholder. Neither Employee nor any person claiming
under or through said Employee shall be or have any of the rights or privileges
of a stockholder of the Company in respect of any of the Shares issuable upon
the exercise of the option, unless and until certificates representing such
Shares shall have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to Employee.
12. No Right to Continued Employment. Employee understands and agrees
that this Agreement does not impact in any way the right of the Company, or the
Affiliate employing Employee, as the case may be, to terminate or change the
terms of the employment of Employee at any time for any reason whatsoever, with
or without good cause. Employee understands and agrees that his or her
employment is "at-will" and that either the Company or Employee may terminate
Employee's employment at any time and for any reason. Employee also
understands and agrees that his or her "at-will" status can only be changed by
an express written contract signed by an authorized officer of the Company and
Employee.
13. Addresses for Notices. Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company, in care of its
Law Department, at The Gap, Inc., One Harrison, San Francisco, California
94105, or at such other address as the Company may hereafter designate in
writing. Any notice to be given to Employee shall be addressed to Employee at
the address set forth beneath Employee's signature hereto, or at such other
address as Employee may hereafter designate in writing. Any such notice shall
be deemed to have been duly given if and when enclosed in a properly sealed
envelope, addressed as aforesaid, registered or certified and deposited,
postage and registry fee prepaid, in a United States post office.
14. Non-Transferability of Option. Except as otherwise herein
provided, the option herein granted and the rights and privileges conferred
hereby shall not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to sale
under execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of said option, or of any
right or privilege conferred hereby, contrary to the provisions hereof, or upon
any attempted sale under any execution, attachment or similar process upon the
rights and privileges conferred hereby, said option and the rights and
privileges conferred hereby shall immediately become null and void.
15. Maximum Term of Option. Notwithstanding any other provision of
this Agreement, this option is not exercisable after the expiration of ten (10)
years from the date of this Agreement.
16. Binding Agreement. Subject to the limitation on the
transferability of the option contained herein, this Agreement shall be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
17. Plan Governs. This Agreement is subject to all terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used and not defined in this
Agreement shall have the meaning set forth in the Plan.
18. Committee Authority. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Employee, the Company and all other interested persons.
No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
this Agreement.
19. Captions. Captions provided herein are for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
20. Agreement Severable. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
Grant No. ___________
THE GAP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
The Gap, Inc. (the "Company") hereby grants to [NAME] (the
"Director"), a stock option under The Gap, Inc. 1996 Stock Option and
Award Plan (the "Plan"), to purchase shares of common stock of the
Company, $0.05 par value ("Shares"). This option is subject to all of
the terms and conditions contained in this Agreement, including the
terms and conditions contained in the attached Appendix A. The date of
this Agreement is [DATE]. Subject to the provisions of Appendix A and
of the Plan, the principal features of this option are as follows:
Number of Shares
Purchasable with this Option: [SHARES]
Price per Share: [PRICE-PER-SHARE]
Date Option was Granted: [DATE]
Date Option is
Scheduled to become Exercisable: <VEST>
Latest Date Option Expires: <EXPIRE>
As provided in the Plan and in this Agreement, this option
may terminate before the date written above, including before the option
becomes exercisable or is exercised. For example, if Director's term
ends before the date this option becomes exercisable, this option will
terminate at the same time as Director's term terminates. PLEASE BE
SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND
CONDITIONS OF THIS OPTION.
IN WITNESS WHEREOF, the Company and the Director have
executed this Agreement, in duplicate, to be effective as of the date
first above written.
THE GAP, INC.
Dated: [DATE] _______________________________________
Donald G. Fisher
Chairman of the Board
My signature below indicates that I understand that this
option is subject to all of the terms and conditions of this Agreement
(including the attached Appendix A) and of the Plan.
DIRECTOR
Dated: __________ ______________________________________
Address:
__________________________________________
_____________________________________________
_____________________________________________
Social Security No.:
__________________________
APPENDIX A
TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION
1. Grant of Option. The Company hereby grants to the Director
under the Plan, as a separate incentive in connection with his or her
service and not in lieu of any salary or other compensation for his or
her services, a non-qualified stock option to purchase, on the terms and
conditions set forth in this Agreement and the Plan, all or any part of
the number of shares set forth on page 1 of this Agreement. The option
granted hereby is not intended to be an Incentive Stock Option within the
meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share (the "Option
Price") shall be equal to the price set forth on page 1 of this
Agreement, which is the fair market value per Share on the date of this
Agreement. The Option Price shall be payable in the legal tender of the
United States.
3. Number of Shares. The number and class of Shares specified
in paragraph 1 above, and/or the Option Price, are subject to appropriate
adjustment in the event of changes in the capital stock of the Company by
reason of stock dividends, split-ups or combinations of Shares,
reclassifications, mergers, consolidations, reorganizations or
liquidations. Subject to any required action of the stockholders of the
Company, if the Company shall be the surviving corporation in any merger
or consolidation, the option granted hereunder (to the extent that it is
still outstanding) shall pertain to and apply to the securities to which
a holder of the same number of Shares of Common Stock that are then
subject to the option would have been entitled. To the extent that the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Compensation and Stock Option Committee
of the Company's Board of Directors (the "Committee"), whose
determination in that respect shall be final, binding and conclusive.
4. Commencement of Exercisability. Except as otherwise provided
in this Agreement, the right to exercise the option awarded by this
Agreement shall accrue as to 100% of the Shares subject to such option on
the third anniversary date of the date of this Agreement.
5. Reduction or Elimination of Exercisability. Notwithstanding
paragraph 4 or any other provision of this Agreement, prior to the third
anniversary of the date of this Agreement, the Committee, in its sole
discretion, may determine that the right to exercise the option awarded
by this Agreement shall not accrue as to all or part of the Shares
specified in paragraph 1 (and as adjusted pursuant to paragraph 3, if
appropriate).
6. Termination of Option. In the event that Director's service
with the Company or an Affiliate terminates for any reason other than
Retirement, Total Disability or death, this option shall immediately
thereupon terminate. In the event of the Director's Retirement or
Termination of Employment by reason of his or her Total Disability, the
Director may, within one (1) year after the date of such Termination of
Employment, or within ten (10) years from the date of this Agreement,
whichever shall first occur, exercise any unexercised portion of the
option. In the event that the Director shall die while in the employ of
the Company or an Affiliate, any unexercised portion of the option may be
exercised by the Director's beneficiary or transferee, as hereinafter
provided, for a period of one (1) year after the date of the Director's
death or within eight ten (10) years from the date of this Agreement,
whichever shall first occur. Notwithstanding the preceding two
sentences, in the event that within one year of the date of this
Agreement, Director's service with the Company or an Affiliate is
terminated on account of his or her Retirement, Total Disability or
death, this option shall immediately thereupon terminate.
7. Persons Eligible to Exercise. The option shall be
exercisable during the Director's lifetime only by the Director. The
option shall be non-transferable by the Director other than by a
beneficiary designation made in a form and manner acceptable to the
Committee, or by will or the applicable laws of descent and distribution.
8. Death of Director. To the extent exercisable after the
Director's death, the option shall be exercised only by the Director's
designated beneficiary or beneficiaries, or if no beneficiary survives
the Director, by the person or persons entitled to the option under the
Director's will, or if the Director shall fail to make testamentary
disposition of the option, his or her legal representative. Any
transferee exercising the option must furnish the Company (a) written
notice of his or her status as transferee, (b) evidence satisfactory to
the Company to establish the validity of the transfer of the option and
compliance with any laws or regulations pertaining to said transfer, and
(c) written acceptance of the terms and conditions of the option as
prescribed in this Agreement.
9. Exercise of Option. The option may be exercised by the
person then entitled to do so as to any Shares which may then be
purchased (a) by giving written notice of exercise to the Company,
specifying the number of full Shares to be purchased and accompanied by
full payment of the purchase price thereof (and the amount of any income
tax the Company is required by law to withhold by reason of such
exercise), and (b) by giving satisfactory assurances in writing if
requested by the Company, signed by the person exercising the option,
that the Shares to be purchased upon such exercise are being purchased
for investment and not with a view to the distribution thereof.
10. No Rights of Stockholder. Neither the Director nor any
person claiming under or through said Director shall be or have any of
the rights or privileges of a stockholder of the Company in respect of
any of the Shares issuable upon the exercise of the option, unless and
until certificates representing such Shares shall have been issued,
recorded on the records of the Company or its transfer agents or
registrars, and delivered to Director.
11. No Effect on Service. Nothing in this Agreement shall confer
upon the Director the right to continue in service on the Board.
12. Addresses for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in
care of its Law Department, at The Gap, Inc., One Harrison Street, San
Francisco, California 94105, or at such other address as the Company may
hereafter designate in writing. Any notice to be given to the Director
shall be addressed to the Director at the address set forth beneath the
Director's signature hereto, or at such other address as the Director may
hereafter designate in writing. Any such notice shall be deemed to have
been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified and deposited, postage
and registry fee prepaid, in a United States post office.
13. Non-Transferability of Option. Except as otherwise herein
provided, the option herein granted and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to sale under execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of said option, or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon any attempted sale
under any execution, attachment or similar process upon the rights and
privileges conferred hereby, said option and the rights and privileges
conferred hereby shall immediately become null and void.
14. Maximum Term of Option. Notwithstanding any other provision
of this Agreement, this option is not exercisable after the expiration of
ten (10) years from the date of this Agreement.
15. Binding Agreement. Subject to the limitation on the
transferability of the option contained herein, this Agreement shall be
binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.
16. Plan Governs. This Agreement is subject to all terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used and not defined in this
Agreement shall have the meaning set forth in the Plan.
17. Committee Authority. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All
actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon Director, the
Company and all other interested persons. No member of the Committee
shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this
Agreement.
18. Captions. Captions provided herein are for convenience only
and are not to serve as a basis for interpretation or construction of
this Agreement.
19. Agreement Severable. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, the remaining provisions of this
Agreement.
Grant No.______
THE GAP, INC.
RESTRICTED STOCK AWARD AGREEMENT
The Gap, Inc. (the "Company") hereby grants to _______ (the
"Employee"), an award of Restricted Stock under The Gap, Inc. 1996 Stock Option
and Award Plan (the "Plan"). This award is subject to all of the terms and
conditions contained in this Agreement, including the terms and conditions
contained in the attached Appendix A. The date of this Agreement is _____.
Subject to the provisions of Appendix A and of the Plan, the principal features
of this award are as follows:
Number of Shares:
Date of Grant:
Date(s) Restrictions on
Shares Scheduled to Lapse:
As provided in the Plan and in this Agreement, this award may
terminate before the restrictions on all or part of the shares lapse. For
example, if Employee's employment ends before the date the restrictions lapse,
this award will terminate and the shares awarded shall revert to the Company.
See paragraph 4 of Appendix A for further information concerning how changes in
employment affect termination of this award.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement, in duplicate, to be effective as of the date first above written.
THE GAP, INC.
Dated: ________________________________________________
Donald G. Fisher
Chairman of the Board
My signature below indicates that I understand that this award is
subject to all of the terms and conditions of this Agreement (including the
attached Appendix A) and of the Plan.
EMPLOYEE
Dated: ______________________________________________
Address:
_____________________________________________
_____________________________________________
_____________________________________________
Social Security No.:
__________________________________
APPENDIX A
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARD
1. Grant of Award. The Company hereby grants to Employee for past
services and as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her services, an
award of the number of restricted shares of common stock of the Company, $0.05
par value, set forth on page 1 of this Agreement, which shares of Restricted
Stock shall be granted on the date hereof, subject to all the terms and
conditions in this Agreement and the Plan.
2. Shares held in Escrow. Unless and until the restrictions on the
shares of Restricted Stock shall have lapsed in the manner set forth in
paragraph 3 below, such shares shall be issued in the name of Employee and held
by the Secretary of the Company as escrow agent (the "Escrow Agent"), and
shall not be sold, transferred or otherwise disposed of and shall not be
pledged or otherwise hypothecated. The Company may instruct the transfer agent
for its common stock to place a legend on the certificates representing the
Restricted Stock or otherwise note its records as to the restrictions on
transfer set forth in this Agreement and the Plan. The certificate or
certificates representing such shares shall be delivered by the Escrow Agent to
Employee only after the restrictions on such shares have lapsed and all other
terms and conditions in this Agreement have been satisfied.
3. Lapse of Restrictions. Subject to the provisions of paragraph
3(b), the restrictions on the shares of Restricted Stock awarded by this
Agreement shall lapse with respect to a number of shares on a date (the "Lapse
Date") determined under paragraph 3(a).
The Lapse Date shall be as set forth on page 1 of this
Agreement.
If compliance with a trading restriction imposed by the
Company's policy prohibiting trading on undisclosed material information, as
set forth in the Company's Corporate Compliance Manual (the "Insider Trading
Policy") would prohibit Employee from selling any shares of the Company's
common stock on a Lapse Date set forth in paragraph 3(a), then the Lapse Date
with respect to that number of shares which would otherwise become vested
pursuant to paragraph 3(a) shall be the earlier of (i) the first subsequent day
on which both (A) the Company's common stock is traded on a national securities
exchange within the meaning of Section 6 of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") (such as the New York Stock Exchange) or
a national market system within the meaning of Section 11A of the Exchange Act
and (B) on which Employee may sell shares of the Company's common stock without
violating the Insider Trading Policy, or (ii) the date which is ninety (90)
days after the Lapse Date set forth in paragraph 3(a).
4. Termination of Service or Change in Status. The shares of
Restricted Stock as to which restrictions have not lapsed at the time of
Employee's Termination of Service shall thereupon be forfeited and
automatically transferred to and reacquired by the Company at no cost to the
Company. Notwithstanding paragraph 3 or any other provision of this Agreement,
prior to the date the restrictions on the shares of Restricted Stock awarded by
this Agreement are deemed to have lapsed, the Committee, in its sole
discretion, may determine that such restrictions shall never lapse as to all or
part of the shares specified in paragraph 1 (and as adjusted pursuant to
paragraph 10, if appropriate), in which case the award shall terminate as to
such shares and such shares shall thereupon be forfeited and automatically
transferred to and reacquired by the Company at no cost to the Company. The
Committee shall exercise such power only if the Committee, in its sole
discretion, determines that (a) Employee's employment with the Company or an
Affiliate has been reduced to less than a full-time basis, and/or (b) Employee
has transferred to a position which, under the Committee's then existing
policy, normally would not qualify Employee to be granted an award of
Restricted Stock or to be granted an award of the number of shares of
Restricted Stock granted under this Agreement. Employee hereby appoints the
Escrow Agent with full power of substitution, as Employee's true and lawful
attorney-in-fact with irrevocable power and authority in the name and on behalf
of Employee to take any action and execute all documents and instruments,
including, without limitation, stock powers which may be necessary to transfer
the certificate or certificates evidencing such unvested shares to the Company
upon such Termination of Service or determination by the Committee.
5. Continuous Employment Required. Restrictions on shares of
Restricted Stock shall not lapse in accordance with any of the provisions of
this Agreement unless Employee shall have been continuously employed by the
Company or by one of its Affiliates from the date of the award until the date
such restrictions are deemed to have lapsed.
6. Withholding Taxes. Notwithstanding anything in this Agreement
to the contrary, no certificate representing Restricted Stock may be released
from the escrow established pursuant to paragraph 2 of this Agreement unless
and until Employee shall have delivered to the Company or its designated
Affiliate, the full amount of any federal, state or local income and other
taxes which the Company or such Affiliate may be required by law to withhold
with respect to such shares.
7. Beneficiary Designation. Any distribution or delivery to be
made to Employee under this Agreement shall, if the Employee is then deceased,
be made to the Employee's designated beneficiary, or if no such beneficiary
survives the Employee, the person or persons entitled to such distribution or
delivery under the Employee's will or, if the Employee shall fail to make
testamentary disposition of such property, the executor of his or her estate.
In order to be effective, a beneficiary designation must be made by the
Employee in a form and manner acceptable to the Committee. Any transferee must
furnish the Company with (a) written notice of his or her status as transferee,
and (b) evidence satisfactory to the Company to establish the validity of the
transfer and compliance with any laws or regulations pertaining to said
transfer.
8. Conditions to Issuance of Shares. The shares of stock
deliverable to Employee may be either previously authorized but unissued shares
or issued shares which have been reacquired by the Company. The Company shall
not be required to issue any certificate or certificates for shares of stock
hereunder prior to fulfillment of all of the following conditions: (a) The
admission of such shares to listing on all stock exchanges on which such class
of stock is then listed; (b) The completion of any registration or other
qualification of such shares under any State or Federal law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; (c) The obtaining of any approval or
other clearance from any State or Federal governmental agency, which the
Committee shall, in its absolute discretion, determine to be necessary or
advisable; and (d) The lapse of such reasonable period of time following the
date of grant of the Restricted Stock as the Committee may establish from time
to time for reasons of administrative convenience.
9. Rights as Stockholder. Except as otherwise provided in this
Agreement, after the date of this Agreement, Employee shall have all rights of
a stockholder of the Company with respect to voting such shares and receipt of
dividends and distributions on such shares.
10. Changes in Stock. In the event that as a result of a stock
dividend, stock split, reclassification, recapitalization, combination of
shares or the adjustment in capital stock of the Company or otherwise, or as a
result of a merger, consolidation, spin-off or other reorganization, the
Company's common stock shall be increased, reduced or otherwise changed, and by
virtue of any such change Employee shall in his or her capacity as owner of
unvested shares of Restricted Stock which have been awarded to him or her (the
"Prior Shares") be entitled to new or additional or different shares of stock
or securities (other than rights or warrants to purchase securities), such new
or additional or different shares or securities shall thereupon be considered
to be unvested Restricted Stock and shall be subject to all of the conditions
and restrictions which were applicable to the Prior Shares pursuant to the
Plan. If an Employee receives rights or warrants with respect to any Prior
Shares, such rights or warrants may be held or exercised by the Employee,
provided that until such exercise any such rights or warrants and after such
exercise any shares or other securities acquired by the exercise of such rights
or warrants shall be considered to be unvested Restricted Stock and shall be
subject to all of the conditions and restrictions which were applicable to the
Prior Shares pursuant to the Plan.
11. Plan Governs. This Agreement is subject to all the terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used in this Agreement that are not
defined in this Agreement shall have the meaning set forth in the Plan.
12. Committee Authority. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Employee, the Company and all other interested persons.
No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
this Agreement.
13. No Right to Continued Employment. The Employee understands
and agrees that this Agreement does not impact in any way the right of the
Company, or the Affiliate employing the Employee, as the case may be, to
terminate or change the terms of the employment of the Employee at any time for
any reason whatsoever, with or without good cause. The Employee understands
and agrees that his or her employment is "at-will" and that either the Company
or the Employee may terminate Employee's employment at any time and for any
reason. Employee also understands and agrees that his or her "at-will" status
can only be changed by an express written contract signed by an authorized
officer of the Company and the Employee.
14. Non-Transferability of Award. Except as otherwise herein
provided, the Restricted Stock herein granted and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of such award, or of
any right or privilege conferred hereby, contrary to the provisions hereof, or
upon any attempted sale under any execution, attachment or similar process upon
the rights and privileges conferred hereby, such award and the rights and
privileges conferred hereby shall immediately become null and void.
15. Binding Agreement. Subject to the limitation on the
transferability of the Restricted Stock contained herein, this Agreement shall
be binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of Employee and the Company.
16. Addresses for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Law Department, at The Gap, Inc., One Harrison, San Francisco, California
94105, or at such other address as the Company may hereafter designate in
writing. Any notice to be given to the Employee shall be addressed to the
Employee at the address set forth beneath the Employee's signature hereto, or
at such other address as the Employee may hereafter designate in writing. Any
such notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, registered or certified and
deposited, postage and registry fee prepaid, in a United States post office.
17. Captions. Captions provided herein are for convenience only
and are not to serve as a basis for interpretation or construction of this
Agreement.
18. Agreement Severable. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
<TABLE>
THE GAP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net earnings ($000) $ 69,458 $65,790 $ 153,762 $147,363
Weighted average shares of
common stock outstanding
during the period 269,687,093 286,179,138 271,581,001 287,092,901
Add incremental shares
from assumed exercise of stock
options (primary) 5,198,663 3,979,454 4,588,464 3,689,245
274,885,756 290,158,592 276,169,465 290,782,146
Primary earnings per share $ 0.25 $ 0.23 $ 0.56 $ 0.51
Weighted average shares of
common stock outstanding
during the period 269,687,093 286,179,138 271,581,001 287,092,901
Add incremental shares from
assumed exercise of stock
options (fully-diluted) 6,662,221 4,034,292 6,406,110 4,137,765
276,349,314 290,213,430 277,987,111 291,230,666
Fully-diluted earnings
per share $ 0.25 $ 0.23 $ 0.55 $ 0.51
NOTE:
(1The 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 share bases is less than 3%.
</TABLE>
Deloitte &
Touche LLP
1111 Broadway #2100 Telephone:(510) 287-2700
Oakland, California 94607-4036 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 twenty-six week periods ended August 2, 1997 and August 3,
1996, as indicated in our report dated August 12, 1997; 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 August 2, 1997, is
incorporated by reference in (i) Post Effective Amendment No. 1 to
Registration Statement No. 2-72586, (ii) Registration Statement No. 2-60029,
(iii) Registration Statement No. 33-39089, (iv) Registration Statement
No. 33-40505, (v) Registration Statement No. 33-54686, (vi) Registration
Statement No. 33-54688, (vii) Registration Statement No. 33-54690, (viii)
Registration Statement No. 33-56021, (ix) Registration No. 333-00417, and
(x) Registration No. 333-12337.
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.
August 25, 1997
/s/ Deloitte & Touche LLP
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> AUG-2-1997
<CASH> 220,148
<SECURITIES> 37,454
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 791,925
<CURRENT-ASSETS> 1,201,089
<PP&E> 2,083,432
<DEPRECIATION> 849,048
<TOTAL-ASSETS> 2,576,749
<CURRENT-LIABILITIES> 782,515
<BONDS> 0
0
0
<COMMON> 15,929
<OTHER-SE> 1,544,032
<TOTAL-LIABILITY-AND-EQUITY> 2,576,749
<SALES> 1,345,221
<TOTAL-REVENUES> 1,345,221
<CGS> 883,086
<TOTAL-COSTS> 352,462
<OTHER-EXPENSES> (1,459)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 111,132
<INCOME-TAX> 41,674
<INCOME-CONTINUING> 69,458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,458
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
