EXHIBIT 10.12
EXECUTION COPY
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$408,000,000
CREDIT AGREEMENT
dated as of
December 9, 1996
among
Brylane, L.P.,
The Lenders Listed Herein,
Xxxxxx Guaranty Trust Company of New York,
as Administrative Agent
and
Xxxxxxx Xxxxx Capital Corporation,
as Documentation Agent
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[CS&M Ref No. 1385-309]
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 2
SECTION 1.02. Accounting Terms and Determinations...................... 32
SECTION 1.03. Types of Borrowings...................................... 32
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend...................................... 33
SECTION 2.02. Method of Borrowing...................................... 34
SECTION 2.03. Notes.................................................... 36
SECTION 2.04. Interest Rate Elections.................................. 37
SECTION 2.05. Interest Rates........................................... 39
SECTION 2.06. Commitment Fees.......................................... 41
SECTION 2.07. Termination or Reduction of
Commitments............................................ 42
SECTION 2.08. Mandatory Repayments and Prepayments..................... 42
SECTION 2.09. Optional Prepayments..................................... 46
SECTION 2.10. General Provisions as to Payments........................ 47
SECTION 2.11. Funding Losses........................................... 48
SECTION 2.12. Computation of Interest and Fees......................... 48
SECTION 2.13. Letters of Credit........................................ 48
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness............................................ 54
SECTION 3.02. Each Credit Event........................................ 59
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Existence and Power...................................... 60
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention......................... 60
SECTION 4.03. Binding Effect........................................... 61
SECTION 4.04. Financial Information; Title to
Properties.............................................. 61
SECTION 4.05. Litigation............................................... 62
SECTION 4.06. Compliance with ERISA.................................... 62
SECTION 4.07. Taxes.................................................... 63
SECTION 4.08. Subsidiaries............................................. 63
SECTION 4.09. Not an Investment Company................................ 63
SECTION 4.10. Compliance with Laws..................................... 64
SECTION 4.11. Agreements............................................... 64
SECTION 4.12. Federal Reserve Regulations.............................. 64
SECTION 4.13. Disclosure............................................... 64
SECTION 4.14. Governmental Approvals................................... 65
SECTION 4.15. Security Interests....................................... 65
SECTION 4.16. Employment and Management Agreements..................... 66
SECTION 4.17. Capitalization........................................... 66
SECTION 4.18. Environmental Matters.................................... 66
ARTICLE V
COVENANTS
SECTION 5.01. Information.............................................. 67
SECTION 5.02. Payment of Obligations................................... 70
SECTION 5.03. Maintenance of Property; Insurance;
Casualty and Condemnation............................... 71
SECTION 5.04. Conduct of Business and Maintenance
of Existence............................................ 72
SECTION 5.05. Compliance with Laws..................................... 73
SECTION 5.06. Inspection of Property, Books and
Records................................................. 73
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SECTION 5.07. Fiscal Year.............................................. 74
SECTION 5.08. Further Assurances....................................... 74
SECTION 5.09. Subsidiaries; Partnerships............................... 74
SECTION 5.10. Amendment of Certain Documents........................... 75
SECTION 5.11. Debt; Preferred Stock; Rate
Protection Agreements................................... 75
SECTION 5.12. Restricted Payments...................................... 78
SECTION 5.13. Mergers, Consolidations,
Acquisitions and Sales of Assets........................ 80
SECTION 5.14. Transactions with Affiliates............................. 81
SECTION 5.15. Sale and Lease-Back Transactions......................... 82
SECTION 5.16. Investments.............................................. 82
SECTION 5.17. Negative Pledge.......................................... 83
SECTION 5.18. Use of Proceeds and Letters of
Credit.................................................. 85
SECTION 5.19. Grants of Negative Pledges or
Dividend Restrictions................................... 85
SECTION 5.20. Changes in Accounting.................................... 85
SECTION 5.21. Fixed Charge Coverage Ratio.............................. 85
SECTION 5.22. Minimum Adjusted Net Worth............................... 86
SECTION 5.23. Debt Coverage Ratio...................................... 86
SECTION 5.24. Capital Expenditures..................................... 86
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default........................................ 87
SECTION 6.02. Notice of Default........................................ 91
ARTICLE VII
THE AGENT, SECURITY AGENT AND ISSUING BANKS
SECTION 7.01. Appointment and Authorization............................ 91
SECTION 7.02. Agent and Affiliates..................................... 91
SECTION 7.03. Action by Agent.......................................... 91
SECTION 7.04. Consultation with Experts................................ 92
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SECTION 7.05. Liability of Agent....................................... 92
SECTION 7.06. Indemnification.......................................... 92
SECTION 7.07. Credit Decision.......................................... 92
SECTION 7.08. Successor Agent.......................................... 93
SECTION 7.09. Agents Fees.............................................. 93
SECTION 7.10. Sub-Agents............................................... 93
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair.................................... 94
SECTION 8.02. Illegality............................................... 94
SECTION 8.03. Increased Cost and Reduced Return........................ 95
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans............................... 97
SECTION 8.05. Replacement of Lenders................................... 97
SECTION 8.06. Taxes.................................................... 98
ARTICLE IX
CONVERSION OF BORROWER
SECTION 9.01. General.................................................. 101
SECTION 9.02. New Corporate Borrower................................... 101
SECTION 9.03. Holding Company Structure................................ 103
SECTION 9.04. Liquidation.............................................. 104
SECTION 9.05. Post-Conversion Actions.................................. 104
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices.................................................. 105
SECTION 10.02. No Waivers............................................... 105
SECTION 10.03. Expenses; Documentary Taxes;
Indemnification......................................... 105
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SECTION 10.04. Sharing of Set-Offs.................................... 106
SECTION 10.05. Amendments and Waivers................................. 107
SECTION 10.06. Successors and Assigns................................. 108
SECTION 10.07. Collateral............................................. 110
SECTION 10.08. Waiver of Trial by Jury................................ 110
SECTION 10.09. New York Law........................................... 110
SECTION 10.10. Counterparts; Integration.............................. 111
SECTION 10.11. Limitation on Recourse................................. 111
SECTION 10.12. Interest Rate Limitation............................... 111
Exhibit A - Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Guarantee Agreement
Exhibit D - Pledge Agreement
Exhibit E - Security Agreement
Exhibit F - Trademark Collateral Agreement
Exhibit G - Forms of Opinions of Borrower's Counsel
Exhibit H - Form of Perfection Certificate
Exhibit I - Form of Issuing Bank Agreement
Schedule 1 - Commitments
Schedule 2 - Mortgaged Properties
Schedule 4.08 - Subsidiaries
Schedule 4.16 - Employment and Management Agreements
Schedule 5.14 - Certain Fees
Schedule 5.17 - Certain Liens
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CREDIT AGREEMENT
AGREEMENT dated as of December 9, 1996, among BRYLANE, L.P.,
the LENDERS listed on the signature pages hereof, XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent, and XXXXXXX
XXXXX CAPITAL CORPORATION, as Documentation Agent.
Preliminary Statement
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The Borrower (such term, and all other capitalized terms in this
preliminary statement, being used as herein after defined) has entered into the
Asset Purchase Agreements pursuant to which the Borrower has agreed to undertake
the Acquisition. In connection therewith, the Borrower has requested the
Lenders, subject to the terms and conditions of this Agreement, to extend credit
to the Borrower, in the aggregate principal amount of up to $408,000,000, in the
form of (i) Term Loans to be made by the Lenders on the Effective Date in an
aggregate principal amount not in excess of $283,000,000, (ii) Revolving Loans
to be made by the Lenders from time to time during the Revolving Loan
Availability Period in an aggregate principal amount at any time outstanding not
in excess of $125,000,000 (subject to certain limitations specified herein) and
(iii) Letters of Credit to be issued by the Issuing Banks from time to time
during the Revolving Loan Availability Period in an aggregate amount at any time
outstanding not in excess of $75,000,000 (subject to certain limitations
specified herein); provided that the sum of Revolving Loans and Letters of
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Credit shall not exceed $125,000,000. The proceeds of the Term Loans shall be
used by the Borrower to finance a portion of the Acquisition and to refinance
certain existing Debt. The proceeds of the Revolving Loans shall be used by the
Borrower for general corporate
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purposes, including to finance the working capital requirements of the Borrower.
Letters of Credit shall be issued only for general corporate purposes in the
ordinary course of business of the Borrower.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
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the following meanings:
"Acquisition" means the purchase by the Borrower of substantially all
the assets (excluding cash and certain accounts receivable) of Xxxxxxxx'x, Inc.
and its subsidiary, CDM Corp., pursuant to the Asset Purchase Agreements.
"Adjusted EBITDA" means, for any period, the sum of (a) Consolidated
Net Income for such period, excluding extraordinary or nonrecurring gains or
losses, plus (b) depreciation, amortization (including amortization of deferred
financing costs and of the initial write-up of inventories resulting from the
acquisition of a business, including the Acquisition) and interest expense
deducted in determining such Consolidated Net Income, plus (c) income taxes
deducted in determining such Consolidated Net Income.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(b).
"Administrative Questionnaire" means, with respect to each Lender, the
administrative questionnaire in the form submitted to such Lender by the Agent
and submitted to the Agent (with a copy to the Borrower) duly completed by such
Lender.
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"Affiliate" means any Person (other than a Subsidiary) directly or
indirectly controlling, controlled by or under common control with the Borrower.
As used in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement and the other Loan
Documents, any Person that directly or indirectly owns a 10% or greater
ownership interest in the Borrower (or, following a Conversion, 10% or more of
the regularly voting common equity securities of the Borrower or its Parent
Corporation, as applicable), together with its affiliates, shall be deemed to be
an Affiliate of the Borrower.
"Agent" means Xxxxxx Guaranty Trust Company of New York in its
capacity as administrative agent for the Lenders hereunder, and its successors
in such capacity.
"Applicable Lending Office" means, with respect to any Lender, (i) in
the case of its Domestic Loans, its Domestic Lending Office and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Percentage" of any Lender means the percentage of the
aggregate Revolving Commitments represented by such Lender's Revolving
Commitment.
"Asset Purchase Agreements" means, collectively, (i) the Asset
Purchase Agreement, dated as of October 18, 1996, among The TJX Companies, Inc.,
Xxxxxxxx'x, Inc. and the Borrower, and (ii) the Asset Purchase Agreement, dated
as of October 18, 1996, between CDM Corp. and the Borrower.
"Asset Sale Prepayment Event" means any sale, assignment, transfer or
other disposition of, or casualty to or condemnation of, any assets or
properties of the Borrower or any Subsidiary, other than (a) sales of inventory
and used or surplus equipment in the ordinary course of
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business, (b) sales of credit card receivables pursuant to the Credit Card
Agreement and (c) any other event that would constitute an "Asset Sale
Prepayment Event" if the Borrower intends to reinvest the Net Cash Proceeds
therefrom in capital assets within six months after receipt of such Net Cash
Proceeds (any such event described in this clause (c) being referred to as a
"Reinvestment Event"); provided that (i) if the Net Cash Proceeds from any
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Reinvestment Event, plus the Net Cash Proceeds from any previous Reinvestment
Event that have not yet been reinvested in capital assets, exceed $15,000,000,
then an "Asset Sale Prepayment Event" shall be deemed to have occurred with Net
Cash Proceeds equal to such excess, and (ii) if the Net Cash Proceeds from any
Reinvestment Event have not been fully reinvested in capital assets by the date
that is six months after the receipt of such Net Cash Proceeds, an "Asset Sale
Prepayment Event" shall be deemed to have occurred on such date with Net Cash
Proceeds equal to the Net Cash Proceeds from such Reinvestment Event (excluding
any excess portion thereof referred to in clause (i) above) minus the reinvested
portion; provided further that, if a Reinvestment Event constitutes a casualty
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or condemnation, then (A) clause (i) above shall not apply to Net Cash Proceeds
therefrom consisting of insurance proceeds or condemnation awards and (B) the
six-month period referred to in clause (ii) above shall be extended for such
period of time as the Borrower is actively and diligently engaged in the repair
or replacement of the affected asset or property.
"Assignee" has the meaning set forth in Section 10.06(c).
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means at any time a loan out standing hereunder which
bears interest at such time at a rate based on the Base Rate pursuant to a
Notice of Borrow-
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ing or Notice of Interest Rate Election (or in the case of the Borrower's
failure to timely provide such a notice) or pursuant to Article VIII.
"Base Rate Margin" means (a) with respect to any Tranche B Term Loan
that is a Base Rate Loan, the applicable Tranche B Margin, and (b) with respect
to any other Base Rate Loan outstanding on any day: (i) 1.00% if such day is
prior to the Pricing Adjustment Date, and (ii) if such day is on or after the
Pricing Adjustment Date:
(A) 0.00%, if such day falls within a Level I Pricing Period;
(B) 0.25%, if such day falls within a Level II Pricing Period;
(C) 0.50%, if such day falls within a Level III Pricing Period;
(D) 0.75%, if such day falls within a Level IV Pricing Period; or
(E) 1.00%, if such day falls within a Level V Pricing Period.
"Borrower" means Brylane, L.P., a Delaware limited partnership, and
its successors (including any successor contemplated by Article IX).
"Borrowing" has the meaning set forth in Section 1.03.
"Borrowing Base" means, at any time, an amount equal to the sum of (a)
70% of the excess of (i) the book value of the Borrower's inventory as of such
date, minus (ii) the book value of any such inventory that is classified for
purposes of the Borrower's financial statements as slow-moving or obsolete
inventory, plus (b) 50% of the excess of (i) the book value (net of accumulated
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depreciation) of the Borrower's property, plant and equipment as of such date
minus (ii) the aggregate outstanding principal amount of Capital Financing Debt
as of such date. The Borrowing Base at any time shall be determined by
reference to the most recent Borrowing Base Certificate delivered to the Agent,
absent any error in such Borrowing Base Certificate.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B hereto, duly completed and executed by the chief financial officer,
chief accounting officer or treasurer of the Borrower.
"Capital Expenditures" means, with respect to any period, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its Consolidated Subsidiaries for such period, as the same are (or
would be) set forth, in accordance with generally accepted accounting
principles, in a consolidated statement of cash flow of the Borrower for such
period, and (b) any other additions to assets or expenditures of the Borrower
and its Consolidated Subsidiaries during such period financed with Capital
Financing Debt, whether or not such other additions to assets or expenditures
are (or would be) set forth in such statement of cash flow (but without
duplication of amounts described in clause (a) above); provided that Permitted
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Acquisitions shall not constitute "Capital Expenditures" for purposes of this
Agreement.
"Capital Financing Debt" means (a) Debt (including obligations under
capital leases) incurred to finance the acquisition, construction, improvement
or lease of property, plant or equipment or other capital assets; provided that
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such Debt is incurred at the time of or within 90 days after such acquisition or
lease, or during or within 90 days after the substantial completion of such
construction or improvement; and (b) any Debt incurred to refinance Debt
described in clause (a) above, provided that the principal amount of such
refinancing Debt does not exceed the principal amount of Debt being refinanced.
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"Cash Available for Principal Payments" means, for any period,
Consolidated Net Income for such period, plus, without duplication, (a)
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depreciation, amortization (including amortization of the initial write-up of
inventories resulting from the acquisition of a business, including pursuant to
the Acquisition) and other noncash items deducted in determining such
Consolidated Net Income, (b) the amount, if any, by which Net Working Investment
decreased during such period and (c) the amount, if any, of cash received by the
Borrower and its Subsidiaries during such period (net of any expenses
attributable thereto not deducted in determining such Consolidated Net Income)
pursuant to transactions not in the ordinary course of business, to the extent
receipt of such cash is (x) not included in income in determining such
Consolidated Net Income but to be included in income in a later period or
periods and (y) not attributable to a Prepayment Event or Reinvestment Event,
minus, without duplication, (i) the amount of any noncash items included in
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income in determining such Consolidated Net Income, (ii) the amount, if any, by
which Net Working Investment increased during such period, (iii) the amount of
Capital Expenditures made during such period (but excluding Capital Expenditures
to the extent financed with Capital Financing Debt or financed with Net Cash
Proceeds from a Reinvestment Event), (iv) to the extent not deducted in
determining such Consolidated Net Income, the amount, if any, paid by the
Borrower during such period as cash consideration for Permitted Acquisitions
(provided that no deduction shall be permitted pursuant to this clause (iv)
after the aggregate cumulative amount of cash consideration for Permitted
Acquisitions equals $35,000,000), (v) the amount, if any, of items included in
income in determining such Consolidated Net Income representing cash received
and included in calculating "Cash Available for Principal Payments" in a
previous period pursuant to clause (c) above, (vi) the amount, if any, by which
deferred compensation decreased during such period, (vii) to the extent not
deducted in determining such Consolidated Net Income, the amount of Tax Advances
and Tax Distributions paid in cash during such period in compliance
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with Section 5.12, and (viii) in the case of the fiscal year ending on the
Saturday closest to and January 31, 1998, to the extent not deducted in
determining such Consolidated Net Income for such fiscal year, the aggregate
amount, if any, paid by the Borrower during such fiscal year in cash in respect
of post-closing purchase price adjustments and tax adjustments pursuant to the
Asset Purchase Agreements; provided that, for purposes of the foregoing,
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Consolidated Net Income shall be determined without regard to any gains, losses,
taxes or expenses resulting from or incurred in connection with a Prepayment
Event or Reinvestment Event.
A "Change of Control" shall be deemed to have occurred if (a) prior to
a Conversion (i) any Person other than an affiliate of FS&Co. shall be a general
partner in the Borrower, (ii) The Limited and its subsidiaries, as a group,
shall own (beneficially and of record) and control partnership interests in the
Borrower representing less than 15% of the ownership interests in the Borrower
represented by all its outstanding partnership interests, (iii) FS&Co. and its
affiliates, as a group, shall own (beneficially and of record) and control
partnership interests in the Borrower representing less than 20% of the
ownership interests in the Borrower represented by all its outstanding
partnership interests, (iv) the Initial Control Group, as a group, shall own
(beneficially and of record) and control partnership interests in the Borrower
representing less than a majority of the ownership interests in the Borrower
represented by all its outstanding partnership interests, (v) any person or
group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) other than a Person or Persons in
the Initial Control Group shall become the beneficial owner (within the meaning
of Rule 13d-3 of such Commission as in effect on the date hereof) of partnership
interests (including any options, warrants or rights to purchase, and any
securities convertible into or exchangeable for, partnership interests) of the
Borrower representing 20% or more of the ownership interests in the Borrower
represented by all its outstanding partnership interests or (vi) less than a
majority of the
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seats (other than vacant seats) on the board of representatives of the Borrower
shall at any time be occupied by persons who were (x) designated by a Person or
Persons in the Initial Control Group, or (y) appointed by persons so designated,
or (b) after a Conversion (i) if the Borrower remains a partnership, any
partnership interest in the Borrower shall be owned by any Person other than the
Borrower's Parent Corporation and such Parent Corporation's wholly-owned
subsidiaries, (ii) FS&Co. and its affiliates, as a group, shall own
(beneficially and of record) and control voting securities of the Borrower (or
its Parent Corporation, if applicable) representing less than 20% of the voting
power represented by all outstanding securities of the Borrower (or its Parent
Corporation, if applicable), (iii) the Initial Control Group, as a group, shall
own (beneficially and of record) and control voting securities of the Borrower
(or its Parent Corporation, if applicable) representing less than 40% of the
voting power represented by all outstanding securities of the Borrower (or its
Parent Corporation, if applicable), (iv) any person or group (within the meaning
of Rule 13d-5 of the Securities and Exchange Commission as in effect on the date
hereof) other than a Person or Persons in the Initial Control Group shall become
the beneficial owner (within the meaning of Rule 13d-3 of such Commission as in
effect on the date hereof) of voting securities (including any options, rights
or warrants to purchase, and any securities convertible into or exchangeable
for, voting securities) of the Borrower (or its Parent Corporation, if
applicable) representing 20% or more of the voting power represented by all
outstanding securities of the Borrower (or its Parent Corporation, if
applicable), or (v) less than a majority of the seats (other than vacant seats)
on the board of directors of the Borrower (or its Parent Corporation, if
applicable) shall at any time be occupied by persons who were (x) nominated by a
Person or Persons in the Initial Control Group, or (y) appointed by directors so
nominated, or (c) at any time, whether prior to or after a Conversion, a "Change
of Control", as defined in the Subordinated Debt Documents, shall occur;
provided that an event described in clause (b)(ii) or (b)(iii) above shall
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not constitute a "Change of Control" if, after giving effect to such event and
to any repayment of Debt effected in connection with such event, the Debt
Coverage Ratio is equal to or less than 2.5:1.0.
"Class" has the meaning set forth in Section 1.03.
"Commitment" means, with respect to each Lender, its Tranche A Term
Commitment, Tranche B Term Commitment or Revolving Loan Commitment or all such
Commitments, as the context may require.
"Consolidated Adjusted Net Worth" means at any date (a) the partners'
capital (or, if the Borrower is a corporation, stockholders' equity) of the
Borrower as of such date, adjusted to eliminate (i) the effects on Consolidated
Net Income of the amortization of the initial write-up of inventories resulting
from an acquisition of a business on or after the Effective Date, including the
Acquisition, and (ii) any accounting adjustments resulting from a Conversion,
minus (b) the amount, if any, of Tax Advances and Management Notes outstanding
on such date, to the extent such outstanding Tax Advances and Management Notes
are included in determining the amount referred to in clause (a) above.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"Conversion" has the meaning set forth in Section 9.01.
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"Convertible Subordinated Debt" means Debt of the Borrower (and its
Parent Corporation, if applicable) in the aggregate principal amount of
$20,000,000 in respect of convertible subordinated notes issued as part of the
consideration for the Acquisition, maturing 10 years after the Effective Date
and convertible into limited partnership interests in the Borrower or, if a
Conversion occurs, into shares of common stock of the Borrower or, if
applicable, its Parent Corporation.
"Credit Card Agreements" means (a) the Credit Card Processing
Agreement in effect on the Effective Date between the Borrower and World
Financial Network National Bank, as amended and in effect from time to time, (b)
the Accounts Receivable Purchase Agreement in effect on the Effective Date
between the Borrower and Alliance Data Systems Corporation, as amended and in
effect from time to time, and (c) any successor, replacement or additional
agreement providing for similar services and transactions.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all obligations of
such Person as an account party in respect of letters of credit and bankers'
acceptances, (vi) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (vii) all Debt
of others Guaranteed by such Person. The amount of any Debt described in clause
(vi) above shall be deemed to be limited to the fair market value of the assets
on which a Lien has been granted to secure such Debt unless such Debt has been
assumed or Guaranteed by such Person. The amount of any Debt described in clause
(vii) above shall be limited to the
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maximum amount payable under the applicable Guarantee of such Person if such
Guarantee contains limitations on the amount payable thereunder.
"Debt Coverage Ratio" means, at any date, the ratio of (i) the
consolidated Debt of the Borrower and its Consolidated Subsidiaries (excluding
(a) Letter of Credit Exposure and the amount of any other outstanding letters of
credit, except to the extent such Letter of Credit Exposure and other
outstanding letters of credit represent unreimbursed drawings thereunder;
provided that amounts excluded under this clause (a) shall not exceed
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$75,000,000, and (b) contingent liabilities to repurchase accounts receivable
pursuant to the Credit Card Agreements, to the extent such contingent
liabilities constitute Debt), determined on a consolidated basis as of such
date, divided by (ii) Adjusted EBITDA for the most recent period of four
consecutive fiscal quarters of the Borrower ended on or prior to such date;
provided that if the Acquisition or a Permitted Acquisition has occurred during
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the period since the commencement of the period of four consecutive fiscal
quarters for which such Adjusted EBITDA has been determined and on or prior to
such date of determination, then such Adjusted EBITDA shall be determined on a
pro forma basis (i.e., based on the assumption that the Acquisition or such
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Permitted Acquisition, as the case may be, occurred on the first day of such
period of four consecutive fiscal quarters) in accordance with generally
accepted accounting principles.
"Debt Prepayment Event" means the incurrence by the Borrower or any
Subsidiary after the Effective Date of any Debt referred to in clause (iv) of
Section 5.11(a).
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
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"Descriptive Memorandum" means the Information Memorandum dated
November 1996 prepared by X.X. Xxxxxx Securities Inc., Xxxxxxx Xxxxx Capital
Corporation and the Borrower in connection with the Financing Transactions.
"Documentation Agent" means Xxxxxxx Xxxxx Capital Corporation in its
capacity as documentation agent for the Lenders hereunder.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Lender, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Environmental and Safety Laws" means any and all applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, approvals, concessions, grants, franchises,
licenses, agreements with Governmental Authorities or other governmental
restrictions or requirements binding upon the Borrower or any of its
Subsidiaries, as applicable, relating to the environment, or to employee health
or safety as it pertains to the use or handling of or exposure to noxious odors
or toxic, caustic or radioactive substances, materials or wastes (including,
without limitation, petroleum or petroleum products, polychlorinated byphenyls
(PCBs), asbestos or asbestos containing materials) or to the preservation or
reclamation of natural resources as a result of the actual or threatened
emission, discharge or release of pollutants or contaminants into the
environment
-14-
including, without limitation, ambient air, surface water, groundwater, or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any such pollutants,
contaminants, toxic, caustic or hazardous substances, materials or wastes or the
clean-up or other remediation thereof, including the Hazardous Materials
Transportation Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, the Clean Air Act of 1970, as amended, the Toxic
Substances Control Act of 1976, the Occupational Safety and Health Act of 1970,
as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the
Safe Drinking Water Act of 1974, as amended, and any similar or implementing
state law, and all amendments or regulations promulgated hereunder.
"Equity Prepayment Event" means the issuance of additional partnership
interests or equity securities, or receipt of additional capital contributions,
by the Borrower (or, after a Conversion, its Parent Corporation, if applicable),
or any other equity investment in the Borrower (or, after a Conversion, its
Parent Corporation, if applicable), in each case after the Effective Date;
provided that (a) the foregoing shall not constitute "Equity Prepayment Events"
--------
to the extent attributable to equity investments by members of management of the
Borrower (either made directly in the Borrower or indirectly by any partner in
or stockholder of the Borrower from funds obtained, directly or indirectly, from
such members of management) unless either (i) the aggregate Net Cash Proceeds
therefrom exceed $2,500,000 during any fiscal year of the Borrower or (ii) after
giving effect thereto the aggregate cumulative amount of Net Cash Proceeds
therefrom since the Effective Date exceeds the sum of $1,000,000 plus the
aggregate cumulative amount of Restricted Payments made since the
-15-
Effective Date pursuant to clause (e) of Section 5.12, in which case the
foregoing shall constitute "Equity Prepayment Events" to the extent of any such
excess referred to in clause (i) or (ii) above and (b) the foregoing shall not
constitute an "Equity Prepayment Event" to the extent attributable to the
issuance by VP Holding Corporation of preferred stock on or about the Effective
Date and the investment of the proceeds thereof, directly or indirectly, in the
Borrower.
"Equity Prepayment Percentage" means, with respect to the Net Cash
Proceeds of any Equity Prepayment Event, (i) 100%, if the Debt Coverage Ratio at
the time of receipt of such Net Cash Proceeds (but calculated prior to giving
effect to the receipt and application thereof) is greater than or equal to
4.0:1, (ii) 75%, if such Debt Coverage Ratio is greater than or equal to 3.0:1
but less than 4.0:1, (iii) 50%, if such Debt Coverage Ratio is greater than or
equal to 2.0:1 but less than 3.0:1 or (iv) 0.0% if such Debt Coverage Ratio is
less than 2.0:1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Euro-
Dollar Lending Office) or such other office, branch or
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affiliate of such Lender as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means at any time a loan outstanding hereunder
which bears interest at such time at a rate based on the Adjusted London
Interbank Offered Rate pursuant to a Notice of Borrowing or Notice of Interest
Rate Election.
"Euro-Dollar Margin" means (a) with respect to any Tranche B Term Loan
that is a Euro-Dollar Loan, the applicable Tranche B Margin, and (b) with
respect to any other Euro-Dollar Loan outstanding on any day (i) 2.00%, if
such day is prior to the Pricing Adjustment Date, and (ii) if such day is on or
after the Pricing Adjustment Date:
(A) 1.00%, if such day falls within a Level I Pricing Period;
(B) 1.25%, if such day falls within a Level II Pricing Period;
(C) 1.50%, if such day falls within a Level III Pricing Period;
(D) 1.75%, if such day falls within a Level IV Pricing Period; or
(E) 2.00%, if such day falls within a Level V Pricing Period.
"Euro-Dollar Reference Banks" means the principal London offices of
[Midland Bank PLC, NationsBank of North Carolina, N.A.] and Xxxxxx Guaranty
Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(b).
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"Event of Default" has the meaning set forth in Section 6.01.
"Excess Cash Flow" means, for any period, the excess, if any, of Cash
Available for Principal Payments for such period over the sum of (a) principal
payments made during such period in respect of Term Loans, but excluding (i) any
such principal payments made pursuant to subsection (e) or (f) of Section 2.08
or clause (iv) of Section 5.11(a) plus (b) principal payments made during such
period in respect of Capital Financing Debt (other than pursuant to a
refinancing) and any Debt incurred in reliance upon clause (iv) of Section
5.11(a).
"Existing Credit Agreement" means the Credit Agreement dated as of
August 30, 1993, among the Borrower, certain banks and Xxxxxx Guaranty Trust
Company of New York, as agent, as amended and in effect immediately prior to the
Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of l%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
--------
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Xxxxxx Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"Finance Corp." means Brylane Capital Corp., a Delaware corporation,
and its successors.
-18-
"Financing Transactions" means the transactions contemplated by the
Loan Documents, including the borrowing of the Loans and the grant of security
interests under the Security Documents.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
the sum of (i) Adjusted EBITDA for such period plus (ii) rental expense deducted
in determining Consolidated Net Income for such period divided by (b) the sum of
rental expense and interest expense (excluding any portion of interest expense
representing amortization of financing costs paid in a previous period) deducted
in determining Consolidated Net Income for such period.
"FS&Co." means Xxxxxxx Xxxxxx & Co., a California general partnership.
"Governmental Authority" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
--------
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
-19-
"Guarantee Agreement" means the Guarantee Agreement among the
Subsidiaries and the Agent, substantially in the form of Exhibit C hereto, as
amended from time to time.
"Incremental Capital Expenditures" means any Capital Expenditures made
in reliance upon the proviso to Section 5.24.
"Initial Control Group" means (i) FS&Co. and its affiliates and (ii)
The Limited and its subsidiaries; provided that the Borrower and its
--------
Subsidiaries shall not be considered to be affiliates of FS&Co. or subsidiaries
of The Limited for purposes of identifying the "Initial Control Group".
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing or Notice of Interest Rate Election; provided that:
---------
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) if any Interest Period includes a date on which a payment of
principal of the Loans of the applicable Class is required to be made under
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subsection (a), (b) or (c) of Section 2.08 but does not end on such date,
then (i) the principal amount (if any) of each Euro-Dollar Loan required to
be repaid on such date shall have an Interest Period ending on such date
and (ii) the remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above; and
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending on the next Quarterly Payment Date that occurs
thereafter; provided that:
--------
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b)(i) below) which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a payment of
principal of the Loans of the applicable Class is required to be made under
subsection (a), (b) or (c) of Section 2.08 but does not end on such date,
then (i) the principal amount (if any) of each Base Rate Loan required to
be repaid on such date shall have an Interest Period ending on such date
and (ii) the remainder (if any) of each such Base Rate Loan shall have an
interest Period determined as set forth above.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"Issuing Banks" means (i) The Bank of Nova Scotia and (ii) any other
Lender that shall enter into an Issuing Bank Agreement as provided in Section
2.13(m), in each case
-21-
in their capacities as the issuers of Letters of Credit, and their respective
successors in such capacity.
"Issuing Bank Agreement" has the meaning set forth in Section 2.13.
"Lender" means each bank or other financial institution listed on the
signature pages hereof, each Assignee which becomes a Lender pursuant to Section
10.06(c), and their respective successors.
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.13.
"Letter of Credit Disbursement" means a payment or disbursement made
by an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" means at any time the sum of (i) the
aggregate undrawn amount of all outstanding Letters of Credit plus (ii) the
aggregate amount of all Letter of Credit Disbursements not yet reimbursed by the
Borrower as provided in Section 2.13. The Letter of Credit Exposure of any
Lender at any time shall mean its Applicable Percentage of the aggregate Letter
of Credit Exposure at such time.
"Level I Pricing Period" means any period on or after the Pricing
Adjustment Date during which the Pricing Ratio is less than or equal to 2.00:1
and no Event of Default has occurred and is continuing.
"Level II Pricing Period" means any period on or after the Pricing
Adjustment Date during which the Pricing Ratio is greater than 2.00:1 but less
than or equal to 2.50:1 and no Event of Default has occurred and is continuing.
"Level III Pricing Period" means any period on or after the Pricing
Adjustment Date during which the Pricing
-22-
Ratio is greater than 2.50:1 but less than or equal to 3.00:1 and no Event of
Default has occurred and is continuing.
"Level IV Pricing Period" means any period on or after the Pricing
Adjustment Date during which the Pricing Ratio is greater than 3.00:1 but less
than or equal to 3.50:1 and no Event of Default has occurred and is continuing.
"Level V Pricing Period" means any period on or after the Pricing
Adjustment Date that is not a Level I Pricing Period, a Level II Pricing Period,
a Level III Pricing Period or a Level IV Pricing Period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan" means a Term Loan or a Revolving Loan, whether made as a Base
Rate Loan or a Euro-Dollar Loan, and "Loans" means Term Loans or Revolving Loans
or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Guarantee Agreement, the Trademark Collateral Agreement and the
Security Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(b).
"Management Notes" means promissory notes payable to the Borrower from
members of management of the Borrower and contributed to the Borrower as an
equity investment in the Borrower; provided that the aggregate principal amount
--------
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of such promissory notes at any time outstanding shall not exceed $3,500,000.
"Margin Stock" has the meaning given such term under Regulation U.
"Material Adverse Effect" means (i) a materially adverse effect on the
assets, financial condition or results of operations of the Borrower and its
Consolidated Subsidiaries taken as a whole, (ii) material impairment of the
ability of the Borrower or any Subsidiary to perform any material Obligations
under the Loan Documents, or (iii) material impairment of the rights of or
benefits available to the Lenders under any Loan Document.
"Material Debt" means Debt of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions, in an
aggregate principal amount exceeding $5,000,000.
"Maximum Subordinated Debt Prepayment" means, with respect to any
Equity Prepayment Event, (i) if the Equity Prepayment Percentage with respect
thereto is 100%, then $0.00, (ii) if the Equity Prepayment Percentage with
respect thereto is 75%, then an amount equal to 25% of the Equity Prepayment
Percentage of the Net Cash Proceeds in respect of such Equity Prepayment Event,
(iii) if the Equity Prepayment Percentage with respect thereto is 50%, then an
amount equal to 50% of the Equity Prepayment Percentage of the Net Cash Proceeds
in respect of such Equity Prepayment Event, or (iv) if the Equity Prepayment
Percentage with respect thereto is 0.0%, then $0.00; provided that, in the case
--------
of an Equity Prepayment Event occurring prior to the date that is 180 days after
the Effective Date, "Maximum Subordinated Debt Prepayment" means an amount equal
to 35% of the Net Cash Proceeds in respect of such Equity Prepayment Event.
"Minimum Adjusted Net Worth" means, at any date, the sum of (a)
$80,000,000, plus (b) 90% (or, if as of the end of the fiscal quarter for which
an amount is being
-24-
calculated for purposes of this clause (b) "Minimum Adjusted Net Worth" exceeds
$150,000,000, then 50%) of the excess of (i) Consolidated Net Income in respect
of each fiscal quarter of the Borrower ending after the Effective Date and prior
to such date of determination (adjusted as provided below), minus (ii) as long
as the Borrower is a partnership, the decrease in Consolidated Adjusted Net
Worth attributable to Tax Advances and Tax Distributions made in respect of the
Tax Distribution Amount for such fiscal quarter, plus (c) 90% of each increase
in Consolidated Adjusted Net Worth attributable to the issuance of additional
partnership interests or equity securities by, or capital contributions to, or
other equity investments in, the Borrower after the Effective Date; provided
--------
that (i) "Minimum Adjusted Net Worth" shall not decrease if the amount
determined pursuant to clause (b) above in respect of any fiscal quarter is
negative (and any such negative amount shall be disregarded in calculating
"Minimum Adjusted Net Worth") and (ii) for purposes of clause (b) above,
Consolidated Net Income shall be adjusted to eliminate the effects thereon of
[the amortization of the initial write-up of inventories resulting from the
Acquisition and] any accounting adjustments resulting from a Conversion.
"Mortgage" means a mortgage, deed of trust or other security document
granting a lien on a Mortgaged Property to secure the Obligations.
"Mortgaged Property" means each real property and the improvements
thereto identified on Schedule [ ].
"Net Cash Proceeds" means, with respect to any Prepayment Event or
Reinvestment Event or any other event requiring a calculation of "Net Cash
Proceeds" hereunder, an amount equal to the cash proceeds (including insurance
proceeds and condemnation awards) received by the Borrower and its Subsidiaries
from or in respect of such event (including cash received as proceeds from any
noncash consideration received in respect of any such event), less (i) any
expenses reasonably incurred by the Borrower and its
-25-
Subsidiaries in respect of such event, (ii) in the case of an Asset Sale
Prepayment Event or Reinvestment Event, amounts required to be applied to repay
Debt (other than Loans or Subordinated Debt) associated with the assets or
properties subject to such Event and reasonable reserves established in good
faith by the Borrower to satisfy any indemnification obligations undertaken in
connection with such Event or to pay other retained liabilities associated with
such assets or properties, (iii) taxes paid or payable by the Borrower and its
Subsidiaries (as determined reasonably and in good faith by the chief financial
officer or chief accounting officer of the Borrower) in respect of such event
and (iv) as long as the Borrower is a partnership, the increase, if any, in the
Tax Distribution Amount attributable to such event (as determined reasonably and
in good faith by the chief financial officer or chief accounting officer of the
Borrower).
"Net Working Investment" means, at any date (i) the consolidated
current assets of the Borrower and its Consolidated Subsidiaries (excluding
cash, Temporary Cash Investments and the unamortized portion of the initial
write-up of inventories resulting from the Transactions) minus (ii) the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries (excluding any current liabilities in respect of Debt), all
determined as of such date. Net Working Investment at any date may be a
positive or negative number. Net Working Investment increases when it becomes
more positive or less negative and decreases when it become less positive or
more negative.
"Note" means a promissory note of the Borrower payable to a Lender,
substantially in the form of Exhibit A hereto for the applicable Class,
evidencing the obligation of the Borrower to repay the Loans made by such Lender
of a particular Class, and "Notes" means any of or all such promissory notes
issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
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"Notice of Interest Rate Election" has the meaning set forth in
Section 2.04.
"Obligations" means (a) the due and punctual payment by the Borrower
of (i) the principal of and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under Section
2.13 in respect of any Letter of Credit Disbursement, when and as due, including
interest thereon, if any, (iii) all other monetary obligations of the Borrower
to the Agent, the Security Agent, the Issuing Banks and the Lenders under this
Agreement and the other Loan Documents to which the Borrower is or is to be a
party and (iv) all monetary obligations of the Borrower under any Rate
Protection Agreement entered into with a counterparty that was a Lender at the
time such Rate Protection Agreement was entered into, (b) the due and punctual
performance of all other obligations of the Borrower under this Agreement and
the other Loan Documents and (c) the due and punctual payment and performance of
all obligations of each Subsidiary under the Loan Documents to which it is or is
to be a party.
"Parent" means, with respect to any Lender, any Person controlling
such Lender.
"Parent Corporation" means any corporation that becomes the owner,
directly or indirectly, of all the outstanding partnership interests of the
Borrower pursuant to a Conversion.
"Participant" has the meaning set forth in Section 10.06(b).
"Partnership Agreement" means the partnership agreement of the
Borrower, as amended from time to time.
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means (a) any acquisition by the Borrower of
assets or properties (other than Investments) to be utilized in the Borrower's
business, or comprising a separate business of the same type conducted by the
Borrower prior to such acquisition, excluding assets and properties acquired in
the ordinary course of business or (b) any acquisition by the Borrower of all
the outstanding capital stock of a corporation; provided that (i) no Default has
--------
occurred and is continuing at the time of, or would result from, such
acquisition, (ii) the consideration paid by the Borrower in connection with such
acquisition consists entirely of cash or limited partnership interests in the
Borrower (or common stock of the Borrower or its Parent Corporation, if
applicable), or Permitted Preferred Stock, or warrants or options to acquire any
such limited partnership interests (or common stock) or Permitted Preferred
Stock, or a combination thereof, (iii) the aggregate cash consideration paid by
the Borrower in connection with such acquisition and all previous acquisitions
constituting "Permitted Acquisitions" does not exceed the sum of (A) $35,000,000
plus (B) the Net Cash Proceeds from Equity Prepayment Events previously received
by the Borrower minus (C) the sum of the aggregate amount that the Borrower has
expended to make Restricted Payments pursuant to clauses (f) and (g) of Section
5.12 plus the aggregate principal amount of Term Loans required to have been
prepaid pursuant to subsection (e) of Section 2.08 in respect of such Net Cash
Proceeds and pursuant to clause (g) of Section 5.12 in order to permit
Restricted Payments thereunder, and (iv) if such acquisition is made pursuant to
clause (b) above, then (A) substantially all the business of the acquired
corporation is of the same type as the business conducted by the Borrower prior
to such acquisition, (B) the acquired corporation does not have any Debt that
will remain outstanding after giving effect to such acquisition (other than Debt
that would be permitted under clause (vii) of
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Section 5.11(a) if incurred by the Borrower at the time of such acquisition),
(C) such corporation does not have any subsidiaries (other than subsidiaries
that are liquidated or merged into the Borrower within 90 days after such
acquisition or that constitute Permitted Subsidiaries) and (D) such corporation
is liquidated or merged into the Borrower within 90 days after such acquisition.
Notwithstanding the foregoing, the Acquisition shall not be considered to be a
"Permitted Acquisition".
"Permitted Preferred Stock" means preferred stock issued by the
Borrower (if it becomes a corporation pursuant to a Conversion) that (a) does
not require payment of cash dividends, (b) is not subject to any mandatory
redemption or repurchase requirements and (c) is not convertible or
exchangeable (other than at the option of the Borrower or its Parent
Corporation) into or for any other security other than limited partnership
interests in the Borrower (or common stock of the Borrower or its Parent
Corporation, if applicable) or other securities that would constitute "Permitted
Preferred Stock" hereunder.
"Permitted Subsidiary" means any Subsidiary that (i) is a Wholly Owned
Consolidated Subsidiary and (ii) complies with the requirements set forth in
Section 5.04(c) or, in the case of Finance Corp., Section 5.04(b).
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by a
member of the ERISA Group for employees of a member of the ERISA Group or (ii)
maintained pursuant to a collective
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bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"Pledge Agreement" means the Pledge Agreement among the Borrower, such
Subsidiaries as shall become parties thereto and the Security Agent,
substantially in the form of Exhibit D hereto, as amended from time to time.
"Prepayment Event" means an Asset Sale Prepayment Event, a Debt
Prepayment Event or an Equity Prepayment Event.
"Pricing Adjustment Date" means the day that is six months after the
Effective Date.
"Pricing Ratio" means, at any date, the ratio of (i) the consolidated
Debt of the Borrower and its Consolidated Subsidiaries (excluding (a) the Letter
of Credit Exposure and the amount of any other outstanding letters of credit,
except to the extent such Letter of Credit Exposure and other outstanding
letters of credit represent unreimbursed drawings thereunder; provided that
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amounts excluded under this clause (a) shall not exceed $75,000,000, and (b)
contingent liabilities to repurchase accounts receivable pursuant to the Credit
Card Agreements, to the extent such contingent liabilities constitute Debt),
determined on a consolidated basis, divided by (ii) Adjusted EBITDA for the most
recent period of four consecutive fiscal quarters of the Borrower for which
financial statements have been delivered to the Agent; provided that, solely for
--------
purposes of this definition, the consolidated Debt of the Borrower and its
Consolidated Subsidiaries shall be determined for purposes of clause (i) above
on the basis of (a) Term Loans outstanding on the last day of the most recent
fiscal quarter covered by the financial statements referred to in clause (ii)
above, and (b) the daily average outstanding amount of all other Debt during
such most recent
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period of four consecutive fiscal quarters; provided further that if the
----------------
Acquisition or a Permitted Acquisition has occurred during the period since the
commencement of the period of four consecutive fiscal quarters for which such
Adjusted EBITDA has been determined and on or prior to such date of
determination, then such Adjusted EBITDA shall be determined on a pro forma
basis (i.e., based on the assumption that the Acquisition or such Permitted
----
Acquisition, as the case may be, occurred on the first day of such period of
four consecutive fiscal quarters) in accordance with generally accepted
accounting principles. A change in the Pricing Ratio shall be effective on the
date of receipt by the Agent of the Borrower's financial statements
demonstrating such change.
"Prime Rate" means the rate of interest publicly announced by Xxxxxx
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Quarterly Payment Date" means each day that is the last Euro-Dollar
Business Day preceding the Saturday closest to January 31, April 30, July 31 and
October 31, of each year.
"Rate Protection Agreements" means interest rate protection
agreements, foreign currency exchange agreements and other interest or exchange
rate hedging, cap, collar or swap arrangements.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reinvestment Event" has the meaning set forth in the definition of
the term "Asset Sale Prepayment Event".
"Reportable Event" means any reportable event as defined in Section
4043(b) of ERISA, or the regulations issued thereunder, with respect to a Plan
(other than those
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excepted from such reporting requirements by virtue-thereof).
"Required Lenders" means at any time Lenders with Loans, Letter of
Credit Exposure and unused Commitments representing at least a majority of the
sum of the aggregate principal amount of Loans outstanding and the aggregate
amount of the Letter of Credit Exposure and unused Commitments at such time.
"Restricted Payment" means (a) any Tax Advance, Tax Distribution or
other distribution by the Borrower to any one or more of the partners in the
Borrower or otherwise on account of any partnership interest in the Borrower,
(b) if the Borrower shall become a corporation, any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its common stock or Permitted Preferred Stock), (c)
any payment or other consideration on account of the purchase, redemption,
retirement or acquisition of (i) any partnership interest in the Borrower, any
shares of the Parent Corporation's capital stock or, if the Borrower becomes a
corporation, any shares of the Borrower's capital stock or (ii) any option,
warrant or other right to acquire any partnership interest in the Borrower, any
shares of the Parent Corporation's capital stock or, if the Borrower becomes a
corporation, any shares of the Borrower's capital stock, (d) any payment or
prepayment of principal of or premium (if any) or interest on or any other
amount in respect of any Subordinated Debt, or (e) any payment or other
consideration on account of the prepayment, purchase, redemption, retirement,
defeasance, acquisition, termination, cancellation or compromise of any
Subordinated Debt.
"Revolving Loan" means a loan made by a Lender pursuant to Section
2.01(c).
"Revolving Loan Availability Period" means the period from and
including the Effective Date to but excluding the Tranche A Maturity Date, or
such earlier date
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as the Revolving Loan Commitments shall have expired or been terminated.
"Revolving Loan Commitment" means, as to any Lender, the obligation of
such Lender to make Revolving Loans to the Borrower and to acquire
participations in Letters of Credit in an aggregate principal amount at any one
time outstanding not exceeding the amount set forth opposite such Lender's name
in Schedule 1 hereto under the caption "Revolving Loan Commitment", as the same
may be reduced from time to time pursuant to Section 2.07 and subject to the
limitations of Sections 2.01(c) and 2.13.
"Security Agent" means Xxxxxx Guaranty Trust Company of New York in
its capacity as security agent under the Security Documents and its successors
in such capacity.
"Security Agreement" means the Security Agreement among the Borrower,
its Subsidiaries and the Security Agent, substantially in the form of Exhibit E
hereto, as amended from time to time.
"Security Documents" means the Mortgages, the Pledge Agreement, the
Security Agreement and all other security agreements, mortgages, deeds of trust
and other documents and instruments executed and delivered pursuant to Section
5.08 in order to secure any Obligations.
"Subordinated Debt" means the Convertible Subordinated Debt and Debt
in respect of the Subordinated Notes or any Debt incurred in compliance with
clause (ii) of Section 5.11(a) to refinance the Convertible Subordinated Debt or
the Subordinated Notes.
"Subordinated Debt Documents" means any indentures, notes or other
agreements, instruments or securities evidencing or governing the terms of any
Subordinated Debt, including any agreements or instruments pursuant to which any
Subordinated Debt is guaranteed or secured.
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"Subordinated Debt Prepayment Amount" has the meaning set forth in
Section 2.08(e).
"Subordinated Guarantee Agreement" means an agreement pursuant to
which a Subsidiary Guarantees Subordinated Debt and which (i) is required by the
terms of a Subordinated Debt Document, (ii) is subordinated to such Subsidiary's
Debt in respect of the Obligations on the same terms that the Subordinated Debt
is required to be subordinated, (iii) is unsecured and (iv) does not impose any
additional covenants or other obligations (other than covenants and obligations
already contained in the Subordinated Debt Documents which become applicable by
virtue of such agreement) upon such Subsidiary.
"Subordinated Notes" means the senior subordinated notes due September
1, 2003 jointly issued by the Borrower and Finance Corp. in the aggregate
principal amount of $125,000,000.
"Subsidiary" means any corporation or other entity (including any
partnership) of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Borrower.
"Tax Advance" means any loan made to a partner in the Borrower in
accordance with Section 5.01(c) of the Partnership Agreement.
"Tax Distribution" means any distribution made to a partner in the
Borrower in accordance with Section 5.01(b) or (d) of the Partnership Agreement.
"Tax Distribution Amount" means, in respect of any period during which
the Borrower is a partnership, an amount equal to (a) the sum of the highest
marginal Federal income tax rate and highest state and local income or franchise
tax rate applicable to any corporate partner in the Borrower on
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its income from the Borrower for such period, expressed as a percentage,
multiplied by (b) the Borrower's taxable income for such period; provided that
--------
(i) the foregoing shall be determined giving effect to the deduction of state
and local income and franchise taxes for purposes of determining Federal income
taxes, (ii) the foregoing shall be determined giving effect to any carryforward
of cumulative tax losses of the Borrower from any previous period (to the extent
not previously utilized) since the organization of the Borrower and any
investment tax credits and other tax credits generated by the Borrower and (iii)
if the Borrower remains a partnership after a Conversion occurs, the tax rates
determined pursuant to clause (a) above shall be based on the actual tax rates
applicable to the Parent Corporation. The "Tax Distribution Amount" for any
period may be estimated for any period, provided that such estimate is
reasonably made by the Borrower's chief financial officer or chief accounting
officer in good faith, but in the event that the Borrower files any Federal
income tax return that is inconsistent with its estimate for any period (or in
the event that it is subsequently determined that such estimate or the amounts
reflected in any such Federal income tax return were incorrect) then an
appropriate adjustment shall be made to the Tax Distribution Amount for the next
succeeding period or periods to reflect such discrepancy. The "Tax Distribution
Amount" also shall be increased by the amount of any Tax Distribution to be made
in accordance with Section 5.01(d) of the Partnership Agreement.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated in the highest grade by a nationally recognized credit rating agency,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, (iv)
repurchase agreements with respect to
-35-
securities described in clause (i) above entered into with an office of a bank
or trust company meeting the criteria specified in clause (iii) above, or (v)
any mutual fund managed by a reputable investment manager that invests
substantially all of its assets in Investments of the type described in clauses
(i), (ii), (iii) or (iv) above; provided in each case that such Investment
--------
matures within one year from the date of acquisition thereof by the Borrower or
a Subsidiary (except that an Investment described in clause (v) above need not
satisfy the foregoing maturity requirement, but such Investment shall be subject
to redemption on demand and the Investments made by such mutual fund shall
satisfy the foregoing maturity requirement).
"Term Commitment" means a Tranche A Term Commitment or a Tranche B
Term Commitment.
"Term Loan" means a Tranche A Term Loan or a Tranche B Term Loan.
"Termination Date" means the last day of the Revolving Loan
Availability Period or such earlier date as the Revolving Loan Commitments shall
have expired or been terminated, all Revolving Loans have been repaid in full,
all Letter of Credit Disbursements shall have been repaid in full, and all
Letters of Credit shall have expired or been canceled.
"The Limited" means The Limited, Inc., a Delaware corporation, and its
successors.
"Trademark Agreements" means, collectively, (i) the Trademark License
Agreement and the Electronic Media Trademark License Agreement previously
entered into among certain subsidiaries of The Limited as contemplated by the
Transaction Agreement, the rights of the licensees under which have been
assigned to the Borrower, as amended from time to time and (ii) each of (A) the
Assignment and License of Trademarks Agreement among The TJX Companies, Inc.,
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Xxxxxxxx'x, Inc. and the Borrower, as amended from time to time, (B) the
Trademarks License Agreement among The TJX Companies, Inc. and the Borrower, as
amended from time to time, and (C) the Trademarks License Agreement among the
TJX Companies, Inc. and Xxxxxxxx'x Trade Name Sub, Inc., as amended from time to
time, each to be entered into in connection with the Acquisition.
"Trademark Collateral Agreement" means the Trademark Collateral
Agreement among each of The Limited, certain subsidiaries thereof and the
Security Agent, substantially in the form of Exhibit F hereto, as amended from
time to time.
"Tranche A Maturity Date" means the last Euro-Dollar Business Day
preceding the Saturday closest to January 31, 2002.
"Tranche A Term Commitment" means, as to any Lender, the obligation of
such Lender to make Tranche A Term Loans to the Borrower in an aggregate
principal amount not exceeding the amount set forth opposite such Lender's name
in Schedule 1 hereto under the caption "Tranche A Term Commitment", as the same
may be reduced from time to time pursuant to Section 2.07.
"Tranche A Term Loan" means a loan made by a Lender pursuant to
Section 2.01(a).
"Tranche B Margin" means (a) with respect to any Tranche B Term Loan
that is a Base Rate Loan, 1.50%, and (b) with respect to any Tranche B Term Loan
that is a Euro-Dollar Loan, 2.50%.
"Tranche B Maturity Date" means the last Euro-Dollar Business Day of
the month of February 2003.
"Tranche B Term Commitment" means, as to any Lender, the obligation of
such Lender to make Tranche B Term Loans to the Borrower in an aggregate
principal amount not
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exceeding the amount set forth opposite such Lender's name in Schedule 1 hereto
under the caption "Tranche B Term Commitment", as the same may be reduced from
time to time pursuant to Section 2.07.
"Tranche B Term Loan" means a loan made by a Lender pursuant to
Section 2.01(b).
"Transaction Agreement" means the Transaction Agreement dated as of
July 13, 1993, among VGP, VLP and certain subsidiaries of The Limited, as
amended from time to time.
"Transaction Documents" means (i) the Transaction Agreement, the
Partnership Agreement, the Credit Card Agreements, the Asset Purchase Agreements
and the Trademark Agreements and (ii) any and all contracts and agreements in
effect on the Effective Date between the Borrower and any Subsidiary, on the one
hand, and any Person in the Initial Control Group, on the other hand.
"Transactions" means the Financing Transactions and the Acquisition.
"Type" has the meaning set forth in Section 1.03.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested benefits under
such Plan exceeds (ii) the fair market value of all Plan assets, all determined
as of the then most recent valuation date for such Plan based on the actuarial
assumptions used to fund the Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the PBGC or
the Plan under Title IV of ERISA.
"VGP" means VGP Corporation, a Delaware corporation, and its
successors.
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"VLP" means VLP Corporation, a Delaware corporation, and its
successors.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
------------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Lenders; provided that, if the Borrower notifies the Agent that the
--------
Borrower wishes to amend any covenant contained in Article V or the definition
of "Pricing Ratio" to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant or such definition (or
if the Agent notifies the Borrower that the Required Lenders wish to amend any
such covenant or such definition for such purpose), then the Borrower's
compliance with such covenant or the calculation of the Pricing Ratio, as
applicable, shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such amendment becomes effective in accordance with this Agreement.
SECTION 1.03. Types of Borrowings. The term "Borrowing" refers to
--------------------
the portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific
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Interest Period (subject to clauses (1)(c), and (2)(b) of the definition of
Interest Period) pursuant to a Notice of Borrowing or Notice of Interest Rate
Election. Each Lender's ratable share of each Borrowing is referred to herein as
a separate "Loan". Borrowings and Loans hereunder are distinguished by "Class"
and by "Type". The "Class" of a Loan (or of a Commitment to make such a Loan or
of a Borrowing comprising such Loans) refers to whether such Loan is a Tranche A
Term Loan, a Tranche B Term Loan or a Revolving Loan, each of which constitutes
a Class. The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or
a Euro-Dollar Loan. Borrowings and Loans may be identified by both Class and
Type (e.g., a "Tranche A Euro-Dollar Loan" is a Loan which is both a Tranche A
----
Term Loan and a Euro-Dollar Loan).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Tranche A Term Loans. Each
-------------------- ---------------------
Lender having a Tranche A Term Loan Commitment severally agrees, on the terms
and conditions set forth in this Agreement, to make a loan to the Borrower on
the Effective Date in an aggregate principal amount not exceeding its Tranche A
Term Commitment.
(b) Tranche B Term Loans. Each Lender having a Tranche B Term Loan
---------------------
Commitment severally agrees, on the terms and conditions set forth in this
Agreement, to make a loan to the Borrower on the Effective Date in an aggregate
principal amount not exceeding its Tranche B Term Commitment.
(c) Revolving Loans. Each Lender having a Revolving Loan
---------------
Commitment severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower from time to time during the Revolving
Loan Availability Period; provided that the aggregate principal
--------
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amount of such Lender's loans at any one time outstanding shall not exceed the
excess of (i) the lesser of its Revolving Loan Commitment or its Applicable
Percentage of the Borrowing Base at such time, over (ii) its Letter of Credit
Exposure at such time. Within the foregoing limit, the Borrower may borrow under
this subsection (c), repay or (to the extent permitted by Section 2.09) prepay
loans made under this subsection (c) and reborrow at any time during the
Revolving Loan Availability Period under this subsection (c).
(d) Borrowings Ratable. Each Borrowing under subsection (a), (b) or
-------------------
(c) of this Section 2.01 shall be made from the Lenders ratably in proportion to
their respective Commitments of the relevant Class.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give the
--------------------
Agent notice (a "Notice of Borrowing") not later than 10:00 A.M. (New York City
time) on the date of any Base Rate Borrowing and not later than 10:00 A.M. (New
York City time) at least three Euro-Dollar Business Days before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000 (except that any Borrowing
may be in the aggregate amount of the unused Commitment of the applicable
Class);
(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable
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thereto, subject to the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Lender of the contents thereof and of such Lender's share of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by the
Borrower.
(c) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Lender shall (except as provided in subsection (d) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Agent at its address specified in
or pursuant to Section 10.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
(d) If any Lender makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Lender,
such Lender shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Lender to
the Agent as provided in subsection (b), or remitted by the Borrower to the
Agent as provided in Section 2.10, as the case may be.
(e) If the Agent has not received from the Borrower the payment
required by Section 2.13(g) by 12:30 P.M. (New York City time) on the date on
which an Issuing Bank has notified the Borrower and the Agent that payment of a
draft presented under any Letter of Credit will be made, as provided in Section
2.13(g), the Agent will promptly notify such Issuing Bank and each Lender of the
Letter of Credit Disbursement and, in the case of each Lender, its Applicable
Percentage of such Letter of Credit Disbursement. Not later than 2:00 P.M. (New
York City time)
-42-
on such date, each Lender shall make available such Lender's Applicable
Percentage of such Letter of Credit Disbursement, in Federal or other funds
immediately available in New York City, to the Agent at its address specified in
or pursuant to Section 10.01, and the Agent will promptly make such funds
available to the applicable Issuing Bank. The Agent will promptly remit to each
Lender that shall have made such funds available its Applicable Percentage of
any amounts subsequently received by the Agent from the Borrower in respect of
such Letter of Credit Disbursement.
(f) Unless the Agent shall have received notice from a Lender prior
to the date of any Borrowing, or prior to the time of any required payment by
such Lender in respect of a Letter of Credit Disbursement, that such Lender will
not make available to the Agent such Lender's share of such Borrowing or
payment, the Agent may assume that such Lender has made such share available to
the Agent on the date of such Borrowing or payment in accordance with
subsections (c) and (d) or (e), as applicable, of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the Borrower or
an Issuing Bank, as applicable, on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such share available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available by the Agent until the
date such amount is repaid to the Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.05 or Section 2.13(g), as
applicable, and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Agent such corresponding amount in respect of a
Borrowing, such amount so repaid shall constitute such Lender's Loan included in
such Borrowing for purposes of this Agreement.
-43-
SECTION 2.03. Notes. (a) Each Lender's Tranche A Term Loans,
------
Tranche B Term Loans and Revolving Loans shall be evidenced by a separate Note
(in the form applicable to such Class) payable to the order of such Lender for
the account of its Applicable Lending Office in an amount equal to (i) in the
case of its Note evidencing Tranche A Term Loans or Tranche B Term Loans, the
aggregate principal amount of Term Loans of such Class made by such Lender (or
its predecessor in interest) on the Effective Date, or (ii) in the case of its
Note evidencing Revolving Loans, the aggregate Commitment of such Lender of such
Class.
(b) Each Lender may, by notice to the Borrower and the Agent, request
that its Loans of a particular Type and Class be evidenced by a separate Note.
Each such Note shall be in substantially the form of Exhibit A hereto applicable
to the relevant Class with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant Type. Each reference in this Agreement
to the "Note" or "Notes" of such Lender shall be deemed to refer to and include
any or all of such Notes, as the context may require.
(c) Upon receipt of each Lender's Note or Notes pursuant to Section
3.01(b), the Agent shall mail such Note or Notes to such Lender. Each Lender
shall record the date and amount of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and
prior to any transfer of any of its Notes shall endorse on the schedule forming
a part thereof appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding; provided that the failure of any
--------
Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes. Each Lender is hereby
irrevocably authorized by the Borrower so to endorse its Note and to attach to
and make a part of its Note a continuation of any such schedule as and when
required.
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SECTION 2.04. Interest Rate Elections. (a) The initial Type of
------------------------
Loans comprising each Borrowing, and the duration of the initial Interest Period
applicable thereto if they are initially Euro-Dollar Loans, shall be as
specified in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the Type of, or the duration of
the Interest Period applicable to, the Loans included in any Borrowing
(excluding overdue Loans and subject in each case to the provisions of the
definition of Interest Period and Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
designate such Loans as Euro-Dollar Loans, may elect to continue such Loans
as Base Rate Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and Euro-Dollar
Loans; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
designate such Loans as Base Rate Loans, may elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, or may elect to
designate such Loans as any combination of Base Rate Loans and Euro-Dollar
Loans.
Notwithstanding the foregoing, the Borrower may not elect an Interest Period for
Euro-Dollar Loans of any Class unless (A) the aggregate outstanding principal
amount of such Euro-Dollar Loans (including any such Euro-Dollar Loans of the
same Class made pursuant to Section 2.01 on the date that such Interest Period
is to begin) to which such Interest Period will apply is at least $5,000,000 and
(B) such election will not result in the total number of outstanding Euro-Dollar
Borrowings exceeding 10 at any time.
(b) Any election permitted by subsection (a) of this Section may
become effective on any Euro-Dollar Business Day specified by the Borrower (the
"Election Date"); provided that the Borrower may not specify an
--------
-45-
Election Date with respect to an outstanding Euro-Dollar Loan that is not the
last day of the Interest Period therefor. Each such election shall be made by
the Borrower by delivering a notice (a "Notice of Interest Rate Election") to
the Agent not later than 10:00 A.M. (New York City time) at least one Domestic
Business Day before the Election Date, if all the resulting Loans will be Base
Rate Loans, and at least three Euro-Dollar Business Days before the Election
Date, if the resulting Loans will include Euro-Dollar Loans. Each Notice of
Interest Rate Election shall specify with respect to the outstanding Loans to
which such notice applies:
(i) the Election Date;
(ii) if the Type of Loan is to be changed, the new Type of Loan and,
if such new Type is a Euro-Dollar Loan, the duration of the first Interest
Period applicable thereto;
(iii) if such Loans are Euro-Dollar Loans and the Type of such Loans
is to be continued for an additional or different Interest Period, the
duration of such additional or different Interest Period; and
(iv) if such Loans are to be designated as a combination of Base
Rate Loans and Euro-Dollar Loans, the information specified in clauses (i)
through (iii) above as to each resulting Borrowing and the aggregate amount
of each such Borrowing.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period and the last
sentence of subsection (a) of this Section.
(c) Upon receipt of a Notice of Interest Rate Election, the Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
share of such
-46-
Borrowing and such notice shall not thereafter be revocable by the Borrower.
(d) If the Borrower (i) fails to deliver a timely Notice of Interest
Rate Election to the Agent electing to continue or change the Type of, or the
duration of the Interest Period applicable to, the Loans included in any
Borrowing as provided in this Section and (ii) has not theretofore delivered a
notice of prepayment relating to such Loans, then the Borrower shall be deemed
to have given the Agent a Notice of Interest Rate Election electing to change
the Type of such Loans to (or continue the Type thereof as) Base Rate Loans,
with an Interest Period commencing on the last day of the then current Interest
Period.
SECTION 2.05. Interest Rates. (a) Each Base Rate Loan shall bear
---------------
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the sum of
the applicable Base Rate Margin at the time and the Base Rate for such day.
Such interest shall be payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by law, overdue interest
on any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to such Base Rate Loan for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the applicable Euro-Dollar Margin at the time plus
the applicable Adjusted London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three months after the first
day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum
-47-
equal to the quotient obtained (rounded upwards, if necessary, to the next
higher 1/100 of l%) by dividing (i) the applicable London Interbank Offered Rate
by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upwards, if necessary, to the next higher 1/16 of l%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(c) Any overdue principal of and, to the extent permitted by law,
overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the
-48-
applicable Euro-Dollar Margin at the time plus the Adjusted London Interbank
Offered Rate applicable to such Loan and (ii) the applicable Euro-Dollar Margin
at the time plus the quotient obtained (rounded upwards, if necessary, to the
next higher 1/100 of l%) by dividing (x) the average (rounded upwards, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one-day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than three months
as the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Lenders by telecopy, telex or cable of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(f) Each Euro-Dollar Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any Euro-
Dollar Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Euro-Dollar Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.06. Commitment Fees. During the period from and including
----------------
the date of execution and delivery of this Agreement to but excluding the last
day of the
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Revolving Loan Availability Period, the Borrower shall pay to the Agent for the
account of the Lenders ratably in proportion to their Revolving Loan Commitments
a commitment fee at the applicable rate specified below on the daily average
amount by which the aggregate amount of the Revolving Loan Commitments exceeds
the sum of the Letter of Credit Exposure and the aggregate outstanding principal
amount of the Revolving Loans. Such commitment fee shall accrue at the rate of
(i) 0.25% per annum during any Level I Pricing Period, (ii) 0.375% per annum
during any Level II Pricing Period, (iii) 0.4375% per annum during any Level III
Pricing Period or (iv) 0.50% at all other times. If the rate at which the
commitment fee accrues shall change, the daily average amount referred to above
shall be determined separately for the periods before and after such change.
During the period from and including the date of execution and delivery of this
Agreement to but excluding the Effective Date or earlier termination of the Term
Commitments, the Borrower shall pay to the Agent for the account of the Lenders
ratably in proportion to their Term Commitments a commitment fee at the rate of
0.50% per annum on the amount of their respective Term Commitments. All such
commitment fees shall accrue from and including the date of execution and
delivery of this Agreement to but excluding, in the case of the Term
Commitments, the Effective Date or earlier termination of the Term Commitments,
or, in the case of the Revolving Loan Commitments, the last day of the Revolving
Loan Availability Period. Accrued commitment fees under this paragraph shall be
calculated by the Agent as of the Effective Date, as of each Quarterly Payment
Date and as of the date of termination of the Revolving Loan Commitments in
their entirety. The Agent shall make such calculation and notify the Borrower of
the amount so calculated within three Domestic Business Days after each date as
of which such calculation is so required, and such fees shall be payable by the
Borrower upon receipt of such notice, except that commitment fees accrued prior
to the Effective Date or any earlier termination of the Commitments shall be
payable on such date.
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SECTION 2.07. Termination or Reduction of Commitments. (a) During
----------------------------------------
the Revolving Loan Availability Period, the Borrower may, upon at least three
Domestic Business Days' notice to the Agent, (i) terminate the Revolving Loan
Commitments at any time, if there is no Letter of Credit Exposure at such time
and if no Revolving Loans are outstanding at such time, or (ii) ratably reduce
from time to time by an aggregate amount of $5,000,000 or any larger multiple of
$1,000,000 the aggregate amount of the Revolving Loan Commitments in excess of
the sum of the Letter of Credit Exposure and the aggregate outstanding principal
amount of the Revolving Loans; provided that the Borrower may not terminate or
--------
reduce the Revolving Loan Commitments pursuant to this subsection (a) at any
time that any Term Loans remain outstanding.
(b) After the Term Loans have been fully repaid, the Revolving Loan
Commitments shall be ratably reduced at each time that a prepayment would have
been required in respect of the Term Loans pursuant to subsection (e) or (f) of
Section 2.08 if Term Loans were then outstanding, by an amount equal to the
prepayment that would have been so required.
(c) The Term Commitments of each Class shall automatically terminate
at the close of business on the Effective Date.
SECTION 2.08. Mandatory Repayments and Prepayments. (a) Subject to
-------------------------------------
adjustment as provided in subsection (j) of this Section, on each date specified
below the Borrower shall repay (i) Tranche A Term Loans in the aggregate amount,
if any, set forth under the caption "Tranche A Amount" opposite such date and
(ii) Tranche B Term Loans in the aggregate amount, if any, set forth under the
caption "Tranche B Amount" opposite such date:
Tranche A Amount Tranche B Amount
---------------- ----------------
May 3, 1997 $ 6,250,000 $ 250,000
August 2, 1997 $ 6,250,000 $ 250,000
-00-
Xxxxxxx X Xxxxxx Xxxxxxx X Amount
---------------- ----------------
November 1, 1997 $ 6,250,000 $ 250,000
January 31, 1998 $ 6,250,000 $ 250,000
May 2, 1998 $10,000,000 $ 250,000
August 1, 1998 $10,000,000 $ 250,000
October 31, 1998 $10,000,000 $ 250,000
January 30, 1999 $10,000,000 $ 250,000
May 1, 1999 $11,250,000 $ 250,000
July 31, 1999 $11,250,000 $ 250,000
October 30, 1999 $11,250,000 $ 250,000
January 29, 2000 $11,250,000 $ 250,000
April 29, 2000 $12,500,000 $ 250,000
July 29, 2000 $12,500,000 $ 250,000
October 28, 2000 $12,500,000 $ 250,000
February 3, 2001 $12,500,000 $ 250,000
May 5, 2001 $13,250,000 $ 250,000
August 4, 2001 $13,250,000 $ 250,000
November 3, 2001 $13,250,000 $ 250,000
February 2, 2002 $13,250,000 $ 250,000
May 4, 2002 $11,000,000
August 3, 2002 $11,000,000
November 2, 2002 $11,000,000
February 1, 2003 $11,000,000
Tranche B Maturity Date $21,000,000
(b) Any Tranche A Term Loans outstanding on the Tranche A Maturity
Date shall be due and payable on such date, together with accrued interest
thereon. Any Tranche B Term Loans outstanding on the Tranche B Maturity Date
shall be due and payable on such date, together with accrued interest thereon.
(c) Any Revolving Loans outstanding on the Termination Date shall be
due and payable on such date, together with accrued interest thereon.
(d) In the event and on each occasion that the sum of the Letter of
Credit Exposure plus the aggregate outstanding principal amount of the Revolving
Loans exceeds the lesser of the Borrowing Base or the sum of the Revolving Loan
Commitments, the Borrower shall forthwith prepay
-52-
Revolving Loans (or, if no Revolving Loans are outstanding, provide cash
collateral in respect of the Letter of Credit Exposure pursuant to Section
2.13(k) and thereupon such cash shall be deemed to reduce the Letter of Credit
Exposure by an equivalent amount solely for purposes of this subsection) in an
amount equal to such excess.
(e) In the event and on each occasion after the Effective Date that a
Prepayment Event occurs, the Borrower shall, promptly following (and in any
event not later than the Domestic Business Day next following) the receipt of
Net Cash Proceeds in respect of such Prepayment Event, prepay Term Loans as
provided in subsection (i) of this Section in an aggregate principal amount
equal to 100% of such Net Cash Proceeds, in the case of an Asset Sale Prepayment
Event or Debt Prepayment Event, or the applicable Equity Prepayment Percentage
of such Net Cash Proceeds, in the case of an Equity Prepayment Event; provided
--------
that (i) no such prepayment shall be required in an aggregate principal amount
less than $1,000,000 and any receipt of Net Cash Proceeds that would otherwise
result in prepayment of a lesser amount shall cumulate until the aggregate
amount of Net Cash Proceeds from Prepayment Events received and not yet applied
hereunder equals or exceeds $1,000,000, at which time such prepayment shall be
made, and (ii) in the case of an Equity Prepayment Event, if no Default has
occurred and is continuing at the time, the Borrower may, at its option, elect
by notice delivered to the Agent on or prior to the date that the prepayment in
respect of such event would be required pursuant to the foregoing provisions of
this subsection (e), to apply an amount specified in such notice (the amount so
specified, the "Subordinated Debt Prepayment Amount") to purchase, redeem,
prepay or acquire Subordinated Debt in accordance with clause (f) of Section
5.12; provided that the Subordinated Debt Prepayment Amount in respect of any
--------
Equity Prepayment Event shall not exceed the Maximum Subordinated Debt
Prepayment with respect thereto. If the Borrower delivers to the Agent a notice
with respect to an Equity Prepayment Event as provided in clause (ii) above,
then the prepayment of Term Loans required pursuant to this
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subsection (e) with respect to such event shall be reduced by the Subordinated
Debt Prepayment Amount specified in such notice; provided that on the date 90
--------
days after the date that such prepayment would have been required the Borrower
shall deliver to the Agent a certificate specifying the aggregate amount of
Restricted Payments made pursuant to clause (f) of Section 5.12 in respect of
the applicable Equity Prepayment Event and shall prepay Term Loans in an
aggregate principal amount equal to the excess, if any, of the Subordinated Debt
Prepayment Amount specified by the Borrower in its notice to the Agent referred
to above over the aggregate amount of Restricted Payments so made.
(f) As promptly as practicable but in any event within 90 days after
the end of each fiscal year of the Borrower, commencing with the fiscal year
ending on the Saturday closest to January 31, 1998, the Borrower shall prepay
Term Loans as provided in subsection (i) of this Section in an aggregate
principal amount equal to the Excess Cash Flow with respect to such fiscal year
multiplied by (i) 67%, if the Debt Coverage Ratio as of the last day of such
fiscal year was greater than or equal to 2.50:1 or (ii) 50%, if the Debt
Coverage Ratio as of the last day of such fiscal year was less than 2.50:1 but
greater than or equal to 2.00:1; provided that no prepayment shall be required
--------
pursuant to this subsection (f) with respect to the Excess Cash Flow for any
fiscal year if the Debt Coverage Ratio as of the last day of such fiscal year
was less than 2.00:1. The Borrower shall deliver to the Agent at or prior to
the time of each prepayment pursuant to this subsection (f) a certificate
executed by the chief financial officer of the Borrower setting forth, in a form
acceptable to the Agent, a reasonably detailed calculation of the amount of such
prepayment.
(g) On the date of each repayment or prepayment of Loans pursuant to
this Section, the Borrower shall pay interest accrued on the principal amount
repaid or prepaid to the day of repayment or prepayment. The repayments and
prepayments of the Loans required by the respective subsec-
-54-
tions of this Section and the optional prepayments permitted by Section 2.09 are
separate and cumulative, so that any one such repayment or prepayment shall
reduce any other repayment or prepayment only as and to the extent specified in
subsection (j) of this Section.
(h) Prior to the date of each mandatory repayment or prepayment
pursuant to this Section, the Borrower shall, by notice to the Agent given not
later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day
prior to the date of such repayment or prepayment, select which outstanding
Borrowings of the required Class are to be repaid or prepaid (in accordance with
subsection (i) of this Section, if applicable); provided that the Borrower shall
--------
not elect to prepay any Euro-Dollar Borrowing if a Base Rate Borrowing of the
required Class is outstanding. Upon receipt of such notice, the Agent shall
promptly notify each Lender of the contents thereof and of such Lender's ratable
share of such prepayment, and such notice shall not thereafter be revocable by
the Borrower. Each such repayment or prepayment shall be applied to repay or
prepay ratably the respective Loans included in the Borrowings so selected.
(i) In the event of any mandatory prepayment of Term Loans pursuant
to subsection (e) or (f) of this Section, or any optional prepayment of Term
Loans pursuant to Section 2.09, at a time when Term Loans of both Classes remain
outstanding, the Borrower shall select Borrowings to be prepaid so that the
aggregate amount of each such prepayment is allocated between Borrowings of
Tranche A Term Loans and Borrowings of Tranche B Term Loans pro rata based on
the aggregate principal amount of outstanding Term Loans of each such Class;
provided that any Lender holding a Tranche B Term Loan may elect, by notice to
--------
the Agent prior to the prepayment date, to decline all or any portion of any
such prepayment of its Tranche B Term Loans (other than an optional prepayment
of its Tranche B Term Loans pursuant to Section 2.09, which may not be
declined), in which case the aggregate amount that would have been applied to
prepay
-00-
Xxxxxxx X Term Loans but was so declined shall be applied to prepay Tranche A
Term Loans.
(j) Any mandatory prepayment of the Term Loans of either Class
pursuant to subsection (e) or (f) of this Section, and any optional prepayment
of the Term Loans of either Class pursuant to Section 2.09, shall be applied to
reduce the remaining scheduled repayments of the Term Loans of such Class
pursuant to subsection (a) of this Section pro rata, except as provided in
clause (iv) of Section 5.11(a) with respect to a Debt Prepayment Event.
SECTION 2.09. Optional Prepayments. (a) Subject to subsection (b)
---------------------
below, the Borrower may, upon at least one Domestic Business Day's notice to the
Agent, in the case of Base Rate Borrowings, or three Euro-Dollar Business Days'
notice to the Agent, in the case of Euro-Dollar Borrowings, prepay any Borrowing
in whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment.
Each such notice of prepayment shall specify which outstanding Borrowing is to
be prepaid in connection therewith. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Lenders included in such
Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
voluntarily prepay all or any portion of the principal amount of any Euro-Dollar
Borrowing prior to the end of the related Interest Period. Any prepayment of a
Borrowing pursuant to this Section that includes Term Loans of either Class
shall be subject to the requirements of subsection (i) of Section 2.08.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Lender of the contents thereof and of such
Lender's ratable share of such prepayment and such notice shall not thereafter
be revocable by the Borrower.
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SECTION 2.10. General Provisions as to Payments. (a) The Borrower
----------------------------------
shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 10.01. The Agent will promptly distribute
to each Lender its ratable share of each such payment received by the Agent for
the account of the Lenders. Whenever any payment of principal of, or interest
on, the Base Rate Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-
Dollar Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment, each Lender shall
repay to the Agent forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Agent, at the Federal Funds Rate.
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SECTION 2.11. Funding Losses. If any payment of principal with
---------------
respect to any Euro-Dollar Loan (pursuant to Article II, VI or VIII or
otherwise) is made on any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed pursuant to Section
2.05(c), or if the Borrower fails to borrow, continue or prepay any Euro-Dollar
Loans after notice has been given to any Lender in accordance with Section 2.02,
2.04 or 2.08, the Borrower shall reimburse each Lender within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow, provided that such Lender shall have delivered to the
--------
Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.12. Computation of Interest and Fees. Interest based on
---------------------------------
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All fees and other
interest shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.13. Letters of Credit. (a) The Borrower may request the
------------------
issuance, extension or renewal of Letters of Credit, in a form reasonably
acceptable to the Agent and the applicable Issuing Bank, appropriately
completed, for the account of the Borrower, at any time and from time to time
during the Revolving Loan Availability Period; provided that any Letter of
--------
Credit shall be issued only if, and each request by the Borrower for the
issuance of any Letter of Credit shall be deemed a representation and warranty
of the Borrower that, immediately following the
-58-
issuance of any such Letter of Credit, (i) the Letter of Credit Exposure shall
not exceed $75,000,000, (ii) the sum of the Letter of Credit Exposure and the
aggregate principal amount of outstanding Revolving Loans shall not exceed the
then current Borrowing Base and (iii) the sum of the Letter of Credit Exposure
and the aggregate principal amount of outstanding Revolving Loans shall not
exceed the aggregate Revolving Loan Commitments at the time.
(b) Each Letter of Credit shall expire at the close of business on
the date that is five Domestic Business Days prior to the last day of the
Revolving Loan Availability Period, unless such Letter of Credit expires by its
terms (or is required by subsection (c) below to expire) on an earlier date.
Each Letter of Credit shall provide for payments of drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at least
three Domestic Business Days' prior written or telex notice (or such shorter
notice as shall be acceptable to the applicable Issuing Bank) from the Borrower
to the Agent (which shall give prompt notice thereof to each Lender) and the
applicable Issuing Bank specifying the date of issuance, the date on which such
Letter of Credit is to expire (which shall not be later than the earlier of (i)
the date that is five Domestic Business Days prior to the last day of the
Revolving Loan Availability Period, and (ii) subject to extension, 180 days, in
the case of documentary or trade Letters of Credit, and one year, in the case of
standby Letters of Credit, after the date of any such Letter of Credit, or, if
such Letter of Credit provides that the expiry thereof may be accelerated upon
an Event of Default with respect to the Borrower specified in clause (h) or (i)
of Section 6.01, any later date permitted under clause (i) above), the amount of
such Letter of Credit, the name and address of the beneficiary of such Letter of
Credit, whether such Letter of Credit is a documentary or trade Letter of Credit
or a standby Letter of Credit, and such other information as may be necessary or
desirable to complete such Letter of Credit. Each Issuing Bank will give the
Agent prompt notice of the issuance and amount of such Letter of Credit and the
expiration of such Letter of Credit. Each Issuing Bank also will give the Agent
and the Borrower (i) daily notice of the amount available to be drawn under each
outstanding Letter of Credit and (ii) a quarterly summary indicating, on a daily
basis during such quarter, the issuance of any Letter of Credit and the amount
thereof, the expiration of any Letter of Credit and any payment on drafts
presented under Letters of Credit.
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(d) Each Issuing Bank that issues a Letter of Credit, by the issuance
of a Letter of Credit and without any further action on the part of such Issuing
Bank or the Lenders in respect thereof, hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the Agent, on
behalf of such Issuing Bank, in accordance with Section 2.02(e), such Lender's
Applicable Percentage of each Letter of Credit Disbursement made by such Issuing
Bank and not reimbursed by the Borrower when due in accordance with subsection
(g) of this Section; provided that the Lenders shall not be obligated to make
--------
any such payment with respect to any wrongful Letter of Credit Disbursement made
as a result of the gross negligence or wilful misconduct of the applicable
Issuing Bank.
(e) Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to subsection (d) above in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever (subject only to the proviso in subsection
(d) above).
(f) During the Revolving Loan Availability Period (and thereafter, so
long as any Letter of Credit remains outstanding), the Borrower shall pay (i) to
the Agent for the account of the Lenders ratably in proportion to their
Revolving Loan Commitments a fee on the amount available to be drawn under each
outstanding Letter of Credit at a rate per annum equal to the applicable Euro-
Dollar Margin from time to time in effect with respect to Revolving Euro-Dollar
Loans (minus 0.375%, in the case of documentary or trade Letters of Credit), and
(ii) to each Issuing Bank for its own account, a fee at the rate per annum
specified in such Issuing Bank's Issuing Bank Agreement on the amount available
to be drawn under each outstanding Letter of Credit issued by such Issuing Bank.
Such fees shall accrue from and including the Effective Date to but excluding
the last day of the Revolving Loan Availability Period (provided that such fees
shall continue to accrue so long as any Letter of Credit remains outstanding).
Accrued fees under this subsection shall be calculated by the Agent as of each
Quarterly Payment Date and as of the Termination Date. The Agent shall make
such calculation and notify the Borrower of
-60-
the amount so calculated within three Domestic Business Days after each date as
of which such calculation is so required, and such fees shall be payable by the
Borrower upon receipt of such notice. In addition to the foregoing, the Borrower
shall pay directly to each Issuing Bank, for its own account, such Issuing
Bank's customary processing and documentation fees in connection with the
issuance or amendment of or payment on any Letter of Credit, payable within 15
days after demand therefor by such Issuing Bank.
(g) If an Issuing Bank shall pay any draft presented under a Letter
of Credit, the Borrower shall pay to the Agent, on behalf of such Issuing Bank,
an amount equal to the amount of such draft before 12:00 Noon (New York City
time), on the day on which such Issuing Bank shall have notified the Borrower
that payment of such draft will be made. The Agent will promptly pay any such
amounts received by it to such Issuing Bank. If the Borrower shall fail to pay
any amount required to be paid by it under this subsection when due, such unpaid
amount shall bear interest, for each day from and including the due date to but
excluding the date of payment, at a rate per annum equal to the interest rate
applicable to overdue Base Rate Revolving Loans.
(h) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in subsection (g) above shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances whatsoever, and
irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
any other Loan Document;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower, any Subsidiary or any other person may at any time have
against the beneficiary under any Letter of Credit, any Issuing Bank, the
Agent or any Lender or any other Person in connection with this Agreement,
any other Loan Document
-61-
or any other related or unrelated agreement or transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; provided that such payment was not
--------
wrongfully made as a result of the gross negligence or wilful misconduct of
the applicable Issuing Bank; and
(v) any other act or omission or delay of any kind or any other
circumstance or event whatsoever, whether or not similar to any of the
foregoing and whether or not foreseeable, that might, but for the
provisions of this subsection (h), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(i) It is expressly understood and agreed that, for purposes of
determining whether a wrongful payment under a Letter of Credit resulted from an
Issuing Bank's gross negligence or wilful misconduct, an Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) an Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit
-62-
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute wilful misconduct or
gross negligence of the applicable Issuing Bank. It is further understood and
agreed that, notwithstanding the proviso to clause (iv) of subsection (h) above,
the Borrower's obligation hereunder to reimburse Letter of Credit Disbursements
will not be excused by the gross negligence or wilful misconduct of an Issuing
Bank to the extent that such Letter of Credit Disbursement actually discharged a
liability of, or otherwise benefited, or was recovered by, the Borrower;
provided that the foregoing shall not be construed to excuse an Issuing Bank
--------
from liability to the Borrower to the extent of any direct damages suffered by
the Borrower that are caused by such Issuing Bank's gross negligence or wilful
misconduct in determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof.
(j) Each Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. Each Issuing Bank shall as promptly as possible give
telephonic notification, confirmed by telex or telecopy, to the Agent and the
Borrower of such demand for payment and whether such Issuing Bank has made or
will make a Letter of Credit Disbursement thereunder, provided that the failure
to give such notice shall not relieve the Borrower of its obligation to
reimburse any such Letter of Credit Disbursement in accordance with this
Section. The Agent shall promptly give each Lender notice thereof.
(k) In the event that the Borrower is required pursuant to the terms
of this Agreement or any other Loan Document to provide cash collateral in
respect of the Letter of Credit Exposure, the Borrower shall deposit in an
account with the Security Agent, for the benefit of the Lenders, an amount in
cash equal to the Letter of Credit Exposure (or such lesser amount as shall be
required hereunder or
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thereunder). Such deposit shall be held by the Security Agent as collateral for
the payment and performance of the Obligations. The Security Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits in Temporary Cash Investments, which investments shall be made as
directed by the Borrower (unless such investments shall be contrary to
applicable law or regulation or a Default shall have occurred and be continuing,
in which case investments shall be made at the option and sole but reasonable
discretion of the Security Agent), such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall automatically be applied by the Security
Agent to reimburse each Issuing Bank for Letter of Credit Disbursements and, if
the maturity of the Loans has been accelerated, to satisfy the Obligations. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Domestic Business Days
after all Events of Default have been cured or waived. If the Borrower is
required to provide an amount of cash collateral hereunder pursuant to Section
2.08(d), such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower upon demand; provided that, after giving effect to such return,
--------
(i) the sum of the Letter of Credit Exposure plus the aggregate outstanding
principal amount of Revolving Loans would not exceed the lesser of the aggregate
Revolving Loan Commitments or the Borrowing Base and (ii) no Default shall have
occurred and be continuing.
(l) All letters of credit outstanding under the Existing Credit
Agreement as of the Effective Date shall be deemed to have been issued hereunder
on the Effective Date and shall constitute "Letters of Credit" for all purposes
of the Loan Documents.
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(m) The Borrower, the Agent and any Lender that is willing to be an
Issuing Bank hereunder may agree that such Lender shall be an Issuing Bank by
the execution and delivery of an agreement substantially in the form of Exhibit
I (an "Issuing Bank Agreement"). The Agent shall notify the Lenders of the
identity of any Issuing Bank appointed pursuant to this subsection (m). The
Borrower also may terminate the status of any Issuing Bank as an Issuing Bank
hereunder at any time by at least three Domestic Business Days' prior notice to
such Issuing Bank and the Agent, and the Agent shall thereupon notify the
Lenders of such termination; provided that such termination shall operate only
--------
to relieve such Issuing Bank of its obligation to issue Letters of Credit
hereunder and shall not affect such Issuing Bank's status as an Issuing Bank or
its rights and obligations hereunder with respect to any Letters of Credit
previously issued by it.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective
--------------
on the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 10.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Lender of a duly
executed Note or Notes, dated on or before the Effective Date complying
with the provisions of Section 2.03;
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(c) receipt by the Agent of (i) opinions of each of Xxxxxxx &
XxXxxxxx, Xxxxxxxx & O'Neil, Foley, Xxxx & Elliot and Ice Xxxxxx Xxxxxxx &
Xxxx, in each case as counsel for the Borrower, substantially in the forms
of Exhibits G-1, G-2, G-3 and G-4 hereto, respectively, and covering such
additional matters relating to the transactions contemplated hereby as the
Required Lenders may reasonably request and (ii) the opinions of counsel to
be delivered pursuant to the Asset Purchase Agreements, together with
letters from such counsel to the effect that the Lenders may rely upon
their respective opinions as though addressed to the Lenders;
(d) receipt by the Agent of a certificate signed by the Chairman and
Chief Executive Officer and any Vice President of the Borrower, dated the
Effective Date, to the effect set forth in clauses (c) and (d) of Section
3.02;
(e) receipt by the Agent of counterparts of the Guarantee Agreement
duly executed by the parties thereto;
(f) receipt by the Security Agent of counterparts of the Pledge
Agreement, duly executed by the parties thereto, and certificates
representing all outstanding shares of capital stock of each corporate
Subsidiary existing on the Effective Date, accompanied by stock powers
endorsed in blank;
(g) receipt by the Security Agent of counterparts of the Security
Agreement, duly executed by the parties thereto, and a duly completed and
executed Perfection Certificate from the Borrower, substantially in the
form of Exhibit H hereto;
(h) receipt by the Security Agent of copies of each document
(including each Uniform Commercial Code financing statement) required by
law or reasonably requested by the Security Agent to be filed, registered
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or recorded in order to create in favor of the Security Agent for the
benefit of the Lenders a valid, legal and perfected security interest in or
lien on the collateral that is the subject of the Security Agreement;
(i) receipt by the Security Agent of the results of a search of the
Uniform Commercial Code filings made with respect to the Borrower and its
Subsidiaries in the States in which are located the chief executive offices
of such persons and the other jurisdictions in which Uniform Commercial
Code filings are to be made pursuant to the preceding paragraph, together
with copies of such financing statements disclosed by such search, and
accompanied by evidence that each lien indicated in any such financing
statement is permitted hereunder or has been released;
(j) receipt by the Security Agent of (i) counterparts of a Mortgage
with respect to each Mortgaged Property, satisfactory in form and substance
to the Security Agent and signed on behalf of the record owner of such
Mortgaged Property, (ii) a policy or policies of title insurance issued by
a nationally recognized title insurance company, insuring the Lien of each
such Mortgage as a valid first Lien on the Mortgaged Property described
therein, free of any other Liens except as permitted by Section 5.17,
together with such endorsements, coinsurance and reinsurance as the
Security Agent or the Required Lenders may reasonably request, (iii) such
surveys, abstracts, appraisals and legal opinions as may be required
pursuant to such Mortgages or as the Security Agent or the Required Lenders
may reasonably request, including FIRREA appraisals to the extent required
by applicable law or regulation; and (iv) with respect to the warehouse
facilities located in the state of Indiana, a policy or policies of flood
insurance issued by a nationally recognized insurance company;
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(k) receipt by the Security Agent of an initial Borrowing Base
Certificate as of the Saturday closest to the last day of October, 1996;
(l) receipt by the Security Agent of counterparts of the Trademark
Collateral Agreements, duly executed by the parties thereto;
(m) receipt by the Agent of true and complete copies of the
Transaction Documents and all other agreements and documents relating to or
to be entered into in connection with the Acquisition, and satisfaction of
the Lenders with the form and substance thereof (it being understood that
the form and substance of the Transaction Documents delivered to the
Lenders prior to the execution and delivery of this Agreement and the forms
of other agreements and documents attached as exhibits thereto shall be
considered satisfactory);
(n) the Convertible Subordinated Debt shall have been issued on terms
and conditions satisfactory to the Lenders and the Agent shall have
received true and complete copies of the Subordinated Debt Documents
executed and delivered in connection therewith which shall be in form and
substance satisfactory to the Lenders (it being understood that the terms
and conditions of the Convertible Subordinated Debt disclosed to the
Lenders prior to the execution and delivery of this Agreement, and the
forms of the Subordinated Debt Documents delivered to the Lenders prior to
the execution and delivery of this Agreement, shall be considered
satisfactory);
(o) receipt by the Lenders of satisfactory evidence that the
Borrower, its partners and their respective affiliates shall have obtained
all consents and approvals of, and shall have made all filings and
registrations with, any Governmental Authority required in order to
consummate the Acquisition, in each case
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without the imposition of any condition which, in the judgment of the
Required Lenders, presents a reasonable possibility of a Material Adverse
Effect;
(p) receipt by the Lenders of a pro forma (giving effect to the
Acquisition) consolidated balance sheet of the Borrower as of a recent
date, which shall not be materially inconsistent with information disclosed
to the Lenders prior to the execution and delivery of this Agreement;
(q) the Required Lenders shall not have advised the Agent that, in
their judgment, there shall have occurred a material adverse change in the
assets, financial condition, prospects or results or operations of the
Borrower and its Subsidiaries (including the assets and business to be
acquired pursuant to the Acquisition), taken as a whole;
(r) receipt by the Borrower of at least $50,000,000 of additional
cash equity contributions and the availability of cash balances of the
Borrower (prior to giving effect to such additional cash equity) in an
amount not less than $4,000,000;
(s) the Acquisition shall be consummated on the Effective Date in
accordance with the terms and conditions of the Asset Purchase Agreements
without giving effect to any amendment, modification, waiver or breach
thereof that, in the judgment of the Required Lenders, is materially
adverse to the interests of the Lenders;
(t) the purchase price for the Acquisition shall not exceed
$222,800,000 of cash consideration (plus working capital and tax adjustment
payments to be made after the Effective Date as provided in the Asset
Purchase Agreements) and issuance of the Convertible Subordinated Debt;
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(u) the Agent and the Documentation Agent shall be reasonably
satisfied that the total fees and expenses payable by the Borrower and its
Subsidiaries in connection with the Acquisition and the Financing
Transactions shall not exceed $15,000,000;
(v) the Borrower shall have made arrangements satisfactory to the
Agent and the Documentation Agent to repay all loans outstanding under the
Existing Credit Agreement, together with accrued and unpaid interest, fees
and other amounts owing thereunder, to terminate all lending commitments
thereunder, and to obtain the release and termination of all Liens securing
obligations thereunder, in each case on the Effective Date, and after
giving effect thereto and to the Acquisition the only Debt of the Borrower
and its Subsidiaries on the Effective Date will be Loans, Subordinated Debt
and other Debt that was permitted by the Existing Credit Agreement;
(w) receipt by the Agent of all fees and other compensation payable
to the Agent, the Documentation Agent, the Lenders or the Security Agent on
or prior to the Effective Date pursuant to their agreements with the
Borrower;
(x) receipt by the Agent of the certificate to be delivered on the
Effective Date pursuant to Section 5.03(b) and satisfaction of the Lenders
with the amount and scope of the Borrower's insurance coverage set forth
therein and the identity of the insurers providing such coverage; and
(y) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Borrower and its Subsidiaries, the
corporate authority for and the validity of the Loan Documents, and any
other matters relevant hereto, all in form and substance satisfactory to
the Agent;
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provided that this Agreement shall not become effective or be binding on any
--------
party hereto unless all of the foregoing conditions are satisfied not later than
January 27, 1997. The Agent shall promptly notify the Borrower and the Lenders
of the Effective Date, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. Each Credit Event. The obligation of any Lender to
------------------
make a Loan on the occasion of any Borrowing (it being understood that, for
purposes of this Section, a "Borrowing" does not include a change or
continuation of the Type of, or the duration of the Interest Period applicable
to, a previously outstanding Borrowing pursuant to Section 2.04) and of the
Issuing Bank to issue, extend or renew a Letter of Credit is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or a notice requesting issuance, extension or renewal of a
Letter of Credit as required by Section 2.13(c), as applicable;
(b) the fact that, immediately after such Borrowing or the issuance,
extension or renewal of such Letter of Credit, the aggregate outstanding
principal amount of the Loans of each Class and the Letter of Credit
Exposure will not exceed the limitations set forth in Sections 2.01 and
2.13(a);
(c) the fact that, immediately after such Borrowing or issuance of
such Letter of Credit, no Default shall have occurred and be continuing;
and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents shall be true on
and as of the date of such Borrowing or issuance, extension or renewal of
such Letter of Credit (except to the extent
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such representations and warranties expressly relate solely to an earlier
date).
Each Borrowing hereunder and the issuance, extension or renewal of each Letter
of Credit hereunder shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing or issuance as to the facts specified in
clauses (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Existence and Power. The Borrower is a limited
--------------------
partnership (or, if the Borrower shall become a corporation pursuant to a
Conversion, a corporation) duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and has all powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted or proposed to be conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
----------------------------------------------
Contravention. The execution, delivery and performance by each of
--------------
the Borrower and its Subsidiaries of this Agreement and the other Loan Documents
to which it is to be a party and the consummation of the Financing Transactions
and the Acquisition are within its powers, have been duly authorized by all
necessary action on the part of the Borrower, its partners, the Subsidiaries and
their respective stockholders or partners (as applicable), require no action by
or in respect of, or filing with, any Governmental Authority (other than (i)
such as have been duly taken or made, (ii) filings required to perfect Liens
granted under the Security Documents and (iii) compliance with "bulk sales"
laws) and do not contravene, or constitute a default under, any provision of
applicable law or
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regulation or of the partnership agreement, certificate of incorporation or By-
laws (as applicable) of the Borrower or any Subsidiary or of any judgment,
injunction, order or decree or (to the extent that such contravention or default
could result in a Material Adverse Effect) any agreement or other instrument
binding upon the Borrower or any Subsidiary or result in the creation or
imposition of any Lien (other than the Liens of the Security Documents) on any
asset of the Borrower or any of its Subsidiaries, in each case both before and
after giving effect to the Transactions.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
---------------
binding agreement of the Borrower and the other Loan Documents, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of each of the Borrower and the Subsidiaries party thereto,
in each case enforceable in accordance with its terms.
SECTION 4.04. Financial Information; Title to Properties. (a) The
-------------------------------------------
consolidated balance sheet of the Borrower as of February 3, 1996 and the
related consolidated statements of operations, partnership equity and cash flows
for each of the two fiscal years ended February 3, 1996, reported on by Coopers
& Xxxxxxx and set forth in the Descriptive Memorandum, copies of which have been
delivered to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Borrower as of such date and the results of its operations and cash flows for
such years.
(b) The unaudited consolidated balance sheet of the Borrower as of
August 3, 1996, and the related unaudited consolidated statements of operations
and cash flows for the 13-week and 26-week periods ended August 3, 1996, set
forth in the Descriptive Memorandum, copies of which have been delivered to each
of the Lenders, fairly present, in conformity with generally accepted accounting
principles applied on a basis consistent with the financial statements
referred to in subsection (a) of this Section (except as
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disclosed therein), the consolidated financial position of the Borrower as of
such date and the results of its operations for such periods (subject to normal
year-end adjustments).
(c) The unaudited pro forma consolidated statement of income for the
fiscal year ended February 3, 1996, set forth in the Descriptive Memorandum, has
been derived from the historical financial statements for such period referred
to in subsection (a) of this Section adjusted to give effect to the Transactions
on the basis described therein. Such pro forma consolidated statement of income
presents fairly, on a pro forma basis, the Borrower's consolidated income for
such period, assuming that the adjustments specified therein had occurred as
described therein.
(d) Since February 3, 1996, there has been no material adverse change
in the assets, financial condition or results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole (it being understood that
the consummation of the Transactions on the Effective Date shall not be
considered to constitute such a material adverse change).
(e) Each of the Borrower and the Subsidiaries has good and marketable
title to, or valid leasehold interests in, all its material properties and
assets, except for minor defects in title that do not interfere with its ability
to conduct its business as currently conducted or proposed to be conducted or to
utilize such properties and assets for their intended purposes.
SECTION 4.05. Litigation. There is no injunction, stay, decree or
-----------
order of any Governmental Authority or any action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an
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adverse decision, which in any such case could have a Material Adverse Effect or
which in any manner draws into question the validity of any Transaction
Document, this Agreement or the other Loan Documents.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group
----------------------
has, in all material respects, fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan. No
member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan, or made any
amendment to any Plan, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any material liability under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Taxes. The Borrower and its Subsidiaries have filed or
------
caused to be filed all United States Federal income tax returns and all other
material tax returns which are required to be filed by them and have paid or
caused to be paid all taxes shown to be due on such returns or pursuant to any
assessment received by the Borrower or any Subsidiary, except where the same may
be contested in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Borrower,
adequate.
SECTION 4.08. Subsidiaries. Each of the Borrower's Subsidiaries is a
-------------
corporation, a general partnership or a limited partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all corporate or
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partnership powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. As of
the Effective Date, after giving effect to the Acquisition, the only
Subsidiaries of the Borrower shall be the Subsidiaries identified on Schedule
4.08, each of which shall be a Permitted Subsidiary.
SECTION 4.09. Not an Investment Company. The Borrower is not an
--------------------------
"investment company", nor is it controlled by an "investment company", within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.10. Compliance with Laws. Neither the Borrower nor any of
---------------------
the Subsidiaries is in violation of any law, rule or regulation, or in default
with respect to any judgment, writ, injunction or decree applicable to it of any
Governmental Authority, that (individually or in the aggregate) could result in
a Material Adverse Effect.
SECTION 4.11. Agreements. (a) Except as disclosed in the
-----------
Descriptive Memorandum, neither the Borrower nor any of the Subsidiaries is a
party to any agreement or instrument or subject to any partnership or corporate
restriction that has resulted or could result in a Material Adverse Effect.
Neither the Borrower nor any of the Subsidiaries is a party to any agreement or
instrument or subject to any restriction (other than restrictions on the payment
of dividends or partnership distributions imposed by law) that restricts or
impairs (i) the ability of the Borrower and its Subsidiaries to grant to the
Security Agent Liens on any of their assets to secure the Obligations or (ii)
the ability of any Subsidiary to pay dividends on its capital stock or
distributions to its partners, as applicable.
(b) Neither the Borrower nor any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Debt, or any other agreement or instrument to which it is a
-76-
party or by which it or any of its properties or assets are or may be bound,
where such default could result in a Material Adverse Effect.
SECTION 4.12. Federal Reserve Regulations. Neither the Borrower nor
----------------------------
any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
SECTION 4.13. Disclosure. All information (including the Descriptive
-----------
Memorandum but excluding projected financial information) furnished in writing
by or on behalf of the Borrower or any Subsidiary to the Agent or any Lender for
purposes of or in connection with this Agreement or any transaction contemplated
hereby was true and accurate in all material respects or based on reasonable
estimates on the date as of which such information was stated or certified. The
Borrower has disclosed to the Lenders in writing any and all facts (other than
prevailing economic conditions affecting similarly situated businesses
generally) known to any officer of the Borrower which materially and adversely
affect or may materially and adversely affect (to the extent the Borrower can
now reasonably foresee) the business, financial position or results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole. All projected financial information which has been furnished by or on
behalf of the Borrower or any Subsidiary to the Agent or any Lender was, at the
time so furnished, believed by the Borrower to have been prepared in a
reasonable manner and based on reasonable assumptions with respect to the
Borrower's business; provided that no representation is made by the Borrower
--------
that the future results of the Borrower will equal those set forth in such
projected financial information.
SECTION 4.14. Governmental Approvals. As of the Effective Date, all
-----------------------
consents and approvals of, and filings and registrations with, and all other
actions in respect of,
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all Governmental Authorities required in order to consummate the Transactions
shall have been obtained, given, filed or taken and shall be in full force and
effect, other than filings required in order to perfect Liens granted under the
Security Documents.
SECTION 4.15. Security Interests. (a) The security interests
-------------------
created in favor of the Security Agent under the Pledge Agreement will at all
times after the execution and delivery of the Pledge Agreement constitute valid,
first-priority, perfected security interests in the Pledged Securities (as
defined therein), and such Pledged Securities will be subject to no Liens (other
than unperfected Liens imposed by law) or security interests of any other
Person. No filings or recordings are or will be required in order to perfect
the security interests in the Pledged Securities created under the Pledge
Agreement.
(b) Upon the completion of the filings and recordations in the filing
and recording offices specified in the Perfection Certificate referred to in
Section 3.01, the security interests created in favor of the Security Agent for
the benefit of the Lenders under the Security Documents will constitute valid,
perfected security interests in the collateral subject thereto, subject only to
Liens permitted by the Loan Documents.
SECTION 4.16. Employment and Management Agreements. Except as
-------------------------------------
disclosed in Schedule 4.16, as of the Effective Date (after giving effect to the
Transactions) there are no (a) employment agreements covering management
employees of the Borrower, (b) agreements for management or consulting services
to which the Borrower is a party or by which it is bound, or (c) collective
bargaining agreements or other labor agreements covering any of the employees of
the Borrower.
SECTION 4.17. Capitalization. As of the Effective Date, the only
---------------
general partner in the Borrower is VGP. As of the Effective Date, there are no
outstanding
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subscriptions, options, warrants, calls, rights (including preemptive rights) or
other agreements or commitments of any nature relating to any partnership
interests in the Borrower, except as provided for in the Partnership Agreement
and except with respect to management plans and arrangements and the Convertible
Subordinated Debt.
SECTION 4.18. Environmental Matters. Except as disclosed in the
----------------------
environmental audit reports delivered to the Agent prior to the date of
execution of this Agreement, each of the Borrower and the Subsidiaries has
complied with all Environmental and Safety Laws, except for any noncompliance
that, individually or in the aggregate, could not reasonably be anticipated to
result in a Material Adverse Effect. None of the Borrower and the Subsidiaries
has received notice of any failure so to comply which alone or together with any
other such failure could result in a Material Adverse Effect. Except as
disclosed in the environmental audit reports delivered to the Agent prior to the
date of execution of this Agreement, the facilities of the Borrower and the
Subsidiaries do not treat, store or dispose of any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as those
terms are used in any Environmental and Safety Laws, in violation thereof where
such violation could result, individually or together with other violations, in
a Material Adverse Effect.
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ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any Commitment
hereunder or any amount payable under any Loan Document remains unpaid or any
Letter of Credit remains outstanding:
SECTION 5.01. Information. The Borrower will deliver to each of the
------------
Lenders:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries as of the
end of such fiscal year and the related consolidated and consolidating
statements of income and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on by Coopers & Xxxxxxx or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the
Borrower, consolidated balance sheets of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of income and cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth
in each case in comparative form the figures for the corresponding quarter
and the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by
the chief financial officer or the chief accounting officer of the
Borrower;
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(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail a list of Investments in order to
establish whether the Borrower was in compliance with Section 5.16, (ii)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.21, 5.22 and 5.23 on the date of such financial statements, (iii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto, (iv)
stating whether, since the date of the most recent financial statements
previously delivered pursuant to this Section, there has been any material
change in the generally accepted accounting principles applied in the
preparation of such statements and, if so, describing such change, (v)
identifying any Reinvestment Events that occurred during the previous six-
month period and the status of the reinvestment of the Net Cash Proceeds
thereof, (vi) as long as the Borrower is a partnership, setting forth the
Tax Distribution Amount and a reasonably detailed calculation thereof, and
(vii) in the case of each such certificate delivered on or after the
Pricing Adjustment Date, setting forth the Pricing Ratio and a reasonably
detailed calculation thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
stating whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously
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therewith pursuant to subclauses (ii), (vi) and (vii) of clause (c) above;
(e) as soon as available and in any event within 20 days after the
Saturday closest to the last day of each calendar month, a summary
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of such Saturday and the related summary consolidated
statement of income for the fiscal month then ended and for the portion of
the Borrower's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal month and the
corresponding portion of the Borrower's previous fiscal year, prepared in
accordance with generally accepted accounting principles (subject to normal
year-end adjustments);
(f) within 20 days after the Saturday closest to the last day of each
calendar month (commencing with the month ending November 30, 1996), a
Borrowing Base Certificate as of such Saturday certified by the chief
financial officer or chief accounting officer of the Borrower (which
certificate the Agent and the Security Agent shall have the right to audit
at the expense of the Borrower; provided that not more than two such audits
--------
may be conducted at the Borrower's expense during any fiscal year of the
Borrower unless an Event of Default has occurred and is continuing);
(g) prompt notice of any default or alleged default under or breach
or alleged breach of the Trademark Agreements or Credit Card Agreements;
(h) prompt notice of each Prepayment Event or Reinvestment Event,
including a reasonably detailed calculation of the Net Cash Proceeds
therefrom;
(i) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief
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financial officer or the chief accounting officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(j) promptly upon the delivery or mailing thereof to the partners in
the Borrower (or, following a Conversion, the shareholders of the Borrower
or its Parent Corporation, as applicable), copies of all reports, financial
information (including budgets or projections), proxy statements and other
information so delivered or mailed;
(k) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower, its Parent Corporation or Finance
Corp. shall have filed with the Securities and Exchange Commission;
(l) if and when any member of the ERISA Group (i) becomes aware of or
gives or is required to give notice to the PBGC of any Reportable Event
with respect to any Plan which might constitute grounds for or result in a
termination of such Plan by the PBGC under Title IV of ERISA, or knows that
the plan administrator of any Plan has become aware of or has given or is
required to give notice of any Reportable Event, a copy of the notice of
such Reportable Event given or required to be given to the PBGC if any such
notice is required; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA under circumstances that would result in
a material amount of withdrawal liability, a copy of such notice; (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a copy of such
notice; or (iv) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Internal
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Revenue Code a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of the chief financial officer
or the chief accounting officer of the Borrower setting forth details as to
such failure and the action that the Borrower proposes to take with respect
thereto, together with a copy of any such notice given to the PBGC;
(m) promptly upon delivery thereof to the holders of Subordinated
Debt, copies of any and all reports, notices, financial information
(including any budgets or projections) and other information delivered to
such holders, to the extent not duplicative of information previously
delivered to the Lenders; and
(n) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Lender, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
-----------------------
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except in connection with a good faith
contest with the applicable obligee, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance; Casualty and
------------------------------------------------
Condemnation. (a) The Borrower will keep, and will cause each Subsidiary to
-------------
keep, all property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, (i) physical damage insurance
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on all real and personal property on an all risks basis (including the perils of
flood and quake), covering the repair and replacement cost of all such property
and consequential loss coverage for business interruption and extra expense
(such consequential loss coverage to be in a reasonable amount in relation to
the Borrower's gross revenues), (ii) public liability insurance (including
products/completed operations liability coverage) in such amounts (on a per
occurrence basis) as is customary with prudent companies similarly situated in
the same or similar businesses, and (iii) such other insurance coverage in such
amounts and with respect to such risks as shall be required by the terms of any
other Loan Document or as the Required Lenders may reasonably request. All such
insurance shall be provided by financially sound and reputable insurers or such
other insurers as the Required Lenders may approve in writing. The Borrower will
deliver to the Lenders (i) on the Effective Date, a certificate dated such date
showing the amount of coverage as of such date, (ii) upon request of any Lender
through the Agent from time to time full information as to the insurance
carried, (iii) within five days of receipt of notice from any insurer a copy of
any notice of cancellation or material change in coverage from that existing on
the Effective Date and (iv) forthwith, notice of any cancellation or nonrenewal
of coverage by the Borrower.
(c) The Borrower will furnish to the Agent and the Lenders prompt
written notice of any casualty or other insured damage to any portion of any
Mortgaged Property or the commencement of any action or proceeding for the
taking of any Mortgaged Property or any part thereof or interest therein under
power of eminent domain or by condemnation or similar proceeding. If any such
event results in Net Cash Proceeds (whether in the form of insurance proceeds,
condemnation award or otherwise), the Security Agent is authorized to collect
such Net Cash Proceeds and, if received by the Borrower or any Subsidiary, such
Net Cash Proceeds shall be paid over to the Security Agent; provided that if the
--------
aggregate Net Cash Proceeds in respect of such
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event are less than $5,000,000, such Net Cash Proceeds shall be paid over to the
Borrower unless a Default has occurred and is continuing. All such Net Cash
Proceeds retained by or paid over to the Security Agent shall be held by the
Security Agent and released from time to time to pay the costs of repairing,
restoring or replacing the affected property in accordance with the terms of the
applicable Mortgage, subject to the provisions of the applicable Mortgage
regarding application of such Net Cash Proceeds during a Default. If any Net
Cash Proceeds retained by or paid over to the Security Agent as provided above
continue to be held by the Security Agent on the date that is two years after
the collection of such Net Cash Proceeds, then such Net Cash Proceeds shall be
applied to prepay Term Loans as provided in Section 2.08(e).
SECTION 5.04. Conduct of Business and Maintenance of Existence. (a)
-------------------------------------------------
The Borrower will continue, and will cause each Subsidiary to continue, to
engage in business of the same general type as conducted by the Borrower and its
Subsidiaries prior to the Effective Date, and will preserve, renew and keep in
full force and effect, and will cause each Subsidiary to preserve, renew and
keep in full force and effect, their respective existences (except that the
Borrower may become a corporation pursuant to a Conversion) and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business.
(b) All outstanding shares of Finance Corp.'s capital stock shall be
owned directly by the Borrower, Finance Corp.'s only business or activity shall
be the issuance of the Subordinated Debt and activities incidental thereto and
Finance Corp. shall not own or acquire any assets.
(c) The only business or activity of a Permitted Subsidiary (other
than Finance Corp.) shall be (i) creative design activities associated with the
preparation of catalogues in connection with the Borrower's business, (ii) the
production and distribution of such catalogues,
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(iii) other activities incidental to the Borrower's business, (iv) the leasing
of property and employment of management and employees for purposes of the
foregoing activities, (v) other activities incidental to such Permitted
Subsidiary's business and (vi) ownership of interests in other Permitted
Subsidiaries. Without limiting the generality of the foregoing, Permitted
Subsidiaries (including Finance Corp.) shall not own or acquire any inventory or
collect or hold any revenues or other proceeds generated from the sale of
inventory, all of which activities shall be conducted by the Borrower. The
Borrower will not permit any Permitted Subsidiary to incur any Debt (other than
pursuant to the Guarantee Agreement, the Security Documents and a Subordinated
Guarantee Agreement and, in the case of Finance Corp., the Subordinated Debt) or
other liability (other than liabilities for franchise taxes and similar
liabilities incidental to its existence).
SECTION 5.05. Compliance with Laws. The Borrower will comply, and
---------------------
cause each Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental and Safety Laws and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where the failure to
comply, either alone or combined with other failures to comply, could not have a
Material Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The
------------------------------------------
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of any Lender
at such Lender's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective offi-
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cers, employees and independent public accountants, all at such reasonable times
and as often as may reasonably be desired; provided that (a) reasonable advance
--------
notice shall be given to the Borrower of any such visit or inspection of
properties and (b) the Borrower shall be afforded an opportunity to participate
in any such discussions with independent public accountants.
SECTION 5.07. Fiscal Year. The Borrower will cause its fiscal year
------------
to end on the Saturday closest to January 31 in each year.
SECTION 5.08. Further Assurances. The Borrower will execute any and
-------------------
all further documents, financing statements, agreements and instruments, and
take all further action, which may be required under applicable law, or which
the Required Lenders or the Agent or Security Agent may reasonably request, in
order to effectuate the transactions contemplated by the Loan Documents and in
order to grant, preserve, protect and perfect the validity and first priority of
the security interests created or intended to be created by the Security
Documents. In addition, (a) the Borrower will deliver prompt written notice to
the Lenders of each Permitted Acquisition describing the assets and properties
acquired and the Borrower will, at the Borrower's cost and expense, promptly
secure the Obligations by pledging or creating, or causing to be pledged or
created, first priority (subject to Liens incurred prior to the applicable
Permitted Acquisition) perfected security interests with respect to such assets
and properties as the Agent or the Required Lenders shall reasonably designate,
and (b) if the Borrower shall form or acquire any additional Subsidiary, the
Borrower will, at the Borrower's expense, cause such Subsidiary to become a
party to the Guarantee Agreement and the Security Agreement and pledge (or cause
to be pledged) the capital stock of such Subsidiary under the Pledge Agreement.
Such additional security interests and Liens will be created under security
agreements, mortgages, deeds of trust and other instruments and documents in
form and substance reasonably satisfactory to the Required
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Lenders, and the Borrower shall deliver or cause to be delivered to the Lenders
all such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Required Lenders shall reasonably request to
evidence compliance with this Section 5.08. The Borrower agrees to provide such
evidence as the Required Lenders shall reasonably request as to the perfection
and (subject to Liens incurred prior to the applicable Permitted Acquisition)
first priority status of each such security interest and Lien.
SECTION 5.09. Subsidiaries; Partnerships. The Borrower will not have
---------------------------
any Subsidiaries other than (i) Wholly-Owned Consolidated Subsidiaries acquired
pursuant to Permitted Acquisitions and liquidated or merged into the Borrower
within 90 days after the date of acquisition and (ii) Permitted Subsidiaries.
The Borrower will not, and will not permit any of its Subsidiaries to, enter
into any partnership (other than a partnership that is a Permitted Subsidiary)
or joint venture.
SECTION 5.10. Amendment of Certain Documents. The Borrower will not
-------------------------------
permit any amendment or modification to be made to, or any waiver of its rights
or the rights of any Subsidiary under, any Transaction Document or Subordinated
Debt Document, other than (a) amendments, modifications and waivers with respect
to the Credit Card Agreements that are not, individually or in the aggregate,
materially adverse to the interests of the Lenders, (b) amendments,
modifications and waivers with respect to the Trademark Agreement that are not,
individually or in the aggregate, adverse to the interests of the Borrower or
the Lenders, (c) amendments, modifications and waivers with respect to the
Subordinated Debt Documents limited to (i) immaterial changes necessary to
comply with the Trust Indenture Act of 1939, as amended, in connection with
registration under the Securities Act of 1933 and (ii) other changes that would
not result in the Subordinated Debt governed by such Subordinated Debt Documents
having terms and conditions that would not be permitted terms and
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conditions for Subordinated Debt incurred to refinance the Convertible
Subordinated Debt or the Subordinated Notes (as the case may be), as described
in the proviso to clause (ii) of Section 5.11(a), and (d) amendments to the
Partnership Agreement that will not have the effect of increasing the amount of
Tax Advances or Tax Distributions and that are not, individually or in the
aggregate, adverse to the interests of the Borrower or the Lenders; provided
--------
that any such amendment, modification or waiver permitted hereunder shall be
made only after prior notice to the Lenders, and copies thereof shall be
delivered to the Lenders.
SECTION 5.11. Debt; Preferred Stock; Rate Protection Agreements. (a)
--------------------------------------------------
The Borrower will not, nor will it permit any of its Subsidiaries to, incur or
at any time be liable with respect to any Debt, except:
(i) Debt outstanding under this Agreement and the other Loan
Documents;
(ii) unsecured Subordinated Debt in an aggregate principal amount not
exceeding $125,000,000 (in respect of the Subordinated Notes or any
permitted refinancing thereof) and $20,000,000 (in respect or the
Convertible Subordinated Debt or any permitted refinancing thereof) at any
time outstanding; provided that any Subordinated Debt incurred to refinance
--------
the Subordinated Notes or the Convertible Subordinated Debt shall have
terms and conditions no less favorable to the Borrower and the Lenders than
the Subordinated Notes or the Convertible Subordinated Debt, as the case
may be, and, without limiting the generality of the foregoing, shall (A)
not require any payment of principal earlier than the original scheduled
maturity date of the Subordinated Notes or the Convertible Subordinated
Debt, as the case may be (except pursuant to mandatory repurchase
provisions that are the same as, or more favorable to the Borrower than,
those applicable to the Subordinated Notes or the Convertible Subordinated
Debt, as the case may be), (B) bear interest at a fixed rate that is
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equal to or less than the rate of interest borne by the Subordinated Notes
or the Convertible Subordinated Debt, as the case may be, and (C) have
terms of subordination, covenants, events of default, mandatory offers to
repurchase and other material terms that are the same as, or more favorable
to the Borrower and the Lenders than, those applicable to the Subordinated
Notes or the Convertible Subordinated Debt, as the case may be; provided
--------
further that any Subordinated Debt to be incurred after the Effective Date
-------
shall not be incurred without reasonable prior notice to the Lenders and
prior delivery to the Lenders of copies of the Subordinated Debt Documents
to be executed and delivered in connection therewith;
(iii) Capital Financing Debt in an aggregate principal amount not
exceeding (A) $10,000,000 at any time outstanding prior to the end of the
fiscal year ending on the Saturday closest to January 31, 1998, and (B)
$30,000,000 at any time outstanding thereafter;
(iv) unsecured Debt for borrowed money issued solely for cash
consideration; provided that the incurrence of such Debt shall constitute a
--------
Debt Prepayment Event and (A) all the proceeds of such Debt shall be
applied forthwith to the prepayment of Term Loans or, after the Term Loans
are fully repaid, the reduction of Revolving Loan Commitments and (B)
notwithstanding any contrary provision in this Agreement, any prepayment of
Term Loans of either Class required by clause (A) above shall be applied to
reduce subsequent scheduled repayments thereof pursuant to Section 2.08(a)
in reverse chronological order;
(v) Debt arising under the Credit Card Agreements, to the extent that
payment obligations thereunder are deemed to constitute Debt; provided that
--------
the foregoing shall not be construed to permit the sale of accounts
receivable pursuant to the Credit Card Agreements with recourse to the
Borrower or otherwise on terms and
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conditions (other than price) materially less favorable to the Borrower
than those specified in the Credit Card Agreements as in effect on the
Effective Date;
(vi) other unsecured Debt in an aggregate principal amount not
exceeding $5,000,000 at any time outstanding;
(vii) Debt in respect of the financing of insurance premiums for
insurance obtained in the ordinary course of business; provided that the
--------
amount of such Debt relating to any policy of insurance shall not at any
time exceed the amount that the Borrower or a Subsidiary would be entitled
to receive as a refund of insurance premium if such insurance policy were
to be cancelled at such time; and
(viii) unsecured Debt of any Wholly-Owned Consolidated Subsidiary
owing to the Borrower in respect of an Investment made by the Borrower in
such Subsidiary in compliance with Section 5.16;
provided that the Borrower shall not permit any Subsidiary to incur or become
--------
liable for any Debt, whether or not permitted above, other than (1) Subordinated
Debt of Finance Corp. permitted under clause (ii) above, (2) Debt of a Wholly-
Owned Consolidated Subsidiary acquired pursuant to a Permitted Acquisition that
is outstanding at the time of such acquisition to the extent permitted under
clause (vi) above, (3) Debt arising under the Guarantee Agreement or any
Security Document to which such Subsidiary is a party, (4) Subordinated Debt
arising under a Subordinated Guarantee Agreement to which such Subsidiary is a
party, if such Subsidiary is required to enter into such Subordinated Guarantee
Agreement by the terms of the Subordinated Debt Documents and if such Subsidiary
also Guarantees the Obligations pursuant to the Guarantee Agreement, and (5)
Debt permitted under clause (vii) or (viii) above.
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(b) The Borrower will not, nor will it permit any of its Subsidiaries
to, issue any additional capital stock or partnership interests other than, in
the case of the Borrower, (i) additional partnership interests issued in
accordance with the Partnership Agreement and (ii) common stock and Permitted
Preferred Stock issued in connection with or after a Conversion.
(c) The Borrower will, commencing 90 days after the Effective Date,
from time to time enter into, and maintain in effect, such Rate Protection
Agreements as shall be necessary so that at all times at least 45% of its long-
term Debt (determined on a consolidated basis in accordance with generally
accepted accounting principles) consists of Debt that bears a fixed rate of
interest and Debt that is hedged pursuant to Rate Protection Agreements to
effectively bear interest at a fixed rate or to cap the rate of interest
thereon.
SECTION 5.12. Restricted Payments. The Borrower will not, nor will
--------------------
it permit any of its Subsidiaries to, declare or make or agree to make, directly
or indirectly, any Restricted Payment, except (a) the Borrower may pay interest
on the Subordinated Debt as and when due unless prohibited by the terms of
subordination applicable thereto; (b) the Borrower may refinance Subordinated
Debt with the proceeds of, or exchange Subordinated Debt for, Subordinated Debt
permitted under clause (ii) of Section 5.11(a) if no Default has occurred and is
continuing or would result therefrom; (c) the Borrower may make Tax Advances and
Tax Distributions if (i) no Default described in clause (a) of Section 6.01 has
occurred and is continuing, (ii) the Borrower is a partnership at the time such
Tax Advance or Tax Distribution is made and (iii) the aggregate cumulative
amount of Tax Advances and Tax Distributions does not exceed the aggregate
cumulative Tax Distribution Amounts for periods completed since the Effective
Date; (d) the Borrower may make Restricted Payments to VGP, VLP or their holding
company as reimbursement of out-of-pocket expenses actually incurred by such
Affiliates to third parties (not including
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other Affiliates or employees of Affiliates) in connection with their respective
existences, the administration of the Borrower and the Subsidiaries and
activities incidental thereto, provided that aggregate Restricted Payments
pursuant to this clause (d) shall not exceed $250,000 during any fiscal year of
the Borrower; (e) the Borrower may make Restricted Payments in order to redeem,
repurchase or otherwise reacquire equity interests in the Borrower (including
Restricted Payments to any partner or shareholder in the Borrower in order to
permit such partner or shareholder (either directly or indirectly through
additional payments or distributions to its parent entities) to redeem,
repurchase or otherwise reacquire equity interests in such partner, shareholder
or parent entity) from members of the Borrower's management, if (i) no Default
has occurred and is continuing and (ii) after giving effect to any such
Restricted Payment, the aggregate cumulative amount of Restricted Payments made
pursuant to this clause (e) shall not exceed the sum of $2,000,000 plus the
amount of Net Cash Proceeds received by the Borrower on or after the Effective
Date and prior to making such Restricted Payment from the issuance of additional
partnership interests or equity securities to members of management of the
Borrower and from capital contributions attributable to the issuance by any
partner or shareholder in the Borrower or any parent entity thereof of
additional equity securities to members of management of the Borrower; provided
--------
that Management Notes may be forgiven or returned without regard to the
limitation in clause (e)(ii) above and the forgiveness or return thereof shall
not be treated as Restricted Payments for purposes of determining compliance
with such clause (e)(ii); (f) if an Equity Prepayment Event occurs with respect
to which the Equity Prepayment Percentage is greater than 0.0%, the Borrower may
purchase, redeem, prepay or acquire Subordinated Debt if (i) no Default has
occurred and is continuing, (ii) any Restricted Payments made pursuant to this
clause (f) shall be made within the 90-day period provided for in Section
2.08(e) following delivery by the Borrower to the Agent of a notice in
accordance with Section 2.08(e) electing to make such
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Restricted Payments in lieu of prepaying Term Loans as a result of an Equity
Prepayment Event, (iii) the aggregate amount of Restricted Payments made
pursuant to this clause (f) during any 90-day period referred to above shall not
exceed the Subordinated Debt Prepayment Amount specified in the applicable
notice and (iv) the aggregate principal amount of Subordinated Debt permitted by
clause (ii) of Section 5.11(a) shall be permanently reduced by the aggregate
principal amount of Subordinated Debt purchased, redeemed, prepaid or acquired
pursuant to this clause (f); and (g) if an Equity Prepayment Event occurs with
respect to which the Equity Prepayment Percentage is 0.0%, the Borrower may
purchase, redeem, prepay or acquire Subordinated Debt provided that (i) no
Default has occurred and is continuing, (ii) within two Domestic Business Days
after each Restricted Payment pursuant to this clause (g) the Borrower shall
make an optional prepayment of Term Loans in accordance with Section 2.09 in an
aggregate principal amount equal to the amount of such Restricted Payment and
notify the Agent that such optional prepayment is being made in order to permit
Restricted Payments pursuant to this clause (g) and (iii) the sum of the
aggregate Restricted Payments made pursuant to this clause (g) plus the
aggregate principal amount of Term Loans required to be prepaid as a result of
the foregoing clause (ii) of this clause (g) shall not exceed the excess of (A)
the Net Cash Proceeds from all Equity Prepayment Events after the Effective Date
with respect to which the Equity Prepayment Percentage was 0.0% over (B) the
aggregate amount of cash consideration paid by the Borrower in connection with
Permitted Acquisitions in reliance upon Net Cash Proceeds referred to in clause
(A).
SECTION 5.13. Mergers, Consolidations, Acquisitions and Sales of
--------------------------------------------------
Assets. (a) The Borrower will not, nor will it permit any of its Subsidiaries
-------
to, merge into or consolidate with any other Person, or permit any other Person
to merge into or consolidate with it, or purchase or otherwise acquire (in one
transaction or a series of related transactions) any material assets, except
that (i) the foregoing shall not prohibit the consummation of the
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Acquisition, (ii) the foregoing shall not prohibit the acquisition of assets in
the ordinary course of business (including Capital Expenditures permitted by
Section 5.24), (iii) the foregoing shall not prohibit Permitted Acquisitions,
subject to 30 days' prior written notice to the Lenders of such Permitted
Acquisition describing the material terms of such Acquisition and delivery to
the Lenders prior to consummation of such Permitted Acquisition of a certificate
of the chief financial officer or the chief accounting officer of the Borrower,
setting forth calculations establishing to the reasonable satisfaction of the
Agent that the Borrower will be in compliance with Section 5.23 upon giving
effect to such Permitted Acquisition, (iv) the foregoing shall not prohibit a
Conversion in accordance with Article IX, (v) if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing any Wholly-Owned Consolidated Subsidiary (other than Finance Corp.)
may merge or liquidate into the Borrower in a transaction in which the Borrower
is the survivor and (vi) the foregoing shall not prohibit capital contributions
to the Borrower made in cash or Investments by the Borrower in Subsidiaries
permitted under Section 5.16; provided that the acquisition of assets by
--------
Subsidiaries shall be subject to the further restrictions set forth in Section
5.04.
(b) The Borrower will not, nor will it permit any of its Subsidiaries
to, sell, assign, transfer or otherwise dispose of any asset, including any
stock, without the prior written consent of the Required Lenders to such sale,
assignment, transfer or disposition and the terms thereof; provided, however,
-------- -------
that the foregoing shall not prohibit a Conversion in accordance with Article IX
or the sale of (i) inventory in the ordinary course of business, (ii) used or
surplus equipment in the ordinary course of business, (iii) credit card
receivables pursuant to the Credit Card Agreements, and (iv) other tangible
personal property and real property not exceeding $3,000,000 in fair market
value in any fiscal year of the Borrower; provided further,
----------------
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however, that such sales shall be made for fair market value and solely for
-------
cash consideration.
SECTION 5.14. Transactions with Affiliates. The Borrower will not,
-----------------------------
nor will it permit any of its Subsidiaries to, directly or indirectly, (a) make
any Investment in an Affiliate, (b) sell, lease or otherwise transfer any assets
to or perform services for an Affiliate, (c) purchase, lease or acquire assets
or services from an Affiliate, or (d) enter into any other transaction directly
or indirectly with or for the benefit of an Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate); provided
--------
that (i) the Borrower or any of its Subsidiaries may enter into any such
transaction with an Affiliate that does not involve the payment of financial or
management advisory fees or similar consideration to an Affiliate if the
monetary or business consideration arising therefrom would not be less
advantageous to the Borrower or such Subsidiary than the monetary or business
consideration which it would obtain in a comparable arm's length transaction
with a Person not an Affiliate, (ii) the foregoing shall not prohibit the grant
of warrants or options to acquire equity interests in the Borrower pursuant to
management incentive arrangements, (iii) the foregoing shall not prohibit the
Restricted Payments permitted under Section 5.12 and (iv) the foregoing shall
not prohibit the Transactions or the execution, delivery and performance by the
Borrower of a stockholders agreement and registration rights agreement
substantially in the respective forms attached to the Partnership Agreement and
(v) the foregoing shall not prohibit the payment described in Schedule 5.14.
SECTION 5.15. Sale and Lease-Back Transactions. The Borrower will
---------------------------------
not, nor will it permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
asset, real or personal, whether now owned or hereafter acquired, and thereafter
rent or lease such asset or other assets which it intends to use for
substantially
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the same purpose or purposes as the asset being sold or transferred, except that
the Borrower may enter into any such arrangement within 90 days after acquiring
the asset that is sold or transferred; provided that (i) for purposes of
--------
determining compliance with clause (iii) of Section 5.11(a), such arrangement
shall be deemed to constitute Capital Financing Debt in a principal amount equal
to the amount that would constitute Debt if such arrangement were accounted for
as a capital lease and (ii) the Borrower shall not enter into any such
arrangement if, after giving effect thereto, the Borrower would not be in
compliance with clause (iii) of Section 5.11(a).
SECTION 5.16. Investments. The Borrower will not, nor will it permit
------------
any of its Subsidiaries to, make or acquire any Investment in any Person
(including any Subsidiary) other than:
(a) Temporary Cash Investments;
(b) the acquisition by the Borrower of all the outstanding capital
stock of a corporation pursuant to a Permitted Acquisition;
(c) the Management Notes;
(d) Tax Advances permitted under Section 5.12; and
(e) Investments consisting of advances and capital contributions made
by the Borrower in cash to any Permitted Subsidiary; provided that (i) such
--------
Investments in Finance Corp. shall be limited to amounts necessary to
discharge franchise taxes and similar liabilities incidental to its
existence, (ii) such Investments in any other Permitted Subsidiary shall be
limited to amounts necessary to discharge liabilities permitted to be
incurred by such Subsidiaries under Section 5.04, (iii) no such Investment
shall be made more than five Domestic Business Days prior to the date that
payment is to be
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made in respect of the liability to be discharged with the proceeds of such
Investment and (iv) such Investments shall be represented by promissory
notes or capital stock pledged pursuant to the Pledge Agreement or
partnership interests subject to a perfected Lien in favor of the Security
Agent.
SECTION 5.17. Negative Pledge. The Borrower will not, nor will it
----------------
permit any of its Subsidiaries to, create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except Liens granted under the
Security Documents and except:
(a) any Lien (other than a Lien securing Debt) existing on any asset
(other than an asset subject to a security interest granted under the
Pledge Agreement or the Security Agreement) prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(b) Liens for taxes not delinquent or being contested in good faith
and by appropriate proceedings;
(c) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance;
(d) mechanics', workers', materialmen's, warehousemen's, landlords'
or other like Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good
faith;
(e) easements, rights-of-way, charges, covenants, restrictions and
matters of public record, survey defects and imperfections of title that do
not in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business, in each
case affecting real property;
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(f) the reservation by any prior grantor of any right, title or
interest in and to all oil, gas and other hydrocarbon substances, minerals,
ores and metals of every nature and kind in and under real property that do
not in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(g) any Liens securing Capital Financing Debt; provided that such
--------
Lien does not attach to any asset other than the asset financed by such
Capital Financing Debt and proceeds thereof;
(h) Liens, if any, on credit card receivables sold pursuant to the
Credit Card Agreements that arise under the Credit Card Agreements by
virtue of such sale and proceeds thereof;
(i) Liens incurred in the ordinary course of business to secure
performance of surety and indemnity bonds, leases and other contracts
(other than to secure Debt);
(j) interests (other than Debt) of a lessor or lessee arising under a
lease;
(k) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with
imported goods, which duties are not delinquent or are being contested in
good faith by appropriate proceedings;
(l) unperfected Liens on inventory arising in the ordinary course of
business securing trade accounts payable to suppliers of such inventory
which are not past due or which are being contested in good faith; and
(m) Liens arising in the ordinary course of its business which (i) do
not attach to any asset subject
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to a security interest granted under the Security Documents, (ii) do not
secure Debt or any other monetary obligation (other than judgments and
appeal bonds not exceeding $2,000,000 in the aggregate) and (iii) do not in
the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business.
SECTION 5.18. Use of Proceeds and Letters of Credit. The Letters of
--------------------------------------
Credit and the proceeds of the Loans made under this Agreement will be used by
the Borrower only for the purposes set forth in the preliminary statement of
this Agreement. None of such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any Margin Stock.
SECTION 5.19. Grants of Negative Pledges or Dividend Restrictions.
----------------------------------------------------
The Borrower will not, nor will it permit any of its Subsidiaries to, agree to
or become bound by any agreement or other arrangement that would restrict or
impair (i) the ability of the Borrower and its Subsidiaries to grant to the
Security Agent a Lien on any of their respective properties or assets (provided
that the foregoing shall not prohibit restrictions in (a) agreements entered
into in connection with the incurrence of Capital Financing Debt that restrict
or impair the ability to grant Liens on the asset financed thereby while such
Capital Financing Debt remains outstanding or (b) the Credit Card Agreements
that restrict or impair the ability to grant Liens on accounts receivable sold
thereunder) or (ii) the ability of any Subsidiary of the Borrower to pay
dividends on its capital stock.
SECTION 5.20. Changes in Accounting. The Borrower will not, nor will
----------------------
it permit any of its Subsidiaries to, change its accounting policies or
practices from those utilized in the preparation of the financial statements of
the Borrower referred to in Section 4.04,
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except as permitted or required by generally accepted accounting principles
consistently applied.
SECTION 5.21 Fixed Charge Coverage Ratio. The Fixed Charge Coverage
----------------------------
Ratio for the period of four consecutive fiscal quarters ending on the last day
of each fiscal quarter of the Borrower set forth below will not be less than the
ratio set forth below opposite such fiscal quarters:
Fiscal Quarter Ending on: Ratio
------------------------- -----
February 1, 1997 1.90:1.0
May 3, 1997 1.90:1.0
August 2, 1997 1.90:1.0
November 1, 1997 2.20:1.0
January 31, 1998 2.20:1.0
May 2, 1998 2.20:1.0
August 1, 1998 2.20:1.0
October 31, 1998 2.40:1.0
January 30, 1999 2.40:1.0
May 1, 1999 2.40:1.0
July 31, 1999 2.40:1.0
October 30, 1999 2.75:1.0
January 29, 2000 2.75:1.0
April 29, 2000 2.75:1.0
July 29, 2000 2.75:1.0
October 28, 2000 3.0:1.0
February 3, 2001 3.0:1.0
May 5, 2001 3.0:1.0
August 4, 2001 3.0:1.0
November 3, 2001 3.0:1.0
February 2, 2002 3.0:1.0
May 4, 2002 3.0:1.0
August 3, 2002 3.0:1.0
November 2, 2002 3.0:1.0
February 1, 2003 3.0:1.0
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SECTION 5.22. Minimum Adjusted Net Worth. Consolidated Adjusted Net
---------------------------
Worth will not at any date be less than Minimum Adjusted Net Worth at such date.
SECTION 5.23. Debt Coverage Ratio. The Debt Coverage Ratio will not
--------------------
at any time during any period set forth below be greater than the ratio set
forth below with respect to such period:
Period
------------------------------------------------
From and Including To and Excluding Ratio:
------------------------- -------------------- ------
Effective Date January 31, 1998 4.5:1
January 31, 1998 January 30, 1999 3.9:1
January 30, 1999 January 29, 2000 3.40:1
January 29, 2000 February 3, 2001 2.8:1
February 3, 2001 February 2, 2002 2.25:1
February 2, 2002, and at all times thereafter 2.0:1
SECTION 5.24. Capital Expenditures. Capital Expenditures during any
---------------------
fiscal year of the Borrower, commencing with the fiscal year ending on the
Saturday closest to January 31, 1998, will not exceed the sum of (a) $12,500,000
plus (b) during any fiscal year of the Borrower other than the first such fiscal
year, the excess of $12,500,000 over the amount of Capital Expenditures during
the immediately preceding fiscal year; provided that additional Capital
--------
Expenditures not exceeding an aggregate of $30,000,000 for all such periods will
be permitted in excess of those permitted by clauses (a) and (b) above, except
that not more than $7,000,000 of such additional Capital Expenditures shall be
permitted during the first two such fiscal years; and provided further that, to
the extent that Capital Expenditures after the Effective Date but prior to the
Saturday closest to January 31, 1997 do not exceed $4,000,000, the excess of
$4,000,000 over the actual amount expended during such period may be added to
the amount of Capital Expenditures permitted under clause (a) above for
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the fiscal year ending on the Saturday closest to January 31, 1998.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
------------------
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) when due any principal of any
Loan or any reimbursement obligation in respect of a Letter of Credit
Disbursement or (ii) within three Domestic Business Days of the date due,
any interest on any Loan, any fees or any other amount payable hereunder or
under any other Loan Document;
(b) the Borrower shall fail to observe or perform (i) any covenant
contained in clause (a) or (b) of Section 5.01 for three Domestic Business
Days after notice thereof has been given to the Borrower by the Agent at
the request of any Lender or (ii) any covenant contained in clause (i) of
Section 5.01 or in Section 5.07 or in Sections 5.09 to 5.24, inclusive;
(c) the Borrower or any Subsidiary shall fail to observe or perform
any covenant or agreement contained in any Loan Document (other than those
covered by clause (a) or (b) above) for 10 days after written notice
thereof has been given to the Borrower by the Agent at the request of any
Lender;
(d) any representation, warranty, certification or statement made by
the Borrower or any Subsidiary in any Loan Document or in any certificate,
financial statement or other document delivered pursuant to any
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Loan Document shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment of
principal, interest or premium in respect of any Material Debt (other than
the Obligations) at maturity;
(f) any event or condition (including, without limitation, failure to
make any payment when due) shall occur which results in the acceleration of
the maturity of any Material Debt or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any
Person acting on such holder's behalf to accelerate the maturity thereof or
to require the prepayment, redemption or repurchase thereof or to terminate
any commitment to lend such Debt;
(g) any of the Trademark Agreements (other than those referred to in
clause (ii) of the definition thereof) or the Credit Card Agreements shall
be canceled, terminated or repudiated (other than termination of a Credit
Card Agreement in connection with the replacement thereof with another
Credit Card Agreement), or any event shall occur that results in any of
such Trademark Agreements having a term that expires earlier than the
initial term thereof, or any default, breach or other event shall occur
that would permit a termination of any of such Trademark Agreements (if the
Trademark Collateral Agreement were not in effect) or the Credit Card
Agreements and shall continue beyond any applicable grace period;
(h) the Borrower or any Subsidiary (i) shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a trustee,
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receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall fail
generally to pay its debts as they become due, or (v) shall take any
corporate action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the Federal bankruptcy laws as now or
hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA or
Section 412 of the Internal Revenue Code; or notice of intent to terminate
a Plan or Plans having aggregate Unfunded Liabilities in excess of
$2,000,000 (collectively, a "Material Plan") shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Plan against any member of the ERISA Group to enforce
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Section 515 or 4219(c)(5) of ERISA where the amount in controversy exceeds
$2,000,000 and such proceeding shall not have been dismissed within 30 days
thereafter; or a Reportable Event or Reportable Events shall have occurred
with respect to a Material Plan and the Agent shall have notified the
Borrower that the Required Lenders have made a determination that, on the
basis of such Reportable Event or Reportable Events, there are reasonable
grounds for the termination of such Material Plan by the PBGC or for the
appointment by an appropriate United States District Court of a trustee to
administer such Material Plan;
(k) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $2,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and shall continue
unsatisfied and unstayed for a period of 10 days, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of
the Borrower or any Subsidiary to enforce any such judgment;
(l) a Change of Control shall occur; or
(m) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any
Subsidiary not to be, a valid, perfected, first priority security interest
in respect of any material amount of collateral, other than as a result of
an act or omission of the Security Agent, the Agent or any Lender and
subject to exceptions as to priority expressly permitted under the Loan
Documents;
then, and in every such event, the Agent shall (i) if requested by Lenders
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate, (ii) if
requested by Lenders holding Notes
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evidencing more than 50% in aggregate principal amount of the Loans, by notice
to the Borrower declare the Notes (together with accrued interest thereon) to
be, and the Notes shall thereupon become, immediately due and payable (in whole
or, in the sole discretion of the Lenders, from time to time in part) without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, (iii) if requested by Lenders having more than
50% of the Letter of Credit Exposure, require cash collateral as contemplated by
Section 2.13(k) in an amount not exceeding the Letter of Credit Exposure, (iv)
exercise and direct the Security Agent to exercise remedies available under the
Guarantee Agreement, the Security Documents or otherwise, as requested by the
Required Lenders, or (v) any combination of the foregoing; provided that in the
--------
case of any of the Events of Default specified in clause (h) or (i) above with
respect to the Borrower without any notice to the Borrower or any other act by
the Agent or the Lenders, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable (in whole) without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
------------------
Borrower under clause (b)(i) or (c) of Section 6.01 promptly upon being
requested to do so by any Lender, and shall thereupon notify all the Lenders
thereof.
ARTICLE VII
THE AGENT, SECURITY AGENT AND ISSUING BANKS
SECTION 7.01. Appointment and Authorization. Each Lender irrevocably
------------------------------
appoints and authorizes each of the Agent, the Security Agent and any Issuing
Bank (each being referred to as an "Agent" for purposes of this Article VII) to
take such action as agent on its behalf and to exercise
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such powers under this Agreement and the other Loan Documents as are delegated
to such Agent by the terms hereof or thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Each Lender that is an Agent
---------------------
shall have the same rights and powers under this Agreement as any other Lender
and may exercise or refrain from exercising the same as though it were not an
Agent, and each such Lender and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not an Agent.
SECTION 7.03. Action by Agent. The obligations of any Agent under
----------------
the Loan Documents are only those expressly set forth herein and therein.
Without limiting the generality of the foregoing, no Agent shall be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. Each Agent may consult with
--------------------------
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither any Agent nor any of its
-------------------
directors, officers, agents, or employees shall be liable for any action taken
or not taken by it in connection herewith (i) with the consent or at the request
of the Required Lenders or (ii) in the absence of its own gross negligence or
willful misconduct. Neither any Agent nor any of its directors, officers, agents
or employees shall be responsible for or have any duty to ascertain, inquire
into or verify (i) any statement, warranty or representation made in connection
with this Agreement or any borrowing hereunder; (ii) the performance
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or observance of any of the covenants or agreements of the Borrower or any
Subsidiary; (iii) the satisfaction of any condition specified in Article III,
except receipt of items required to be delivered to it; or (iv) the validity,
effectiveness or genuineness of this Agreement, any other Loan Document or
Transaction Document or any other instrument or writing furnished in connection
herewith. No Agent shall incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a
telecopy, bank wire, telex or similar writing) believed by it to be genuine or
to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Lender shall, ratably in
----------------
accordance with its Loans, Letter of Credit Exposure and unused Commitment,
indemnify each Agent (to the extent not reimbursed by the Borrower) against any
cost, expense (including counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from such Agent's gross negligence or
willful misconduct) that such Agent may suffer or incur in connection with this
Agreement or any other Loan Document or any action taken or omitted by such
Agent hereunder or thereunder.
SECTION 7.07. Credit Decision. Each Lender acknowledges that it
----------------
has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. Any Agent (other than an Issuing Bank
----------------
in respect of Letters of Credit issued by it) may resign at any time by giving
written notice
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thereof to the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor to such Agent after
consultation with the Borrower (but the foregoing shall not be construed to
require any consent or approval by the Borrower). If no successor to such Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which, in the case of the Agent under this Agreement, shall be
a commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of its appointment as an Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations. After any retiring
Agent's resignation, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was an Agent.
SECTION 7.09. Agents Fees. The Borrower shall pay to each Agent for
------------
its own account fees in the amounts and at the times previously agreed upon
between the Borrower and such Agent.
SECTION 7.10. Sub-Agents. Each Agent may perform any of its
-----------
obligations and exercise any of its rights under the Loan Documents by or
through sub-agents. The provisions of this Article VII shall inure to the
benefit of any sub-agent of any Agent in the same manner and to the same extent
as they inure to the benefit of such Agent.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If on or prior to the first day of any Interest Period for any Euro-
-------
Dollar Borrowing:
(a) the Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
the Euro-Dollar Reference Banks in the relevant market for such Interest
Period, or
(b) Lenders having 50% or more of the aggregate amount of the
Commitments or Loans of the relevant Class advise the Agent that the
Adjusted London Interbank Offered Rate, as the case may be, as determined
by the Agent will not adequately and fairly reflect the cost to such
Lenders of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Lenders to make
Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the Agent at
least two Domestic Business Days before the date of any Euro-Dollar Borrowing
for which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
SECTION 8.02. Illegality. If, on or after the date of this
-----------
Agreement, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or
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compliance by any Lender (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Lender (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-
Dollar Loans and such Lender shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Lenders and the Borrower, whereupon
until such Lender notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Lender to
make Euro-Dollar Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Lender shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Lender, be otherwise disadvantageous to
such Lender. If such Lender shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall
so specify in such notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each such Euro-Dollar Loan, together with
accrued interest thereon. Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Lender (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Lenders), and
such Lender shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
----------------------------------
the date hereof the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive
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(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Lender (or its Applicable Lending Office) to
any tax, duty or other charge with respect to its Euro-Dollar Loans, its
Notes, its participations in Letters of Credit or its obligation to make
Euro-Dollar Loans or acquire participations in Letters of Credit, or shall
change the basis of taxation of payments to any Lender (or its Applicable
Lending Office) of the principal of or interest on its Euro-Dollar Loans or
any other amounts due under this Agreement in respect of its Euro-Dollar
Loans or its obligation to make Euro-Dollar Loans (except for changes in
the rate of tax on, or determined by reference to, the overall net income
of such Lender or its Applicable Lending Office imposed by the jurisdiction
in which such Lender's principal executive office or Applicable Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Lender (or its Applicable Lending Office) or shall impose on any
Lender (or its Applicable Lending Office) or on the London interbank market
any other condition affecting its Euro-Dollar Loans, its Notes, its
participations in Letters of Credit or its obligation to make Euro-Dollar
Loans or acquire participations in Letters of Credit;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan
or holding or acquiring a participation in any Letter of Credit, or to
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reduce the amount of any sum received or receivable by such Lender (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Lender to be material, then, within 15 days
after demand by such Lender (with a copy to the Agent), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction.
(b) If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender (or its Parent)
as a consequence of such Lender's obligations hereunder to a level below that
which such Lender (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender (or its Parent) for such reduction.
(c) Each Lender will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate of any
Lender claiming compensation under this
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Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed Rate
---------------------------------------------------
Loans. If (a) the obligation of any Lender to make Euro-Dollar Loans has been
------
suspended pursuant to Section 8.02 or (b) any Lender has demanded compensation
under Section 8.03(a) and the Borrower shall, by at least five Euro-Dollar
Business Days' prior notice to such Lender through the Agent, have elected that
the provisions of this Section shall apply to such Lender, then, unless and
until such Lender notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer apply:
(i) all Loans which would otherwise be made by such Lender as Euro-
Dollar Loans shall be made instead as Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Euro-
Dollar Loans of the other Lenders); and
(ii) after each of its Euro-Dollar Loans has been repaid, all payments
of principal which would otherwise be applied to repay Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
SECTION 8.05. Replacement of Lenders. In the event (a) any Lender
-----------------------
delivers a notice under Section 8.02 or (b) any Lender demands compensation
pursuant to Section 8.03, then the Borrower may, at its sole expense and effort,
require such Lender to assign, without recourse (in accordance with Section
10.06), all of its rights and obligations under this Agreement and the Notes to
an Assignee which shall assume such assigned obligations; provided that (i) such
--------
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (ii) the
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Borrower shall have received the written consent of the Agent (and of an Issuing
Bank, if such Lender has a Revolving Loan Commitment) and (iii) such Assignee
(or, in the case of amounts other than principal, interest and accrued Fees, the
Borrower) shall have paid to the transferor Lender in immediately available
funds an amount equal to the sum of the principal of and interest accrued to the
date of such payment on the outstanding Loans and participations in Letter of
Credit Disbursements of such Lender, plus all Fees and other amounts accrued for
the account of such Lender hereunder (including any amounts under Section 2.11
and Section 8.03, it being understood that such assignment shall be treated as a
prepayment for purposes of Section 2.11); provided further that if prior to any
----------------
such assignment the circumstances or event that resulted in such Lender's notice
under Section 8.02 or demand for compensation under Section 8.03, as the case
may be, cease to cause such Lender to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 8.02, as the case may be (including
as a result of any action taken by such Lender), or if such Lender shall waive
its right to claim further compensation under Section 8.03 in respect of such
circumstances or event or shall withdraw its notice under Section 8.02 in
respect of such circumstances or event, as the case may be, then such Lender
shall not thereafter be required to make any such assignment hereunder.
SECTION 8.06. Taxes. (a) For the purposes of this Section 8.06, the
------
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any Note, and all liabilities with
respect thereto, excluding (i) in the case of each Lender,
---------
each Issuing Bank and the Agent, taxes imposed on its income, and franchise or
similar taxes imposed on it, by a
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jurisdiction under the laws of which such Lender, such Issuing Bank or the Agent
(as the case may be) is organized or in which its principal executive office is
located or, in the case of each Lender, in which its Applicable Lending Office
is located and (ii) in the case of each Lender, any United States withholding
tax imposed on such payments but only to the extent that such Lender is subject
to United States withholding tax at the time such Lender first becomes a party
to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any other Loan
Document or from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Loan Document.
(b) Any and all payments by the Borrower to or for the account of any
Lender, any Issuing Bank or the Agent hereunder or under any Note shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
--------
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) such Lender, such Issuing Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section
10.01, the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Lender, each Issuing Bank
and the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
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amounts payable under this Section) paid by such Lender, such Issuing Bank or
the Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be paid within 15 days after such Lender, such Issuing Bank or the Agent
(as the case may be) makes demand therefor.
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrower and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which exempts the Lender from United
States withholding tax or reduces the rate of withholding tax on payments of
interest for the account of such Lender or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States.
(e) For any period with respect to which a Lender has failed to
provide the Borrower or the Agent with the appropriate form pursuant to Section
8.06(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Lender shall not be entitled to indemnification under Section
8.06(b) or (c) with respect to Taxes imposed by the United States; provided that
--------
if a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as
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such Lender shall reasonably request to assist such Lender to recover such
Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section, then such Lender will change
the jurisdiction of its Applicable Lending Office if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) in the judgment of such Lender, is not otherwise disadvantageous (other
than in a de minimis respect) to such Lender.
-- -------
ARTICLE IX
CONVERSION OF BORROWER
SECTION 9.01. General. The purpose of this Article is to provide for
--------
the ability of the Borrower and its partners to reorganize the initial ownership
structure of the Borrower so that the Borrower becomes a corporation, and/or
becomes wholly owned by a corporation, in order to facilitate an offering of
equity interests in the Borrower, either directly by the Borrower or indirectly
by a parent corporation that holds (directly or indirectly) all the partnership
interests in or capital stock of the Borrower, as applicable. Any such
reorganization, regardless of form or method, is referred to herein as a
"Conversion". The following Sections of this Article describe alternative
methods of Conversion and certain conditions applicable thereto. In addition to
the conditions set forth below, any Conversion shall be subject to the condition
that no Default (including, without limitation, any Change of Control) shall
have occurred and be continuing at the time of, or result from, such Conversion.
SECTION 9.02. New Corporate Borrower. Subject to the conditions set
-----------------------
forth below, a Conversion may be accomplished by (a) the transfer (including
transfers accomplished by merger or consolidation) of all the assets
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of the Borrower, including all real and personal property, all cash and
Investments and all rights under contracts and agreements (including the
Trademark Agreement and Credit Card Agreements) and other intangible assets, to
a corporation organized under the laws of any State in the United States of
America or the laws of the District of Columbia (such corporation being referred
to herein as the "Corporate Borrower"), and (b) the assumption by the Corporate
Borrower of all liabilities and other obligations of the Borrower, including the
Obligations. Any Conversion pursuant to this Section shall be subject to the
satisfaction (or waiver in accordance with Section 10.05) of the following
conditions:
(i) immediately prior to such Conversion, the Corporate Borrower
shall not have any material assets or liabilities (other than (A)
liabilities fully indemnified by The Limited and (B) liabilities that also
constitute liabilities of the Borrower prior to such Conversion) and shall
not have any subsidiaries (other than the Borrower and the Subsidiaries);
(ii) receipt by the Security Agent of copies of each document
(including each Uniform Commercial Code financing statement) required by
law or reasonably requested by the Security Agent to be filed, registered
or recorded in order to maintain the validity, perfection and priority of
the security interests and liens granted under the Security Documents;
(iii) receipt by the Lenders of satisfactory evidence that the
Borrower and its Subsidiaries and the Corporate Borrower shall have
obtained all consents and approvals of, and shall have made all filings and
registrations with, any Governmental Authority, or any party to any
contract or agreement with the Borrower or any Subsidiary, or any other
third party, required to be obtained in order to consummate such
Conversion, in each case without the imposition of any condition
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which, in the judgment of the Required Lenders, could have a Material
Adverse Effect;
(iv) receipt by the Agent of reasonable advance notice of such
Conversion together with drafts of all documentation to be entered into in
order to consummate such Conversion (which shall include assumption
agreements, in form and substance satisfactory to the Agent, for the
assumption by the Corporate Borrower of the Obligations) and a reasonable
opportunity to comment upon such drafts;
(v) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Corporate Borrower, the corporate
authority for such Conversion, and any other matters relevant thereto, all
in form and substance satisfactory to the Agent, including, without
limitation, (A) an opinion of counsel (who shall be reasonably satisfactory
to the Agent if other than Xxxxxxx & XxXxxxxx) comparable to that delivered
on the Effective Date pursuant to clause (c)(i) of Section 3.01 and
covering such additional matters relating to such Conversion as the Agent
or the Required Lenders may reasonably request and (B) a certificate signed
by the President and any Vice President of each of the Borrower and the
Corporate Borrower to the effect set forth in clauses (c) and (d) of
Section 3.02; and
(vi) such Conversion shall be consummated on a single date.
Upon consummation of a Conversion in accordance with this Section 9.02, the
Corporate Borrower shall be deemed to be the "Borrower" for all purposes of this
Agreement and the other Loan Documents.
SECTION 9.03. Holding Company Structure. Subject to the conditions
--------------------------
specified below, a Conversion may be accomplished by the transfer (including
transfers
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accomplished by merger or consolidation) to a single corporation organized under
the laws of any State in the United States of America or of the District of
Columbia (which corporation will become the Parent Corporation as a result of
such Conversion) of all outstanding partnership interests (and any options,
warrants or rights to purchase, and any securities convertible into or
exchangeable for, partnership interests, if the same are to remain outstanding
after such Conversion) in the Borrower, either directly or by transfer
(including transfers accomplished by merger or consolidation) to such
corporation of all outstanding capital stock of any corporation holding,
directly or indirectly, a partnership interest. Any Conversion pursuant to this
Section shall be subject to the satisfaction (or waiver in accordance with
Section 10.05) of the conditions specified in clauses (iii) and (iv) of Section
9.02 and the following additional conditions:
(i) after giving effect to such Conversion, (A) the Borrower will be,
directly or indirectly, wholly owned by the Parent Corporation, (B) the
Parent Corporation will not have any subsidiaries, other than the Borrower
and the Subsidiaries and subsidiaries resulting from transfers to the
Parent Corporation of capital stock of corporations holding partnership
interests in the Borrower as described above, and (C) neither the Parent
Corporation nor any of its subsidiaries described above shall have any
material assets (other than partnership interests in the Borrower and
assets of the Borrower and the Subsidiaries) or liabilities (other than (1)
liabilities fully indemnified by The Limited, (2) liabilities that also
constituted liabilities of the Borrower prior to such Conversion and (3)
liabilities of the Borrower and the Subsidiaries);
(ii) the Parent Corporation shall enter into an agreement with the
Agent, in form and substance satisfactory to the Agent, pursuant to which
the Parent Corporation will agree that neither it nor any of its
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subsidiaries (other than the Borrower and the Subsidiaries) will engage in
any business or activity other than the ownership of the Borrower and
activities incidental thereto; and
(iii) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Parent Corporation, the corporate
authority for such Conversion, and any other matters incidental thereto,
all in form and substance satisfactory to the Agent.
SECTION 9.04. Liquidation. Subject to the conditions specified
------------
below, a Conversion may be accomplished by (a) the transfer (including transfers
accomplished by merger or consolidation) to any corporation that would satisfy
the requirements to qualify as a Corporate Borrower as provided in Section 9.02
of all outstanding partnership interests (and any options, warrants or rights to
purchase, and any securities convertible into or exchangeable for, partnership
interests) in the Borrower and (b) the liquidation of the Borrower (which may be
accomplished by operation of law) into such corporation. Any Conversion
pursuant to this Section shall be subject to the satisfaction (or waiver in
accordance with Section 10.05) of the conditions specified in clauses (i), (ii),
(iii), (iv) and (v) of Section 9.02 (as though such corporation into which the
Borrower is to be liquidated were to be a Corporate Borrower), except, as to the
condition specified in clause (i) of Section 9.02, the corporation into which
the Borrower is to be liquidated may own partnership interests in the Borrower.
Upon consummation of a Conversion in accordance with this Section 9.04, the
corporation into which the Borrower is liquidated shall be deemed to be the
"Borrower" for all purposes of this Agreement and the other Loan Documents.
SECTION 9.05. Post-Conversion Actions. Promptly following a
------------------------
Conversion, the Borrower shall distribute to the Agent, the Security Agent, the
Issuing Banks and the Lenders
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copies of all documentation executed and delivered in connection therewith.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other
--------
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower, each Issuing Bank or the Agent, at its
address or telecopy number set forth on the signature pages hereof (with a copy
to Xxxxxxx Xxxxxx & Co. Incorporated, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000, Attention: Xx. X.X. Xxxx, in the case of any notice to the
Borrower relating to a Default), (y) in the case of any Lender, at its address
or telex number set forth in its Administrative Questionnaire or (z) in the case
of any party, at such other address or telecopy or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Borrower.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answer back is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
--------
to the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 10.02. No Waivers. No failure or delay by the Agent, the
-----------
Security Agent, any Issuing Bank or any Lender in exercising any right, power or
privilege hereunder or under any other Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights
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and remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 10.03. Expenses; Documentary Taxes; Indemnification. (a)
---------------------------------------------
The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent,
the Security Agent, the Documentation Agent and (in the case of expenses
relating to the issuance of a Letter of Credit) the Issuing Bank, including fees
and disbursements of special counsel for the Agent and the Documentation Agent,
in connection with the preparation of this Agreement and the other Loan
Documents, any primary or secondary syndication of the credit facilities
hereunder, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or any Conversion or
proposed Conversion and (ii) if an Event of Default occurs, all reasonable out-
of-pocket expenses incurred by the Agent, the Security Agent, any Issuing Bank
or any Lender, including fees and disbursements of counsel, in connection with
such Event of Default and collection, bankruptcy and other enforcement
proceedings resulting therefrom. The Borrower shall indemnify each Lender
against any transfer taxes, documentary taxes, assessments or charges made by
any Governmental Authority by reason of the execution and delivery of this
Agreement or the other Loan Documents.
(b) The Borrower agrees to indemnify the Agent, the Security Agent,
the Documentation Agent, each Issuing Bank and each Lender and hold the Agent,
the Security Agent, each Issuing Bank and each Lender harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind,
including, without limitation, the reasonable fees and disbursements of counsel,
which may be incurred by any Lender (or by the Agent, the Documentation Agent,
the Security Agent or any Issuing Bank in connection with its actions as such)
in connection with any investigative, administrative or judicial proceeding
(whether or not the Agent, the Documentation Agent, the Security Agent, such
Issuing Bank or such Lender shall be designated a party thereto) relating to or
arising out of any Loan Document or
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any actual or proposed use of proceeds of Loans or Letters of Credit hereunder;
provided that neither the Agent, the Documentation Agent, the Security Agent,
--------
any Issuing Bank nor any Lender shall have the right to be indemnified hereunder
for its own gross negligence or wilful misconduct as determined by a court of
competent jurisdiction.
(c) The provisions of this Section 10.03 shall remain in effect and
survive regardless of any termination of this Agreement or the repayment of the
Obligations.
SECTION 10.04. Sharing of Set-Offs. Each Lender agrees that if it
--------------------
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of its claims in respect of
Letter of Credit Disbursements and principal and interest due with respect to
any Note held by it which is greater than the proportion received by any other
Lender in respect of the aggregate amount of claims in respect of Letter of
Credit Disbursements and principal and interest due with respect to any Note
held by such other Lender, the Lender receiving such proportionately greater
payment shall purchase such participations in the claims in respect of Letter of
Credit Disbursements and Notes held by the other Lenders, and such other
adjustments shall be made, as may be required so that all such payments of
claims in respect of Letter of Credit Disbursements and of principal and
interest with respect to the Notes held by the Lenders shall be shared by the
Lenders pro rata; provided that nothing in this Section shall impair the right
--------
of any Lender to exercise any right of set-off or counterclaim it may have and
to apply the amount subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness under the Loan Documents. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Letter of Credit or Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation
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were a direct creditor of the Borrower in the amount of such participation.
SECTION 10.05. Amendments and Waivers. Any provision of this
-----------------------
Agreement or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed or otherwise approved in
writing by the Borrower and the Required Lenders (and, if the rights or duties
of the Agent, the Security Agent or the Issuing Banks are affected thereby, by
the Agent, the Security Agent or the Issuing Banks, as the case may be);
provided that no such amendment or waiver shall (i) increase the Commitment of
--------
any Lender or subject any Lender to any additional obligation without the
consent of such Lender, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder without the consent of each Lender affected thereby,
(iii) postpone the date fixed for any payment of principal of any Loan under
Section 2.08(a), (b) or (c) or for any reimbursement of a Letter of Credit
Disbursement or payment of interest on any Loan or any fees hereunder or for any
reduction or termination of any Commitment without the consent of each Lender
affected thereby, (iv) permit the termination of the Trademark Agreement or any
Credit Card Agreements, or any amendment or waiver thereof that would be
materially adverse to the interests of the Borrower or the Lenders, without the
consent of each Lender, (v) permit the release of any material amount of
collateral under any Security Document (except as provided therein), without the
consent of each Lender, (vi) change the percentage of the Commitments, the
percentage of the aggregate unpaid principal amount of the Notes or the number
of Lenders which shall be required for the Lenders or any of them to take any
action under this Section or any other provision of this Agreement, without the
consent of each Lender, (vii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to Lenders holding Loans of any Class differently than those holding Loans of
any other Class, without the consent of Lenders holding a majority in interest
of the outstanding Loans and
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unused Commitments of each affected Class (in addition to any other consent
required under any other clause of this Section) or (viii) change the rights of
Lenders holding Tranche B Term Loans to decline mandatory prepayments as
provided in Section 2.08, without the consent of Lenders holding a majority in
interest of the outstanding Tranche B Term Loans.
SECTION 10.06. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement (other than
pursuant to a Conversion in accordance with Article IX) without the prior
written consent of all Lenders.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in any or all of its
Commitment or its Loans or its participations in Letters of Credit. In the
event of any such grant by a Lender of a participating interest to a
Participant, whether or not upon notice to the Borrower and the Agent, such
Lender shall remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which any Lender may
grant such a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
--------
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver described in clause (i), (ii), (iii), (iv) or
(v) of Section 10.05 without the consent of the Participant. The Borrower agrees
that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of
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Article VIII and Section 2.11 with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
(c) Any Lender may at any time assign to one or more banks or other
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an instrument
executed by such Assignee and such transferor Lender, after consultation with
the Borrower regarding such assignment (but the foregoing shall not be construed
to require any consent or approval by the Borrower) and with (and subject to)
the subscribed consent of the Agent (except in the case of assignments to
Affiliates of Lenders) and, in the case of an assignment of a Revolving Loan
Commitment, the Issuing Banks; provided that (i) each such assignment shall be
--------
in a minimum amount of $5,000,000 or, if less, all the remaining rights and
obligations of the transferor Lender, and (ii) any such assignment of rights and
obligations in respect of any Class of Loans or Commitments shall be made
ratably of all rights and obligations in respect of such Class but shall not
require a ratable assignment of rights and obligations in respect of another
Class. Upon execution and delivery of such an instrument, payment by such
Assignee to such transferor Lender of an amount equal to the purchase price
agreed between such transferor Lender and such Assignee, delivery to the Agent
of an executed copy of such instrument and payment to the Agent by the Assignor
of a processing fee of $3,500, then such Assignee shall be a Lender party to
this Agreement and shall have all the rights and obligations of a Lender with a
Commitment as set forth in such instrument of assumption, and the transferor
Lender shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required. Upon
the consummation of any assignment
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pursuant to this subsection (c), the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a new Note or
Notes are issued to the Assignee, at the Borrower's expense. If the Assignee is
not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of any United States Federal income
taxes in accordance with Section 8.06.
(d) Any Lender may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.06 than such Lender would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.06
requiring such Lender to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 10.07. Collateral. Each of the Lenders represents to the
-----------
Agent and each of the other Lenders that it in good faith is not relying upon
any Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 10.08. Waiver of Trial by Jury. Each of the parties hereto
------------------------
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement or any other Loan Document or the
transactions contemplated hereby.
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SECTION 10.09. New York Law. THIS AGREEMENT AND EACH NOTE SHALL BE
-------------
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 10.10. Counterparts; Integration. This Agreement may be
--------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 10.11. Limitation on Recourse. Notwithstanding any contrary
-----------------------
provision of this Agreement or any other Loan Document, it is expressly agreed
that the Agent, the Security Agent, each Issuing Bank and each Lender shall look
solely to the assets of the Borrower (and of any Subsidiary party to the
Guarantee Agreement or any Security Document) for the payment and performance of
the obligations of the Borrower hereunder and thereunder, without recourse
against any partner in the Borrower or any assets of such partner on account of
such obligations.
SECTION 10.12. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein or in the Notes to the contrary, if at any time the applicable interest
rate, together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other Loan Document, or otherwise contracted for, charged, received, taken or
reserved by any Lender, shall exceed the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by such
Lender in accordance with applicable law, the rate of interest payable under the
Note or Notes held by such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
-132-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BRYLANE, L.P.,
by VGP CORPORATION, General
Partner,
by /s/ Xxxx X. Xxxxx
---------------------------------
Title: Vice President, Treasurer and
Secretary
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention of Chief
Financial Officer
Telecopy number:000-000-0000
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Agent,
by /s/ Xxxx X. Silver
-----------------------------------
Title: Associate
00 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention of Xxxxxxx X. Xxxxxxxx
Telex number:177615 MGT UT
Telecopy number:000-000-0000
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK,
by /s/ Xxxx X. Silver
-----------------------------------
Title: Associate
-133-
XXXXXXX XXXXX CAPITAL
CORPORATION,
by
---------------------------------
Title:
World Financial Center
North Tower
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000-0000
BANK OF AMERICA,
by
---------------------------------
Title:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
THE BANK OF NOVA SCOTIA,
by /s/ J. XXXX XXXXXXX
--------------------------------
Title: AUTHORIZED SIGNATORY
Xxx Xxxxxxx Xxxxx
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
BANKBOSTON
by
--------------------------------
Title:
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
-134-
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
by /s/ Xxxxx X. Xxxx
--------------------------------
Title: Assistant Vice President
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
by /s/ Xxxxxxx Xxxxxxx
--------------------------------
Title: Assistant Vice President
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
FLEET NATIONAL BANK,
by /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Title: Senior Vice President
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
XXXXX FARGO, BANK, N.A.
by /s/ Xxxxx X. Xxxxx
--------------------------------
Title: Vice President
000 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
-135-
THE FUJI BANK, LIMITED,
by /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Title: Joint General Manager
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
by /s/
--------------------------------
Title: Joint General Manager
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
PNC BANK, NATIONAL ASSOCIATION
by /s/ X.X. Xxxxxxxx
--------------------------------
Title: Vice President
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
UNION BANK OF CALIFORNIA,
by /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice President
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
-136-
BANQUE PARIBAS,
by /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Assistant Vice President
0000 Xxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
by /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
Title: Vice President
CORESTATES BANK,
by /s/ Xxxxx Xxxxx Marks
--------------------------------
Title: Vice President
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
CAISSE NATIONALE DE CREDIT AGRICOLE,
by /s/ Xxxxx Xxxxx
--------------------------------
Title: First Vice President
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
IMPERIAL BANK,
by /s/ Xxx Xxxxxxx
--------------------------------
Title: Senior Vice President
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
-137-
NATIONAL CITY BANK OF INDIANA
by /s/ Xxxxx X. Xxxxxx
--------------------------------
Title: Vice President
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
NIPPON CREDIT BANK, LTD.,
by /s/ Xxxxx X. Xxxx
--------------------------------
Title: Assistant Vice President
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
THE SUMITOMO BANK, LTD.,
by /s/ Xxxxx Xxxxxxxx and /s/
---------------------------------
Title: Vice President and Vice
President
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
-138-
ARAB BANKING CORPORATION,
by /s/ Xxxxxx Xxxxxxx
--------------------------------
Title: Vice President
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000-0000
XXX XXXXXX AMERICAN, CAPITAL PRIME RATE
INCOME TRUST
by /s/ Xxxx Xxxxxxx
--------------------------------
Title: Senior Vice President and
Director
One Parkview Plaza
5th Floor
Oakbrook Terrace, IL 60181
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY,
by /s/ Xxxx X. Xxxxx
--------------------------------
Title: Managing Director
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
XXXXX XXXXX SENIOR DEBT PORTFOLIO,
by
---------------------------------
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
-139-
INDOSUEZ CAPITAL,
by
--------------------------------
Title:
0000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
ING CAPITAL ADVISORS, INC., as Agent for Bank
Syndication Account,
by /s/ Xxxxxxx Hath
--------------------------------
Title: Vice President
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
PROTECTIVE LIFE INSURANCE COMPANY,
by /s/ Xxxx X. Xxxxx
--------------------------------
Title: Executive Vice President of
Protective Asset Management,
L.L.C.
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
KZH HOLDING CORPORATION,
by /s/ Xxxxxx Xxxxxxx
--------------------------------
Title: Authorized Signatory
c/o Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
-140-
BANQUE PARIBAS,
by /s/
--------------------------------
Title: Vice President
000 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
-141-
AMSOUTH BANK OF ALABAMA,
by /s/ Xxxx Xxxxxx
--------------------------------
Title: Commercial Banking Officer
0000 0xx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxxx, XX 00000
THE BANK OF NEW YORK
by /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Title: Vice President
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Exhibit A-1 is being filed separately as Exhibit 10.15 to the
Registration Statement.
Exhibit A-2 is being filed separately as Exhibit 10.16 to the
Registration Statement.
EXHIBIT X-0
XXXXXXXXX XXXX
Xxx Xxxx, Xxx Xxxx
[ ], 19[ ]
For value received, BRYLANE, L.P., a Delaware limited partnership (the
"Borrower"), promises to pay to the order of (the "Lender") on the
last day of the Revolving Loan Availability Period, for the account of its
Applicable Lending Office, the unpaid principal amount of all Revolving Loans
made by the Lender to the Borrower pursuant to the Credit Agreement referred to
below. The Borrower also promises to pay interest on the unpaid principal
amount of such Revolving Loans on the dates and at the rate or rates provided
for in the Credit Agreement. All such payments of principal and interest shall
be made in lawful money of the United States in Federal or other immediately
available funds at the office of Xxxxxx Guaranty Trust Company of New York, 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
All Revolving Loans made by the Lender, and all repayments of the
principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, appropriate notations to evidence the foregoing information with respect
to each such Revolving Loan then outstanding shall be endorsed by the Lender on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Lender to make any such
--------
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under any of the other Loan Documents.
This note is one of the Notes referred to in the Credit Agreement
dated as of December , 1996, among the Borrower, the lenders listed on the
signature pages thereof, Xxxxxx Guaranty Trust Company of New York, as
Administrative
2
Agent and Xxxxxxx Xxxxx Capital Corporation, as Documentation Agent (as the same
may be amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the mandatory and optional prepayment
hereof and the acceleration of the maturity hereof.
Notwithstanding any contrary provision of the Credit Agreement or any
other Loan Document, it is expressly agreed that the Agent, the Security Agent,
the Documentation Agent, the Issuing Bank and each Bank shall look solely to the
assets of the Borrower (and of any Subsidiary party to the Guarantee Agreement
or any Security Document) for the payment and performance of the obligations of
the Borrower hereunder and thereunder, without recourse against any partner in
the Borrower or any assets of such partner on account of such obligations.
BRYLANE, L.P.,
by VGP CORPORATION,
General Partner,
by
-----------------------------
Title:
3
LOANS AND PAYMENTS OF PRINCIPAL
Amount Amount of Unpaid
of Principal Principal Notations
Date Loan Repaid Balance Made By
--------- ------ --------- --------- ---------
EXHIBIT B
[FORM OF BORROWING BASE CERTIFICATE]
Reference is made to the Credit Agreement dated as of December 9, 1996
(the "Credit Agreement"), among Brylane, L.P., a Delaware limited partnership
(the "Borrower"), the Lenders listed on the signature pages thereof, Xxxxxx
Guaranty Trust Company of New York, as Administrative Agent, and Xxxxxxx Xxxxx
Capital Corporation, as Documentation Agent. This Certificate is a Borrowing
Base Certificate prepared pursuant to Section 5.01(f) of the Credit Agreement.
Capitalized terms used herein but not defined herein have the meanings assigned
to them in the Credit Agreement.
The undersigned chief financial officer, chief accounting officer or
treasurer of the Borrower hereby certifies that the attached Schedule I sets
forth an accurate computation determined in accordance with the terms of the
Credit Agreement.
[ ],
by______________________________
Title:
Date:
Exhibit C is being filed separately as Exhibit 10.17 to the Registration
Statement.
Exhibit D is being filed separately as Exhibit 10.14 to the Registration
Statement.
Exhibit E is being filed separately as Exhibit 10.13 to the Registration
Statement.
Exhibit F is being filed separately as Exhibit 10.18 to the Registration
Statement.
EXHIBIT G-1
[Letterhead of]
XXXXXXX & XXXXXXXX
To the Banks, the Agent,
the Documentation Agent and the
Security Agent Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Credit Agreement among Brylane, L.P., the lenders listed on the
signature pages thereof, Xxxxxx Guaranty Trust Company of New York, as
Agent, and Xxxxxxx Xxxxx Capital Corporation, as Documentation Agent
----------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Brylane, L.P., a Delaware limited partnership
(the "Borrower"), Brylane Capital Corp., a Delaware corporation ("Finance
Corp."), X.X. Management Services, Inc., a Delaware corporation (the "New York
Holding Subsidiary"), X.X. Catalog Distribution, Inc., a Delaware corporation
(the "Indiana Holding Subsidiary"), B.N.Y. Service Corp., a Delaware corporation
("B.N.Y. Service"), X.X. Management Services Partnership, a New York general
partnership between the Borrower, the New York Holding Subsidiary and B.N.Y.
Service (the "New York Partnership"), K.S. Management, Inc., a Delaware
corporation ("K.S. Management"), [Xxxxxxxx'x Management Corp.] and X.X. Catalog
Distribution Partnership, an Indiana general partnership between the Borrower
and the Indiana Holding Subsidiary (the "Indiana Partnership" and, together with
Finance Corp., the New York Holding Subsidiary, the Indiana Holding Subsidiary,
K.S. Management, B.N.Y. Service, [Xxxxxxxx'x Management] and the New York
Partnership, collectively the "Subsidiaries") in connection with the Credit
Agreement dated as of December , 1996 (the "Credit Agreement") among the
Borrower, the lenders listed on the signature pages thereof (the "Lenders"),
Xxxxxx Guaranty Trust Company of New York, as Agent, and Xxxxxxx Xxxxx Capital
Corporation, as Documentation Agent. Capitalized terms not defined in this
letter have the meanings given to them in the Credit Agreement. The Borrower and
the
2
Subsidiaries are referred to herein collectively as the "Loan Parties" and
individually as a "Loan Party."
This opinion is delivered to you pursuant to Section 3.01(c) of the Credit
Agreement. In connection with this opinion, we have examined and relied upon the
following documents (all of the documents referred to in clauses (a) through (e)
below being collectively referred to herein as the "Documents"):
(a) A copy of the Credit Agreement executed by the Borrower;
(b) A copy of the Guarantee Agreement dated as of December , 1996,
executed by each of the Subsidiaries;
(c) A copy of the Pledge Agreement dated as of December , 1996, executed
by the Borrower;
(d) A copy of the Security Agreement dated as of December , 1996, executed
by the Borrower and each of the Subsidiaries;
(e) A copy of the Mortgage dated as of December , 1996, executed by the
Borrower;
(f) Certificates of the Secretary of State of the State of Delaware dated
as of December , 1996 as to the corporate existence and good standing of Finance
Corp., the New York Holding Subsidiary, the Indiana Holding Subsidiary, B.N.Y.
Service, K.S. Management and [Xxxxxxxx'x Management], respectively, in the State
of Delaware, together with "bring down" letters dated December , 1996, with
respect thereto from CT Corporation;
(g) Certificates of the Secretary of State of the State of New York dated
as of December , 1996 as to the existence and good standing as a foreign
corporation of Finance Corp., the New York Holding Subsidiary, B.N.Y. Service
and K.S. Management, respectively, in the State of New York;
(h) A certified copy of the Certificate of Incorporation of each of
Finance Corp., the New York Holding Subsidiary, the Indiana Holding Subsidiary,
B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management], and all amendments
thereto (such Loan Party's "Charter");
3
(i) A certified copy of the bylaws of each of Finance Corp., the New York
Holding Subsidiary, B.N.Y. Service, K.S. Management, [Xxxxxxxx'x Management] and
the Indiana Holding Subsidiary and all amendments thereto (such Loan Party's
"Bylaws");
(j) A certified copy of the Partnership Agreement of each of the Borrower,
the New York Partnership and the Indiana Partnership and all amendments thereto
(such Loan Party's "Partnership Agreement"); and
(k) A copy of resolutions adopted by the Board of Directors of each of
Finance Corp., the New York Holding Subsidiary, the Indiana Holding Subsidiary,
B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management], certified as being
all proceedings and actions of such Board of Directors with respect to the
Documents and the Transactions.
We have been furnished with, and with your consent have relied upon, a
certificate of officers or general partners, as applicable, of each of the Loan
Parties, with respect to certain factual matters, including a listing of all of
the material agreements and material instruments binding on or affecting such
Loan Party (other than the Loan Documents) (each such certificate, a
"Certificate"). We have also examined originals or copies of such partnership
and corporate records, agreements and other instruments, and of certificates or
comparable documents of public officials and of officers and representatives of
the Loan Parties as we have deemed necessary as the basis for the opinions
hereinafter set forth. In our examination of the documents referred to above, we
have assumed the authenticity of all documents submitted to us as original or
certified documents, the genuineness of all signatures on original or certified
documents (other than the signatures of the officers and partners of the Loan
Parties), the conformity to original documents of all documents submitted to us
as copies thereof and the correctness and accuracy of all facts not
independently established by us set forth in all certificates and reports
identified in this opinion.
We have investigated such questions of law for the purpose of rendering
this opinion as we have deemed necessary. We are opining herein as to the
effect on the subject transactions only of United States Federal law and the
General Corporation Law of the State of Delaware. We are not opining on, and we
assume no responsibility as to, the applicability to or effect on any of the
matters covered
4
herein of the laws of any other jurisdiction. In addition, except as expressly
covered in this opinion, we are not expressing any opinion as to the effect of
compliance by Lenders with any state or federal laws or regulations applicable
to the transactions because of the nature of any of their businesses. We
express no opinion with respect to federal securities or state securities or
"blue sky" laws or state or federal antifraud, antitrust or environmental laws.
We express no opinion with respect to the Borrower's or any other Person's
compliance with their fiduciary duties.
Based upon the foregoing, and in reliance thereon and subject to the
limitations, qualifications and exceptions set forth below, we are of the
following opinion:
1. Each of Finance Corp., the New York Holding Subsidiary, the Indiana
Holding Subsidiary, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management]
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Each of Finance Corp., the New York Holding
Subsidiary, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management] is
qualified as a foreign corporation and is in good standing in the State of New
York. The Indiana Holding Subsidiary is not qualified as a foreign corporation
and is not in good standing in any jurisdiction other than Delaware. Each of
Finance Corp., the New York Holding Subsidiary, the Indiana Holding Subsidiary,
B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management] has the corporate
power and corporate authority to own its properties and assets and to carry on
its business as it is currently being, or is currently proposed to be,
conducted.
2. The execution, delivery and performance by each of Finance Corp., the
New York Holding Subsidiary, the Indiana Holding Subsidiary, B.N.Y. Service,
K.S. Management and [Xxxxxxxx'x Management] of each Document to which it is a
party and the consummation of the Financing Transactions and, to the extent
involving Finance Corp., the New York Holding Subsidiary, the Indiana Holding
Subsidiary, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management],
respectively, the Transactions are within in its corporate powers, have been
duly authorized and approved by all necessary corporate action on the part of
each of them and on the part of each of their respective stockholders, require
no action by or in respect of, or filing with, any federal Governmental
Authority or with any Delaware Governmental Authority pursuant to the Delaware
General
5
Corporation Law (other than (i) such as have been duly taken or made, (ii)
filings required to perfect Liens granted under the Security Documents (iii)
filings necessary to qualify the Borrower and certain of the Subsidiaries as
foreign corporations in the States of Indiana and New York and (iv) filings in
connection with the recordation of intellectual property rights transferred
pursuant to the Transaction Documents).
3. The execution, delivery and performance by each Loan Party of each
Document to which it is a party and the consummation of the Financing
Transactions and, to the extent involving such Loan Party, the Transaction do
not contravene, or constitute a default under, or result in the creation or
imposition of any lien (other than the Lien of the Security Documents) on any
asset of such Loan Party, in each case both before and after giving effect to
the Transactions, under (i) any provision of applicable federal law or federal
regulations or any applicable provision of the Delaware General Corporation Law,
(ii) the Partnership Agreement, Charter or Bylaws of any Loan Party, (iii) any
judgment, injunction, order or decree, known to us, and binding on any Loan
Party or (iv) any contractual restriction contained in any document identified
in any Certificate, except for contraventions, defaults or liens with respect to
the Transaction that would not have a Material Adverse Effect; provided,
---------
however, that we express no opinion as to whether or not such execution,
-------
delivery or consummation will contravene, constitute a default under or result
in the imposition of any lien upon any asset of any Loan Party pursuant to any
contractual restriction contained in any document identified in any Certificate
with respect to financial ratios or tests or any aspects of the financial
condition or results of operations of the Borrower. The foregoing opinion is
limited to those laws and regulations that a lawyer exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Loan parties, the Transaction or both.
4. The borrowings by the Borrower pursuant to the Credit Agreement and
the use of the proceeds of the Loans as contemplated thereby do not violate
Regulations, G, T, U, or X of the Board of Governors of the Federal Reserve
System.
5. To the best of our knowledge, there is no injunction, stay, decree or
order of any Governmental Authority, or any action, suit or proceeding pending
or threatened against or affecting the Borrower or any of the
6
Subsidiaries before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision,
which in any such case could have a Material Adverse Effect or which in any
manner draws into question the validity of any Transaction Document or Loan
Document.
6. The Borrower is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
7. Each Loan Party has duly executed and delivered each Document to which
it is a party.
As used in this opinion, the phrase "to the best of our knowledge" means to
the best of our actual knowledge, which knowledge is based solely on inquiry
within our firm and of the Loan Parties, without other inquiry or investigation.
We advise you that certain members of this firm own interests in a
partnership which owns interests in the Loan Parties.
This opinion is rendered to you and is solely for your benefit in
connection with the Credit Agreement. This opinion may not be relied on by you
for any purpose other than in connection with this transaction, nor may be it
relied upon by any other person, firm or corporation for any purpose without our
prior written consent. Notwithstanding the foregoing, this opinion may be
relied upon by any Person who subsequently becomes a Lender under the Credit
Agreement.
Very truly yours,
---------------------------------
Xxxxxxx & XxXxxxxx
EXHIBIT G-2
[Letterhead of]
ICE XXXXXX XXXXXXX & XXXX
December , 1996
To the Banks, the Agent, the
Security Agent and the Documentation Agent
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
We have acted as special Indiana counsel to Brylane, L.P., a Delaware
limited partnership ("Brylane" or the "Borrower"), Brylane Capital Corp., a
Delaware corporation ("Finance Corp."), X.X. Management Services, Inc., a
Delaware corporation ("New York Holding Subsidiary"), X.X. Catalog Distribution,
Inc., a Delaware corporation ("Indiana Holding Subsidiary"), B.N.Y. Service
Corp., a Delaware corporation ("B.N.Y. Service"), K.S. Management Services,
Inc., a Delaware corporation ("K.S. Management"), [Xxxxxxxx'x Management Corp.],
X.X. Management Services Partnership, a New York general partnership between
Brylane, New York Holding Subsidiary and B.N.Y. Service ("X.X. Management
Services Partnership"), X.X. Catalog Distribution Partnership, an Indiana
general partnership between Brylane and Indiana Holding Subsidiary ("X.X.
Catalog Distribution Partnership" and, together with Finance Corp., New York
Holding Subsidiary, Indiana Holding Subsidiary, X.X. Management Services
Partnership, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x Management],
collectively, the "Subsidiaries") in connection with (a) the Credit Agreement
dated as of December , 1996 (the "Credit Agreement"), among the Borrower, the
lenders listed on the signature pages thereof, Xxxxxx Guaranty Trust Company of
New York, as Agent, and Xxxxxxx Xxxxx Capital Corporation, as Documentation
Agent, (b) the Guarantee Agreement dated as of December , 1996 (the "Guarantee
Agreement"), among the Subsidiaries, the Agent and the Documentation Agent, (c)
the Pledge Agreement dated as of December , 1996 (the "Pledge
2
Agreement"), among the Borrower and Xxxxxx Guaranty Trust Company of New York, a
Delaware corporation, as security agent (the "Security Agent"), (d) the Security
Agreement dated as of December , 1996 (the "Security Agreement"), among the
Borrower, the Subsidiaries and the Security Agent and (e) the Mortgage, Security
Agreement, Fixture Filing and Assignment of Lease And Rents dated as of December
, 1996 (the "Mortgage") by the Borrower to and with the Security Agent. Unless
otherwise indicated, capitalized terms used herein but not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
This opinion is delivered to you pursuant to Section 3.01(c) of the Credit
Agreement. In connection with this opinion, we have examined and relied upon
the following documents (all of the documents referred to in clauses (a) through
(e) below being collectively referred to herein as the "Documents"):
(a) The Credit Agreement;
(b) The Guarantee Agreement;
(c) The Security Agreement;
(d) The Pledge Agreement;
(e) The Mortgage;
(f) A certified copy of the Partnership Agreement of the Indiana
Partnership and all amendments thereto (the "Partnership Agreement");
(g) A copy of resolutions adopted by the Board of Directors of the Indiana
Holding Subsidiary, certified as being all proceedings and actions of such Board
of Directors with respect to the Documents and the Transactions;
(h) The financing statements on Form UCC-1 attached hereto as Exhibit A
---------
(the "Financing Statements") to be filed with the Secretary of State of the
State of Indiana (the "Filing Office"); and
(i) A certificate dated December , 1996 from the Indiana Partnership as
to pertinent resolutions of its general partners and certain other factual
matters.
3
We have been furnished with, and with your consent have relied upon, a
certificate of general partners or officers, as applicable, of each of the
Indiana Partnership, the Borrower and the Indiana Holding Subsidiary, with
respect to certain factual matters (each such certificate, a "Certificate"). We
have also examined originals or copies of such partnership and corporate
records, agreements and other instruments, and of certificates or comparable
documents of public officials and of officers and representatives of the Indiana
Partnership, the Borrower or the Indiana Holding Subsidiary as we have deemed
necessary as the basis for the opinions hereinafter set forth. In our
examination of the documents referred to above, we have assumed the authenticity
of all documents submitted to us as original or certified documents, the
genuineness of all signatures on original or certified documents, the conformity
to original documents of all documents submitted to us as copies thereof and the
correctness and accuracy of all facts not independently established by us set
forth in all certificates and reports identified in this opinion.
We have investigated such questions of law for the purpose of rendering
this opinion as we have deemed necessary. We are opining herein as to the
effect on the subject transactions only of the law of the State of Indiana. We
are not opining on, and we assume no responsibility as to, the applicability to
or effect on any of the matters covered herein of the laws of any other
jurisdiction. In addition, except as expressly covered in this opinion, we are
not expressing any opinion as to the effect of compliance by Lenders with any
state or federal laws or regulations applicable to the transactions because of
the nature of any of their businesses. We express no opinion with respect to
federal securities or state securities or "blue sky" laws or state or federal
antifraud, antitrust or environmental laws. We express no opinion with respect
to any Person's compliance with their fiduciary duties.
In rendering the opinions expressed below, we have not made any
investigation of the business, property or affairs of the Indiana Partnership,
the Borrower, the Indiana Holding Subsidiary or any other party to the Loan
Documents, and we have also assumed, without any independent investigation or
verification of any kind, certain other facts and matters of law that are
necessary to enable us to
4
render the opinions hereinafter expressed. Those additional assumptions, upon
which we have relied, are as follows:
(A) The Indiana Holding Subsidiary is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Delaware; and the Borrower is a limited partnership duly organized and
validly existing and in good standing under the laws of the State of
Delaware.
(B) Each of the Loan Documents to which it is a party has been duly
executed by authorized partners of the Indiana Partnership.
(C) Each party to the Loan Documents (other than the Indiana Partnership)
has been duly organized and is validly existing and in good standing
under its jurisdiction of incorporation or formation, has full power
and authority to enter into, execute, deliver, receive and perform
each of the Loan Documents; the entry into, execution, delivery,
receipt, and performance thereof by such parties have been duly
authorized by all requisite action on the part of such parties; and
each of the Loan Documents has been duly entered into, executed,
received and delivered by such parties.
(D) Each of the Loan Documents constitutes the legal, valid, binding and
enforceable obligations of the parties thereto.
(E) None of the documents identified in the Loan Documents but not
reviewed by us contain provisions which are inconsistent with those of
the Documents or provisions which would make unenforceable the
Documents, or any of them, or any provision thereof.
(F) All parties to any of the Loan Documents will duly file business
activity reports with the Indiana Department of State Revenue (the
"Indiana Business Activity Report") required under Ind. Code 6-8.1-6-
6, unless exempt therefrom (and we hereby advise that such provision
provides that, unless a corporation or other entity is exempt, it may
not pursue in the Indiana courts any claim arising under Indiana law
or arising out of a contract executed under Indiana law until the
5
proper Indiana Business Activity Reports are filed).
(G) The execution, delivery and performance of the Loan Documents by the
parties thereto (each a "Signatory Party") do not and will not
contravene, conflict with, violate or result in breach of (i) any law,
statute or ordinance of any jurisdiction (other than the State of
Indiana), (ii) any provision of the articles of incorporation, bylaws
or partnership agreement of any Signatory Party other than the Indiana
Partnership, and (iii) any approvals, consents, licenses, orders,
writs, judgments, injunctions or decrees of any court, arbitrator,
administrative agency or other governmental authority, or any
indenture, mortgage, deed of trust, agreement, lease, ground lease or
other instrument to which any Signatory Party is a party or by which
any Signatory Party or any of its property or assets of any Signatory
Party is bound or may be subject.
(H) The Agent, the Documentation Agent and the Security Agent will at all
times exercise the rights and remedies under the Loan Documents in
good faith and in a manner which is commercially reasonable, and full
and adequate consideration has been given for the undertakings of the
Indiana Partnership under the Security Agreement and the Guarantee
Agreement.
(I) The principal place of business and chief executive office of each of
the Indiana Holding Subsidiary and the Indiana Partnership is in the
State of Indiana.
(J) The names and addresses of the Indiana Partnership, the Indiana
Holding Subsidiary and the Security Agent as set forth in the
Financing Statements are the correct names and mailing addresses for
the Indiana Partnership, the Indiana Holding Subsidiary and the
Security Agent, as the case may be, and the address of the Security
Agent set forth therein is an address from which information regarding
the security interests in the personal property may be obtained.
6
(K) The Indiana Partnership and the Indiana Holding Subsidiary have
"rights" (as defined in the Uniform Commercial Code as enacted in the
State of Indiana (the "Indiana UCC")) in the Collateral (as defined in
the Security Agreement) located in the State of Indiana. The
descriptions of the Collateral accurately and reasonably identify the
property intended to be completely described, respectively, in the
Security Agreement and the Financing Statements.
(L) The pledge of the Indiana Holding Subsidiary's 1% general partnership
interest in the Indiana Partnership (the "Pledged Partnership
Interest") has been registered in the name of the Security Agent with
the Indiana Partnership pursuant to Article 8 of the Indiana UCC.
(M) The Mortgage secures a fee interest in real property, and the
Mortgagee is either an entity qualified to do business in the state of
Indiana or is a foreign banking corporation under the laws of such
state.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. The Indiana Partnership is a general partnership duly organized and
validly existing under the laws of the State of Indiana and has all partnership
power and partnership authority to carry on its business as now conducted or
proposed to be conducted.
2. The execution, delivery and performance by the Indiana Partnership of
the Credit Agreement and the other Loan Documents to which it is a party have
been duly authorized by all necessary action on the part of the Indiana
Partnership, its partners, and their respective stockholders or partners (as
applicable), require no action by or in respect of, or filing with, any
Governmental Authority in the State of Indiana (other than (i) such as have been
duly taken or made, (ii) filings required to perfect Liens granted under the
Security Documents and (iii) compliance with "bulk sales" laws) and do not
contravene, or constitute a default under, any provision of Indiana law or
regulation applicable to the Indiana Partnership or of the Partnership
Agreement.
7
3. To the extent Indiana law applies, the Security Agreement creates and
constitutes a valid security interest in, lien on or pledge of the Collateral
(as defined in the Security Agreement) of the Indiana Partnership and the
Indiana Holding Subsidiary located in the State of Indiana only to the extent a
lien or security interest therein or pledge thereof may be created solely by
execution and delivery of an agreement between debtor and creditor (without the
creditor obtaining possession of the collateral) under Indiana law. The
Financing Statements relating to the Collateral (as defined in the Security
Agreement) located in Indiana are in proper form for filing in the State of
Indiana pursuant to the Indiana UCC and the filing thereof in the Filing Office
will perfect the security interests created under the Security Agreement in such
Collateral owned by the Indiana Partnership or the Indiana Holding Subsidiary on
the date hereof and hereafter acquired and located in Indiana, to the extent
that such security interests can be perfected by the filing of financing
statements in Indiana pursuant to the Indiana UCC.
4. Upon due execution and delivery, the Mortgage will constitute the
legal, valid, and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms. The Mortgage is in proper form for
recordation upon the land records of the town in the state of Indiana where the
Mortgaged Property is located and upon proper recordation of the Mortgage upon
said land records, the Mortgage will have a valid and perfected mortgage lien on
the Mortgaged Property. The Fixture Filing is in proper form for recording on
the land records of the town in the state of Indiana where the Mortgaged
Property is located and upon proper recordation of the Fixture Filing upon said
land records, the Security Agent, on behalf of the Secured Parties, will have a
valid and perfected security interest in all of the Borrower's right, title and
interest in and to the fixtures described therein and no further filing or
refiling or other action is necessary in the state of Indiana in order to
perfect or maintain such security interest.
In addition to and without limiting the generality of any exceptions,
qualifications, limitations and assumptions noted above, and without expanding
any opinion expressed,
8
the foregoing opinions, notwithstanding anything herein to the contrary, are
subject to the following:
(A) The opinions expressed in numbered paragraph 3 may be:
(i) limited or otherwise affected by bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt, receivership,
moratorium, fraudulent conveyance, equity of redemption or other
similar laws now or hereafter in effect governing the rights and
remedies of debtors and creditors generally;
(ii) with respect to specific enforcement of the terms of the Security
Agreement which may restrict transferability of personal property
described therein and secured thereby, limited or otherwise affected
by (S) 9-311 of the Uniform Commercial Code as enacted in the State of
Indiana (relating generally to the alienability of a debtor's rights
in personal property);
(iii) limited or otherwise affected by general principles of equity,
regardless of whether considered in a proceeding at law or in equity.
(B) In rendering these opinions we have made no examination of and express
no opinion with respect to: (i) the Borrower's, the Indiana Holding
Subsidiary's or the Indiana Partnership's rights in or title to the
Collateral (as defined in the Security Agreement), (ii) what liens,
security interests, charges or encumbrances thereon actually are of
record, or (iii) the priority of the lien and security interests
granted to the Security Agent.
The opinions expressed herein are matters of professional judgment and are
not a guarantee of result. We are qualified to practice law only in the State
of Indiana. All of the opinions expressed in this opinion are limited to the
laws of the State of Indiana. To the extent that any portion or portions of the
Loan Documents is governed by the laws of any jurisdiction other than those of
the State of Indiana, we express no opinion with respect to such portion or
portions. The opinions expressed herein are effective as of the date hereof.
We express no opinions other than as
9
herein expressly set forth and no expansion of our opinions may be made by
implication or otherwise. Our opinions are limited solely to the present laws
of the State of Indiana and we do not undertake to advise you of any matter
within the scope of this letter that comes to our attention after the date of
this letter and disclaim any responsibility to advise you of any future changes
in law or fact that may affect the opinions set forth herein.
This opinion is rendered solely in connection with the transactions
described above and for your benefit, and may be relied upon solely by you.
Very truly yours,
--------------------------
Ice Xxxxxx Xxxxxxx & Xxxx
EXHIBIT G-3
[Letterhead of]
XXXXXXXX & O'NEIL
December , 1993
To the Lenders, the Documentation Agent
and the Security Agent Referred to below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Credit Agreement dated as of December , 1996 among Brylane
L.P., the lenders listed on the signature pages thereof, Xxxxxx
Guaranty Trust Company of New York, as Agent and Xxxxxxx Xxxxx
Capital Corporation, as Documentation Agent
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Brylane, L.P., a Delaware
limited partnership ("Brylane" or the "Borrower"), Brylane Capital Corp., a
Delaware corporation ("Finance Corp."), X.X. Management Services, Inc., a
Delaware corporation ("New York Holding Subsidiary"), X.X. Catalog Distribution,
Inc., a Delaware corporation ("Indiana Holding Subsidiary"), B.N.Y. Service
Corp., a Delaware corporation ("B.N.Y. Service"), K.S. Management Services,
Inc., a Delaware corporation ("K.S. Management"), [Xxxxxxxx'x Management Corp.],
X.X. Management Services Partnership, a New York general partnership between
Brylane, New York Holding Subsidiary and B.N.Y. Service ("X.X. Management
Services Partnership"), X.X. Catalog Distribution Partnership, an Indiana
general partnership between Brylane and Indiana Holding Subsidiary ("X.X.
Catalog Distribution Partnership") and, together with
2
Finance Corp., New York Holding Subsidiary, Indiana Holding Subsidiary, X.X.
Management Services Partnership, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x
Management], collectively, the "Subsidiaries") in connection with the Credit
Agreement, dated as of December , 1996 (the "Credit Agreement"), among Brylane,
the lenders listed on the signature pages thereof (the "Lenders"), Xxxxxx
Guaranty Trust Company of New York, as Agent (the "Agent"), and Xxxxxxx Xxxxx
Capital Corporation, as Documentation Agent (the "Documentation Agent"), and the
consummation of the transactions contemplated thereby.
This opinion is delivered to you pursuant to Section 3.01(c) of the
Credit Agreement. All capitalized terms that are used but not defined herein
shall have the respective meanings assigned to them in the Credit Agreement.
The Borrower and the Subsidiaries may be hereinafter referred to individually as
a "Loan Party" and collectively as the "Loan Parties."
In rendering this opinion, we have examined executed originals,
counterparts or copies of each of the following:
(i) the Credit Agreement;
(ii) the Guarantee Agreement;
(iii) the Pledge Agreement;
(iv) the Security Agreement;
(v) the Mortgage, Security Agreement, Fixture Filing and Assignment
of Leases and Rents (the "Mortgage"); and
(vi) the partnership agreement of X.X. Management Services
Partnership (the "X.X. Management Services Partnership
Agreement").
We have also reviewed the forms of Notes. The Credit Agreement, the
forms of Notes, the Guarantee Agreement, the Pledge Agreement, the Security
Agreement and the Mortgage are herein referred to collectively as the "Operative
Documents." The Operative Documents, the Partnership Agreement of Brylane and
the X.X. Management Services Partnership Agreement are herein referred to
collectively as the "Documents."
As to various questions of fact material to this opinion, we have been
furnished with and with your consent have relied upon, without any independent
investigation or verification of any kind, the representations and warranties
3
contained in the Documents and the other documents executed and delivered in
connection therewith and upon certificates and other documents of officers,
general partners and representatives of Brylane, the Subsidiaries and of public
officials and we have made such other investigations as we have deemed relevant
or necessary as the basis for the opinions hereinafter set forth. In our
examination of the documents referred to above, we have assumed the genuineness
of all signatures, and the incumbency, authority and power, of all Persons
signing the Documents as or on behalf of the parties thereto, the authenticity
and completeness of all documents submitted to us as original or certified
documents, and the conformity to authentic original documents of all documents
submitted to us as certified, conformed, facsimiled or photostatic copies.
To the extent that the obligations of Brylane and the Subsidiaries may
be dependent upon such matters, we have assumed for purposes of this opinion
that: (i) each of Brylane and the Subsidiaries (other than X.X. Management
Services Partnership) is duly incorporated or otherwise formed, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
formation; (ii) the execution, delivery and performance by each of Brylane and
the Subsidiaries (other than X.X. Management Services Partnership) of each of
the Documents to which it is a party (including the execution and delivery of
the Notes by Brylane), and the consummation by each of Brylane and the
Subsidiaries (other than X.X. Management Services Partnership) of the
transactions contemplated thereby are within its corporate or other
organizational power and authority and each document executed by each of Brylane
and the Subsidiaries (other than X.X. Management Services Partnership) has been
duly authorized, executed and delivered by all necessary action on its part; and
(iii) no other corporate or other action is required by the stockholders or
partners of Brylane and the Subsidiaries (other than X.X. Management Services
Partnership) to authorize the execution and delivery of the Documents by each of
Brylane and the Subsidiaries (other than X.X. Management Services Partnership)
or the consummation of the transactions contemplated thereby.
To the extent that the obligations of Brylane and the Subsidiaries may
be dependent upon such matters, we have assumed, for purposes of this opinion
that: (i) each of the Lenders, the Agent, the Documentation Agent and the
Security Agent are duly incorporated or otherwise duly formed,
4
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation; (ii) each of the Lenders, the Agent, the
Documentation Agent and the Security Agent has full corporate or other
organizational power and authority to execute, deliver and perform its
obligations under the Operative Documents and each of the other documents and
agreements executed by it in connection therewith; (iii) each such document
executed by the Lenders, the Agent, the Documentation Agent and the Security
Agent has been duly authorized, executed and delivered by each of the Lenders,
the Agent, the Documentation Agent and the Security Agent, as the case may be,
and constitutes the legal, valid and binding obligation of each of such parties,
enforceable against it in accordance with its terms; (iv) that each party to the
Documents has complied with all legal requirements pertaining to its status as
such status relates to its rights to enforce the Documents against the other
party; (v) that there has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence in connection with the
Documents; and (vi) that there are no agreements or understandings among the
parties to the Documents, written or oral, or usage of trade or course of prior
dealing among such parties, that would, in any case, define, supplement or
qualify the terms of the Documents.
You also have advised us that in rendering the opinions set forth
below we may assume that (A) with respect to the Pledge Agreement and the
Security Agreement, Brylane or the Subsidiaries has "rights" in the Collateral
(as defined in such agreements) within the meaning of Section 9-203 of the
Uniform Commercial Code of the State of New York (the "New York UCC"),
consistent with the purposes of the Pledge Agreement and the Security Agreement;
(B) the description of the Collateral reasonably identifies what is described;
(C) with respect to the Mortgage, (i) the Mortgage secures a fee interest in
real property and (ii) the Mortgagee is either an entity qualified to transact
business in the state of New York or a foreign banking corporation under the
laws of such state; (D) the funds to be loaned or advanced to Brylane, as
contemplated by the Credit Agreement, have been or will be, as applicable,
delivered to and received by Brylane; and (E) each Subsidiary has received
adequate consideration in connection with its obligations under the Guarantee
Agreement and each of the other Operative Documents to which it is a party. We
also have assumed that the holders of the Notes (whether the Lenders or any
subsequent holders), the Agent, the
5
Documentation Agent and the Security Agent will act in good faith and will seek
to enforce their rights and remedies under the Operative Documents in a
commercially reasonable manner.
We also have assumed that the constitutionality or validity of a
relevant statute, rule, regulation or agency action is not in issue unless a
reported decision has specifically addressed but not resolved, or has
established, its unconstitutionality or invalidity.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are attorneys admitted
to practice only in the State of New York and we opine herein only as to the
effect of the law of the State of New York on the subject transactions. We do
not opine on, and we assume no responsibility as to, the applicability to or the
effect on any of the matters covered herein of, the laws of any other
jurisdiction, including, without limitation, federal laws. In addition, we do
not express any opinion as to any law of the State of New York applicable to the
environment, taxes, "bulk sales," securities, "blue sky" or antifraud matters.
The opinions set forth below are subject to the following additional
limitations, qualifications and exceptions:
(a) the enforceability of the Operative Documents may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or similar laws now or hereafter in effect relating to creditors'
rights and remedies generally;
(b) the remedies of specific performance and injunctive and other
forms of relief are subject to general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity)
and such enforceability may be subject to the discretion of the court before
which any proceeding therefor may be brought;
(c) certain remedial and exculpatory provisions contained in the
Operative Documents may be unenforceable (including (i) certain self-help
provisions and provisions which purport to create evidentiary standards; (ii)
provisions which purport to restrict access to legal or equitable remedies or to
waive or release any statutory
6
provisions or common law rights or benefits that may not be waived or released;
and (iii) under certain circumstances, provisions declaring that the failure to
exercise or delay in exercising rights or remedies will not operate as a waiver
of any such right or remedy);
(d) no opinion is expressed as to the enforceability of provisions
which purport to establish consent to the jurisdiction of any court; and
(e) no opinion is expressed below with respect to the enforceability
of provisions regarding indemnification against liabilities where such
indemnification is contrary to public policy.
The opinions set forth herein are as of the date of this letter and we
do not render any opinion as to the effect of any matter which may occur
subsequent to the date hereof.
Based upon and subject to the foregoing, after giving effect to the
consummation of the transactions contemplated by the Operative Documents, we are
of the opinion that:
1. X.X. Management Services Partnership is a general partnership duly
organized and validly existing under the laws of the state of New York and has
all partnership power and authority to carry on its business as now conducted or
as proposed to be conducted.
2. The execution, delivery and performance by X.X. Management
Services Partnership of the Operative Documents to which it is a party are
within its power and have been duly authorized by all necessary action on the
part of X.X. Management Services Partnership and its partners.
3. The execution, delivery and performance by each of the Loan
Parties of the Operative Documents to which it is a party and the consummation
of the Financing Transactions and, to the extent involving Brylane or any
Subsidiary, the other Transactions, require no action by or in respect of, or
filing with, any Governmental Authority of the State of New York other than (i)
filings required to perfect Liens granted under the Security Documents; and (ii)
such actions as have been duly taken or filings that have been made.
7
4. The execution, delivery and performance by each of the Loan
Parties of the Operative Documents to which it is a party do not, assuming
compliance with the filing requirements referred to in paragraph 3 above,
contravene, or conflict with, or constitute a violation of any provision of any
present New York law or regulation binding upon or applicable to Brylane or the
Subsidiaries nor result in the creation or imposition of any Lien (except as
contemplated by the Operative Documents) on any asset of Brylane or the
Subsidiaries, which contravention, conflict or violation, individually or in the
aggregate, would have a material adverse effect on the business, condition
(financial or other), results of operations or properties or prospects of
Brylane and its Subsidiaries, taken as a whole.
5. Each of the Credit Agreement and the Mortgage constitutes the
valid and binding obligation of Brylane, enforceable against it in accordance
with its terms. The Mortgage is in proper form for recordation upon the land
records of the towns in the state of New York where the mortgaged property is
located and, upon proper recordation of the Mortgage upon such land records, the
Mortgagee will have a valid and perfected mortgage lien on the Mortgaged
Property. The Fixture Filing is in proper form for recording on the land
records of the town in the state of New York where the Mortgaged Property is
located and, upon proper recordation of the Fixture Filing upon said land
records, the Security Agent, on behalf of the Secured Parties, will have a valid
and perfected security interest in all of the Borrower's right, title and
interest in and to the fixtures described therein and no further filing or
refiling or other action is necessary in the state of New York in order to
perfect or maintain such security interest.
6. The Notes, when executed and delivered by Brylane in accordance
with the Credit Agreement, will constitute valid and binding obligations of
Brylane, enforceable against it in accordance with its terms. Each of the
Guarantee Agreement, the Pledge Agreement and the Security Agreement constitutes
the valid and binding obligation of each of the Loan Parties that is a party
thereto, enforceable against such party in accordance with its terms.
7. The Security Agreement creates a valid security interest (the
"Security Interest") in favor of the Security Agent, for the benefit of the
Secured Parties in
8
the Collateral (as each such term is defined in the Security Agreement). The
Security Interest validly secures the Obligations, including the payment of any
future Loans made by the Lenders to Brylane, whether or not at the time such
Loans are made an Event of Default or other event not within the control of the
Lenders has relieved or may relieve the Lenders from their obligations to make
such Loans.
8. Assuming that (i) financing statements covering the Collateral
have been duly executed by the debtors and the Secured Parties and have been
duly filed in the offices listed on Schedule I hereto, (ii) the correct names
and addresses of the debtors and the Secured Parties are set forth in the
financing statements and (iii) the representations made by the Loan Parties in
the Documents with respect to locations of the Collateral and the Loan Parties
are and remain true and correct, such filings are sufficient to perfect the
security interests created by the Security Agreement in all right, title and
interest of the debtors in those items and types of Collateral described in the
Security Agreement in which a security interest may be perfected by filing a
financing statement under the New York UCC.
9. Upon delivery to the Security Agent pursuant to the Pledge
Agreement of the shares of capital stock and the promissory notes listed on
Schedule I to the Pledge Agreement (the "Current Pledged Securities"), together
with stock powers duly executed in blank, and assuming (i) the Security Agent
takes possession of the certificates representing all Current Pledged Securities
in the State of New York, (ii) the Security Agent is taking such Current Pledged
Securities for value in good faith, and (iii) the Security Agent and the Secured
Parties are without notice of any adverse claim with respect to the Current
Pledged Securities within the meaning of Section 8-302 of the New York UCC, the
security interest created in favor of the Security Agent for the benefit of the
Secured Parties under the Pledge Agreement in the Current Pledged Securities
constitutes a valid and perfected security interest; provided, however, that:
-------- -------
(a) in the case of the issuance of additional securities in respect
of the Current Pledged Securities and the pledge in accordance with the Pledge
Agreement of additional securities (in each case as such term is defined in
Section 8-102 of the New York UCC), the security interests therein will be
perfected (A) with reference to
9
certificated securities, only if possession thereof is obtained by the Security
Agent in accordance with the provisions of the Pledge Agreement, and (B) with
reference to uncertificated securities, only upon compliance with Section 8-321
of the New York UCC;
(b) in the case of proceeds, continuation of perfection of the
Security Agent's security interest therein is limited to the extent set forth in
Section 9-306 of the New York UCC; and
(c) we express no opinion as to continuation of perfection of the
security interest in the Current Pledged Securities to the extent they are held
by the Security Agent other than in the State of New York.
The foregoing opinions are subject to the qualification that we
express no opinion as to (a) the creation, validity, attachment or perfection of
the security interests created by the Pledge Agreement and the Security
Agreement insofar as they are not governed by Articles 8 or 9 of the New York
UCC; and (b) the adequacy of the description of the Collateral insofar as such
description includes terms which are not defined under Articles 8 or 9 of the
New York UCC.
Our opinion expressed in paragraph 4 is limited to those laws and
regulations that a lawyer exercising customary professional diligence would
reasonably recognize as being directly applicable to the Loan Parties, the
Transactions and the Financing Transactions.
No opinion is expressed above as to any law, statute, rule or
regulation which is applicable to the Transactions or the Financing Transactions
because of the nature of any of the Agent's, the Documentation Agent's, the
Security Agent's and the Lenders' businesses.
This opinion is rendered only to you and is solely for your benefit in
connection with the Credit Agreement. This opinion may not be relied upon by
you for any other purpose, nor may it be relied upon by any other person, firm
or corporation for any purpose without our prior express written consent.
Very truly yours,
---------------------------
Xxxxxxxx & X'Xxxx
EXHIBIT G-4
[Letterhead of]
XXXXX, XXXX & XXXXXXX
December , 1993
To the Lenders, the Documentation Agent
and the Security Agent Referred to below
c/x Xxxxxx Guaranty Trust Company
of New York, as Agent
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Credit Agreement dated as of December , 1996 among Brylane
L.P., the lenders listed on the signature pages thereof, Xxxxxx
Guaranty Trust Company of New York, as Agent and Xxxxxxx Xxxxx
Capital Corporation, as Documentation Agent
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special Massachusetts counsel to Brylane, L.P., a
Delaware limited partnership ("Brylane" or the "Borrower"), Brylane Capital
Corp., a Delaware corporation ("Finance Corp."), X.X. Management Services, Inc.,
a Delaware corporation ("New York Holding Subsidiary"), X.X. Catalog
Distribution, Inc., a Delaware corporation ("Indiana Holding Subsidiary"),
B.N.Y. Service Corp., a Delaware corporation ("B.N.Y. Service"), K.S. Management
Services, Inc., a Delaware corporation ("K.S. Management"), [Xxxxxxxx'x
Management Corp.], X.X. Management Services Partnership, a New York general
partnership between Brylane, New York Holding Subsidiary and B.N.Y. Service
("X.X. Management Services Partnership"), X.X. Catalog Distribution Partnership,
an Indiana general partnership between Brylane and Indiana Holding Subsidiary
("X.X. Catalog Distribution Partnership" and, together with Finance
2
Corp., New York Holding Subsidiary, Indiana Holding Subsidiary, X.X. Management
Services Partnership, B.N.Y. Service, K.S. Management and [Xxxxxxxx'x
Management], collectively, the "Subsidiaries") in connection with the Credit
Agreement, dated as of December , 1996 (the "Credit Agreement"), among Brylane,
the lenders listed on the signature pages thereof (the "Lenders"), Xxxxxx
Guaranty Trust Company of New York, as Agent (the "Agent"), and Xxxxxxx Xxxxx
Capital Corporation, as Documentation Agent (the "Documentation Agent"), and the
consummation of the transactions contemplated thereby.
This opinion is delivered to you pursuant to Section 3.01(c) of the
Credit Agreement. All capitalized terms that are used but not defined herein
shall have the respective meanings assigned to them in the Credit Agreement.
The Borrower and the Subsidiaries may be hereinafter referred to individually as
a "Loan Party" and collectively as the "Loan Parties."
In rendering this opinion, we have examined executed originals,
counterparts or copies of each of the following:
(i) the Credit Agreement;
(ii) the Guarantee Agreement;
(iii) the Pledge Agreement;
(iv) the Security Agreement;
(v) the Mortgage, Security Agreement, Fixture Filing and
Assignment of Leases and Rents (the "Mortgage"); and
(vi) the partnership agreement of X.X. Management Services
Partnership (the "X.X. Management Services Partnership
Agreement").
We have also reviewed the forms of Notes. The Credit Agreement, the
forms of Notes, the Guarantee Agreement, the Pledge Agreement, the Security
Agreement and the Mortgage are herein referred to collectively as the "Operative
Documents." The Operative Documents, the Partnership Agreement of Brylane and
the X.X. Management Services Partnership Agreement are herein referred to
collectively as the "Documents."
As to various questions of fact material to this opinion, we have been
furnished with and with your consent have relied upon, without any independent
investigation or verification of any kind, the representations and warranties
3
contained in the Documents and the other documents executed and delivered in
connection therewith and upon certificates and other documents of officers,
general partners and representatives of Brylane, the Subsidiaries and of public
officials and we have made such other investigations as we have deemed relevant
or necessary as the basis for the opinions hereinafter set forth. In our
examination of the documents referred to above, we have assumed the genuineness
of all signatures, and the incumbency, authority and power, of all Persons
signing the Documents as or on behalf of the parties thereto, the authenticity
and completeness of all documents submitted to us as original or certified
documents, and the conformity to authentic original documents of all documents
submitted to us as certified, conformed, facsimiled or photostatic copies.
To the extent that the obligations of Brylane and the Subsidiaries may
be dependent upon such matters, we have assumed for purposes of this opinion
that: (i) each of Brylane and the Subsidiaries is duly incorporated or
otherwise formed, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation; (ii) the execution, delivery and
performance by each of Brylane and the Subsidiaries of each of the Documents to
which it is a party (including the execution and delivery of the Notes by
Brylane), and the consummation by each of Brylane and the Subsidiaries of the
transactions contemplated thereby are within its corporate or other
organizational power and authority and each document executed by each of Brylane
and the Subsidiaries has been duly authorized, executed and delivered by all
necessary action on its part; and (iii) no other corporate or other action is
required by the stockholders or partners of Brylane and the Subsidiaries to
authorize the execution and delivery of the Documents by each of Brylane and the
Subsidiaries or the consummation of the transactions contemplated thereby.
To the extent that the obligations of Brylane and the Subsidiaries may
be dependent upon such matters, we have assumed, for purposes of this opinion
that: (i) each of the Lenders, the Agent, the Documentation Agent and the
Security Agent are duly incorporated or otherwise duly formed, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
formation; (ii) each of the Lenders, the Agent, the Documentation Agent and the
Security Agent has full corporate or other organizational power and authority to
execute, deliver and perform its obligations
4
under the Operative Documents and each of the other documents and agreements
executed by it in connection therewith; (iii) each such document executed by the
Lenders, the Agent, the Documentation Agent and the Security Agent has been duly
authorized, executed and delivered by each of the Lenders, the Agent, the
Documentation Agent and the Security Agent, as the case may be, and constitutes
the legal, valid and binding obligation of each of such parties, enforceable
against it in accordance with its terms; (iv) that each party to the Documents
has complied with all legal requirements pertaining to its status as such status
relates to its rights to enforce the Documents against the other party; (v) that
there has not been any mutual mistake of fact or misunderstanding, fraud, duress
or undue influence in connection with the Documents; and (vi) that there are no
agreements or understandings among the parties to the Documents, written or
oral, or usage of trade or course of prior dealing among such parties, that
would, in any case, define, supplement or qualify the terms of the Documents.
You also have advised us that in rendering the opinions set forth
below we may assume that (A) with respect to the Pledge Agreement and the
Security Agreement, Brylane or the Subsidiaries has "rights" in the Collateral
(as defined in such agreements) within the meaning of Section 9-203 of the
Uniform Commercial Code of the State of Massachusetts (the "Massachusetts UCC"),
consistent with the purposes of the Pledge Agreement and the Security Agreement;
(B) the description of the Collateral reasonably identifies what is described;
(C) with respect to the Mortgage, (i) the Mortgage secures a fee interest in
real property and (ii) the Mortgagee is either an entity qualified to transact
business in the state of Massachusetts or a foreign banking corporation under
the laws of such state; (D) the funds to be loaned or advanced to Brylane, as
contemplated by the Credit Agreement, have been or will be, as applicable,
delivered to and received by Brylane; and (E) each Subsidiary has received
adequate consideration in connection with its obligations under the Guarantee
Agreement and each of the other Operative Documents to which it is a party. We
also have assumed that the holders of the Notes (whether the Lenders or any
subsequent holders), the Agent, the Documentation Agent and the Security Agent
will act in good faith and will seek to enforce their rights and remedies under
the Operative Documents in a commercially reasonable manner.
5
We also have assumed that the constitutionality or validity of a
relevant statute, rule, regulation or agency action is not in issue unless a
reported decision has specifically addressed but not resolved, or has
established, its unconstitutionality or invalidity.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are attorneys admitted
to practice only in the State of Massachusetts and we opine herein only as to
the effect of the law of the State of Massachusetts on the subject transactions.
We do not opine on, and we assume no responsibility as to, the applicability to
or the effect on any of the matters covered herein of, the laws of any other
jurisdiction, including, without limitation, federal laws. In addition, we do
not express any opinion as to any law of the State of Massachusetts applicable
to the environment, taxes, "bulk sales," securities, "blue sky" or antifraud
matters.
The opinions set forth below are subject to the following additional
limitations, qualifications and exceptions:
(a) the enforceability of the Operative Documents may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or similar laws now or hereafter in effect relating to creditors'
rights and remedies generally;
(b) the remedies of specific performance and injunctive and other
forms of relief are subject to general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity)
and such enforceability may be subject to the discretion of the court before
which any proceeding therefor may be brought;
(c) certain remedial and exculpatory provisions contained in the
Operative Documents may be unenforceable (including (i) certain self-help
provisions and provisions which purport to create evidentiary standards; (ii)
provisions which purport to restrict access to legal or equitable remedies or to
waive or release any statutory provisions or common law rights or benefits that
may not be waived or released; and (iii) under certain circumstances, provisions
declaring that the failure to exercise or delay
6
in exercising rights or remedies will not operate as a waiver of any such right
or remedy);
(d) no opinion is expressed as to the enforceability of provisions
which purport to establish consent to the jurisdiction of any court; and
(e) no opinion is expressed below with respect to the enforceability
of provisions regarding indemnification against liabilities where such
indemnification is contrary to public policy.
The opinions set forth herein are as of the date of this letter and we
do not render any opinion as to the effect of any matter which may occur
subsequent to the date hereof.
Based upon and subject to the foregoing, after giving effect to the
consummation of the transactions contemplated by the Operative Documents, we are
of the opinion that:
1. Xxxxxxxx'x, Inc. is a corporation duly organized and validly
existing under the laws of the state of Massachusetts and has all corporate
power and authority to carry on its business as now conducted or as proposed to
be conducted.
2. The execution, delivery and performance by each of the Loan
Parties of the Operative Documents to which it is a party and the consummation
of the Financing Transactions and, to the extent involving Brylane or any
Subsidiary, the other Transactions, require no action by or in respect of, or
filing with, any Governmental Authority of the State of Massachusetts other than
(i) filings required to perfect Liens granted under the Security Documents; and
(ii) such actions as have been duly taken or filings that have been made.
3. The execution, delivery and performance by each of the Loan
Parties of the Operative Documents to which it is a party do not, assuming
compliance with the filing requirements referred to in paragraph 3 above,
contravene, or conflict with, or constitute a violation of any provision of any
present Massachusetts law or regulation binding upon or applicable to Brylane or
the Subsidiaries nor result in the creation or imposition of any Lien (except as
contemplated by the Operative Documents) on any asset of
7
Brylane or the Subsidiaries, which contravention, conflict or violation,
individually or in the aggregate, would have a material adverse effect on the
business, condition (financial or other), results of operations or properties or
prospects of Brylane and its Subsidiaries, taken as a whole.
4. Each of the Credit Agreement and the Mortgage constitutes the
valid and binding obligation of Brylane, enforceable against it in accordance
with its terms. The Mortgage is in proper form for recordation upon the land
records of the town in the state of Massachusetts where the mortgaged property
is located and, upon proper recordation of the Mortgage upon such land records,
the Mortgagee will have a valid and perfected mortgage lien on the Mortgaged
Property. The Fixture Filing is in proper form for recording on the land
records of the town in the state of Massachusetts where the Mortgaged Property
is located and, upon proper recordation of the Fixture Filing upon said land
records, the Security Agent, on behalf of the Secured Parties, will have a valid
and perfected security interest in all of the Borrower's right, title and
interest in and to the fixtures described therein and no further filing or
refiling or other action is necessary in the state of Massachusetts in order to
perfect or maintain such security interest.
5. The Notes, when executed and delivered by Brylane in accordance
with the Credit Agreement, will constitute valid and binding obligations of
Brylane, enforceable against it in accordance with its terms. Each of the
Guarantee Agreement, the Pledge Agreement and the Security Agreement constitutes
the valid and binding obligation of each of the Loan Parties that is a party
thereto, enforceable against such party in accordance with its terms.
6. The Security Agreement creates a valid security interest (the
"Security Interest") in favor of the Security Agent, for the benefit of the
Secured Parties in the Collateral (as each such term is defined in the Security
Agreement). The Security Interest validly secures the Obligations, including
the payment of any future Loans made by the Lenders to Brylane, whether or not
at the time such Loans are made an Event of Default or other event not within
the control of the Lenders has relieved or may relieve the Lenders from their
obligations to make such Loans.
8
7. Assuming that (i) financing statements covering the Collateral
have been duly executed by the debtors and the Secured Parties and have been
duly filed in the offices listed on Schedule I hereto, (ii) the correct names
and addresses of the debtors and the Secured Parties are set forth in the
financing statements and (iii) the representations made by the Loan Parties in
the Documents with respect to locations of the Collateral and the Loan Parties
are and remain true and correct, such filings are sufficient to perfect the
security interests created by the Security Agreement in all right, title and
interest of the debtors in those items and types of Collateral described in the
Security Agreement in which a security interest may be perfected by filing a
financing statement under the Massachusetts UCC.
8. Upon delivery to the Security Agent pursuant to the Pledge
Agreement of the shares of capital stock and the promissory notes listed on
Schedule I to the Pledge Agreement (the "Current Pledged Securities"), together
with stock powers duly executed in blank, and assuming (i) the Security Agent
takes possession of the certificates representing all Current Pledged Securities
in the State of Massachusetts, (ii) the Security Agent is taking such Current
Pledged Securities for value in good faith, and (iii) the Security Agent and the
Secured Parties are without notice of any adverse claim with respect to the
Current Pledged Securities within the meaning of Section 8-302 of the
Massachusetts UCC, the security interest created in favor of the Security Agent
for the benefit of the Secured Parties under the Pledge Agreement in the Current
Pledged Securities constitutes a valid and perfected security interest,
provided, however, that:
-------- -------
(a) in the case of the issuance of additional securities in respect
of the Current Pledged Securities and the pledge in accordance with the Pledge
Agreement of additional securities, (in each case as such term is defined in
Section 8-102 of the Massachusetts UCC), the security interests therein will be
perfected (A) with reference to certificated securities, only if possession
thereof is obtained by the Security Agent in accordance with the provisions of
the Pledge Agreement, and (B) with reference to uncertificated securities, only
upon compliance with Section 8-321 of the Massachusetts UCC;
(b) in the case of proceeds, continuation of perfection of the
Security Agent's security interest therein
9
is limited to the extent set forth in Section 9-306 of the Massachusetts UCC;
and
(c) we express no opinion as to continuation of perfection of the
security interest in the Current Pledged Securities to the extent they are held
by the Security Agent other than in the State of Massachusetts.
The foregoing opinions are subject to the qualification that we
express no opinion as to (a) the creation, validity, attachment or perfection of
the security interests created by the Pledge Agreement and the Security
Agreement insofar as they are not governed by Articles 8 or 9 of the
Massachusetts UCC; and (b) the adequacy of the description of the Collateral
insofar as such description includes terms which are not defined under Articles
8 or 9 of the Massachusetts UCC.
Our opinion expressed in paragraph 4 is limited to those laws and
regulations that a lawyer exercising customary professional diligence would
reasonably recognize as being directly applicable to the Loan Parties, the
Transactions and the Financing Transactions.
No opinion is expressed above as to any law, statute, rule or
regulation which is applicable to the Transactions or the Financing Transactions
because of the nature of any of the Agent's, the Documentation Agent's, the
Security Agent's and the Lenders' businesses.
This opinion is rendered only to you and is solely for your benefit in
connection with the Credit Agreement. This opinion may not be relied upon by
you for any other purpose, nor may it be relied upon by any other person, firm
or corporation for any purpose without our prior express written consent.
Very truly yours,
------------------------------
Xxxxx, Xxxx & Xxxxxx
EXHIBIT H
[Form of]
PERFECTION CERTIFICATE
The undersigned, the [Financial Officer] of BRYLANE, L.P., a Delaware
limited partnership (the "Borrower"), with reference to (a) the Credit Agreement
dated as of December 9, 1996 (the "Credit Agreement"), among the Borrower, the
----------------
lenders listed on the signature pages thereof, Xxxxxx Guaranty Trust Company of
New York, as administrative agent, and Xxxxxxx Xxxxx Capital Corporation, as
documentation agent, and (b) the Security Agreement dated as of December , 1996
(the "Security Agreement"), among the Borrower, certain subsidiaries of the
------------------
Borrower and Xxxxxx Guaranty Trust Company of New York, as security agent (all
terms used but not defined herein having the meanings given them in the Credit
Agreement and the Security Agreement), hereby certifies to the Agent, the
Security Agent and each Lenders as follows:
1. Names. (a) The exact name of the Borrower and of each Subsidiary
------
Grantor under the Security Agreement as such name appears in its respective
certificate of limited partnership, certificate of incorporation or partnership
agreement, as applicable, is as follows:
(b) The following is a list of all other names (including trade names
or similar appellations) currently used by the Borrower and any Subsidiary
Grantor or any of its divisions or other business units in connection with the
conduct of its business or the ownership of its properties:
2. Current Locations. (a) The chief executive office of the
------------------
Borrower and each Subsidiary Grantor is located at the following address:
Name Mailing Address County State
---- --------------- ------ -----
2
(b) The following are all locations where the Borrower or any
Subsidiary Grantor maintains any books or records relating to any accounts
receivable:
Name Mailing Address County State
---- --------------- ------ -----
(c) The following are all the places of business of the Borrower or
any Subsidiary Grantor not identified above:
Name Mailing Address County State
---- --------------- ------ -----
3. File Search Reports. Attached hereto as Schedule 3(A) are true
--------------------
copies of file search reports from the Uniform Commercial Code filing offices in
each jurisdiction identified in Section 2 hereof with respect to the Borrower
and each Subsidiary Grantor. Attached hereto as Schedule 3(B) is a true copy of
each financing statement or other filing identified in such file search reports
with respect to any Transferor.
4. UCC Filings. A duly signed financing statement on Form UCC-1 in
------------
substantially the form of Schedule 4 hereto has been delivered to the Security
Agent for filing in the Uniform Commercial Code filing office in each
jurisdiction identified in Section 2(a) hereof with respect to the Borrower or
any Subsidiary Grantor.
5. Schedule of Filings. Attached hereto as Schedule 5 is a schedule
--------------------
setting forth, with respect to the filings described in Section 4 above, each
filing office in which such filing is to be made.
3
IN WITNESS WHEREOF, we have hereunto set our hands this day of
December 1996.
___________________________________
Title:
EXHIBIT I
ISSUING BANK AGREEMENT dated as of [ ],
among BRYLANE, L.P., a Delaware limited
partnership (the "Borrower"), [________] (the
"New Issuing Bank"), and XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK, as administrative agent
(the "Administrative Agent") for the lenders
(the "Lenders") party to the Credit Agreement
dated as of December 9, 1996 (as amended or
modified, the "Credit Agreement"), among the
Borrower, the Lenders, the Administrative
Agent and XXXXXXX XXXXX CAPITAL CORPORATION,
as documentation agent (the "Documentation
Agent").
The New Issuing Bank is a Lender party to the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement. The Borrower desires to appoint the New
Issuing Bank as an "Issuing Bank" under the Credit Agreement, and the New
Issuing Bank desires to accept such appointment.
Accordingly, it is hereby agreed that, subject to the consent of the
Administrative Agent, the New Issuing Bank shall be an "Issuing Bank" under the
Credit Agreement, with all the rights, powers and obligations of an Issuing Bank
thereunder.
By its execution hereof, the Administrative Agent hereby consents to
the appointment of the New Issuing Bank as an "Issuing Bank" under the Credit
Agreement. The Borrower shall pay to the New Issuing Bank, for its own account,
a fee at the rate of __% per annum on the amount available to be drawn on each
outstanding Letter of Credit issued by the New Issuing Bank.
2
This Agreement shall constitute a part of the Credit Agreement.
Without limiting the generality of the foregoing, Sections 10.09 and 10.10 of
the Credit Agreement shall apply to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BRYLANE, L.P.,
by VGP CORPORATION, General
Partner,
by_________________________________
Name:
Title:
[NEW ISSUING BANK],
by____________________________________
Name:
Title:
[Address for notices]
XXXXXX GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent,
by______________________________________
Name:
Title:
